May 14

Today’s News 14th May 2017

  • Paul Craig Roberts Rages "Are You Ready To Die?"

    Authored by Paul Criag Roberts,

    “Fifty years ago, the streets of Leningrad taught me one thing: If a fight is inevitable, you must strike first.” Vladimir Putin

    In George Orwell’s 1949 dystopian novel, 1984, information that no longer is consistent with Big Brother’s explanations is chucked down the Memory Hole. In the real American dystopia in which we currently live, the information is never reported at all.

    On April 26 – 16 days ago – Lt. Gen. Viktor Poznihir, Deputy Chief of the Main Operations Directorate of the Russian Armed Forces, stated at the Moscow International Security Conference that the Operations Command of the Russian General Staff has concluded that Washington is preparing a nuclear first strike on Russia.

    See:

    https://www.rt.com/news/386276-us-missile-shield-russia-strike/ 

    http://www.fort-russ.com/2017/04/us-forces-preparing-sudden-nuclear.html 

    https://www.times-gazette.com/ap%20general%20news/2016/10/12/russia-china-to-mull-joint-response-to-us-missile-shield  

    http://themillenniumreport.com/2017/04/us-forces-preparing-sudden-nuclear-strike-on-russia-moscow-security-conference/ 

    The Times-Gazett in Ashland, Ohio, was the only US print media that a Google search could turn up that reported this most alarming of all announcements. A Google search turned up no reports on US TV, and none on Canadian, Australian, European, or any other media except RT and Internet sites.

    I have been unable to find any report that any US Senator or Representative or any European, Canadian, or Australian politician has raised a voice of concern.

    No one in Washington got on the telephone to tell Putin that this was all a mistake, that the US was not preparing a nuclear first strike on Russia, or ask Putin how this serious situation could be defused.

    Americans do not even know about it, except for our readers.

    I would have expected at least that the CIA would have planted the story in the Washington Post, the New York Times, CNN, MSNBC, and NPR that General Poznihir was expressing his personal opinion, nothing to be taken seriously. But apparently Americans and their European vassals are not to even know that such an accussation was made.

    As I reported some time ago and more recently in my column about North Korea, the Chinese leadership has also concluded that the US intends a nuclear first strike against China.

    Alone either Russia or China can destroy the US. If they act together, the destruction of the US would be redundant. What is the intelligence, if any, and morality, clearly none, of the US leadership that recklessly and irresponsibly invites Russia and China to preempt Washington’s attack on them with an attack on the US?

    Surely not even insouciant Americans are so stupid as to think that Russia and China will just sit there and wait for Washington’s nuclear attack.

    I lived through every stage of the Cold War. I participated in it. Never in my life have I experienced the situation where two nuclear powers were convinced that the third was going to surprise them with a nuclear attack.

    I supported Trump because he, unlike Hillary, said he would normalize relations with Russia. Instead he has raised the tensions between the nuclear powers. Nothing is more irresponsible or dangerous.

    We currently are in the most dangerous situation of my lifetime, and there is ZERO AWARENESS AND NO DISCUSSION!

    How can this be? Putin has been issuing warnings for years. He has told the Western presstitute media on more than one occasion that they, in their dishonesty, are pushing the world to nuclear war. Putin has said over and over, “I issue warnings and no one hears.” “How do I get through to you?”

    Maybe the morons will hear when mushroom clouds appear over Washington and New York, and Europe ceases to exist, as it will if Europe continues the confrontation with Russia as is required from Washington’s well-paid vassals.

    Within the last several years I reported the Chinese government’s reaction to US war plans for a nuclear strike on China. The Chinese showed how their submarines would destroy the West Coast of the US and their ICBMs would finish off the rest of the country.

    I reported all of this, and it produced no response. The Memory Hole wasn’t needed, as neither Washington nor the presstitutes nor the Internet noticed. This is insouciance to the thousandth degree.

    In America and its subservient, crawling on their knees vassal states, the information never gets reported, so it never has to be put down the Memory Hole.

    If you convince someone that you are going to kill them, they are going to kill you first. A government, such as what exists in Washington, that convinces powerful countries that they are targeted, is a government that has no respect whatsoever for the lives of its own people or the peoples of the world or for any life on planet Earth.

    Such a government as Washington is evil beyond all measure, as are the media whores and European, Canadian, Australian, and Japanese vassal states that serve Washington at the expense of their own citizens.

    Despite all their efforts to believe otherwise, the Russian and Chinese leaderships have finally arrived, belatedly, at the realization that Washington is evil to the core and is the agent of Satan.

    For Russia and China, the Satanic Evil that rules in the West has reduced the choice for Russia and China to them or us.

  • Which US Region Contributes The Most To GDP?

    The U.S. Bureau of Economic Analysis (BEA) has published gross domestic product (GDP) figures for the fourth quarter of 2016 by state. According to the BEA data released on Thursday, real GDP increased in every state and the District of Columbia for that time period.

    GDP by state growth ranged from 3.4 percent in Texas to 0.1 percent in Kansas and Mississippi. Finance and insurance; retail trade; and professional, scientific, and technical services were the leading contributors to U.S. economic growth in the fourth quarter.

    Overall, growth was pretty even when states are combined to regions. The GDP share of those regions didn’t change much, comparing year-over-year fourth quarter figures.

    Infographic: United States Gross Domestic Product by Region 2016 | Statista

    You will find more statistics at Statista

    As shown in the Statista chart above, the GDP has a strong correlation with how many people live in those areas. It doesn’t come as much of a surprise that the Southeast, which has the combined population of 12 states, amounting to approximately 83 million (or a quarter of U.S. citizens), also has the biggest GDP share, standing at 21.4 percent of total GDP. The thinly populated Rocky Mountain area (12 million inhabitants) has a share of 3.4 percent of the GDP.

  • A California Business Banker Speaks Out: "It's A Classic Late-Cycle Red Flag"

    Authored by Mike Shedlock via MishTalk.com,

    On occasion, I get emails from a commercial banker friend who lives in California. Today he provides anecdotes from a business banker’s perspective.chair
     

    Hey Mish

     

    It’s been a while since my last email. Here are some views from this business banker’s chair.

     

    I had lunch with a financial planner today, and he said the new tax plan coming from DC would eliminate tax-deductibility of state taxes. While Federal tax rates might go down a little, the net impact would be higher total taxes via higher total federal taxes due to the loss of writing off state taxes. At least, that is the view for those of us in high state income tax states like CA. He already had clients exiting the state.

     

    The gentleman I had lunch with today is a lifelong financial planner, mostly on the insurance side. He stated that the insurance industry today is in worse shape than that of the banking industry during the prior recession, and yet we hear very little about it. If so, we both agreed that the world isn’t ready for an insurance industry meltdown anything like that of the Banking industry during the last recession.

     

    I provide financing to a lot of subcontractors (the trades). While visibility 9-12 months looking forward has looked good for the past few years, I finally have a client (a framing contractor for the major home builders) that has said something to the contrary. He stated that some of his major home builders are starting to see some issues in selling inventory in CA. Without going into specifics, he also stated that he senses something is changing in their world.

     

    I’ve seen a spike in the number of unqualified (financially and expertise) in people who want to get into flipping homes. It’s becoming vogue amongst those who lack the qualification to do it at a time when the values in the San Francisco Greater Bay Area have never been higher. Somehow, 2007 peak real estate values were crazy, but the value today that are higher than 2007 are justifiable/sustainable. That’s a classic late cycle red flag.

     

    During the last 3-4 years, I’ve seen more people who seek to finance new restaurants than any time in the past 20 years. This industry seems frothy. With rising rental costs for space and higher minimum wages for staff, I’m seeing pressure on the cost structure of existing operators squeeze them, while people are rushing to build out a new restaurant.

     

    Finally, for the past 12-18 months, I’ve been flooded with new loan requests. I haven’t been this busy with new loan requests since the last cycle Top. Again, this seems like another last cycle red flag.

     

    Hope all is well

     

    “BBC”

    I had a friend tell me one time: “Mish if you ever get the urge to start a restaurant, please call me. I will talk you out of it. Some succeed, but most lose their investment or struggle for years barely surviving.”

    Everyone thinks they are different. But they aren’t. After a run up in property values, rising minimum wages, and increased competition, this is the worst time in the last 10 years.

  • The Final Straw: President Trump Had Two Scoops of Iced Cream, While Everyone Else Had One

    Correspondents from Time Magazine recently dined at the White House in the famed ‘blue room’ and were treated like savage animals. All went well with the enemies of America until dessert was prepared and served. As unbelievable as it might seem, the President made sure he was served not one, but TWO, scoops of iced cream, while everyone else got just 1.

    These revelations have led to new outrage on the left, with the people demanding swift resignation from the President.

    //platform.twitter.com/widgets.js

    Others on the right point out that President Obama was once seen with two scoops inside of a waffled cone.

    //platform.twitter.com/widgets.js

    Personally, I think the President was being generous, as I’d ensure the bastards from Time would’ve received nothing at all.

    //platform.twitter.com/widgets.js

    CNN provides coverage on this important topic.

    Content originally published at iBankCoin.com

  • 'Holier-Than-Thou' – How America's Mainstream Media Rebuke Foreign Leaders

    Authored by Brian Cloughley via The Strategic Culture Foundation,

    In the week of World Press Freedom Day the New York Times carried one of its holier-than-thou and unintentionally ironical editorials, this time titled «Donald Trump Embraces Another Despot». Seeing the headline, the world could be forgiven for asking which one it might be, this time, and eventually the Editorial Board revealed the target of their displeasure to be President Duterte of the Philippines, an unpleasant morsel of filth who had just been invited to visit the United States by President Donald Trump, who is also an unpleasant morsel of filth.

    In the run-up to identifying Mr Duterte as the object of its disapproval, the Times observed that «for the most part American presidents, Republican and Democratic, have believed that the United States should provide a moral compass to the world».

    A moral compass? That rang a bell, because one person who used this phrase recently was the US Ambassador to the United Nations, the egregious Nikki Haley, who declared at her confirmation hearing that she will «speak up against anything that goes against American values», because «we have always been the moral compass of the world». What nonsense.

    Many Americans have been horrified at the way in which their leaders have spun America’s moral compass over the years, and it is barely credible that anyone could utter such a phrase with sincerity.

    Past presidents may have paid lip-service to such ideals, but few have pursued policies that would in any way indicate that the United States of America was providing a global moral compass. Post World War II, Washington’s ethics were blasted into pieces by the Pentagon’s evil fandangos in Vietnam and surrounding countries, where the effects of its massacres, bombings of cities and towns, and use of the chemical Agent Orange are still being suffered.

    Ironically, the New York Times carried a piece in 2014 titled Agent Orange’s Long Legacy, for Vietnam and Veterans, which stated that «the war has not ended for many of the 2.8 million [US] servicemen and women who went to Vietnam. These ailing veterans are convinced that their cancers and nervous disorders and skin diseases — not to mention congenital maladies afflicting some of their children — are a result of their contact with Agent Orange». The writer claimed that «Often enough, that linkage has not been established incontrovertibly», which is a contemptible get-out, but the swinging moral compass went off the wall when he averred that the «Vietnamese accept almost as an article of faith that America’s aerial and ground spraying poisoned their environment, perhaps for decades to come, and is to blame for severe birth defects that afflict hundreds of thousands of their children. Whether that is indeed a reality has not been definitively established».

    The poison of Agent Orange has indeed continued, as evidenced by many reports, one of the latest being on 4 April 2017 that «on a hill above his home, former soldier Do Duc Diu showed me the cemetery he built for his twelve children, who all died soon after being born disabled. There are a few extra plots next to the existing graves for where his daughters, who are still alive but very sick, will be buried». And it was Presidents Kennedy, Johnson and Nixon who bore responsibility for the vile despoliation of a region and the deaths of so many of its innocent citizens.

    Moral compass? You’ve got to be joking.

    Then the Editorial Board excelled itself by pronouncing that the Presidents of the United States have been «encouraging people to pursue their right to self-government and human dignity and rebuking foreign leaders who fall short».

    The list of countries whose people have been actively discouraged by US Administrations from «pursuing their right to self-government» is long and depressing, and when there was movement to support people who want democracy the usual result was catastrophe. That this statement was made during Press Freedom Week was indeed ironic, because it was also reported that «Washington is working to push through contracts for tens of billions of dollars in arms sales to Saudi Arabia, some new, others in the pipeline, ahead of President Donald Trump's trip to the kingdom this month». He is visiting a dictatorship where, as his own State Department acknowledges, «civil law does not protect human rights, including freedoms of speech and of the press». Moral compass, anyone?

    President Duterte is a gross violator of human rights and entirely without any moral sense. As noted on CNN, he is «the thug President of the Philippines — our ally. Here’s a man who has bragged about committing murder . . . and who just happens to be presiding over an anti-drug operation that by some estimates has involved the extrajudicial killing of some 7,000 people».

    But there have been and continue to be many similar despots around the world whom the United States and the New York Times have supported for years. Take the truly evil Park Chung-Hee of South Korea with whom President Kennedy «reaffirmed the strong bonds of friendship traditionally existing between the two countries» and who lasted through Presidents Johnson, Nixon, Ford and even the faintly morally-conscious Carter, until Park’s assassination in 1979. Where was the moral compass in these hideous years in which Park was a valued ally of the United States?

    Then there was the brutal Suharto of Indonesia (1967 to 1998; Johnson, Nixon, Ford, Carter, Reagan, Bush the First, Clinton) about whom in 2015, fifty years after Suharto’s most appalling massacres, the New York Times carried a piece acknowledging that «with American support, more than 500,000 people were murdered by the Indonesian Army and its civilian death squads. At least 750,000 more were tortured and sent to concentration camps, many for decades». Reagan liked Suharto and in a speech went so far as to spin his moral compass back-to-front and say that «tonight we welcome good friends back to the White House» because he considered his dictator guest to have «clear-sighted recognition of where the interests of both our nations lie».

    Of course Suharto recognised American interests — just as present-day dictators recognise them and know that although Nikki Haley and Secretary of State Rex Tillerson and the Tweeter-in Chief, Donald Trump, should, as Haley proudly announced, «speak up against anything that goes against American values», they’ll do that selectively. They adopt this approach because although US values are Constitutionally and morally at variance with those of all the Gulf dictatorships, for example, they are subject to modification in interpretation as they go up the gently-sloped moral ladders of the Congress and the Administration.

    There are never any public rebukes for the Gulf dictators, in spite of the State Department recording that they are intolerant bigots with no regard for human rights.

    Washington declares Saudi Arabia to be «a strong partner» in spite of it being noted in the report on human rights that its citizens have no «ability and legal means to choose their government» while there are «restrictions on universal rights, such as freedom of expression, including on the internet, and the freedoms of assembly, association, movement, and religion; and pervasive gender discrimination and lack of equal rights that affected most aspects of women’s lives».

    It would be refreshing if the New York Times Editorial Board were to get hold of America’s moral compass and encourage the President to rebuke the monarchy of Saudi Arabia for its long-standing, embedded and comprehensive contempt for the rights of Saudi citizens.

    By all means criticize Trump for cosying up to the savage Duterte – but spare us the claptrap about moral compasses.

  • The Other Shoe Drops: Prime Auto Loan Losses Surge As Recoveries Tumble

    When we looked at subprime auto delinquencies most recently, we found some troubling trends: first, in February, we showed that 61+ day delinquencies in General Motors’ subprime securitization book would support a rather bleak thesis for future auto sales, and specifically the demand side of the equation, with January 2017 delinquency rates soaring to the highest levels since late 2009/early 2010. 

    Autos

    Ironically, this hasn’t stopped lenders from providing financing, and according to Morgan Stanley since 2010, the share of Subprime Auto ABS origination that has come from deep subprime deals has increased from 5.1% to 32.5%, suggesting that yield-starved buyside will put “other people’s money” into anything as long as it provides a slightly higher yield.

    Subprime

    Meanwhile, the subprime shock has already impacted the broader market, observed with the latest monthly auto sales data which declined four month in a row heading into May. An even bleaker picture of the subprime market emerged a month later when looking at the latest securitization analysis from Morgan Stanley which revealed that 60+ day delinquencies at 266 subprime auto ABS deals were surging – despite low unemployment, high consumer confidence and debt-to-income ratios at 30-year lows – back to ‘great recession’ levels. Meanwhile, loss severities were also shooting higher just as used car prices were sliding.

     

    Used Car Prices

    In part, this tied in with the overnight look at the “flood of off-lease vehicles“, according to which by the end of 2019, an estimated 12 million low-mileage vehicles are coming off leases inked during a 2014-2016 spurt in new auto sales, which is set to put even more pressure on used (and new) car prices for the foreseeable future.

    As Reuters noted, a computer search for available used vehicles within 150 miles of Reel revealed an eye-popping figure: 668 Escapes. That’s enough to put more than 40 percent of the inhabitants of this small northeastern Ohio town, population 1,600, into the popular crossover. A search for the Chevrolet Equinox, a comparable crossover, showed 461 available.

    “The automakers have flooded the market,” said Reel, owner of Reel’s Auto in Orwell, Ohio, about 40 miles east of Cleveland.

    The above trends validate a recent bearish Morgan Stanley analysis, which forecast that the plunge in used car prices is just getting started, and in a bear case, the bank sees used car prices dropping by up to 50% over the next 5 years.

     

    * * *

    However, in an even more troubling development for US consumers, it now appears that the other shoe for the US auto market has finally also dropped, and according to analyses by both Morgan Stanley and S&P, losses on prime auto loans are also surging.

    In the latest note by Morgan Stanley’s Jeen Ng, the analyst reports that “fundamental performance deterioration has not been confined to Subprime. Both 60+ day delinquencies and default rates in Prime ABS pools have nearly doubled from their post-crisis lows.”

    A slightly better picture – at least according to MS data – emerges in terms of loss severities. Still, while subprime losses are far worse, the deterioration among prime loans is unmistakable: compared to peak levels, 60+ day delinquencies in Prime auto loan pools are roughly 65% of the way back, whereas Subprime pools are close to 95% of their peak levels. On the default rate side, the deterioration is somewhat more subdued, with Subprime over 80% of the way back to prior peaks while Prime has yet to reach the 45% mark.

    One troubling observation, as confirmed in the recent Fed Senior Loan Officers Survey is that credit standards have continued to ease: as in Subprime, some of the ongoing Prime deterioration can be attributed to a relaxing of credit standards.

     

    Subprime

    Aggregate credit scores have decreased by about 5 points, which while easier is not even half as much as the 10+ point deterioration in Subprime. The same is true for longer origination terms. Most Prime issuers have extended loan terms by 3-4 months over the past 5 years. In Subprime, extension in most cases has been longer than 10 months. These easier standards can help explain both why delinquencies and defaults are higher, according to Ng. Also, keep in mind, there is a limit as to how far Prime issuers can expand their credit box in the form of lower credit scores before the deals become Subprime.

    Some more observations from Morgan Stanley, which finds a particular deterioration in recent loan issuance at Huyndai and Mercedes:

    As auto lenders expand their credit box to weaker credit borrowers, we should expect to see poorer credit performance among more recent deals relative to the more seasoned ones.

     

     

    Across the OEM originators above, we see a very consistent shift in lending standards over time – marginally longer loan terms, higher credit scores and lower used car composition. Overall, the longer loan terms and higher credit scores have offsetting effects on fundamental performance. If we look at the 60+ delinquencies and 3-month CDR curves by vintage, we don’t necessarily observe performance  deterioration over time, and for some issuers we even see relative outperformance among recent deals. However, we do see higher severities among recent vintages, which we can at least partly attribute to the decline in used car values.

     

    HART (Hyundai) and MBART (Mercedes Benz) serve as exceptions to the above, with a higher % of used vehicles and FICO migration of less than +10 points over the last 7 years. They are also the two shelves which show the most pronounced performance shift. TAOT (Toyota) also extended their credit score by less than 10 points, but their change in origination loan terms has been minimal and they have a lower  composition of used vehicles over time.

    Additionally, in terms of loss severities, the bank finds that all originator types appear to be trending higher in similar fashion, with non-bank originators printing the lowest recovery values. OEM originators overtook bank originators to see the highest recovery values last year.

    * * *

    In a separate, and even more downbeat report, S&P Global Ratings analyst Ann Matin noted that losses in bonds tied to “prime auto loans have surged surged in recent months from a year ago, hurt by falling recoveries” and notes that prime net losses rose to 0.73% in February from 0.57% in same month last year. According to S&P, bonds from some issuers that have become a larger share of the index, including Mechanics Bank’s California Republic and TCF Financial Corp., and both are contributing to those higher losses.  Additionally, the rating agency referred to the abovementioned loan losses at Huyndai, stating that “we’ve increased our expected cumulative net loss levels for certain issuers, including Hyundai’s most recent transaction, HART 2017-A.”

    Margin also wrote that prime asset-backed deals issued in 2015 seem to be performing worse, comparatively, than those sold between 2010 and 2014, and the deterioration in loans made to strong credit borrowers has forced S&P to revise its net loss expectations for various bonds.

    * * *

    To summarize: subprime loan losses have been surging alongside loss severities (with the buyside happy to soak up any and all issuance, regardless of underlying fundamentals), as recoveries slide, and in recent months this deterioration has finally shifted over to prime loans. Meanwhile, used car prices are tumbling, while new car sales have declined for 4 consecutive months as auto loan demand among tapped out consumers has tumbled. Meanwhile, millions of used cars are about to hit the market as they come off lease, which in turn will further pressure used car prices and new car sales.

    So what happens next?  Here, we’ll repeat what we concluded last night:

    Unstable used car prices will almost certainly reduce OEM reliance on leases as the implied 3-year depreciation (or residual values, if you prefer) will make them all but completely uneconomical: remember, Americans only care about that monthly payment.  Meanwhile, the relative value between used and new cars will tilt heavily in favor of the used market.  Thankfully Americans will still be able to buy that Mercedes they require to get back and forth from their minimum wage jobs, while maintaining a monthly payment of $500 or less, but it will just have to have 30,000 miles on it.

    Of course, the OEMs of the world won’t admit that their game is over until it’s way too late.  So, they’ll keep right on producing new cars to cover a 17-18mm SAAR environment up until the point they face an outright revolt from their dealer networks.  At that point, however, dealer inventories will be so high that Detroit will be forced to shutdown for months on end while new car prices are slashed to reduce the massive inventory glut.  Tanking new car prices will put even more pressure on used car prices which will mark the beginning of the death spiral that will result in a new round of inevitable auto bankruptcies, catalyzing the next economic contraction… assuming one hadn’t started already.

  • Arizona Passes Bill To End Income Taxation On Gold And Silver

    Sound money advocates scored a major victory on Wednesday, when the Arizona state senate voted 16-13 to remove all income taxation of precious metals at the state level. The measure heads to Governor Doug Ducey, who is expected to sign it into law.

    Under House Bill 2014, introduced by Representative Mark Finchem (R-Tucson), Arizona taxpayers will simply back out all precious metals “gains” and “losses” reported on their federal tax returns from the calculation of their Arizona adjusted gross income (AGI).

    If taxpayers own gold to protect themselves against the devaluation of America’s paper currency, they frequently end up with a “gain” when exchanging those metals back into dollars. However, this is not necessarily a real gain in terms of a gain in actual purchasing power. This “gain” is often a nominal gain because of the slow but steady devaluation of the dollar.  Yet the government nevertheless assesses a tax.

    Sound Money Defense League, former presidential candidate Congressman Ron Paul, and Campaign for Liberty helped secure passage of HB 2014 because “it begins to dismantle the Federal Reserve’s monopoly on money” according to JP Cortez, an alumnus of Mises University.

    Ron Paul noted, “HB 2014 is a very important and timely piece of legislation. The Federal Reserve’s failure to reignite the economy with record-low interest rates since the last crash is a sign that we may soon see the dollar’s collapse. It is therefore imperative that the law protect people’s right to use alternatives to what may soon be virtually worthless Federal Reserve Notes.” In early March, Dr. Paul appeared before the state Senate committee that was considering the proposal.

    “We ought not to tax money, and that’s a good idea. It makes no sense to tax money,” Paul told the state senators. “Paper is not money, it’s a substitute for money and it’s fraud,” he added, referring to the fractional-reserve banking practiced by the Federal Reserve and other central banks.

    After the committee voted to pass the bill on to the full body of the Senate, Dr. Paul held a rally on the grounds of the state legislature, congratulating supporters of the measure and of sound money.

    Paul told the crowd that “they were on the right side of history” and that even though those working to restore constitutional liberty to Arizona and all the states “had a great burden to bear,” there are “more than you know” working toward the same goal.

    Referring to the bill’s elimination of capital gains taxes on gold and silver, the sponsor of the bill, State Representative Mark Finchem, said, “What the IRS has figured out at the federal level is to target inflation as a gain. They call it capital gains.”

    Shortly after the vote in the state Senate, the Sound Money Defense League, an organization working to bring back gold and silver as America’s constitutional money, issued a press release announcing the good news.

    “Arizona is helping lead the way in defending sound money and making it less difficult for citizens to protect themselves from the inflation and financial turmoil that flows from the abusive Federal Reserve System,” said Stefan Gleason, the organization’s director

    As a reminder, in 1813 Thomas Jefferson warned, “paper money is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” This is also why the men who drafted the Constitution empowered Congress to mint gold and silver, sound money, and why they included not a single syllable authorizing the legislature to “surrender that critical power to a plutocracy with a penchant for printing fiat money.”

    Slowly, states may be summoning back the days when money was actually worth something. At least 20 states are currently considering doing as Arizona is about to do and remove the income tax on the capital gains from the buying and selling of precious metals: some state legislatures, including Utah and Idaho, have taken steps toward eliminating income taxation on the monetary metals.  Other states are rolling back sales taxes on gold and silver or setting up precious metals depositories to help citizens save and transact in gold and silver bullion. 

  • North Korea Test-Fires 7th Ballistic Missile Of 2017, Projectile Flew 700Km, Landed In Sea Of Japan

    Update: Japanese Chief Cabinet Secretary Yoshihide Suga said on Sunday that North Korea's firing of a ballistic missile was a violation of U.N. resolutions and that Japan strongly protested the action. Additionally:

    • *MISSILE MAY BE NEW TYPE: KYODO CITES JAPAN DEFENSE MINISTER
    • *MISSILE EST ALTITUDE 2,000KM, KYODO NEWS REPORT
    • *S. KOREA WILL DEAL STERNLY WITH N. KOREA PROVOCATIONS: YOON
    • *S. KOREA PRESIDENT STILL OPEN TO DIALOGUE WITH N. KOREA: YOON

    *  *  *

    As we detailed earlier, on the eve of a summit in Beijing, and just hours after Pyongyang's chief nuclear negotiator said North Korea is ready to hold talks with the United States "if the conditions are mature", South Korea's Yonhap reports that North Korea has fired a projectile believed to be a ballistic missile, from a region named Kusong located northwest of Pyongyang, where the North previously test-launched its intermediate-range missile.

    The nature of the projectile was not immediately clear, a South Korean military official told Reuters.

    The ballistic missile firing is North Korea’s seventh this year.

    The launch comes just hours after The South China Morning Post reports Choe Son-hui, head of the North Korea's Foreign Ministry's North America bureau, offered the assurance in the Chinese capital after an informal meeting in Norway with Thomas Pickering, a former US ambassador to the United Nations.

    "If conditions are mature, we will hold dialogue with the Donald Trump administration," she said.

     

    Choe made the remarks just days after Trump said he would be willing to meet North Korean leader Kim Jong-un "under the right circumstances".

     

    But the comments also came as the US embassy in Beijing told China's foreign ministry that North Korea's attendance at the top-level gathering for the "Belt and Road Initiative" could send the wrong message as the world was trying to pressure Pyongyang over its ­repeated missile and nuclear tests. The foreign ministry said Beijing welcomed the participation of all countries in the summit.

    South Korea's Yonhap News confirms North Korea has fired what appears to be a ballistic missile from its west coast, the South Korean military reported early Sunday. The launch would be the first in two weeks since the last attempt to fire a missile ended in a failure just minutes into flight. It would also be the first launch since a new, liberal president took office in South Korea on Wednesday saying dialogue as well as pressure must be used to ease tensions on the Korean peninsula and stop the North's weapons pursuit. The new president Moon has said he is willing to engage in dialogue with his northern neighbor.

    Weapons experts and government officials, cited by Reuters, "believe the North has accomplished some technical progress with those tests."

    South Korean Military has now confirmed it was a ballistic missile that flew 700 km.

    The Japanese government confirms the missile flew 30 minutes and landed in The Sea of Japan.

    Kim claimed in January to be in the final stages of preparations to test-fire an intercontinental ballistic missile, and has since launched several intermediate-range projectiles with varying degrees of success.

    The action provides an early test for South Korean President Moon Jae-in, who came to office on May 10 saying he would visit Pyongyang under the “right circumstances” to bring peace to the peninsula. Moon convened a meeting of the national security council Sunday morning, according to the Presidential Blue House.

    *  *  *

    Today's launch should not be a total surprise: In a interview earlier in the week with by Sky News, in response to a question "is a sixth nuclear test now imminent", the answer of the North Korean Ambassador to the UK, Choe Il was "In regards to the sixth nuclear test, I do not know the scheduled time for it, as I am here in the UK, not in my home country. However, I can say that the nuclear test will be conducted at the place and time as decided by our supreme leader, Kim Jong-Un."

    Asked if he is afraid of a possible US military response, the ambassador answers that "we are developing our nuclear strength to respond to that kind of attack by the US. If the US attacks us, our military and people are fully ready to respond to any kind of attack. I do not think the US are considering a military attack against us." 

    Asked what would North Korea's response be to a preemptive strike, he answer that: "The US cannot attack us first. If the US moves an inch, then we are ready to turn to ashes any available strategic assets of the US."

  • Trump-Appointed Manufacturing Tzar Backfires – Supports NAFTA, Backs Mexico

    In an apparent snub to the administration's trade policy plans, GE CEO Jeff Immelt – who sits on the Trump-appointed manufacturing council – said he "very supportive" of NAFTA adding that he was "optimistic about Mexico."

    Just a day after we showed Mexico's Manufacturing industrial production surge 8.5% year-over-year – the greatest surge since August 2010…

     

    And expectations for employment in US manufacturers are tumbling…

     

    Reuters reports that GE Chief Executive Officer Jeff Immelt said on a visit that Mexico had great potential and was not properly understood. He touted the conglomerate's Mexican operations and the trade deal binding Mexico, Canada and the United States.

    "GE as a company, we're very supportive of NAFTA," Immelt told employees at an event to mark the expansion of operations in the northern city of Monterrey. He said the trade accord could be modernized, as Mexico has argued.

     

    The GE boss said trade meant "win-win" opportunities across North America.

     

    "We will continue to work constructively in the context of wanting to see a close relationship between the U.S. and Mexico," he said, noting that GE's exports to the rest of the world from Mexico were worth $3 billion.

     

    "We're optimistic about Mexico, we're optimistic about what we can do here," Immelt added, saying Latin America's no. 2 economy would be a "big part" of GE's future.

    As a reminder, Immelt sits on a Trump-appointed manufacturing council (that Mexico has targeted for lobbying as Mexico and Canada push U.S. business leaders to defend NAFTA).

    While Trump touts a "Buy American" policy and has railed against U.S. companies moving operations to Mexico (threatening to ditch NAFTA, a lynchpin of the Mexican economy, if he cannot rework it to secure better terms for the United States), unlike some U.S. companies, GE has not backed off plans in Mexico, risking broadsides from Trump on Twitter.

    How long before Mr. Immelt gets a tap on the shoulder?

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May 13

Today’s News 13th May 2017

  • Top NSA Whistleblower: Ransomware Hack Caused by “Swindle of the Taxpayers” by Intelligence Agencies

    What should we make of the global ransomware attacks which happened today?

    We’ve documented that the intelligence services intentionally create digital vulnerabilities, then intentionally leave them open … leaving us exposed and insecure.

    Washington’s Blog asked the highest level NSA whistleblower ever* – Bill Binney – what he thinks of the attacks.

    Binney told us:

    This is what I called short sighted finite thinking on the part of the Intelligence Community managers.

     

    This is also what I called (for some years now) a swindle of the tax payers. First, they find or create weaknesses then they don’t fix these weaknesses so we are all vulnerable to attack.

     

    Then, when attacks occur, they say they need more money for cyber security — a total swindle!!! [Indeed.]

     

    This is only the second swindle of the public. The first was terror efforts by saying we need to collect everything to stop terror — another lie. They said that because to collect everything takes lots and lots of money.

     

    Then, when the terror attack occurs, they say they need more money, people and data to stop terror. Another swindle from the start. [The war on terror is a “self-licking ice cream cone”, because it creates many more terrorists than it stops.]

     

    And, finally, the latest swindle “THE RUSSIANS DID IT.” This is an effort to start a new cold war which means another bigger swindle of US tax payers.

     

    For cyber security, I would suggest the president order NSA, CIA and any others to fix the cyber problems they know about; then, maybe we will start to have some cyber security.

    The bottom line is that our intelligence services should start concentrating on actually defending us, rather than focusing on offensive mischief.

    * Binney is the NSA executive who created the agency’s mass surveillance program for digital information, who served as the senior technical director within the agency, who managed six thousand NSA employees, the 36-year NSA veteran widely regarded as a “legend” within the agency and the NSA’s best-ever analyst and code-breaker, who mapped out the Soviet command-and-control structure before anyone else knew how, and so predicted Soviet invasions before they happened (“in the 1970s, he decrypted the Soviet Union’s command system, which provided the US and its allies with real-time surveillance of all Soviet troop movements and Russian atomic weapons”).

    Binney is the real McCoy. As we noted in 2013, Binney has been interviewed by virtually all of the mainstream media, including CBS, ABC, CNN, New York Times, USA Today, Fox News, PBS and many others.

  • A "Mysterious Antenna" Emerges In An Empty Chicago Field; Billions Depend On It

    Readers are familiar with the various microwave and laser arrays located at the real New York Stock Exchange in Mahwah, New Jersey, both of which we have written about in the past.

    Microwave tower located next to the NYSE in Mahwah, NJ.

    This article, however, is not about the familiar antennas off Route 17 in New Jersey. Instead, demonstrating to what lengths the high frequency traders will go for just a few millisecond advantage – which makes in the HFT world makes all the different between billions in profits and losses – Bloomberg reports that a mysterious antenna has emerged in an empty field in Aurora, near Chicago, and a trading fortune depends on it.

    Strange? Of course: as BBG’s Brian Louis admits “it was an odd transaction from the outset: $14 million, double the going rate, for a 31-acre plot of flat, undeveloped land just west of Chicago. In the nine months since, the curious use of the space has only added to the intrigue. A single, nondescript pole with two antennas was erected by a row of shrubs. Some supporting equipment was rolled in. That’s it.”

    As it turns out, those antennas – as readers may imagine – were anything but ordinary. Same goes for the buyer of the property: anything but your typical land investor, although the name will be all too familiar to those who have followed our reporting on HFT over the years: it was Jump Trading LLC, “a legendary and secretive trading firm that’s a major player in some of the most important financial markets.”


    Equipment on land purchased by an affiliate of Jump Trading

    Jump Trading affiliate World Class Wireless purchased the 31-acre lot for $14 million, according to county records. “They paid probably twice as much as it’s worth,” said David Friedlandof Cushman & Wakefield. “I don’t see anyone else paying close to that price.”

    There was a reason why Jump overpaid so much: it was an investment into guaranteed future returns.

    Because ultimately the purchase was all about the location: just across the street lies the data center for CME Group, the world’s biggest futures exchange. By placing its antennas so close to CME’s servers, Jump hopes to shave maybe a microsecond off its reaction time, enough to separate a winning from a losing bid in trading that takes place at almost the speed of light. Enough to make billions in profits if done successfully millions of times every minute for year.

    As Bloomberg describes the land grab, “it was the latest, and perhaps boldest, salvo in an escalating war that’s being waged to stay competitive in the high-speed trading business.”

    The war is one of proximity — to see who can get data in and out of CME the quickest. A company called McKay Brothers LLC recently won approval to build the tallest microwave tower in the area while another, Webline Holdings LLC, has installed microwave dishes on a utility pole just outside the data center.

    “It tells you how valuable being just a little bit faster is,” said Michael Goldstein, a finance professor at Babson College in Babson Park, Massachusetts. “People say seconds matter. This is microseconds matter.”

    It also tells you something else: at its core, modern trading is simply about being faster than your competition: no thinking goes into the trade, only reaction times matter. That, and frontrunning your competition. Some more details about this literal land grab:

    In October 2015, McKay Brothers, a company that sells access to its microwave network to high-speed traders, leased land diagonal to the CME data center, under the name Pierce Broadband LLC, according to DuPage County property records.

     

    Last month, the county gave McKay approval to erect a 350-foot high microwave tower that could be 600 feet closer to the data center than its current location, records show. Two trading firms, IMC BV and Tower Research Capital LLC, own minority stakes in McKay. Co-founder Stephane Tyc said his firm may never build the tower but it would be part of the firm’s continual efforts to speed transmission time.

     

    Then there’s Webline Holdings. In November 2015, it was granted a license to operate microwave equipment on a utility pole just outside the data center, according to Federal Communications Commission records. Webline has licenses for a microwave network stretching from Aurora to Carteret, New Jersey, where Nasdaq Inc.’s data center is located. Messages left for Webline were not returned.

    Back to the mysterious antenna: according to Bloomberg, the license for the transmission dishes is held by a joint venture between World Class and a unit of KCG Holdings, another HFT trading firm that was recently acquired by Virtu Financial. In other words, the “who is who” of HFT has been unleashed on an empty field near Chicago, and to the builder will go the spoils.

    It could be billions in revenues.

    * * *

    After all this frentic building of microwave tower, who is closest to the CME servers? It is unclear. Trading data first leaves CME computers via fiber cable, and then to nearby antennas that send it by microwave to other towers until it reaches New Jersey, where all the major U.S. stock exchanges house their computers. The moves in Aurora are intended to reduce the time that the data is conveyed through cable; the practical impact is shaving off a millisecond or maybe even a few nanoseconds.

    At its core, the race is about latency arbitrage, and not being the slowest firm on the block – a recipe for financial ruin. Sending data back and forth between the U.S. Midwest and East Coast allows high-frequency traders to profit from price differences for related assets, including S&P 500 Index futures in Illinois and stock prices in New Jersey. Those arbitrage opportunities often last only tiny fractions of a second.

    Ironically, all the land grab and overpriced land purchases could be made obsolete with one simple decision: a microwave tower could be installed on the roof of the CME data center to eliminate the need for jockeying around the site, the same way the NYSE has a microwave tower next to its NJ headquarters. The exchange is indeed looking at allowing roof access, along with CyrusOne, the company that bought the data center last year, CME said in a statement. Traders being traders, however, they may continue to battle, this time for the most advantageous position on the microwave tower itself.

    “We are confident the CME can provide an alternate and better solution which offers a level playing field to all participants,” said McKay’s Tyc.

    Which is ironic because at its core, modern High Frequency Trade is about everything but a level playing field: after all there are millions of traders to be frontrun, take that away, and the HFT parasites of the world have no advantage whatsoever.

  • President Donard Trixon and the Trump-Putin-Nixon Water-Tower Coverup Scandal

    Yesterday (the day after I first published my original article on the Trump-Nixon comparisons that are now screaming in everyone’s face), Trump was interviewed by Lester Holt on NBC and contradicted everything his press team had said about the firing of FBI Director James Comey, stating that it was entirely his idea from the beginning to fire Comey and that his reason was particularly related to the FBI investigation of the Trump-Russia conspiracy, though Trump implied his move was to help the investigation gain more credibility (and speed), not to impede it. (Apparently trusting his salesmanship enough to actually think people would believe him when he said with a straight face in the interview — that his purpose was to help the FBI investigate him and Russia more thoroughly … albeit expeditiously … and to build America’s trust in the outcome of the investigation.)

    Then today, as if Trump’s immediate contradiction of his entire press staff wasn’t peculiar enough, President Donard Trixon purposely established the most blatant tie between himself and Tricky Dick Nixon he possibly could have come up with. In order to prove he’s not a crooked Dick, he threatened (as Richard “I’m not a crook” Nixon would have done) the FBI director that he just fired (as Nixon would have done) by implying in a tweet that he will (in a manner that begs Watergate déjà vu) release the SECRET RECORDINGS he apparently has of conversations between himself and James Comey!

    Oh, my goodness! Even as numerous readers on Zero Hedge criticize me for laying out the Nixonian comparisons, Trump decides to heap more ready-made material on top for me! Yes, if the former FBI director dares to act like Deep Throat (the high-level FBI director who became the primary informant during the Watergate scandal) by leaking information to the press (as Deep Throat did to Bob Woodward and Carl Bernstein of The Washington Post),Trump implied he will use secrete recordings he has apparently made of his conversations.

    Oh my gosh! Just when I thought the Nixon connections couldn’t get any more obvious! And Trump is the one creating all of them!

    The result, of course, of this blatant attempt to silence the FBI, is that leaks are now bursting out everywhere:

     

    At a moment of crisis, the White House looks surrounded on the outside and divided on the inside.

     

    “It’s total chaos,” said one former transition team official with close ties to the administration.

     

    “It’s image-making on the inside and people trying to protect themselves. There is a deep streak of paranoia among staff. The communications team shit the bed on the Comey firing and now the war with the FBI has them all scared and throwing each other under the bus.”Thank God I don’t work there. If I did, I’d be dialing up my attorney.”

     

    …

     

    The unusually detailed accounts of inner turmoil frustrated Trump’s allies in the media, like Matt Drudge, who runs the enormously influential conservative aggregation website Drudge Report. “We never got 1 damaging leak out of Obama White House staff in 8 yrs. Under Trump, they appear hourly. BIG DANGER: Small leaks sink ships!!” Drudge said in a flurry of tweets.

     

    “Trump advisers leaking to media are now deliberately sabotaging presidency. Major house cleaning needed for survival. Leaks on hour, every hour, will destroy Trump presidency. There’s a Trojan horse plotting within the inner circle!” (The Hill)

     

    I think, and have stated even before Trump was elected, the Trojan horse is Trump. This is a White House falling apart at the seams as everyone is starting to realize they may really be serving a lunatic president. Like Don Quixote jousting at windmills, Trump has gone from fighting the deep state to fighting Deep Throat (or, at least, someone he fears will become Deep Throat). But the most amazing part of this is that, each step of the way, Trump is the one setting up scenes that are screaming for comparisons to Richard Nixon. He has now filled the chocolate box with morsels of Watergate-tasting treats ready-made for the press’s consumption.

    Trump’s own suspicious nature (like Nixon’s) creates suspicion. For example, I now ask what exactly is it that Trump so greatly fears James Comb-me-over will leak? At this point, I more than suspect something is there because “leaks” (Trump’s chosen word — and Trump “has and uses the best words” — are about real things you don’t want known, or they wouldn’t be called “leaks.” Trump’s not-even-slightly-veiled threat to Comey could have warned that he would reveal his recordings if Comey “lied” about the president or “denied” the truth or “fabricated” things to be more than they were.

    However, Trump did not threaten to reveal secret recordings if Comey comes out and lies about him. He threatened to reveal secret recordings if Comey “leaks” information. It’s not a leak if it’s a lie. So, Trump practically admitted there is truth Comey knows that Trump is very afraid of — so afraid that it appears to have sent him completely out of control of himself as he actually threatened Comey in a very public way, should Comey come out with any of it.

    And, of course, threatening the just-fired FBI director if he comes out with any information is a thinly veiled threat to the entire FBI because, if Trump will play get-even with their beloved director, he’ll play get-even with any one of them that dares to open his or her mouth. The FBI is familiar with how these kinds of threats are to be understood. How close is that threat from the most powerful person in the world (and the FBI’s commander-in-chief) to being an illegal impedance of justice?

    Unbelievable! This is just getting richer by the day as we watch President Donard Trixon dig his way deep into the manure pile of history and then pull it down over his own comby head.

    Is this what it looks like when a narcissist who started his career in the Watergate era self-destructs? This week’s stunning images of self-destruction and of a White House flying apart at the seams as its press agents literally run for cover in the hedges and beg news agencies to “turn the lights off” will be talked about for years and years to come.

    The meltdown has begun.

     

    Trump-Nixon comparison

  • "Flood Of Off-Lease Vehicles" Set To Wreak Havoc On New Car Sales

    The percentage of new car ‘sales’ moving off dealer lots via leases has nearly tripled since late 2009 when they hit a low of just over 10%.  Over the past 6 years, new leases, as a percent of overall car sales, has soared courtesy of, among other things, low interest rates, stable/rising used car prices and a nation of rental-crazed citizens for whom monthly payment is the only metric used to evaluate a “good deal”…even though leasing a new vehicle is pretty much the worst ‘deal’ you can possibly find for a rapidly depreciating brand new asset like a car…but we digress.

    Of course, what goes up must eventually come down.  And all those leases signed on millions of brand new cars over the past several years are about to come off lease and flood the market with cheap, low-mileage used inventory.  As Reuters noted, the flood of used vehicles is already starting to impact used car dealers:

    Recently, though, a computer search for available used vehicles within 150 miles of Reel revealed an eye-popping figure: 668 Escapes. That’s enough to put more than 40 percent of the inhabitants of this small northeastern Ohio town, population 1,600, into the popular crossover.

     

    A search for the Chevrolet Equinox, a comparable crossover, showed 461 available.

     

    “The automakers have flooded the market,” said Reel, owner of Reel’s Auto in Orwell, Ohio, about 40 miles east of Cleveland.

     

    By the end of 2019, an estimated 12 million low-mileage vehicles are coming off leases inked during a 2014-2016 spurt in new auto sales, according to estimates by Atlanta-based auto auction firm Manheim and Reuters.

     

    And, of course, that kind of supply is already starting to take it’s toll on used car prices…

    Chief Executive Mike Jackson said rising off-lease car numbers means “a higher supply of pre-owned vehicles at a more attractive price.”

     

    Consumers seeking great deals are in luck. Used-vehicle prices at auction fell about 3 percent last year, according to Carmel, Indiana-based KAR Auction Services Inc (KAR.N), which facilitated the sale of 5.1 million used and salvaged vehicles in 2016. Used prices should drop around 3 percent annually for the next couple of years, according to KAR’s chief economist Tom Kontos.

     

    General Motors Co (GM.N) and Ford Motor Co (F.N) say prices for its used vehicles, which consist largely of nearly-new ones coming off lease to consumers, fell 7 percent in the first quarter versus the same period in 2016. GM says it expects a 7 percent decline for 2017 compared to last year.

    …and, as Morgan Stanley recently pointed out, we’re just getting started as they see used car prices dropping by up to 50% over the next 5 years.

     

    So what happens next?  Unstable used car prices will almost certainly reduce OEM reliance on leases as the implied 3-year depreciation (or residual values, if you prefer) will make them all but completely uneconomical…remember, Americans only care about that monthly payment.  Meanwhile, the relative value between used and new cars will tilt heavily in favor of the used market.  Thankfully Americans will still be able to buy that Mercedes they require to get back and forth from their minimum wage jobs, while maintaining a monthly payment of $500 or less, but it will just have to have 30,000 miles on it.

    Of course, the OEMs of the world won’t admit that their game is over until it’s way too late.  So, they’ll keep right on producing new cars to cover a 17-18mm SAAR environment up until the point they face an outright revolt from their dealer networks.  At that point, however, dealer inventories will be so high that Detroit will be forced to shutdown for months on end while new car prices are slashed to reduce the massive inventory glut.  Tanking new car prices will put even more pressure on used car prices which will mark the beginning of the death spiral that will result in a new round of inevitable auto bankruptcies…but that’s just a hunch.

  • Do Ends Justify The Means?

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    I think the U.S. citizenry is being afflicted by a sort of mass insanity at the moment. There are no good outcomes if this continues. As a result, I feel compelled to provide a voice for those of us lost in the political wilderness. We must persevere and not be manipulated into the obvious and nefarious divide and conquer tactics being aggressively unleashed across the societal spectrum. If we lose our grounding and our fortitude, who will be left to speak for those of us who simply don’t fit into any of the currently ascendant political ideologies?

     

    – From February’s post: Lost in the Political Wilderness

    Given our increasingly hysterical, polarized and downright rabid political environment, I think it’s important for those of us who see ourselves as relatively conscious individuals to reflect upon our principles and how they play a role in our everyday lives. As such, today’s piece will examine the concept of whether “the ends justify the means” when it comes to achieving ones objectives, political or otherwise. It’s an extraordinarily important philosophical exercise to undertake, particularly since the turbulent period we inhabit is likely to get far more insane and divisive before it gets better.

    I think many people will quickly answer the question “do the ends justify the means” without putting enough thought into it. The question is meant to be considered when it comes to premeditated voluntary actions of questionable ethics taken with a defined objective in mind. It has nothing to do with matters of self-defense, or anything in that category. For example, if someone is coming at your family with an intent to inflict harm, the ethical decision might be to harm the aggressor to protect your family despite the fact that harming another person in itself is an immoral act. Pretty much everyone can agree with this, so it doesn’t add anything to the argument of whether the ends justify the means.

    That case is obvious. What about if you’re walking down the street and you see someone come from behind an old lady, hit her on the head and then struggle with her on the ground in an attempt to take her purse. You aren’t being directly attacked, so should you intervene with violence if necessary against the perpetrator to help an innocent bystander? Again, I think the right and ethical decision here is to step in to try to help the victim if possible.

    In both these cases the negative “means” of violence you might be required to use against violent aggressors do indeed justify the ends — in the first instance the protection of your family, and in the second a vulnerable old lady. Given these examples, one might be led to believe that the ends can often justify the means, but I would argue that this only holds true in extreme examples such as the ones described above, and that for a principled person, the ends almost never justify the means.

    When people seriously consider whether the ends of a particular action justify the means, it’s almost never in relation to scenarios like the ones described above for two reasons. First, those are extremely rare situations that many people (in the developed world at least) will only experience a few of times in the course of a lifetime, if that. On the other hand, many of us face constant but often overlooked ethical dilemmas on a daily or weekly basis. We all face situations where we are confronted with the choice to do something we know is wrong, but perhaps do it anyway either for instant gratification or in the pursuit of a larger goal. This post is focused on the latter.

    Many people involved in politics swear by the notion that “the ends justify the means,” which is typically the sign of a self-serving actor attempting to justify questionable if not downright evil action in order to get what he or she wants. While pursuit of “the greater good” is often put up for public consumption, the driving force behind this sort of action is almost always personal gain of some sort. This is what most politicians do for a living, which is why they are justifiably hated by the general public.

    One of my favorite books of all time is The Bhagavad Gita According to Gandhi. In the introduction, he writes:

    He who is ever brooding after result often loses nerve in the performance of his duty. He becomes impatient and then gives vent to anger and begins to do unworthy things; he jumps from action to action, never remaining faithful to any…When there is no desire for fruit, there is no temptation for untruth or hisma. Take any instance of untruth or violence, and it will be found that at its back was the desire to attain the cherished end.

    A few pages later he expounds upon the subject.

    We should do no work with attachment. Attachment to good work, is that too wrong? Yes, it is. If we are attached to our goal of winning liberty, we shall not hesitate to adopt bad means. 

    Gandhi clearly did not believe that ends justify the means, and I agree with this conclusion in something like 99% of the ethical dilemmas we regularly face as human beings.

    Someone who wants to make the opposite argument might selectively pick certain historical instances where questionable action led to a favorable outcome overall. I don’t dispute that such instances exist, but I’d argue that for each such instance there are hundreds of examples of the exact opposite. In fact, much of the tragic state of the world as it is today can be directly linked to scores of humans constantly justifying unethical behavior in order to advance their own self interests and goals. A primary driver of so much of the unnecessary suffering in the world relates to individuals making immoral decisions they justify to themselves and others as being a necessary part of a larger goal. Notice how these “larger goals” almost always end up benefiting the person taking and justifying the questionable action? That’s your red flag.

    To those of you who still disagree with my argument, think about it from the slippery slope perspective. The moment you justify one very wrong action to achieve a noble goal, what’s to stop you from next even more unethical action, or the next and the next? Nothing. This is what’s so dangerous about going down such a path. Indeed, those who fight monsters often end up becoming the exact thing they claim to be fighting. The world doesn’t benefit from this, only the person who has gained power as a result does, at least superficially. Ultimately, even that person doesn’t benefit when all is said and done. A person who attains their goal by sacrificing principles is a tormented, miserable person. They may seem to “have it all” from the outside, but deep down they hate themselves and what they’ve become. There is no peace. I believe karma eventually catches up to everybody one way or the other.

    Indeed, so many of the wars, massacres and bloodshed around the world can be directly linked to “ends justify the means” type thinking. That’s exactly what America’s insane neocons use to justify their endless wars of intervention that end up making the world a worse place than it was before. Notice how they always claim their action is to achieve good, yet it always ends up making things worse. Notice how it doesn’t stop them from making the same ridiculous argument over and over again?

    Unfortunately, many people don’t have any principles to begin with and simply live their lives in the pursuit of their own superficial, materialistic or egotistical goals. These are the types of people who most often employ “ends justify the means” thinking, which is exactly why those of us who do have principles must reject this way of thinking and pursue a more conscious manner of achieving our ends. If that means our ends aren’t achieved in our lifetime that’s something that must be accepted. The means we use will reverberate in the universe forever and will benefit the world whether we’re able to point to definitive results or not.

    As Gandhi also wrote:

    If we take a total view, we shall see that it is not wickedness but goodness which rules the world. The wicked can prevail only when they number multitudes, but goodness will rule when embodied to perfection even in one person. Nonviolence has been described as so powerful that all forces of violence subside in its presence. Under its influence, even beasts forget their nature. Even one good person can change the world. Such a one enjoys an empire over people’s hearts…

     

    Where wickedness prevails, there is disorder in every field of life, but where goodness rules, order prevails and people are happy. They are happy not in the sense that their material needs are satisfied, but in the sense that they lead virtuous and contented lives. As for material possessions, some men have fortunes in rupees and yet have a distracted life. That is no sign of being happy.

    Gandhi was himself a victim of the violence he so despised, but his timeless message lives on and he wouldn’t harbor any bitterness or anger to those who gunned him down. I first read the words above nearly a decade ago, and they’ve stayed closely beside me ever since. I hope they connect with you as well.

    Keep striving, keep learning and keep growing. Thanks for joining me on this wild ride that is life.

  • What Happens In An Internet Minute?

    Here is what plays out every 60 seconds online in 2017…

    Source: AllAccess.com

    As Lori Lewis concludes, “It’s a serious traffic jam out there.”

    The question – as we noted last night – is, how much of it is ‘real’?

  • Has Venezuela's Crisis Reached A Tipping Point?

    Authored by William Burke-White and Dorothy Kronick via Knowledge@Wharton,

    Venezuela’s ongoing economic and humanitarian crisis has assumed graver proportions over the past five weeks and pressure is mounting for a regime change, even as doubts persist over the likelihood of the next presidential elections, originally set for October 2018. Fresh protests broke out after President Nicolas Maduro earlier this month signed an order aimed at forming a new constituent assembly of some 500 members and rewriting the country’s constitution to reshape his powers and those of legislators.

    Many Venezuelans clearly saw Maduro’s ruling as a way to snatch powers from the opposition-led National Assembly and consolidate it in a constituent assembly over which he might have a better hold. “[Maduro] tried to do this as a way to unite the country, but it was seen as an attempt to retain power and sparked the latest round of protests,” said William Burke-White, director of the Perry World House and professor at the University of Pennsylvania Law School.

    Venezuela’s crisis has probably hit a tipping point and Maduro’s days in power are numbered, said Burke-White. “The path forward is Maduro will be pushed out of power, or there will be a repressive, horrible crackdown where the death tolls keep mounting,” he noted. “It may be better to be moving in that direction [towards Maduro’s ouster] than be in an ongoing political quagmire that we have been in for the last few years.”

    According to Dorothy Kronick, a political science professor at the University of Pennsylvania, “The best way forward for Venezuela would be elections and having a new government in power.” She noted that 2017 is the fourth consecutive year of negative GDP growth for Venezuela; last year, its economy contracted by more than 17%. “There are devastating shortages of food and medicine, and inflation is above 300%. And there is tremendous suffering.”

    Burke-White and Kronick discussed the scenarios likely to emerge in Venezuela in the foreseeable future on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

    Move to Consolidate Power

    The recent crisis had its first flash point on March 29, when the country’s Supreme Court passed a ruling to assume the functions of the National Assembly, but strong protests forced it to subsequently backtrack. Meanwhile, protestors continued calling for elections and a regime change. Maduro, who was elected in 2013 after the death of Hugo Chavez, signed the executive order to form a new constituent assembly and rewrite the constitution on May 1. “We must modify this state, especially the rotten National Assembly that’s currently there,” he had said.

    Opposition leaders are pressing for a removal of the Supreme Court justices who issued the March 29 ruling, general elections in 2017, the creation of a humanitarian channel for medicine imports and the release of all political prisoners, according to a BBC report.

    Burke-White did not expect elections to happen anytime soon. He noted that Maduro had indicated that fresh elections would be held as part of the new constitution. “His [United] Socialist Party [of Venezuela] would lose those elections if they were held today,” he said. “Much of this is a move to push those elections out indefinitely.”

    Maduro’s plan for the new constituent assembly is to have about half of its 500 members elected directly from among all sections of Venezuelan society, including workers, youth, women, peasants and indigenous people, according to a CNN report. The other half would be made up of delegates chosen from among businesses and workers’ collectives. Kronick noted that the provisions in the rewritten constitution would “undoubtedly … favor the government.” She also predicted that the Maduro government would try to ensure that the convention “is full of delegates that are its supporters.”

    Even so, with Maduro’s low approval ratings, Maduro is taking a big risk, according to Kronick. “His approval ratings are so low that even with electoral rules that are extremely favorable to the government, the opposition could potentially gain control of this constitutional convention,” she said. “That could be very dangerous to the government and lead to regime change.”

    With growing protests, Maduro had his back against the wall, according to Burke-White. “He didn’t have many cards left,” he said. “This was a tactic that was legal within the constitutional structure — that the president can call for a new constitution — which you wouldn’t undertake if you weren’t in this moment of desperation.”

    An Economy Embattled

    Along with those political uncertainties, Venezuela’s economy is also in a sorry state. Oil accounts for 96% of the country’s exports, according to World Bank data, and low oil prices have taken a huge toll. Venezuela has the world’s largest proven supply of oil reserves, but much of that oil has high extraction costs, noted Burke-White. “When oil prices fall, those are the first to cease production because it is economically unviable to do so.” What makes that situation worse is the country has lost both technical talent (fired by the Chavez and Maduro governments) and investors, after foreign investments in the sector were nationalized. “They have lost a great deal of oil extraction capacity, which has both increased the cost of production and decreased the ability to keep production up,” he said. “The oil industry is no longer able to provide the economic support that Maduro needs to consolidate, or buy off, power.” Added Kronick: “Chavez had a windfall when oil prices rose, and raked in hundreds of millions of dollars, but they were not well invested and were squandered.”

    In addition to low oil prices, the Maduro government’s decisions “to maintain some destructive and expensive exchange control measures, and price controls” are responsible for the food and medicine shortages, Kronick said. “Economists have been urging Maduro to introduce “common sense” reforms for years such as lifting price controls, she added, noting that “price controls create shortages.”

    Pressures Closing in on Maduro

    Meanwhile, Maduro could face other threats as he tries to cling to power. For one, it is critical for him to ensure the military’s support. However, as the economic misery widens, it also affects the families of members of the military, Burke-White noted. “It is much harder to maintain a military-based regime when you have to point your guns at your own people,” he said. “Maduro realizes that that’s the support base he can’t let slip, and if it does slip, it could well be the end of his regime.” Kronick noted that a popular chant during protests translates from Spanish to English as: “Soldier, listen. Join the protest, join the fight.”

    Expectations run high that the Trump administration could impose sanctions on the Maduro government. Sanctions might not work well on an economy that is “already devastated,” and “very much isolated and closed from the rest of the world,” Burke-White said. However, if sanctions are targeted at specific individuals or supporters of the Maduro regime, they might work, he added. “Many of those people have bank accounts and condominiums in Miami, and getting them to feel some of the pain a little bit more might work.” However, targeted sanctions against Maduro’s supporters “could raise exit costs for members of the regime” said Kronick. “If they were to leave power, they won’t be able to go to Miami and enjoy their post-government life, and that could actually make regime change more unlikely.”

    The U.S. does not seem to have sufficient “diplomatic capacity” to engage with Venezuela, given the understaffed State Department, said Burke-White. But he did note Thomas A. Shannon, Jr., undersecretary for political affairs, is well versed with the region’s problems. In February, Donald Trump and Mike Pence met with Lilian Tintori, the wife of jailed Venezuelan opposition leader Leopoldo López. “The Trump administration is much more willing to be much more openly critical of Venezuela than the Obama administration was,” he added.

    U.S. involvement in working with the Venezuelan opposition or trying to influence a regime change could backfire and strengthen Maduro’s hand, Kronick said. “Certain actions [the U.S.] might take against the government help [Maduro] to be able to more credibly say, ‘This is the imperialist U.S. that is responsible for the problems of the country.’”

    Pressure could build up on Maduro also within the region. Venezuela has been an important trading and energy partner in the northern part of South America, and it has provided aid to many countries in the region in the form of oil or cash. But its current status has left it unable to drive economic growth in the region. It has socialist-leaning countries as neighbors, including Cuba, “but those countries are leaning in different directions at the moment,” said Burke-White. He expected Cuba to be more susceptible to U.S. pressure “not to be as supportive a trading, economic or even health care partner for Venezuela” as it has been in the past. Kronick said pressure could come on Maduro from regional forums such as the Organization of American States.

    Indeed, some of that has begun. Burke-White noted that the Argentine foreign minister has openly criticized Maduro’s call for a new constitution. “That is unusual given that Latin American and South American states have traditionally been hesitant to criticize one another,” he said. “We’re starting to see the edges of that tacit alliance begin to crack.”

  • "Massive Disturbances" In German Rail System Due To Ransomware Attack

    Germany's WAZ reports massive disturbances in local and long-distance rail traffic on Friday evening due to what appears to be the same ransomware attack that is spreading across the globe.

    Numerous social media accounts are showing the following images…

    More details to follow…

    Local reports say that the situation in Germany is getting chaotic.

  • Great News For College Grads: Starting Salaries Are Finally Back To Where They Were 10 Years Ago!

    The Wall Street Journal and others are cheering today as a new study from executive search firm Korn Ferry International found that the “average base pay for college grads this year ticked to the highest level in at least a decade.”  We guess in the new millennial world that getting back to your original starting point is actually celebrated as an ‘accomplishment’.

    “This has been the best year for students that I’ve seen since coming here,” said Thomas Ward, executive director of the career-services center at Adelphi University, in Garden City, N.Y., who joined the school in 2008. Some students at the school are fielding multiple job offers, allowing students to be choosier about where they ultimately land, he said. “It’s very rewarding.”

    So where are new college graduates earning the most bank?  Well, average starting salaries for 2017 grads are just under $50,000 but software developers, engineers and actuaries, particularly those moving to San Francisco, can be expected to outperform that average by quite a bit. 

    Here are the top 10 money makers for grads:

     

    Of course, while this may all seem like a lot of money, with median rents in San Francisco still hovering around $3,200 per month that means that the average college graduate will be about $5,000 short of covering their annual rent payments…so looks like mom and dad will still get to cover a substantial portion of their daily living costs.

    San Fran

     

    Meanwhile, on the bottom of the earnings rankings we find “category assistants”, whatever that is, and “call center specialists”, which we’re almost certain could be done without a $250,000 college degree…but what do we know?

     

    Of course, higher salaries are only helpful if you’re among the graduates fortunate enough to find a job after graduation.  As we recently pointed out, according to the following chart from Bloomberg, there are 2.2 million millennials who live at home with mom but neither attend classes nor have a job.  Of those, 40% of them are already in their 30’s, they’re predominantly white and have a high school diploma of less.

     

    But we would hate to rain on the daily parade of our snowflakes…so congrats on the “good news” day.

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May 12

Today’s News 12th May 2017

  • Visualizing Who Holds U.S. Debt Internationally

    We recommend viewing the full-size version of today’s infographic by clicking here.

    Everyone knows that the U.S. Federal Government has roughly $20 trillion of debt. A question we often get, however, is who exactly owns all these treasuries? And if it’s held abroad by countries like China, what portion do they hold?

    Today’s infographic comes from TitleMax, and it looks at who owns U.S. debt internationally, as well as the debt from other countries that is held by the U.S.

     

    Courtesy of: Visual Capitalist

     

    WHO HOLDS U.S. DEBT?

    Federal government debt in the United States can be broadly placed in two categories: “Debt held by the public” and “Intragovernmental debt”. The former category includes securities held by individual investors, corporations, local and state governments, the Federal Reserve, and foreign governments.

    Meanwhile, intragovernmental debt includes securities held in accounts administered by other federal authorities. This category, for example, would include treasuries owed to the Social Security Trust Fund.

    Here’s the tallies of these two categories as of December 2016:

    DEBT HELD BY THE PUBLIC

    “Debt held by the public” is the most interesting of these, and it can be further broken down:

    *Note: Data for Fed is for marketable securities only. All data in this table from September 2016.

    About 43% of all debt held by the public is actually owned by foreign governments, corporations, and individuals.

    U.S. DEBT HELD INTERNATIONALLY

    Here’s how that breaks down by country:

  • Militant Leftists Are More An Annoyance Than A Real Threat To Liberty

    Authored by Brandon Smith via Alt-Market.com,

    In many articles leading up to the 2016 election I discussed the problem of “escalation.” Namely escalation on the left end of the political spectrum and the people who identify with it (set aside that this spectrum does not exist for the leaders and gatekeepers that exploit it).  In analyzing the consequences of the inevitable Trump win, it was clear that extreme leftists (cultural Marxists) were about to lose considerable social influence and that this would end up driving them to more aggressive measures. This process has happened even faster than I expected.

    Cultural Marxists are almost universally distrusted or despised in America today. Their only support seems to come from their own inbred activist circles, Hollywood and certain elements of the corporate and political world.

    This does not mean they are going away. Not at all. What it means is that they are going to evolve into something else, perhaps something worse.

    That said, even if this does occur, I worry that conservatives are putting far too much stock in the threat these people represent. My greatest fear is that conservatives will become so hyper-focused on a militant left that they will forget about the international financiers that instigated this mess in the first place. I also worry that we will one day abandon our constitutional principles in the name of stomping such people into the dirt, using government as our primary tool.

    I understand the circus mentality surrounding this issue. The lefties want to “punch fascists” and become some kind of folk heroes in a cultural revolution, so they fabricate images of Nazis and imperialists everywhere in order to rationalize their behavior. Conservatives see this behavior and conjure images of communist hordes overrunning the Republic and building a nation-sized gulag around us, so we want to go out and “punch communists.”  It’s a tale over a century old.

    I see an undue level of fear, though, over these cultural Marxists and their real world effectiveness.

    I see guys going out to counter-protest little 96 pound, vegan Antifa kids by strapping on ballistic plates or soft body armor, level IIIA helmets and SAP gloves like they think they are going to war. I have to chuckle a little because it showcases the conservative tendency to meet every threat with a nuclear over-response (metaphorically speaking… in some cases).  Remember, in most situations these college-age weaklings have no clue what they are doing, they can barely move around in those skinny jeans they all wear and half of the men identify as women. This is not a group of well trained, bloodthirsty Cheka; they are incompetent and fumbling in the dark.

    Opening a high pressure can of whoop ass on such people might be necessary in some instances, but “victory” against them is not going to earn you a place in Valhalla. It may provide some fleeting satisfaction, but let’s be realistic — this is not a war, it is a game… an opportunity to brawl in the streets.

    To illustrate my point further, I would like to repost a video that has been making the rounds in the liberty movement recently. Behold! The next phase of escalation in leftist militancy: Learning which end of a gun goes “Boom!”…

    The above video posted by the Phoenix John Brown Gun Club was apparently meant as a message of intimidation, but instead it resulted in a roar of laughter. These are the people we are supposed to be afraid of?

    Anyone with marginal firearms training will be feeling some cringe right now. There is nothing intimidating about 50 people shooting wildly at a drawing of Pepe The Frog and mostly hitting the dirt hillside instead. It’s hard to become personally proficient with a firearm when you can’t even tell who is hitting what during your “training.”  It is also hard to hit a target when you aren’t shown how to shoulder your weapon correctly or present a proper shooting stance.

    I’m a good sport and I’ll give the Antifa kids a few tips: Lean forward into the gun instead of backwards, and STOP gripping the mag well and put your non-shooting hand on the handguard; that’s what it is there for.  Or, just form a big circle during live weapons training and get the friendly fire incidents over with now.

    Don’t get me wrong, I have seen poorly managed prepper and militia training as well, but nothing quite to the level of pure suck that comes across in the video above. And I don’t hold it against the people who showed up to the event, I hold it against the incompetence of the trainers.

    But let’s get back to the main point of this article.

    The John Brown Gun Club does not represent REAL escalation. Not the kind of escalation I have referred to in the past. Most leftists do not grow up in a gun culture and are thus lost when trying to adopt it. When you are barely exposed to the notion of a thing, you are going to be VERY SLOW in learning that thing. When I showed a friend of mine this video they said, “It’s like when Asians immigrate and have trouble driving…” (Is that racist?  Oh who cares…).

    Real escalation when it comes to the Left is almost always funded and supported by governments or by elites seeking to use those leftists as weapons for prodding the general population and creating rationalizations for reactionary totalitarianism. I highly suggest skeptics of this idea look into Antony Sutton’s evidenced records and studies into the corporate backing of the Bolshevik Revolution in Russia as well as their backing of the rise of fascism in Europe.

    I would also suggest research into more famous and violent leftist activist groups like the Weather Underground; a collective responsible for dozens of bombings and threats against government facilities. Perhaps the most suspicious circumstance of the Weathermen and their seeming immunity in many cases to prosecution is the strange story of Bill Ayers, a leader within the Weather Underground that planned multiple bombings but remains free to this day and is an influential figure among political elites in Washington.

    If you think that the racially charged rhetoric of social justice warriors today is extreme or “new,” just look at the rhetoric of the Weather Underground, which included discussions on “killing all white babies” because they were destined to “grow up to be oppressive racists.”  This propaganda has been going on a LONG time.

    These are the kinds of groups we should be truly worried about when it comes to the left, and not because they are capable of ever accomplishing their goals. Leftists rely on two things when imposing their will on others — they rely on the power of the mob, the power of government or both at the same time. Right now it is clear that the left has lost the power of the mob. They have no momentum. They were losing any momentum they did have long before conservatives faced off with them at places like Berkeley.

    Government and elitist-supported groups, supplied with training and funding, are a greater danger. They tend to operate more like terrorist cells, using bombings, shootings and attrition.

    This is not always simply to instill fear or to achieve an actual political aim in support of leftist “values.” Instead, these groups are sometimes injected into the system as a way to inspire conservatives to overreact or to run into the welcoming arms of a waiting dictatorship.

    Perhaps the most effective example of the creation and exploitation of violent leftist terror was Operation Gladio, a false flag program running from the 1950s to the 1990s in Europe until it was finally exposed by Italian Prime Minister Giulio Andreotti. Many of the leftist and “communist” cells involved in the numerous attacks on civilians during this period were in fact either manipulated by government agencies like the CIA, or they were created from scratch by those same agencies.

    This is not to say that every Antifa and SJW organization active today is some kind of Frankenstein creation of the government.  Most of them are not. As I stated earlier, many of these people are ignorant college kids brainwashed by academia. They are, at most, useful idiots and not a true threat because they don't have the tools or capacity to present a true threat.

    However, a day is likely coming in which Gladio-style leftist groups will be active in the U.S., and they will not be assaulting senior citizens with mere pepper spray, or screaming at Trump supporters and throwing bike locks from sidewalks.

    The goal behind such groups will NOT be to “win.”  They are not trying to establish a Marxist enclave. What they really want is to frighten conservatives and liberty activists into supporting extreme measures outside of the constitution and our principles. For once we abandon our principles in the name of “winning,” we will have actually lost everything.

    At bottom, the pinnacle threat to liberty is not the cultural Marxists, the SJWs, Antifa or whatever else they like to call themselves. The real threat, as always, are the establishment elites funding and influencing that very ideology, that very mob. Countering the leftists on the street in some situations is useful, but not at the expense of abandoning the fight against the root cancer eating at the heart of our country.  Until the moneymen and political criminals (on both sides of the aisle) are dealt with, the waves of angry leftist dupes and their more dangerous Marxist cells will never end.  Fighting the left while ignoring the greater demon is an eternally foolish strategy.

  • Trump Tweets "Russia Is Laughing As U.S. Tears Itself Apart", Scraps FBI Visit

    It appears that US politics is back to its quasi-surreal state first observed in the early weeks of the Trump administration, when the president spent much of his day in front of Twitter. And while it is unclear if Trump is bored, busy, engaging in damage control or quite the opposite, he blasted a couple of tweets shortly after the close which have led to the now traditional media firestorm.

    First, Trump responded to his perpetual nemesis, Rosie O’Donnell, and specifically her tweet from December 20 of last year, in which she said “FIRE COMEY” to which Trump responded, “We finally agree on something Rosie.”

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    A New York Times reporter promptly provided the necessary and sufficient reaction to that particular tweet.

    //platform.twitter.com/widgets.js

    Shortly after, Trump followed up with another tweet, this time taking aim at Democrats, saying “Russia must be laughing up their sleeves watching as the U.S. tears itself apart over a Democrat EXCUSE for losing the election.”

    //platform.twitter.com/widgets.js

    Trump is right: whether for this, or some other reason, it is safe to say that the residents of the Kremlin have been enjoying a good time recently.

    And while the two may or may not be linked, moments ago NBC reported that contrary to a Reuters report earlier this morning confirmed later by Deputy White House press secretary Sanders, Trump abandoned plans to visit the FBI headquarters to ease tensions with the agency’s employees after he fired James Comey.  The reason: “Trump was told FBI agents might not provide a warm reception following Comey’s ouster.”

    FBI agents told NBC that many of them voted for Trump during the 2016 presidential election. However NBC’s sources added that few were ready to celebrate Trump’s visit after his sacking of Comey.

     

    “My sense is most FBI employees feel a loyalty to Comey,” one person who works at the bureau’s headquarters said.

     

    “And whether they agree or disagree with the way he handled the email case, like and respect him … Trump would not be well-received at headquarters.”

    Perhaps it’s just more fake news, but in either case with Trump having recently burned bridges with Russia just to boost his domestic image, a move which was then mostly obviated when he fired Comey and delayed the passage of his domestic economic agenda by weeks if not months, getting on the bad side of FBI’s rank and file is arguably one of the more precarious things the president can do, especially with the Russian interference probe still going on, bonus points for twitter trolling – which sadly does not result in better governance – notwithstanding.

  • "Apocalypse Now": The Horror Of The Deep State's Plan Exposed – Part 3

    Authored by Jim Quinn via The Burning Platform blog,

    In Part One and Part Two of this article I detailed the decades of propaganda, false flags, and misinformation campaigns used by the Deep State to gain power and control over the U.S. government. When war or a financial crisis is necessary to keep the profits flowing, events will be steered to such an outcome. With the latest financial plundering operation running out of steam, the Deep State is pushing the world toward global conflict.

    If at first you don’t succeed with a false flag gas attack, try try again. Knowing a vast swath of the American populace is incapable of critical thinking or able to discern between fake news and factual events, the Deep State and their media lackeys unquestioningly promoted the story of children being killed by a sarin gas attack by Assad. The photos of rescue workers helping victims without gloves immediately invalidated the narrative, as the rescue workers would be dead if they handled sarin gas victims without protective gear.

    The faux journalists, pretending to be neutral observers, did not question this blatant lie. They did not ponder why Assad would commit such an idiotic atrocity when he was clearly in control of the battlefield and on the verge of defeating his American funded rebel enemies.

     

    The Deep State masters of manipulation had been flogging the Russiagate story to such a degree, a large portion of the population actually believed Putin hacked the election and got Trump elected. Despite not one iota of proof or evidence, they had successfully used their propaganda mainstream media machine to keep Trump on the ropes. Putin’s unwavering support for Assad and success in defeating the ISIS/Al Qaeda/American rebel forces made the Deep State even more desperate.

    With Trump’s domestic agenda stalled, this false flag gas attack offered him the opportunity to look tough and distance himself from Russia. He took the bait and launched the 59 missiles into Syria, doing virtually no damage to anything vital to Syria’s war effort. They were launching planes to attack rebels from that base the next day.

    The invisible government players achieved victory once again, as it only took three months to turn the non-interventionist candidate into the next war loving president. The overwhelming cheers from liberal and conservative media outlets were deafening. McCain, Graham, Schumer, Pelosi and all the usual neo-con suspects were ecstatic. Trump’s poll ratings jumped. The majority of the non-thinking public applauded the tough guy act.

    It went so well, Trump was convinced by his trigger happy military leadership to use the Mother of All Bombs on some underground tunnels in the middle of bumfuk Afghanistan. It was all captured on film so it could be played over and over on CNN, Fox, MSNBC, and the rest of Deep State network TV. The corporate media dutifully provided casualty counts even though they had no way of verifying anything they reported. This was essentially a propaganda film to pump up the spirits of the heavily indebted, iGadget addicted, clueless masses.

    Trump is seeing how easy it is to wage war around the globe, make threatening gestures, order his fleets into attack position, place a $1 billion missile defense system in another country at our cost, and generally act as if he is playing a giant game of Risk, like he did as a rich kid. Everything looks like a nail when all you have is a hammer. It’s much easier being a foreign interventionist and pleasing the Deep State, than draining the swamp and going to war against the status quo like he promised during the campaign.

    Filling your cabinet with status quo insiders is not a recipe for success. His first two military parlays played so well, he decided it was time to teach the crazed midget lunatic in North Korea who’s boss. Trump ordered carrier groups to sail towards North Korea. He’s been test firing ICBM rockets as a warning. He’s been threatening China unless they do something to get the height challenged dictator under control. The propaganda machine has been trying to strike fear into the hearts of Americans with bullshit storylines about him nuking the U.S.

    Kim Jong Un is a certifiable nutjob. He’s been running the third world country as dictator for the last five years. He’s a blustering fool who constantly threatens, with no actions to back up the threats. Half his missile launches blow up shortly after launch. If he even has a nuke, he has no means of delivering it effectively. The drivel about him hitting the U.S. with a nuke is laughable, but the deceitful neo-cons act as if he could do it.

    The mainstream media unquestioningly reports the threat to the western U.S. The Deep State would love to provoke a war with North Korea. They have no concern for the millions of South Koreans who would become the latest collateral damage of the imperialist American Empire. War means profits. Maybe a clash with the Chinese over the South China Sea islands could be arranged. Placing missiles on the border of Russia and conducting NATO war games certainly isn’t provocative.

    “They were conquerors, and for that you want only brute force–nothing to boast of, when you have it, since your strength is just an accident arising from the weakness of others.” – Joseph Conrad, Heart of Darkness

    The United States is not in danger of being attacked by North Korea, Syria, Iran or a bunch of cave dwellers in Afghanistan. Russia and China are not threatening our vital interests. We spend more on the military than the next seven countries combined, but the narrative sold to the gullible public is how our military has been gutted and needs hundreds of billions more funding. When the cost of past wars and the surveillance state expenditures are included, the U.S. spends in excess of $1 trillion per year.

    We have been an imperial power since World War II and have been intervening in other countries’ affairs since the inception of the Federal Reserve in 1913. Policing the world is expensive for the citizens, but enriching to those doing the policing and supplying the police. Without a central bank printing press and man-made inflation, American presidents and their Deep State backers couldn’t oppress countries throughout the world with the threat of instantaneous annihilation or invade without a declaration of war – as mandated by the Constitution.

    “It is no coincidence that the century of total war coincided with the century of central banking.” – Ron Paul, End the Fed

    America’s imperial empire may be more technologically advanced and larger than previous empires, but there is nothing special or new about imperialism. The policy of wielding influence and power through the use of military and economic force by empires over smaller weaker countries has been played out through the centuries. Whether it was the Roman, Dutch, Ottoman, or British empires, they all declined and fell due to military overreach, civic decay, and economic decline.

    When I step back and try to analyze our current situation I come to the conclusion our current policies and budget priorities are pure madness. But I feel like the crazy uncle at the family reunion who is shunned and ignored when I bring up the blatantly obvious facts regarding our fiscal situation.

    Congress just passed a spending bill extension which cuts nothing and increases military spending. The House just passed an Obamacare replacement bill that won’t cut your premiums or copays, and will keep insurance conglomerates, hospital corporations and corporate drug company cartels in charge of your healthcare.

    It is business as usual in the imperialistic capital of Washington DC, and the madness will continue until the teetering empire collapses under the massive weight of debt and overreach. Trump is no Tea Party Republican. He’s a big spending, big tax cut, big military, pretend fiscal conservative without the guts to touch entitlement spending or war expenditures – the two budget areas driving the country towards bankruptcy.

    “As many frustrated Americans who have joined the Tea Party realize, we cannot stand against big government at home while supporting it abroad. We cannot talk about fiscal responsibility while spending trillions on occupying and bullying the rest of the world. We cannot talk about the budget deficit and spiraling domestic spending without looking at the costs of maintaining an American empire of more than 700 military bases in more than 120 foreign countries. We cannot pat ourselves on the back for cutting a few thousand dollars from a nature preserve or an inner-city swimming pool at home while turning a blind eye to a Pentagon budget that nearly equals those of the rest of the world combined.” –  Ron Paul

    Trump’s recent conversion into a warmongering neo-con, policing the world with his cruise missiles, MOABs, carrier fleets, and boots on the ground remind me of Apocalypse Now, one of my favorite movies about imperialism and madness. Francis Ford Coppola’s brilliant movie was a modern day updating of Joseph Conrad’s classic novel Heart of Darkness.

    Both the movie and the novel address the evil nature of imperialism, the brutality inflicted on innocent people in the name of spreading democracy, and ultimately driving good men to madness as they attempt to rationalize their allegiance to an imperialist empire bent on profit through the committing atrocities in the name of progress. Rational moral men cannot carry out the orders of sociopathic politicians and generals without ultimately losing their minds.

    King Leopold of Belgium formed “The Company” to strip the Congo of its natural resources while enslaving and killing millions from 1880 until 1900. The leaders of imperialist nations practice hypocrisy on a grand scale. While they justify their imperialism with rhetoric about democracy, fighting evil, and doing God’s work, reality is the opposite of the propaganda peddled by the imperialist emperors of evil.

    The Kurtz character in the novel and the movie is a brilliant man, selected by his imperial masters for great things and a future at the top of the “Company” food chain. While the men running the show at the top describe their invasion and subjugation of foreign peoples as a benevolent project of civilization, people like Kurtz, who are tasked with the dirty work of suppression and extermination through the use of violence and intimidation, are driven mad in the process.

    The young men who do the fighting and killing on the front lines of this so called War on Terror must eventually come to realize they are waging war on behalf of evil men who have lied to them and the American public. Assenting to obvious mistruths and propaganda is essentially co-operating with and enabling evil. When citizens fail to hold their leaders accountable for blatant lies, false narratives, and despicable propaganda storylines, they become evil themselves.

    They lie to themselves in order to go along with the crowd and appear normal. By remaining silent as the State operates without constraints, a humiliated populace loses its will to resist evil deeds done in their name. A society of impotent, passive, normalcy bias racked people is easy to control and manipulate. Appearing normal in a world gone mad is not a sign of true normalcy, but a sign of madness and abnormalcy.

    “The real hopeless victims of mental illness are to be found among those who appear to be most normal. Many of them are normal because they are so well adjusted to our mode of existence, because their human voice has been silenced so early in their lives, that they do not even struggle or suffer or develop symptoms as the neurotic does.

    They are normal not in what may be called the absolute sense of the word; they are normal only in relation to a profoundly abnormal society. Their perfect adjustment to that abnormal society is a measure of their mental sickness. These millions of abnormally normal people, living without fuss in a society to which, if they were fully human beings, they ought not to be adjusted.” –  Aldous Huxley, Brave New World Revisited

    If Huxley considered American society to be inhabited by millions of abnormally normal people in the 1950’s, I can only imagine what he would think of our deviant, irrational, utterly mad civilization today. In this profoundly abnormal society my views are considered absurd and the ravings of a chicken little. How could I question $1 trillion annual budget deficits? How could I point out the unsustainability of a system with $20 trillion of debt and $200 trillion of unfunded entitlement liabilities?

    How could I be outraged by a private bank controlling our currency, debasing its purchasing power by 96% over 104 years, and working on behalf of Wall Street rather than Main Street? How could I question spending $1 trillion per year on military adventurism and policing the world when we are already $20 trillion in debt? Is it too much to ask if we send men to die for a cause, that the cause not be false?

    “To die for an idea; it is unquestionably noble. But how much nobler it would be if men died for ideas that were true!” – H.L. Mencken

    How could I not trust my government to run our healthcare system after seeing how well they run the Veterans Administration, Medicare and Social Security? Why would I not believe politicians of both parties who have lied to me for decades and are completely in the pockets of wealthy special interests? Why shouldn’t I support mega-corporations who have shipped millions of American jobs to foreign slave labor camps, while utilizing lobbyists to game our purposely complex tax system?

    It’s crazy talk for me to point out how Wall Street bankers committed the largest control fraud in world history and were rewarded with a $700 billion taxpayer bailout, free money from the Fed, larger market shares, record bonuses, no prosecutions, and now control of the White House from the inside. How could I possibly support “traitors” like Snowden and Assange for revealing the contempt for the Constitution displayed by our government keepers as they illegally conduct surveillance operations against every citizen in the nation? Am I mad for asking these questions?

    Kurtz symbolizes the imperialism of empires enforced through the ruthless application of power, craven terror, economic retribution, armed intimidation and military attack. As the empire grows in power, degenerates morally, becomes more corrupt, and develops an overwhelming level of arrogance and hubris, decline and fall are inevitable. Madness and imperialism go hand in hand.

    Absolute power with no fear of reprisal from citizens or a free press, combined with man’s fundamental fallibility, lead to uncontrolled dangerous decision making. We are witnessing the perilous effects of imperial hubris as Trump and his arrogant advisors provoke conflict in multiple hotspots across the globe with nuclear armed nations. Imperialists are always sure their malevolent machinations will end in victory. They never consider the potential unintended consequences of their actions, like global war, nuclear annihilation, millions of casualties, or the fall of their empire.

    The same arrogance displayed by central bankers, government apparatchiks, crooked politicians, and Wall Street shysters as the 2008 financial catastrophe approached is being displayed today by Trump, his surveillance state cronies, and the neo-cons now running the show in the White House. They believe their “brilliant” strategy, tactics, and propaganda campaign will surely result in success, as their opponents/victims are weaker and not as skilled in diplomatic manipulation and military aptitude.

    The Deep State players, who now seem to have gained control over Trump, have no sense of morality, no shame in their blatant hypocrisy, no hesitation in sending men to their deaths based on a fabricated cause, no compunction in lying to the American public, and no guilt while shredding the U.S. Constitution. The object of power is power to these traitorous men.

    Many Americans viewed the presidential election as a choice between the lesser of two evils, or the least bad choice. As Trump has broken promises, filled his cabinet with Goldman Sachs cronies, failed to drain the swamp, proven ineffective in legislating, and has now been captured by the neo-con warmongers, the best argument for his presidency has been “at least he’s not Clinton”. That is true. The Supreme Court won’t go further left, taxes won’t go up, the EPA won’t regulate industries out of existence, illegal immigration will be reduced and ridiculous social justice bullshit won’t be pushed down our throats by the Feds.

    But let’s face the facts. This is nothing but tinkering around the edges of a bloated government bureaucracy, controlled by powerful men in smoke filled rooms, who have absolutely no interest in changing anything that would impact their financial interests in a negative way. They are doing everything in their power to keep the status quo in place.

    The American Empire has been waging war virtually non-stop since the creation of the Creature from Jekyll Island (aka Federal Reserve) in 1913. After World War II, as the size of the empire grew to heights never seen in world history, the level of hypocrisy, propaganda, maliciousness, immorality, and hubris has grown exponentially. The madness of the men running this colonial empire is concealed through the moral ambiguity and faux patriotism utilized to confuse and mislead a willfully ignorant populace who long ago relinquished their citizenship responsibilities to men they have never seen and never voted for.

    How can we judge the actions of these men to be evil when all societal moral standards and social values have been abandoned?  Is there such thing as insanity in a world that has already gone insane? The American Empire is slithering along the edge of a straight razor. Only real judgement enforced by alarmed critical thinking armed citizens can defeat the Deep State at this point.

    “I watched a snail crawl along the edge of a straight razor. That’s my dream; that’s my nightmare. Crawling, slithering, along the edge of a straight razor… and surviving.” – Kurtz – Apocalypse Now

    “If I had ten divisions of those men, our troubles here would be over very quickly. You have to have men who are moral… and at the same time who are able to utilize their primordial instincts to kill without feeling… without passion… without judgment… without judgment! Because it’s judgment that defeats us.”- Kurtz – Apocalypse Now

     

  • A Russian Went Inside A Chinese Click-Farm: This Is What He Found

    On the day when Snapchat erased billions of market cap from investors (and founders) accounts – as the MAUs-means-money model seems to break – we thought it worthwhile taking another glimpse into the hush-hush world of 'click-farms' and the fakeness of the latest social network fads.

    In 2014, we first exposed the world to the 'click-farm' where nothing is what it seems, and where social networking participants spend millions of dollars to appear more important, followed, prestigious, cool, or generally "liked" than they really are. As we detailed at the time, social networking has been the "it" thing for a while: for the networks it makes perfect sense because they are merely the aggregators and distributors of terrabytes of free, third party created content affording them multi-billion dollar valuations without generating a cent in profits (just think of the upside potential in having 10 times the world's population on any given publicly-traded network), while for users it provides the opportunity to be seen, to be evaluated or "liked" on one's objective, impartial merits and to maybe go "viral", potentially making money in the process. Of course, the biggest draws of social networks also quickly became their biggest weaknesses, and it didn't take long to game the weakest link: that apparent popularity based on the size of one's following or the number of likes, which usually translates into power and/or money, is artificial and can be purchased for a price.

    But it is not only sport stars with chips on their shoulder, or fading move and music gods who are willing to dish out in order to get the fake adoration and fake fans: as the AP reports, In 2013, the State Department, which has more than 400,000 likes and was recently most popular in Cairo, said it would stop buying Facebook fans after its inspector general criticized the agency for spending $630,000 to boost the numbers. In one case, its fan tally rose to more than 2.5 million from about 10,000.

    Since then there have been crackdowns (self-regulated) and also numerous "advertising metric errors," but still, as recently as March of this year, scientists at USC and Indiana University discovered up to 15% of Twitter accounts could be fake. Since Twitter currently has 319 million monthly active users, that translates to nearly 48 million bot accounts, using USC's high-end estimate. The report goes on to say that complex bots could have shown up as humans in their model, "making even the 15% figure a conservative estimate." At 15 percent, the evaluation is far greater than Twitter's own estimates.

    In a filing with the SEC last month, Twitter said that up to 8.5 percent of all active accounts contacted Twitter's servers "…without any discernable additional user-initiated action."

    Since that equates to roughly 20 million more bot accounts than Twitter's own assessment, that could be an issue in light of analyst concerns about user growth. In a recent research report, Nomura Instinet analysts wrote that "Twitter's revenue growth has slowed to the mid-single digits, as the platform has struggled to attract new users over the past year…"

    The research could be troubling news for Twitter, which has struggled to grow its user base in the face of growing competition from Facebook, Instagram, Snapchat and others.

    So, if they're not human, where do all those "likes," "retweets," and "followers" lighting up your social media accounts from?

    Thanks to this Russian gentleman – who visited a Chinese click farm, where they make fake ratings for mobile apps and other things like this –  we now know…

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          He said they have 10,000 more phones just like these.

    As we concluded previously, the bottom line is simple: "The illusion of a massive following is often just that," said Tony Harris, who does social media marketing for major Hollywood movie firms, said he would love to be able to give his clients massive numbers of Twitter followers and Facebook fans, but buying them from random strangers is not very effective or ethical. And once the prevailing users of social networks grasp that one of the main driving features of the current social networking fad du jour is nothing but a big cash scam operating out of a basement in the far east, expect both Facebook and shortly thereafter, Twitter, to go the way of 6 Degrees, Friendster and MySpace, only this time the bagholders will be the public. Because "it is never different this time." The only certain thing: someone will promptly step in to replace any social network that quietly fades into the sunset.

  • 'Resist 45' Activist Gets $45,000 Taxpayer Grant To Study 'Transgender Health'

    The National Institute of Health (NIH), in its infinite wisdom, has just awarded nearly $45,000 to a post-doctoral student at Duke University, and unabashed “Resist 45” activist, for the specific purpose of studying ‘transgender health.’  According to the NIH website, the project got underway on May 1st and is expected to continue through August 2018…at which point we’re almost certain more taxpayer money will be thrown at worthy follow-up projects.

    NIH

     

    But, perhaps even more important that the topic of the grant is the person to whom the grant has been awarded.  Ethan Cicero is a post-doctoral student at Duke University and an avid “Resist 45” activist.   He has written numerous previous research reports in the past on extremely critical healthcare issues like whether or not hospitals should ask individuals for their preferred pronouns and “be sensitive to shared spaces” by keeping the “gender to which they identify in mind” when placing transgender individuals in rooms.

    Cicero has also attacked doctors for “incorrectly us[ing] sex and gender interchangeably,” since gender is “more abstract and refers to the complex relationships among gender biology (sex), gender identity (one’s sense of being female, male, both, or neither), and gender expression (outward presentation behaviors, and roles).”

    Meanwhile, in an article published in the January 2016 issue of the Journal of Emergency Nursing entitled “‘I Was a Spectacle…A Freak Show at the Circus’: A Transgender Person’s ED Experience and Implications for Nursing Practice,” Cicero went so far as to blame America’s emergency rooms for the high attempted suicide rates of transgender people.

    “Few worry about clinician competence or are concerned that they may be denied care; however, transgender personal contemplating and ED visit sometimes face these issues.  The scarcity of of clinical providers adequately prepared to care for transgender persons is a major barrier to seeking care.  In addition, some transgender people encounter denial of services, discrimination, harassment, and even violence in healthcare settings.  The accumulation of barriers cause some transgender people to avoid seeking even routine preventative care.

     

    The implication of these barriers is profound.  The lack of high-quality, equitable healthcare is directly  associated with a high lifetime suicide rate in the transgender community.”

    New flash, Ethan, everyone hates going to the emergency room…it has nothing to do with your ‘gender expression.’

    As the The Washington Free Beacon points out, Cicero’s controversial public statements go well beyond his emergency room research papers and were spread all over his FaceBook page before it was recently changed to private.  Perhaps he didn’t think that the NIH would appreciate his post alleging the Pence’s pro-life views only applied to “white, straight, and American individuals/babies.”

    Ethan Cicero, a post-doctoral student at Duke University, received the grant. Cicero describes his employer as “The Resistance” on his now-private Facebook account.

     

    Cicero’s cover photo on the social media platform reads “Resist 45,” in reference to President Donald Trump. He changed his profile picture to “Not My President” on Inauguration Day.

     

    “Hey Women’s Marchers, vagina does not equal woman,” Cicero wrote on Facebook, referencing the liberal march the day after Inauguration Day that received criticism from transgender activists for not being inclusive to biological men who identify as women.

     

    “Stop erasing trans/gender nonconforming people,” Cicero said, linking to an article in the Washington Post with the headline, “It’s time to drop the vagina as a protest symbol.”

     

    Cicero’s Facebook account was changed to private shortly after the request for comment was sent.

    We simply can’t wait to see what amazing things Ethan can write about with his new $45,000 budget. 

  • Maxine Waters Does It Again…

    Maxine Waters is mad; angry as hell that President Trump dared to fire FBI Director Comey and she took to MSNBC to explain just how terrible his decision to fire Comey was… except it didn't quite come out that way – as we are used to seeing when the California Democrat opens her mouth.

    As RealClearPolitics reports, in March, Waters issued a press release that read Comey "advanced Russia's misinformation campaign."

    But today, during an interview on MSNBC, she explained…

    "I do not necessarily support the president's decision,"

     

    " I think that if the president would have fired him when he first came in, he would not have to be in a position now where he is trying to make up a story about why. It does not meet the smell test."

    However, NBC's Peter Alexander asked if she would be okay with a hypothetical President Hillary Clinton dismissing Comey from his position, Waters said yes.

    "If she had won the White House, I believe that given what he did to her, and what he tried to do, she should have fired him. Yes," the California Democrat said.

     

    "So she should have fired him but had he shouldn't fire him. This is why I'm confused," Alexander said to Waters.

     

    "No, no you're not confused," Waters told Alexander.

     

    "I am confused," Alexander responded, adding "The bottom line is you think an FBI director without credibility would have been best served in this position to try to pursue this investigation."

    Waters then tries to explain to Alexander that she does not support Trump's decision to fire Comey. Enjoy…

  • Do Americans Eat In Or Out?

    In the aftermath of today’s woeful results from Macy’s, Kohl’s and Nordstrom’s, It may sound surprising, but there is one US industry that is doing even worse than “bricks and mortar” retail – restaurants. For those unfamiliar, we urge readers to skim our latest analysis of the state of the US restaurant indstry, which just suffered its worst monthly collapse since 2009. For everyone else, ahead of tomorrow’s retail sales report, here are some evening thoughts from Bank of America on the divergence in eating patterns across America.

    In a note looking at “City Eating” (vs everything else) BofA investigates changes in how consumers eating habits. The bank asks the following questions: 1) Has there been a shift toward online shopping  for groceries? 2) Are there differences based on demographic group? 3) How do urban  consumers allocate spend on food vs. suburban/rural? This is what it found.

    We created a proxy for online grocery stores which is representative of the sector but unlikely comprehensive, making up only about 1% of average household spending on groceries. Card spending for this aggregate has increased at a roughly 50% yoy pace  since 2015. Digging deeper by demographic group, we find that spending by Millennials at online grocery stores has increased 750% since 2012 and is running at a 55% yoy  pace since 2015. Generation X and Baby Boomers have also increased spending at  online groceries but at a much more modest rate.

     

    The story is also fascinating on a regional level. We don’t have sufficient data to test online grocery shopping regionally, but we can look at broad food consumption trends.  We break the data into major cities (defined as densely populated regions), cities, suburban and rural. The standout comes from major cities where a greater share of food consumption is from dining out versus groceries (Chart of the month). The combination  of competition from online grocers and greater urbanization may continue to present a  challenge to the standard grocery store model.

     

    What does this tell us about the consumer? Our internal data shows how innovation is changing how the consumer spends money, even on ‘necessary goods such as groceries. In our view, this will continue to create disturbances to the retail sector,  impacting trends in job creation and creating downward price pressures.

    Finally, here is the visual answer to the question posed in the title.

  • Senate Hearing Summary: Everything You Thought You Knew About Russia/Comey Just Got Destroyed

    Pretty much no one emerged a ‘winner’ from today’s Senate Intelligence Committee hearing other than perhaps Andrew McCabe.  From the mainstream media to Trump to Congressional Democrats, pretty much all of the narratives surrounding the FBI’s Russia investigation and Comey’s sudden dismissal were succinctly obliterated by McCabe’s testimony.

    First, the mainstream media and Democrat narratives which suggest that Trump’s firing of Comey was nothing more than an intentional obstruction of an ongoing FBI investigation was laid to bed pretty early when McCabe said “There has been no effort to impede our investigation to date.”

    Rubio:  “Has the dismissal of Mr. Comey in any way impeded, interrupted, stopped, or negatively impacted any of the work, any of the investigations or any ongoing projects at the Federal Bureau of Investigation?”

     

    McCabe:  “There has been no effort to impede our investigation to date.”

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    Meanwhile, McCabe also succinctly destroyed Democrats’ demands for the appointment of an “independent investigator.”

    Senator Lankford:  “Is it your impression at this point that the FBI is unable to complete the investigation in a fair and expeditious way because of the removal of Jim Comey?”

     

    McCabe:  “Is is my opinion and belief that the FBI will continue to pursue this investigation vigorously and completely.”

     

    Senator Lankford:  “Do you need someone to take this away from you and somebody else to do it?”

     

    McCabe:  “No, sir.”

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    Going one step further, McCabe also destroyed another New York Times narrative that emerged yesterday (which we covered here) which implied that Comey was fired as a direct result of his request for a “significant increase” in funding for his ‘Russia probe’. 

    Senator:  “Can you confirm that that request [funding request for Russia probe] was, in fact, made?”

     

    McCabe:  “I can not confirm that request was made.

     

    As you know, when we need resources, we make those requests here.  So, I’m not aware of that request and it’s not consistent with my understanding of how we request additional resources. 

     

    That said, we don’t typically request resources for an individual case.  And, as I mentioned, I strongly believe that the Russia investigation is adequately resourced.”

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    All that said, the narratives emanating from Trump and the White House also took a beating.

    First, on Trump’s assertion that Comey confirmed on three separate occasions that he was not the subject of an ongoing FBI investigation, McCabe implied that such a confirmation would be highly unusual.

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    Then on whether the Russia investigation was “one of the smallest things on the plate of the FBI”, as suggested by the White House, McCabe said the FBI considers the Russia probe to be a “highly significant investigation.”

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    And then on whether Comey had lost the confidence of the “rank and file” within the FBI…

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    That said, McCabe did confirm for the first time publicly that Comey’s decision to not pursue charges against Hillary Clinton did result in some “frustration” among certain agents who were “very vocal about their concerns.”

    “I think morale’s always been good, but there were folks within our agency that were frustrated with the outcome of the Hillary Clinton case and some of those folks were very vocal about those concerns.”

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    But perhaps nothing from the hearing today was more damaging to the White House’s narrative than Trump’s own words.  As we noted earlier, after repeatedly saying the Comey was fired based solely on the recommendation of AG Sessions and Deputy AG Rosenstein, Trump today told Lester Holt that he planned to fire Comey all along.

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    So, does that clear everything up?

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May 11

Today’s News 11th May 2017

  • North Korea Is A Major Opium Producer (Making It A Prime Target For The CIA)

    Authored by Whitney Webb via TheAntiMedia.org,

    When the U.S. overthrew the Taliban in the wake of 9/11 as part of its newly launched “war on terror,” it set the stage for the explosive growth of Afghanistan’s dying opium industry. A few short months before the invasion took place, the Taliban made headlines for having “dramatically ended the country’s massive opium trade” after the leader of the fundamentalist group had declared the substance to be un-Islamic. At the time, Afghanistan’s opium was used to produce 75 percent of the world’s heroin.

    But despite being squashed by the Taliban, the opium market made a dramatic comeback immediately following the U.S. invasion in October 2001. Not only was the opium trade restored, it surged drastically – rising from a production level of 185 tons under the Taliban (before the production ban) to 3,400 tons in 2002.

    Over a decade later, the amount of opium harvested annually continues to rise. Afghanistan’s opium is now used to produce 90 percent of the world’s heroin. This increase has been directly overseen by U.S. forces, who openly guard Afghanistan’s poppy fields. Indeed, during that same time, the U.S. government claims to have spent $8.4 billion on counternarcotic programs within Afghanistan.

    The dramatic increase in opium production in post-invasion Afghanistan has sparked speculation regarding the motives behind the aggressive action that the U.S. has recently taken towards North Korea, which is also a major opium producer.

    While government-sanctioned opium production took a hit after Kim Jong-un assumed power in 2011, things have changed drastically in recent months, largely due to Chinese sanctions that were announced in mid-February. The sanctions, created in response to a North Korean ballistic missile test, led China to refuse imports of North Korean coal. Coal represents 40 percent of North Korea’s exports to China.

    That drastic hit to the North Korean economy has apparently forced Kim Jong-un’s hand, as opium production has once again picked up. Kang Cheol-hwan, a North Korean defector and president of the North Korea Strategy Center, told the Yonhap News Agency that “the North is cultivating poppy fields again for drug smuggling as a way to secure funds to manage its regime.”

    While North Korea’s opium production is small compared to that of post-invasion Afghanistan, it is still significant. North Korea, according to the Chosun Ilbo, produces around 40 tons of opium annually — comparable to Pakistan’s opium industry. Most of its opium is smuggled into and sold in China and cannot be targeted by sanctions, since it is hard to trace on the black market.

    Some have speculated that North Korea’s return to opium production has caught the attention of the CIA, as the intelligence agency has a history of involving itself in opium trade and drug-running in general, as evidenced by its well-documented habit of managing drug supplies from Latin America to Asia.

    In addition, opioid addiction – in the form of both legal opiate painkillers and illegal drugs – is growing out of control in the U.S., with more opium being consumed within America than ever before. The onset of this epidemic coincided with the U.S.’ occupation of Afghanistan as, between 2002 and 2013, U.S. heroin use jumped by 63 percent, reaching a 20-year high. Heroin overdoses quadrupled in the U.S. within that same timeframe.

    The U.S. government’s actions also suggest that it seeks to protect opium production, as has been made clear in its occupation of Afghanistan. For instance, the U.S. vehemently opposes opium legalization efforts and the State Department refuses to acknowledge eradicating opium as a primary goal, despite the billions that have been spent on counternarcotic programs.

    With tension increasing on the Korean Peninsula, the U.S. has put “all options on the table” in order  to prevent further missile tests and “provocations” from the Kim Jong-un regime, including warnings that the U.S. may soon find itself in a “major, major conflict” with North Korea.

    If North Korea finds itself targeted for regime change, history suggests that the U.S. military may end up guarding its poppy fields as well.

  • The Consensus Echo Chamber Take On Trump Firing Comey Is All Wrong

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    The unanimous very smart person take on Trump’s firing of James Comey is that it’s a political disaster which will lead to total ruin and possibly his impeachment.

    I disagree.

    The key factor that will determine how this ultimately turns out hinges largely on whether or not there was actual coordination between the Trump campaign and the Russian government to sway the election through hacking or other nefarious means. Personally, I don’t think there was, which is why I don’t expect Donald Trump to be removed from office. The consensus view right now is that Trump’s firing of Comey offers further circumstantial evidence that he’s trying to cover up coordination with Russia in order to end the ongoing investigation. This is certainly a possibility to consider, but it’s definitely not the only possibility, nor is it the most likely explanation.

    First, the optics. The timing of this move looks unquestionably bad, particularly if a story published in today’s New York Times is correct. It reports:

    WASHINGTON — Days before he was fired, James B. Comey, the former F.B.I. director, asked the Justice Department for a significant increase in money and personnel for the bureau’s investigation into Russia’s interference in the presidential election, according to three congressional officials who were briefed on his request.

     

    Mr. Comey asked for the resources last week from Rod J. Rosenstein, the deputy attorney general who wrote the Justice Department’s memo that was used to justify the firing of Mr. Comey this week, the officials said.

     

    Mr. Comey then briefed members of Congress on the meeting in recent days, telling them about his meeting with Mr. Rosenstein, who is the most senior law enforcement official supervising the Russia investigation. Attorney General Jeff Sessions recused himself from that inquiry because of his close ties to the Trump campaign and his undisclosed meetings with the Russian ambassador.

     

    The timing of Mr. Comey’s request is not clear-cut evidence that his firing was related to the Russia investigation. But it is certain to fuel bipartisan criticism that President Trump appeared to be meddling in an investigation that had the potential to damage his presidency.

    If this is accurate, I think it’d be impossible for any honest person to determine that the above played no role in Trump’s firing of Comey. The next conclusion is that this means Trump is afraid of the ongoing Russia investigation — where there’s smoke there’s fire, right?

    While that could be the case, there are other explanations. First, Trump simply may have been sick and tired of Comey, just as most Americans, including myself, are sick and tired of him. Comey isn’t the most popular guy out there. Indeed, high profile Democrats have been incessantly complaining about him, with Hillary Clinton once again publicly blaming him for her election loss as recently as last week. Trump may genuinely think Comey is incompetent (after all he didn’t even look at the hacked DNC servers but let discredited private company CrowdStrike do the work), and Comey’s recent request to expand the Russia investigation may have further called his judgment into question in the eyes of Trump.

    This doesn’t mean Trump is guilty of coordination with Russia. For example, let’s assume for a moment that there was no coordination with Russia to sway the election. If that’s right, Trump and his team could quite legitimately view Comey’s insistence on more funding for the investigation look like incompetence or a personal vendetta. This would frustrate anyone, and it would especially irritate a person accustomed to firing whoever he wants, whenever he wants (after all, he had a show where he became famous for saying “You’re Fired”). As such, the overwhelming impulse for a guy like Trump is to fire Comey irrespective of whether or not there was any Russia conspiracy. This doesn’t make it the right thing to do, but it also doesn’t mean he’s in cahoots with Russia. It could simply be that an impulsive guy who’s accustomed to firing people at will decided to fire a guy who was increasingly getting on his nerves.

    Given what we know about Trump’s personality, I think his choice to fire Comey is consistent with both the scenario where he is guilty of Russia coordination, and one where he isn’t. The consensus narrative which claims Trump firing Comey is proof of his guilt and merely an attempt to cover up a Russia conspiracy, is an emotionally driven and hastily determined conclusion.

    To summarize, Trump’s dismissal of Comey looks bad, but it doesn’t mean he’s hiding anything. To me, it looks like a typical Trumpian move whether or not there’s any shadiness with Russia going on. Let’s now move on the the next part of the post: How does this play out politically in the near-term, and how will it affect his chances for reelection in 2020?

    While Trump often doesn’t seem to understand this, his true power comes from his base. By base, I don’t mean the tens of millions of people who voted for him, rather, I’m referring his hardcore fans who voted for him largely to disrupt the status quo. I’m referring to the dedicated MAGA people who had never really participated in politics before, but became energized by Trump. These people are the key to winning reelection in 2020.

    Despite all the noise made by D.C. “Never Trump” think tankers and pundits, they proved themselves to be irrelevant in 2016, as Trump won despite their vitriol. Trump’s base got him elected and Trump’s base will determine his prospects in 2020. Your average Republican doesn’t really matter. The average GOP voter would vote for a fire hydrant before Hillary Clinton, and these people aren’t going to vote Democratic or stay home in 2020 because Trump fired James Comey. In contrast, if Trump sufficiently pisses off the base, he’s finished.

    Trump’s base is absolutely giddy about the firing of James Comey, and that’s a win for Trump in my opinion. Trump’s base accurately sees the entire Department of Justice (which includes the FBI) as a total joke. An institution that primarily exists to protect elitist criminals. Considering the inability of the DOJ/FBI to jail a single bank executive for the financial crimes committed last decade, this view is entirely appropriate.

    James Comey has been a big part of this racket, so there’s no love lost for him. Comey’s termination is being cheered by Trump’s base, unlike his very unpopulist and oligarch-coddling moves up until this point, such as surrounding himself with Goldman Sachs bankers. If anything, this energizes a base that had become increasingly concerned about the neocon war mongers and financial crooks running rampant throughout his administration. This move plays perfectly into Trump’s base and will be seen as Trump taking it to the deep state.

    Unfortunately, Trump’s not really taking on any deep state, as was fully demonstrated earlier today when he was seen in the Oval Office with one of the deep state’s most notorious war criminals.

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    While I find the above far more offensive than the dismissal of James Comey, the hyperventilation emanating from the corporate media, Democrats and Never Trumpers actually gives Trump more cover to be an even more egregious pawn of the deep state and Wall Street. That’s because the firing of Comey gives him unwarranted street cred amongst the base, and the more the corporate media parrots squawk, the more the base will love it.

    Which brings me to the final and most important part of this piece. The entire Comey firing saga could go in several directions, but an increasingly likely outcome is the one I don’t see being discussed anywhere. First we need to ask ourselves, what’s likely to happen next? Calls for a special prosecutor and independent investigation into Trump-Russia collusion are likely to get louder and louder. Given the timing of the firing, I support this and I think there’s a good chance it’ll happen. I hope it does happen, as we really do need to put an end to all the speculation and hysteria one way or the other, once and for all. But here’s where it gets really interesting…

    If Trump really did coordinate with the Russian government to affect the U.S. election and indisputable evidence emerges, it will be an enormous scandal and he will likely be removed from office. Personally, I don’t think such evidence exists because I don’t think such collusion happened, but I support an independent investigation. On the other hand, what might happen if Trump didn’t collude with Russia?

    Here’s where Trump legitimately has a chance to destroy the Democratic Party once and for all. The Democrats have already been putting all their eggs in the Russia conspiracy theory basket, and this focus on Russia as opposed to jobs, healthcare, student loans, debt slavery etc., has made the American public think the Democratic Party is more out of touch than both Trump and the GOP. Given that’s where things stand today, imagine what’ll happen to the party and its leaders if they start spending 100% of their time pursuing this lead and then nothing comes up? What then?

    I’ll tell you what happens. The Democratic Party, as useless as it is today, will completely evaporate as a serious political opposition force in America. This is because it appears all of its handful of 2020 hopefuls seem to be completely hyperventilating and losing their minds about Comey’s dismissal and asserting that it represents proof Trump colluded with Russia.

    Imagine if Trump is cleared by an independent investigation? These Dems will look like complete imbeciles with horrible judgement who wasted the nation’s time while tens of millions of Americans struggled to make ends meet. This will destroy the party and lead to an easy Trump win in 2020. This is a potentially lethal trap for Democrats and they seem to be falling for it in unison.

    And give me a break on all of this sudden placing of the FBI up on a pedestal. As I remarked to Eric Holder last night on Twitter:

     

    To conclude, I think the “expert” pundit take on the Comey affair is completely wrong and missing the bigger picture. Most commentators are merely following their own biases and coming to conclusions based largely on emotions. I’m no fan of Trump and I think he’ll merely prove to be a useful tool of the deep state and Wall Street dressed in populist language. I don’t come to the conclusion in today’s post based on my desire for it to happen. In fact, what I’d really like to see is real and thoughtful opposition to his authoritarian nature and Wall Street ass-kissing, but we know we won’t be getting that from the Dems. Indeed, it’s becoming increasingly likely the entire party may end up falling on the sword that is the Russia conspiracy theory.

    As always, time will tell.

  • Connecticut State Capital Prepares For Bankruptcy Amid Collapse In Hedge Fund Revenue

    The state of Connecticut has been hit hard by the double whammy of a deteriorating local economy, coupled with a plunge in hedge fund profits – as well as hedge fund managers permanently relocating to Florida – leading to a collapse in tax revenues. According to the the latest Connecticut budget released last week, the state is reeling from the consequences of sliding tax revenue from the super-rich, i.e. the state’s hedge fund managers. The latest figures showed that tax revenue from the state’s top 100 highest-paying taxpayers declined 45% from 2015 to 2016. The drop adds up to a $200 million revenue loss for Connecticut.

    In a dramatic, if of questionable credibility, soundbite Department of Revenue Services Commissioner Kevin Sullivan says these wealthy people are “dramatically less wealthy than they were before.” He was referring to annual income, not actual asset holdings, because judging by the all time high in the S&P, the local financial elite have never had a higher net worth.

    “When you look at the top 75, top 50 … this is a group of wealthy people who are dramatically less wealthy than they were before,” said Kevin Sullivan, commissioner of the Connecticut Department of Revenue Services. “These folks, for a number of reasons, are either not realizing as much income or don’t have as much income.”

    Just don’t expect tears from the general public. Sullivan also noted how several international hedge funds have recently failed, resulting in “significant retrenchment” from investors. That drop in tolerance for risk brings smaller margins and ultimately less personal income for the state to tax, he added. It’s fascinating how the Fed’s central planning, superficially meant to restore “confidence” in a rigged, manipulated market is having such proound and adverse 2nd and 3rd order effects on state budgets.

    Sullivan also acknowledged part of revenue decline can also be attributed to “a handful” of wealthy individuals who moved to more tax-friendly states — an issue frequently raised by legislative Republicans, who argue Connecticut’s tax policies encourage the state’s super-rich to move out.

    Of course, for tax purposes it’s the actual income that matters, and as a result the steep decline has exacerbated Connecticut’s budget woes. The projected deficit for the new fiscal year beginning July 1 has now jumped from about $1.7 billion to $2.3 billion, while the deficit predicted for the second year of the state’s two-year budget is now about $2.7 billion.

    According to AP, lawmakers and the governor have already discussed the possibility of making deep cuts throughout state government, including to state colleges and universities and social services. Meanwhile, there’s a threat of about 4,000 layoffs if a $700 million labor concession deal isn’t reached with state employees. Lawmakers say these latest revenue figures make that agreement even more crucial.

    * * *

    Meanwhile, in a stark confirmation just how dire the state’s economic and fiscal situation has rapidly become, the Hartford Courant reports that city leaders in the state’s capital have taken a step toward bankruptcy, soliciting proposals from law firms that specialize in Chapter 9. It adds that the city is reviewing several firms and could hire an attorney as early as this week, sources with knowledge of the plans said.

    Facing a $65 million deficit next year and a $14 million shortfall this year, Mayor Luke Bronin has hinted for months that Hartford could file for bankruptcy, and said during his budget release in April that he was “not in a position to rule anything out.”  Bronin proposed cuts and concessions from the unions, but is still seeking $40 million in additional state aid to close next year’s budget gap. The city resorted to short-term borrowing to cover costs such as payroll payments this year.

    The mayor confirmed Tuesday that the city was looking at firms. “We have not engaged bankruptcy counsel, but we have had initial conversations with firms that have experience in Chapter 9 and municipal restructuring,” Bronin said. “Given the uncertainty of the state budget process and the depth of the state budget crisis, it shouldn’t surprise anyone that we might engage counsel in the near future.”

    Some, such as Council President Thomas Clarke II, who was briefed by Bronin on the prospect of hiring a bankruptcy lawyer, called the move premature. “I was told it was possible that a decision would be made before the end of this week,” Clarke said Tuesday. “It’s premature. We haven’t exhausted every option and every avenue for us to go down this road.”

    Maybe not yet, but time is fast running out.  Meanwhile, reminding the state that “we’re all in it together”, Bronin stressed that the state must be a partner in pulling Hartford “from the brink of financial ruin”, noting that more than half of the city’s properties are tax-exempt and that Hartford has limited options for revenue.

    “We’ve made clear for more than a year that Hartford’s fiscal challenge cannot be responsibly solved at the local level alone with the tools that we have,” Bronin said, “and we continue to push hard to build a new partnership with the state of Connecticut to put our capital city on a path to solvency, stability and growth.”

    However, as noted above, the itself has its own problems, with a more than $2 billion budget gap estimated for next year. It is unclear whether there is support in the General Assembly for bailing out Hartford.

    * * *

    Clarke said that if the city proceeds with legal representation, the council will look to hire its own lawyer. A key question members want answered is whether the mayor must get the council’s approval to file for bankruptcy, the Courant notes. The state statute covering municipal bankruptcy says that a city or town must receive consent from the governor, and that the governor “shall submit a report to the treasurer and the joint standing committee of the general assembly.” It doesn’t specify whether a mayor needs the council’s approval.

    In other words, if Bronin intends to go through with it, Hartfort may be in bankruptcy within weeks, if not days.

    Hartford wouldn’t be the first city in Connecticut to seek Chapter 9 protection. Bridgeport filed for bankruptcy in 1991, but a federal judge dismissed the petition, saying the city was capable of paying its bills. Other cities that have filed include Detroit, Stockton and San Bernardino, Calif., and nearby Central Falls, R.I.

  • Canada, Let's Not Minsky Words

    After tonight's significant downgrade and warning from Moody's about Canadian Banks, the following seems extremely prescient now.

    Authored by George Stockus via BeatlesOnBanking.com,

    Stability breeds instability – this was economist Hyman Minsky‘s lasting contribution to the craft.  The Minsky Moment , popularized during the 07-09 US housing crisis, basically suggests breeding animal spirits too long creates systemic problems.

    Essentially, the ongoing rises in asset prices back then created the sense of a new paradigm, that the elevated activity was safe, and home prices couldn’t fall – they’d never done so.  As the cycle progressed and prices rose, normal course mortgage lending turned to borrowing for speculation and then, ultimately, for ponzi-like leveraged derivative structures that proved unable to withstand volatility.  Turns out, Federal Reserve policy and over-sight engendered it all, and even Bernanke whistled into the then soon-to-be graveyard top of the market.

    There’s no reason Minsky thinking couldn’t apply today.  Central banks have forced years of emergency level interest rates and QE upon the markets with the very intent of manipulating asset prices higher and preached this in the name of stability.  Normal course lending has lead to borrowing for speculation, seen in real estate and margin stock trading accounts everywhere.

    As for Canadian real estate, the truth is Minsky instability could’ve been argued, say a year ago for example, and yet despite no real change in fundamental backdrop Toronto real estate prices have still risen by an additional 1/3 since.  The Canadian economy now relies on real estate for stability and growth and is in no position to cool the frenzy with higher interest rates.  Pretty safe to say that policy goals of stability are leading to instability.  So this is Minsky redux,  with a twist.  Central banks have created unstable market monsters that they neither can afford to feed nor fight.

    Pretty scary.

    Another truth is that it’s happened everywhere.  Increasingly, increasing the world’s cost of living to fight a world of too much debt places today’s central bankers in the history books as those who would double down on fighting Minsky’s warnings.

    It’s hard to universally claim Canada is driven by ponzi-like lending, but it’s easy to point out that record consumer debt levels include a record stretch in borrowing to chase these rising home prices.  So Home Capital’s breakdown should be viewed as a warning sign.  In fact, Canada’s big 5 banks came out to support the Equitable Group – maybe this should be viewed as the industry trying to contain cracks in their system?

    The stock price action in the big 5 banks seems to convey growing concern too, breaking down on higher volumes.  Is it just the HCG and mortgage market noise or are big picture markets sensing other issues in Canada too?

    Other issues?

    Oil.  Loonie.  NAFTA and Trump.  Metals markets.  Softwood lumber.  Seems Trump’s reflation trade could also be fading.  Between new questions over US trade policy and re-emerging China credit concerns buzzing again, the list of things that could unnerve Canadian markets over and above the real estate and consumer debt picture are popping up too.

    Maybe the most troubling signs regarding our real estate markets come from the powers that be.  After years of being so sanguine, only now is CMHC issuing concerns over select regional markets.  Finance Minister Morneau suggests there is no link between risk in housing markets in Toronto/Vancouver and HCG.  We’ve had ultra-low rates for several years and Bank of Canada head Poloz actually claimed low interest rates have nothing to do with fuelling speculation!   Is this the height of detachment?  Arrogant deflection?  Has he not studied Minsky? After this last decade, this statement may go down as the most fantastical  I can remember.

    Minsky laid out a salient concept and it was only several years ago that the world was brought to its economic knees experiencing it.  I know those in the position of policy influence are mandated to speak with tone and instil confidence.  Unfortunately recent history shows us that these powers that be, who steered us into the rocks, also end up being the ones who try to manage us out.  That makes me nervous.  That, and of course, the whistling.

    A few select Ben Bernanke quotes from back in the day.

    “House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” Oct 05

     

    “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.” Feb 06

     

    “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”  Mar 07

     

    “All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”  May 07

     

    “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.” Oct 07

     

    “The Federal Reserve is not currently forecasting a recession.”  Jan 08

     

    “The financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again.” Aug 10

     

    “One myth that’s out there is that what we’re doing is printing money. We’re not printing money.” Dec 10

     

    “I wish I’d been omniscient and seen the crisis coming.” Dec 10

    Pretty sure Minsky didn’t suggest omniscience was required to avoid repeating our mistakes.

  • China Iron Ore Prices Crash Through Key Support To 6-Month Lows

    After a few short days of respite – suggested by some as indicative that the worst is over – China commodities are crashing again tonight with Dalian Iron ore snapping below 460 to its lowest since before Trump's election…

     

    This has erased the entire post-Trump reflation trade hope…

    The commodity has sunk on concern mine supplies will go on rising just as China’s mills enter a weaker period for demand and policy makers in Asia’s top economy rein in leverage. Stockpiles at mainland ports are near a record after robust shipments from Australia and Brazil, with miner BHP Billiton Ltd. citing the inventories as among risk factors that may tug prices lower. Citigroup Inc. has said there may have been forced sales by some traders in China.

    With all the industrials now red post-Trump…

    As Citi warned over the weekend, "We suspect that a good number of physical traders that are financially leveraged up to five times have been forced to destock due to rising short-term borrowing costs and the recent sharp price corrections."

    Citigroup isn’t alone in saying that some traders may be compelled to sell holdings into a falling market as China tightens. Shanghai Cifco Futures Co. said this week signs are emerging that traders are dumping their holdings.

  • Baltimore Has Become A Rotting, Decaying War Zone Amid Raging Opioid Epidemic

    Authored by Michael Snyder via The Economic Collapse blog,

     

    It is hard to believe that Baltimore was once one of the greatest cities in the entire world.  Unlike nearby Washington D.C., Baltimore is a blue collar city that is home to some of the hardest working people in America.  When I was in high school, my brother and I were huge fans of the Baltimore Orioles, and once in a while our parents would drive us from our home in Virginia all the way up to Baltimore to see them play.  As an adult, I spent a number of years living near D.C., and I would take frequent trips up to Baltimore. 

    To say that the city is in a state of decline would be a major understatement.  Everywhere you look there are abandoned buildings and homes, and as you drive through some of the worst areas you can actually see drug addicts just lying in the streets.  Just like so many other communities all over this country, decades of liberal policies have taken a brutal toll, and now the city is just a rotting, decaying shell of the glorious metropolis that it once was.

    There are some sections of Baltimore that you simply do not go into once the sun goes down.  And actually it isn’t a very good idea to go into those areas during the day either.  The crime in the city has gotten so bad that authorities have actually formally requested help from the federal government…

    According to The Baltimore Sun Newspaper, the city has logged in 118 homicides today with the projection of >400 murders for year’s end. It’s so bad here that Baltimore’s Mayor has asked the Federal Government for help in attempt to regain control. Even the police union sounds the alarm of an officer shortage leading to decrease in patrols. All of this is occurring as the Baltimore population declines, nearing a 100-year low, U.S. Census says.

    Through the end of April, Baltimore was on pace for the highest murder rate in the history of the city.

    Yes, you read that correctly.

    The primary factor fueling all of this violence is an opioid epidemic that is completely and totally out of control…

    The opioid epidemic is the quiet killer that has been leaving a trail of bodies on the streets of Baltimore.

     

    “The individuals that are putting these drugs on our street, they’re killing people on our street,” said deputy commissioner Dean Palmere of the Baltimore Police Department.

     

    Drug overdoses is expected to have killed 2,000 people statewide in 2016 and more than 800 in Baltimore alone.

     

    “There are more people dying from overdose here in Baltimore City, than there are dying of homicide,” said Baltimore City health commissioner Dr. Leana Wen in February.

    That last paragraph amazed me when I first read it.

    Even though Baltimore is on pace for the highest murder rate in the city’s history, more people are actually dying from drug overdoses.

    And now police in the city are warning of a new opioid that is reportedly “100 times more potent than heroin”.  It is called Carfentanyl, and it can kill people almost instantly.

    I would like to share with you a short YouTube film put out by Alastair Williamson just a few days ago entitled “The Baltimore Experience”.  No matter how much I write, I could never communicate the devastation in the city quite like this little video does…

    Did you see the part near the end where Williamson stops to offer a bottle of water to a man that is just lying in the street?

    Hopefully that particular man is not on anything, but it is quite common to see people lying around like zombies in cities where an opioid epidemic is raging.  These are very cruel drugs, and they will utterly consume you if you allow them to.

    The more drugs that come in, the worse the violence gets, and within the past 24 hours we have seen four more senseless murders in Baltimore…

    Two men were shot and killed Tuesday morning in west Baltimore, police said. Officers responded at 5:52 a.m. to the shooting on the 2800 block of Lanvale Street.

     

    Police said officers found the victims in and around a vehicle. Both had been shot in the head and were declared dead at the scene, police said.

     

    A 35-year-old man was fatally shot Monday evening in southeast Baltimore, police said.

     

    The victim, identified as Charles Gatuthu, 35, was shot in the head and body at about 7:45 p.m. in the 6100 block of Boston Street. He was taken to Johns Hopkins Bayview Hospital, where he died.

     

    A 25-year-old was shot and killed Monday afternoon in west Baltimore, police said.

    Of course Baltimore is far from alone.  On Monday, I wrote about how Chicago is becoming a gang-infested wasteland, and on Tuesday we got news of Chicago’s 200th homicide so far in 2017.

    And an official bulletin went out to all members of the Chicago police on Monday warning them about the “high-powered weapons” that gangs are now using to kill people…

    Chicago police issued a bulletin Monday warning its officers about gangs armed with high-powered weapons, after three people were shot to death over the weekend – including two attending a memorial for the earlier victim.

     

    Department spokesman Anthony Guglielmi said the three people who were killed in the shootings Sunday were all members of the same street gang.

    Sometimes it is hard to believe that this is still America.

    The precious people that are getting hooked on these drugs and that are committing these murders were once innocent little boys and girls.  Somewhere along the way they were led down the wrong path, and this is happening on a massive scale all over the nation.

    So what should we do?

    What we need are some real solutions.  We need to restore the principles and the values that this nation was founded upon, and we need people that are willing to step forward and take this nation in a different direction. In times of great darkness, light is needed the most, and at this moment in our history we are in desperate need of some lights.

  • Caught On Video: Hockey-Playing Putin Reacts To Comey Termination

    In a rare appearance of the Russian president in his natural sporting habitat, CBS’ caught up with Russian President Putin rink side and asked him about the firing of former Director Comey.  Here is a transcript of the conversation:

    Palmer: How will the firing of James Comey affect US-Russia relations?

    Putin: There will no effect. Your question, please don’t get mad, is silly. We have nothing to do with that. President Trump is acting in according with his competence, and in acordance with his law and constitution. And what about us? Why us? You see I am going to play hockey with the hockey fans. And I invite you to do the same.”

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  • Trump Tantrum: "Democrats Should Be Ashamed"

    At the end of a long 24-hour news cycle, it’s clear that one thing is still bugging President Trump – the hypocrisy of The Democrats.

    In a terse tweet tonight, Trump exclaimed “The Democrats should be ashamed. This is a disgrace!”  with the attached clip.

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    Where is the mainstream media on this? At last check, looking for what the evidence that Comey found that caused Trump to fire him.

  • Trump Named As "Risk Factor" In Company Filings 3x More Than Obama

    According to the research firm Sentieo, which spent hours and hours of time scouring the “Risk Factor” sections of 10-Ks and 10-Qs, Trump has been about 3x more likely to be cited by a publicly traded company in the U.S. as a “Risk Factor” in his first 100 days in office than was Obama.  Courtesy of the Wall Street Journal, here are a couple of histograms that highlight the comparison:

     

    Of course, there are multiple factors, some of which are unrelated to worries about a specific candidate’s policies, that go into the crafting of such risk factors.  For example, Trump was way more likely to be cited as a risk factor by healthcare companies in his first 100 days…though we suspect that is only because he’s entering office during a time in which it’s becoming increasingly obvious that Obamacare is an epic failure and needs to be saved from the brink of collapse. 

    Although the mainstream media is certainly trying, it’s pretty difficult for any serious person to blame Obamacare’s failure on the Trump administration.

     

    And, in other instances, we suspect Trump actually welcomed the notion of being a “risk factor”…here are just a few examples:

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    Meanwhile, both candidates were deemed of relatively equal risk by financial companies…Trump for, among other things, going after special tax treatment of carried interests at private equity firms and Obama for regulatory risk coming out of the great recession.

    President Trump expressed support for legislation ending treatment of carried interest as capital gain … we and possibly our unitholders would be required to pay a materially higher amount of taxes, thereby adversely affecting our ability to recruit, retain and motivate our current and future professionals. — Blackstone Group LP filings

     

    Due to the current economic environment and issues facing the financial services industry, as well as the effect of the change from the Bush to the Obama administration, we anticipate new legislative and regulatory initiatives over the next several years, including many focused specifically on banking and other financial services in which we are engaged. These initiatives will be in addition to the actions already taken by Congress and the regulators… — PNC Financial Services Group Inc. filings

     

    And while it’s probably not a fair comparison, given that Obama took office right in the midst of the great recession which was more attributable to Bush/Clinton, we would be remiss if we failed to point out that manipulated equity prices of today are far more enamored with Trump than similarly manipulated equity markets of 2008 were with Obama.

    Trump Obama

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May 10

Today’s News 10th May 2017

  • The Last Living Nuremberg Prosecutor: War Is Not The Answer

    Authored by Carey Wedler via TheAntiMedia.org,

    Only one lawyer who prosecuted the Nuremberg trials is still alive today, and he has an important message for the world: war is not the answer.

    60 Minutes recently interviewed Ben Ferencz, a son of Romanian Jewish immigrants who found refuge in the United States. His father worked as a janitor, and Ben was the first person in his family to go to college. After Japan’s attack on Pearl Harbor, he was driven to enlist in the military.

    Due to his short stature, the Air Force rejected him, as did the Marines. He eventually finished his education at Harvard and went on to join the Army, landing at Normandy and fighting in the Battle of the Bulge.

    Because of his legal training, Ferencz was transferred to a new unit in General Patton’s Third Army, where he was tasked with gathering evidence from concentration camps as the U.S. Army liberated them. That information was going to be used to prosecute war crimes.

    He says he is still haunted by what he saw and the stories he heard, remembering the story of a son whose father had hidden bread for him under his arm every night so other prisoners couldn’t steal it.

    Though he returned home to the United States, he has soon summoned again. General Telford Taylor, who was in charge of the Nuremberg trials, requested Ferencz’ legal expertise, sending him multiple binders of top secret documents from the Nazi regime.

    “He gave me a bunch of binders, four binders. And these were daily reports from the Eastern Front — which unit entered which town, how many people they killed. It was classified, so many Jews, so many gypsies, so many others,” he told 60 Minutes.

     

    “Ferencz had stumbled upon reports sent back to headquarters by secret SS units called Einsatzgruppen, or action groups. Their job had been to follow the German army as it invaded the Soviet Union in 1941,” killing communists, gypsies, and Jews, the outlet reported. These murders were independent of concentration camp exterminations and occurred in the victims’ own towns.

     

    “They were 3,000 SS officers trained for the purpose, and directed to kill without pity or remorse, every single Jewish man, woman, and child they could lay their hands on,” Ferencz recounted.

    Ultimately, his findings led him to push for an additional trial, despite the previous ones already being conducted at Nuremberg.

    “When I reached over a million people murdered that way, over a million people, that’s more people than you’ve ever seen in your life, I took a sample. I got on the next plane, flew from Berlin down to Nuremberg, and I said to Taylor, ‘General, we’ve gotta put on a new trial.’“

    Because the prosecutors were already stretched thin and other trials were already underway, Taylor put him in charge of handling the Einsatzgruppen. At age 27, Ferencz prosecuted 22 former commanders, all of whom plead not guilty to their crimes.

    But, as Ferencz proved with written evidence, they had documented their atrocities in cold, plain language. 60 Minutes noted the Nazi reports:

    “Exhibit 111: ‘In the last 10 weeks, we have liquidated around 55,000 Jews.’  Exhibit 179, from Kiev in 1941: ‘The city’s Jews were ordered to present themselves… about 34,000 reported, including women and children. After they had been made to give up their clothing and valuables, all of them were killed, which took several days.’ Exhibit 84, from Einsatzgruppen D in March of 1942: Total number executed so far: 91,678.”

    Otto Ohlendorf, who led Einsatzgruppen D, actually claimed the murders were carried out in self-defense. “He was not ashamed of that. He was proud of that. He was carrying out his government’s instructions,” Ferencz told 60 Minutes.

    Though Ferencz was exposed to some of the worst behavior in human history, he fell short of calling the soldiers “savages,” as the 60 Minutes interviewer referred to them. Rather, he blamed the power of patriotism and soldiers ‘just doing their jobs.’

    “He’s a patriotic human being acting in the interest of his country, in his mind,” he said, speaking of soldiers who commit atrocities.

     

    “Do you think the man who dropped the nuclear bomb on Hiroshima was a savage? Now I will tell you something very profound, which I have learned after many years. War makes murderers out of otherwise decent people. All wars, and all decent people.” [emphasis added]

    Ferencz successfully prosecuted the 22 commanders he put on trial, and four were hanged. He has spent his life trying to deter war crimes and delivered the closing arguments in the first case at the International Criminal Court at the Hague in the Netherlands, which was established in 1988. He has also donated his personal life savings to a Genocide Prevention Initiative at the Holocaust Museum.

    When the interviewer pressed him about his optimism in the face of continued genocide in places like Sudan — asking whether he is simply naive — he maintained his positivity and rejected the claims of those who insist war is necessary:

    “Well, if it’s naive to want peace instead of war, let ’em make sure they say I’m naive. Because I want peace instead of war. If they tell me they want war instead of peace, I don’t say they’re naive, I say they’re stupid. Stupid to an incredible degree to send young people out to kill other young people they don’t even know, who never did anybody any harm, never harmed them. That is the current system. I am naive? That’s insane.”

    Though the interviewer also accused of him being an idealist, he insisted the opposite — that he’s a realist. He also said:

    “People get discouraged. They should remember, from me, it takes courage not to be discouraged.”

    He pointed out that decades ago, freedom for women, gays, and transsexuals was unthinkable, they have now come to pass, insisting it’s also possible to end mass murder and war.

    “[I]t’s a reality today. So the world is changing. And you shouldn’t — you know — be despairing because it’s never happened before. Nothing new ever happened before.”

  • CoMeY THe CLoWN…
  • 'Anonymous' Issues Ominous World War 3 Warning: "The Citizens Will Be The Last To Know"

    Using their signature Guy Fawkes character, the infamous hacktivist group Anonymous has issued an ominous new video – warning people around the world to "prepare" for World War 3 as the US and North Korea continue to move "strategic pieces into place" for battle.

    All the signs of a looming war on the Korean Peninsula are surfacing… we’re watching as each country moves strategic pieces into place… but unlike past world wars… although there will be ground troops the battle is likely to be fierce, brutal and quick.

     

    It will also be globally devastating on the environmental and economic levels.

     

    … This is a real war with real global consequences… With three super powers drawn into the mix… Other nations will be coerced into choosing sides.

     

    … The citizens will be the last to know…

    As The New York Post reports, Anonymous – described online as a global network of hackers, intent on spreading “facts the government doesn’t want you to know” – claims the US and South Korea have been working together to keep the peace in the region, along with China and the Philippines, but their pleas have fallen “on deaf ears.”

    They claim that the Trump administration has been also working closely with the Australians, sending a rotational deployment of more than 1,000 US troops to the country, along with a large fleet of military aircraft. Australia is ultimately considered to be a “strategic location in the Indian ocean,” Anonymous says.

     

    “The citizen will be the last to know, so it is important to understand what the other nations are doing,” the group states, citing China’s warning last week to its people in the North. “The pragmatic Chinese, it seems, are starting to lose their patience.”

     

    Another surefire sign that war is imminent, according to Anonymous, are the recent talks between President Trump and Philippines President Rodrigo Duterte.

    The group concludes the video with an eerie message for those watching around the world.

    “Prepare for what comes next,” they say. “We are Anonymous. We are Legion. We do not forgive. We do not forget.”

    As SHTFplan.com's Mac Slavo points out, both China and Russia are mobilizing troops to the North Korean border, and the United States now has a Naval strike group directly off the coast of the rogue state. With the North threatening to continue testing missiles and weapons of mass destruction, and the Trump administration officially stating that past policies of “patient diplomacy” no longer apply, it appears confrontation is imminent.

    North Korea has responded to President Trump’s deployment of an aircraft carrier, surveillance drones and missile tests by saying that if even a single bullet is fired they will nuke the United States.

    The geo-political strain in the region could lead to any number of potential triggers. The growing concerns have not gone unnoticed in Japan, which recently saw panic buying of emergency shelters and air purifiers skyrocket.

    In the United States, retailers report that the sale of NBC/CBRN gas masks and anti-radiation pills has spiked in recent weeks amid fears of impending global disaster.

    Elite billionaires are building bunkers and long term preparedness plans to survive disaster, while governments around the world are positioning pieces on the grand chessboard.

    All signs point to serious trouble in the very near future.

    The world sits on the brink of a war unlike anything mankind has ever witnessed.

  • Chinese Producer Prices Miss, Slide For Second Month As Burst Commodity Bubble Spills Over

    With the entire world’s focused on the last remaining reflationary dynamo in the world, China, today’s inflation data out of Beijing, fabricated as it may be, was closely watched.  After all, just one month ago, UBS declared China‘s reflationary phase over, and a dark, deflationary era of negative credit impulse-driven deflation would soon be unleashed on the world. Again.

    It wasn’t quite so dramatic.

    After surging to almost 8% at the start of 2017, the fastest pace in 9 years, PPI declined for a second consecutive month, slowing to just 6.4% YoY in April, down 0.4% from March, and missing expectation, confirming (as if it was needed) that China’s commodity boom is now in the rearview mirror.  The accelerating producer price plunge has been all too obvious to those who have watched the recent crash (most recently previewed here) in Chinese iron ore and coal prices, which tumbled after rising sharply on a construction boom, or rather bubble, that drove China’s strongest economic growth since 2015.

    At the same time consumer prices rose fractionally more than expected, although CPI remained at just 1.2% YoY, up from 0.9% in March. This was driven entirely by non-food inflation which jumped 2.4%, while food inflation plunged 3.5% from a year ago.

    And in the backward logic of the “good is good and bad is great” world, the burst commodity bubble (declining PPI)  and lower purchasing power (rising CPI) allowed the  PBOC to be a little more generous with its liquidity, ending the three drought of no reverse repos, even if the central bank still drained a net of CNY80 billion today, and so Chinese stocks are higher… for now.

  • For The First Time, You Can Track Every Dollar The Government Spends

    Despite paying trillions in Federal taxes every year, Americans’ requests for a clear, detailed breakdown of where their money goes every year, have gone unanswered and been ignored by both Republican and Democrat administrations for one simple reason: transparency has an unpleasant way of mutating into accountability, which is the scariest thing imaginable for any career politician.

    Not any more.

    On Tuesday, the US Treasury launched a new website designed to track virtually every dollar – out of roughly $4 trillion – in federal spending. The new website, Beta.USAspending.gov, was created to put data into the hands of taxpayers by empowering them to track how their tax dollars are spent. The site is designed to follow federal agency spending and, for the first time, links spending data to awards distributed by the government.

    In the statement, the Treasury said that “the new site provides taxpayers with the ability to track nearly USD in government spending from Washington, DC directly into their communities and cities,” says Treasury Secretary Mnuchin. “Furthermore, greater access to data will drive better decision making and strengthen accountability and transparency – qualities central to the Administration’s focus on a more innovative and effective government.”

    Federal spending flows through hundreds of federal agencies and programs to thousands of companies and nonprofits and millions of individual citizens. Visitors to the site can search by location, federal agency or by keyword for a specific program or type of spending. They can also search for a specific recipient of federal funds, such as a business or university.

     

    Treasury released this new version of the USAspending.gov site in accordance with Digital Accountability and Transparency Act (DATA Act) requirements. The DATA Act was enacted into law in May 2014 to make federal spending data more accessible, searchable, and reliable. The data on Beta.USAspending.gov is compiled by Treasury with the assistance of other federal agencies and will be updated and published on the site quarterly, with the first batch of data published in May 2017. Over the past two years, Treasury conducted extensive user research and stakeholder outreach to develop the new site.

    More than just pretty charts, however, the site will likely serve as a tool for investors following along with Trump Administration proposal debates, and tracking who, where and when is set to receive several billion in excess government generosity.

    The top level website can be found at the following link:

    Readers eager to experiment with the website’s search can do so after the jump:

    The more detailed spending breakdown by state can be found at the following link: it even lets you find spending by zip code and even recipient name.

  • Stockman On The Coming Fiscal Bloodbath: "Sell Stocks, Sell Bonds, Buy Gold"

    Authored by Craig Wilson via The Daily Reckoning blog,

    David Stockman joined Greg Hunter of USA Watchdog to discuss what he views as a fiscal bloodbath and the biggest bond market bubble to ever hit the global economy.

    To begin the discussion, the Washington insider was asked about the cash on hand in the United States federal budget and the fiscal conditions that Donald Trump faced where he unloaded, “I think it is a total calamity. They capitulated entirely.”

    While speaking on what cuts Trump proposed Stockman pressed, “He wants to cut $18 billion in order to ‘balance it out’ from domestic programs like the the National Institute of Health (NIH), Public Broadcasting Service (PBS) and a lot of things in between… and that’s just a down payment for the big reduction proposed for the full fiscal year that starts in October. That proposal is looking for $54 billion for defense and other domestic priorities, met with $54 billion of cuts on the domestic side… the problem is, Trump went to the Hill and they got totally fleeced. They ended up with most of the increases they wanted because that is the way Washington works. More money for the defense and border pork barrel.”

    With contrarian style, David Stockman then pointed out, “He ended up with no cuts at all. He now has $30 billion in increases and a statement from Congress, that was on a bipartisan basis, allowed that we’re in control – you can have your defense and other priorities but we’ll march the budget higher together. I think that’s the opening gambit for what’s going to happen in the full year as the Congress struggles to try to pass bills for fiscal year 2018. They’re going to raise defense and all the priorities, they’ll cut nothing domestically…”

    “The whole thing is headed for a real fiscal bloodbath sometime this summer or fall when they run out of debt ceiling (money) and can’t borrow any more to pay for all of this. When they use up the cash on the balance sheet right now… we’re going to be in a huge shutdown mode.”

    Greg Hunter inquired with Stockman over what budget deals he would feel Trump and GOP leadership could make that would signal serious change. The former Reagan Budget Director argued, “First, he would need to rethink making defense great again. It is already far greater than we need. We don’t need that $54 billion for defense. Second, he promised he wouldn’t touch social security or medicare… A lot of people need them, I recognize that, but there are millions of affluent retirees who never earned all of the benefits they’re getting.”

    When asked what his view on a Congressional budget deal is and what it could mean for jobs and the economy Stockman relayed, “There will be panic in the financial markets. This is not priced in. The market isn’t expecting anything. I think it will cause some very difficult times.” The interviewer then asked what his expectations on a government shutdown would look like with Trump.”

    The author noted, “I doubt he’ll go for a shutdown by choice. The leadership is not going to stand for it. They have a false idea that Republicans can govern by keeping the Washington Monument open even if we’re bankrupting the country by piling spending. I don’t think they’re going to elect to have a shutdown. What I think is going to happen instead is they’re going to run out of borrowing authority with the debt ceiling, it is now frozen on March 15. We’re locked in at $19.8 trillion so when they run out of cash in a few months, they’ll need a majority in both houses to vote through a multi-trillion bill in both houses. They won’t have the votes.”

    Stockman sounded the alarm, “This isn’t speculation, this is what is coming down the pipe. I don’t think it is even remotely anticipated by the markets. It is not priced in at all. That’s when you get huge disruptions in the financial markets. When they’re hit by surprise or black swans, that’s where we’re heading in a matter of few months.”

    After the host pushed for clarity over his bubble forecast Stockman urged, “The market is insanely valued right now. They were trying to tag 2,400 points to close out last week. The point is, that represents about 25 times the trailing earnings for 2016 at a point where we’re already into a “recovery” that’s lasted 96 months. Almost the longest in history. What the market is saying is that we’ve reached a point of full employment, forever. [They appear to be behaving] as though there will never be another recession or economic surprise.”

    “The market is pricing itself for perfection for all of eternity. This is crazy. We’ve got headwinds everywhere. The auto industry is now starting to roll over. The red ponzi in China has only a matter of time before it explodes. We now have debt for the household sector above where it was for the 2008 crisis. I think the market could easily drop to 1,300-1,600 by 30% or more once the fantasy ends. The government will show its true colors. We are headed for a fiscal bloodbath.”

    Stockman voiced his concern for clarity remarking, “This crazy notion that there is going to be a Trump tax cut and fiscal stimulus must be put to rest once and for all. It’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporates $10 or $15 trillion of debt over the next decade. Week by week, slowly the market is beginning to figure this out. What it means is, all of the corporate insiders are selling stock like there is no tomorrow… where institutional sales of stock have been going up since the election and what we have is the usual end of the cycle. This is the greatest suckers rally we’ve ever seen.”

    When asked what he would recommend to protect yourself he urged, “The main thing is, get out of the markets. These markets are unstable. They’re rigged and unsustainable… there is no reason to own stocks at this point in the game. It is so overvalued that maybe you can get another two or three out but you’re facing a 30% or 40% down. The risk versus reward is horrible. The bond market is one giant bubble because the central bank’s have been buying bonds worldwide. They’re buying trillion and still buying a trillion or so on an annual basis. All of that is coming to a halt.”

    In offering his bond market and central bank analysis he urged, “The Fed has finally run out of dry powder. They’re out of the bond buying business and even talking about initiating shrinking of their balance sheets. The European Central Bank (ECB) is near the end of its money printing spree. Even in Japan, which has gone off the deep end with quantitative easing, is beginning to have second thoughts.”

    “Everywhere in the world, the central banks are finally getting to the end of the road. There isn’t going to be anymore money printing. That’s going to leave a giant mess on the doorstep of the fiscal authority. It is going to make the bond market a particularly dangerous place. Bonds are totally mispriced. If the central banks had not bought $20 trillion worth of government bonds worldwide over the last two decades, the yield on debt everywhere would be much higher.”

    Stockman warned on the bond market environment that, “We have, what is roughly a $100 trillion global bond market (corporate and government) that is the biggest bubble ever seen. The advice is, get out of the bond market and stock market. Buy gold. Not all at once. When the financial system finally unwinds and the monetary authorities are discredited the one hard asset in the world is going to have another day in the sun.”

    He reminded viewers, “The gold market is relatively small in comparison to the size of the equity market or bond markets. The gold markets are only a fraction of that. When the panic comes… the price of gold will rise dramatically.”

  • Odds Of Trump Still Being President In 2019 Tumble

    From a recent high of 75%, the last few hours – since FBI Director Comey was fired – have seen the odds of Donald Trump still being President at the end of 2018 have tumbled…

    On relatively high volume, PredictIt's site shows heavy selling (with some trades crossing at 60%).

    Interestingly, President Trump had just reached his highest odds of staying… and this drop is merely a one-month low…

    Buy The F**king Comey Dip?

  • Seattle Mayor Wants To Tax Diet Soda To Fight "White Privileged Institutionalized Racism"

    Back in February, Seattle’s Mayor Ed Murray called for a 2 cent per ounce tax on sugary soft drinks in order to “improve Seattle’s educational opportunities for students of color.”  Per Lynx Media, the tax was expected to raise some $16 million per year.

    Of course, when someone on his staff pointed out that a tax on sugary drinks would disproportionately impact the minorities that he was apparently trying to help, Murray knew that something drastic had to happen.  So that’s when he decided to launch a new attack against the most recognizable symbol of “white privileged institutionalized racism” on the planet:  DIET SODA!

    Per the Seattle Times:

    The changes were recommendations that emerged when staff from the mayor’s office and the office of Councilmember Tim Burgess studied disparate impacts the tax could have on people with low incomes and on people of color, according to Murray.

     

    That work involved conversations with community advocates, public-health professionals and business owners, according to the mayor. After Murray’s initial announcement, some suggested the exclusion of beverages with artificial sweeteners would be unfair because affluent white people tend to consume more diet drinks.

    And while we suspect that many of our readers who frequently enjoy diet sodas didn’t realize they were racist, trust Ed Murray when he says that you most certainly are…and he’s going to tax you for it.

    And now that Democrats have found a way to directly tax “white privilege,” we suspect we’re going to see a whole lot more diet soda taxes. 

    Of course, Murray’s staffers may also want to remind him of how well Philadelphia’s soda tax has worked out for their mayor.  When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, shortly after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

    What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases. According to Philly.com reports, just a couple of months into the city’s sweetened-beverage tax, supermarkets and distributors were reporting a 30% to 50% drop in beverage sales and – adding insult to injury – are now planning for layoffs.

    Then, a month ago, PepsiCo slashed jobs, blaming the soda tax…

    With sales slumping because of the new Philadelphia sweetened beverage tax, Pepsi said that it will lay off 80 to 100 workers at three distribution plants that serve the city.

     

    The company, which employs 423 people in the city, sent out notices and said the layoffs would be spread over the next few months. The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc. spokesman Dave DeCecco said.

     

    “Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,” DeCecco said.

     

    Outside of the North Philadelphia plant Wednesday, Ed Langdon, a 40-year employee  who shuttles products between warehouses, said the cuts are the most drastic he’s seen in his time at Pepsi. Langdon said the writing was on the wall: Some colleagues who are paid on commission were seeing drastic cuts in weekly pay. “The trucks are going out and they’re coming back with the soda on it,” he said. “No one’s buying it. It’s just not happening.”

    And just a week ago, as Phily.com reported, Coke did the same…

    Philadelphia’s new sweetened-beverage tax has led to the loss of 40 Coca-Cola jobs and a 32 percent drop in sales, the company said Friday.

     

    Fran McGorry, president and general manager of Philly Coke, the local Coca-Cola bottler, said in a news release that the job losses are due to commission-based employees leaving the company, not layoffs.

     

    “We are not able to replace those positions right now,” he said. “In total, we have fewer people working in the city while more people are now working outside Philadelphia due to increased demand there. We have also made the decision not to hire seasonal employees for the summer months due to the negative impact the tax is having on our business.”

    Of course, if nothing else, Murray’s stupidity at least serves to debunk the notion that ‘soda taxes’ arise from some compassionate attempt on the part of Democrats to eradicate obesity.  And, at a minimum, we can only hope that this embarrassing mishap just might prove to at least a few liberals that these taxes, like Obamacare, are nothing more than just a another money grab from an oppressive government, wrapped in clever packaging to dupe the American public. 

  • James Comey Learned He Was Fired From A TV News Report, Thought It Was A Joke

    According to the NYT’s Michael Schmidt, today’s termination of James Comey was not an impromptu event: the “WH and DOJ had been working on firing Comey since at least last week. Sessions had been working to come up with reasons.” Still, only a handful of people got a heads up: Trump called Senators Lindsey Graham (R) and Diane Feinstein (D) before breaking the news. They are the top Republican and Democrat on the Senate committee running the Russia probe.

    He did not, however, tell Comey, who according to the NYT, learned he was unemployed by hearing it on the TV.

    Comey, who is three years into a 10-year term at the helm of the F.B.I., learned from news reports that he had been fired while addressing bureau employees in Los Angeles. While Mr. Comey spoke, television screens in the background began flashing the news. Shortly after, a letter was delivered to F.B.I. Headquarters in Washington.

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    Adding to the humiliationin his first reaction, Comey laughed, saying he thought it was a fairly funny prank. Then his staff started scurrying around in the background and told Mr. Comey that he should step into a nearby office.

    Mr. Comey stopped addressing the group. He proceeded to shake hands with the employees he had been speaking to. Then he stepped into a side office, where he confirmed that he had been fired. At that point, he had not heard from the White House.

     

    Mr. Comey’s day had begun in Florida, where he spoke to a group of police officers. He then flew to Los Angeles, where he was also scheduled to speak at a diversity meeting.

    At the same time, Keith Schiller, the director of Oval Office operations at the White House, hand delivered a letter from Trump to Comey informing him of his firing late Tuesday afternoon. But Comey was not there to receive it.

    In his letter, the president said he was dismissing Comey because it was time for a “new beginning” at the nation’s “crown jewel of law enforcement.”

    “While I greatly appreciate you informing me, on three separate occasions, that I am not under investigation, I nevertheless concur with the judgment of the Department of Justice that you are not able to lead the Bureau,” Trump wrote.  The recipient of the letter would be on the other end of the country at that moment.

    Meanwhile, in a separate NBC report, a senior FBI official said they “had no idea this was coming. They are in shock there.”

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May 09

Today’s News 9th May 2017

  • Will Gold or Silver Pay the Higher Interest Rate?

    by Keith Weiner

    This question is no longer moot. As the world moves inexorably towards the use of metallic money, interest on gold and silver will return with it. This raises an important question.

    Which interest rate will be higher?

    The Wrong Approach

    It’s instructive to explore a wrong, but popular, view. I call it the purchasing power paradigm. In this view, the value of money—its purchasing power—is 1/P (where P is the price level). Inflation is the rate of decline of purchasing power.

    This view treats the quantity of goods you can buy as intrinsic to the money itself. This is a mistake, and it leads to a false theory of interest. Before I can present this wrong theory, let me define some terms.

    The Nominal Interest Rate means the rate at which lenders lend and borrowers borrow in the market. The Real Interest Rate is the Nominal Interest Rate – inflation. Notice the switcheroo. The actual rate charged by actual lenders to actual borrowers is dismissed as merely nominal. A fictitious rate which is not used in any transactions is elevated to the status of real. Got that?

    The theory asserts that interest is determined by inflation, that is, real interest> 0. With nominal rates below zero in Europe and elsewhere, this view is tempting and convenient.

    According to this view, which metal has the higher interest rate comes down to which will have a faster-rising purchasing power. Most people would say silver, especially when silver is so cheap compared to gold by a long-term historical perspective.

    Suppose silver’s purchasing power rises at 5% per annum (i.e. deflation) over the long run, then a nominal interest rate of 2% gives a real rate of 7%. If gold’s purchasing power is rising at only 3%, then its nominal rate must be 4%, if both metals have the same real rate.

    First, and it should be obvious that, no one knows how prices will change in the future. Anyone who knew could make billions trading commodities futures. In any case, prices may change, but that is not the measure of the value of money. Consumer prices have many nonmonetary forces pushing them up (such as regulations and taxes) and down (such as improved manufacturing efficiency). At best, prices are a weak proxy for the value of a falling paper currency.

    I don’t take the purchasing power approach.

    Monetary Science

    Instead, to determine which rate will be higher, let’s look at the incentives that encourage action. Everyone who owns metal will face the choice: to hoard it or to lend it.

    In general, we know that if interest is greater than their time preference, people will lend. But that does not help us predict which metal will have the higher rate. For that, we must look at factors that differ between them.

    For example, there is a cost to store precious metals. Since silver is about half as dense as gold, an ounce of silver is almost twice as bulky. And that ounce has about 1/75 as much value as an ounce of gold. This means to hold the same value in silver you need 150 times the volume of gold. An iPhone (the small size) made of gold is worth as much as two and half bread loaves made of silver. No wonder why storing silver is typically more expensive.

    If silver storage costs you 0.75%, and gold is 0.5%, then there is a 0.25% spread in storage costs. Lending silver is a net gain for you, compared to lending gold at the same rate. This is an actionable spread (unlike the so called real rate)—an incentive to lend silver in preference to gold.

    There are other differences between the metals, such as marginal utility. Economists had long struggled with a dilemma. Water is important to human life, but diamonds are not, so why is the price of a diamond much higher? If you are thirsty in a desert, the first gallon of water is worth a high price. The second is worth less. By the third or fourth, you are not willing to pay anything. The reason is that you use the first gallon for drinking. The second is a spare. The third is to wash yourself. The fourth is maybe to wash your clothes. Can you think of what to do with a fifth gallon?

    Economist Carl Menger resolved the dilemma with his discovery of the principle of marginal utility. Marginal utility refers to the value of the next quantity of the good in relation to the previous. Marginal utility declines, because when the higher needs are satisfied, the next unit of the good goes to a lower need.

    Water is so abundant, that at the margin its value is nearly zero. People use water to clean their driveways. Large, high-quality diamonds are not so abundant. They are used only for engagement rings and other important jewelry pieces.

    Each kind of good has a different marginal utility. For food, it’s low because food perishes. For many durable goods, it’s higher because they can be stored until needed.

    Over thousands of years, the market ranked all goods by marginal utility. It determined that the highest marginal utility belongs to gold. Gold is not consumed, and virtually all gold ever mined is still in human hands. Even today, gold mining continues and the market happily absorbs all that can be produced. Silver is second.

    People value the last ounce of gold as much as the first (or nearly as much). Whereas wiith silver, the last ounce matters a bit less. People may be willing to part with some silver more easily. By this assessment, one might expect people to prefer to lend silver, and therefore gold should have the higher interest rate.

    However, there are other factors to consider.

    For the next one, it may be easier by starting with a physical analogy. A metal ball is tied to the left side of frame by a piece of string. You try to pull it to the right with a magnet. Physics teaches us that it will not move, unless the force of the magnet is greater than the strength of the string.

    Applying this analogy to money, the left side is hoarding. Metal is held there by the propensity to hoard. People have hoarded since before recorded history, because they must plan for the future, especially senescence and retirement. They hoard today because they don’t know what a dollar will be worth in 10 or 30 years. The force pulling metal out of hoards is interest. Lending can only occur if Interest is high enough.

    This sounds a lot like our discussion of time preference. Interest must be higher, or else there is no lending. However, time preference is not about a metal, and so it tells us nothing about which will have the higher rate.

    It also sounds a bit like our discussion of marginal utility. If the propensity to hoard were just the effect of marginal utility—if people hoarded simply because they valued the next ounce of gold as much as the previous—then the answer would be simple. Gold would have the higher interest rate, as it has the higher marginal utility.

    However, the propensity to hoard is something else. To understand, we must ask something that few have asked.

    Why are there two monetary metals?

    This is an important question. The answer is not at all obvious. Money has a network effect. The more people who use a form of money, the more value its value increases. Think of eBay. All the sellers go there because that’s where the buyers are. And all the buyers go there because that’s where all the stuff is offered for sale.

    The network effect makes it more puzzling that we have two different monies. In other cases when two different networks compete, one winner eventually emerges. For example, alternating current beat direct current for use in the electric grid. More recently, Internet protocol beat token ring for use in the public data network.

    Yet, over thousands of years, gold has not displaced silver. The reason is that gold and silver do not directly compete. They perform different functions.

    Both are heavy and shiny metals. Both are resistant to tarnish, and they’re good conductors of heat and electricity. But their physical similarity has misdirected attention from their separate roles.

    Gold was selected by traders as the best money to carry large values, especially over long distances. Before gold, they used cattle, because cows move under their own power. Gold does not move itself, but its value density is so high that you can easily carry a fortune in your pocket.

    Today, gold can be moved anywhere in the world in days. The entire globe is effectively the trading region for gold. This means that gold is not subject to local gluts or shortages. Gold supply and demand are quickly smoothed out over the entire world. This helps makes gold the most liquid commodity.

    Silver was chosen by wage-earners, not for carrying large value over distance, but to carry value over long periods of time. Before they used silver, they used salt. Salt is not perishable, and it is accessible to even unskilled laborers. Workers need a way to accumulate small amounts of value every month, and store it until needed to buy groceries in retirement. Gold does not work as well for this purpose. An ounce of gold is far too much for most people to buy weekly or even monthly. In smaller sizes, you pay a high premium which will be lost when you sell. Silver offers a better deal for small savers. Silver is the most hoardable commodity.

    Gold tends to be owned by wealthier people. It is likely that a larger number of people have smaller amounts of silver.

    The wage-earner who has a modest stack of silver coins does not need interest so much as he needs security. Lending and interest are for people who have already covered their need for security. The wealthy, by contrast, will decide to lend their gold purely as a financial decision. To them, it may be no different than running their dollar investments.

    Silver’s greater hoardability suggests that much of this metal is not available for lending, and what is offered will demand a higher interest rate.

    Silver is also the metal of choice for speculators. We might coin the term speculability (not a real word). Speculators are betting on a 25% gain in a few months, or a 2,500% gain in a few years. As a trader, the speculator is ready to sell quickly. While speculators may appreciate interest, they may not want to commit the metal for the time necessary to earn it.

    Silver’s higher speculability, like its hoardabilty, encourages us to think that silver will command the higher interest rate.

    This leads to an opposing factor. The world is inverting now. For many decades, there had been interest on paper currencies, but not on money. But now, interest in paper is vanishing, while it emerges in money.

    Some investors will be drawn to metal solely for the interest. If they can buy either gold or silver to earn interest, most will choose gold. It’s the senior metal, less volatile, and less ambiguous between industrial consumption and monetary uses.

    So far, we have looked at lender supply of metal. What of borrower demand? I think it’s premature to try to predict this. A business should borrow the money which it earns as revenue. For example, a gold mine should borrow gold to expand and a silver mine should borrow silver. The question of which metal will have higher demand for borrowing is simply which metal will be more used as a medium of exchange.

    Circulation is itself a function of interest rate. At zero interest, metal cannot circulate. It is for hoarding only. Interest draws it out of hoards. This is a feedback loop, a non-linear system.

    Finally, let’s look at some data which may help inform our analysis. Today, under paper currency, there is a market for what is called leasing (I have written three papers discussing this market—the links to Part I, Part II and Part III are here—arguing why one should be careful not to conclude too much from it, especially Part II).

    Here is a graph showing the gold and silver lease rates (six-month maturity). It runs from July 26, 1999 through November 2, 2012, or 3,356 days, the period when the London Bullion Market Association quoted the silver lease rate.
    Lease Rates
    Source: London Bullion Market Association

    The silver lease rate is higher most of the time. Here is a graph of the spread, to show this more clearly.
    Lease Rate Spread

    The silver lease rate was higher than the gold lease rate on 71% of trading days. And when the silver rate was higher, it was about 0.9% higher on average, whereas when gold was higher, it was only about 0.3% higher.

    It is worth noting that the silver lease rate is much more volatile than that of gold. This is due to several reasons, but the most important is that silver is less liquid.

    My Opinion

    The above is my framework for thinking about this topic. I welcome criticism of any errors I may have made. But errors aside, what I tried to present above is not opinion but science.

    However, an article like this demands that I offer my opinion. So here it goes, I will stick my neck out.

    I believe that silver will have the higher interest rate.

    The primary reason is that silver is more hoardable, and hence it will require greater compensation to incentivize people to give up their silver. I must also say that I already see dollar investors buying metal just to earn interest. They are buying gold.

    Let me take this opportunity to add one sobering thought. While I believe that my study of monetary science qualifies me more than most people to predict the interest rate, central planning always fails. One reason is that no one—no matter how qualified—knows what everyone wants.

    I would never want to be put in a position to dictate what interest rates people must lend gold, silver, or anything. I would refuse, as John Galt did in Atlas Shrugged, the job of Economic Dictator. It takes a market with many buyers and sellers, to set the price of anything. Including the price of borrowing money.

    The Crowdsourced Experiment

    Which metal should offer the higher rate—and what those rates should be—is the most important economic question of our era.

    The paper currencies are now in the terminal stage of failure, with some already dead (Zimbabwe), some in their death throes (Venezuela), and some showing advanced signs of cancer (Switzerland and Japan). The dollar is the least ill paper currency in hospice.

    My company is conducting an experiment. We are crowdsourcing the answer to these questions, and publishing our findings.

    We just closed a gold deal. Here is the graph showing the interest rates offered by the investors (horizontal axis), and amount of gold offered (vertical).

    Lease Offers

    The market is nascent. However, notice that there was a pretty tight grouping of offers from 3% to 3.5%, with significant additional gold offered at 4%.

    We may find that I am correct in predicting that silver will have the higher rate. We may find I am totally wrong. Maybe both metals will even have the same rate (though I doubt that, it would be like finding two ropes from different manufacturers had the same strength).

    Whether I am right or wrong about the gold-silver interest rate spread doesn’t matter. What matters is that this is the moment of a monetary renaissance. It’s an exciting time.

    I encourage everyone to tune in, and follow our results as they emerge.

  • "Brexit Is A Time Bomb…" UBS Chairman Warns "Europe's Not Out Of The Woods With Macron Win"

    It appears the chairmen of UBS have plenty to say on Europe.Following former UBS chairman Peter Kurer's comments that "to the elites, the EU is a means to get rich quickly and export their problems," UBS current chairman Axel Weber has warned bankers that Europe is not "out of the woods" from its political risks even after Emmanuel Macron’s reassuring victory in the French presidential election.

    Peter Kurer recently remarked on the end of the Euro…

    Following an unfortunate combination of wrong decisions at the top and the uncontrolled flourishing of a self-serving bureaucracy, the union has moved in a direction where it has become a prisoner of its own constructed reality.

     

    The EU was a great idea but it has been ridden to death. Back in 1992, almost half of Swiss voted to join the European Economic Area, including the traveller. If there was a vote today on joining the union, the latest polls say just 15 per cent would vote yes.

     

    The EU had its chances. It squandered them, and maybe it will come to an end in the foreseeable future under the weight of its burdens: La messa è finita, andate in pace.

    And over the weekend speaking in Tokyo, as The FT reports,  UBS Chairman Axel Weber said that political risk in Europe remained “actually quite high” even though “we’ve seen the centre hold in France” with Macron’s victory over far-right candidate Marine Le Pen, and even though all the signs were that the centre will also hold in the upcoming German location elections.

    “That doesn’t mean Europe is out of the woods,” he told the International Institute of Finance’s spring meeting. “There is still Italy where it is very unclear that the centre will hold. And there is still Greece.”

     

    He continued: “Where you find some bright side….there are (also) some downside risks that are not really priced into the market but could derail (Europe).”

     

    “Brexit is a time bomb… and the countdown is on. It will be two years from now,” Mr Weber said. He added that “if the British really do leave the customs union and single market there could be a lot of volatility which could impact on the global economy”.

    This is not the first time Weber has dared to comment against the global elites' party-line…  Speaking on the sidelines of their annual meetings of the IMF and World Bank last year, Weber warned that monetary intervention is causing international spillovers and major disturbances in global markets.

    "They (central banks) have taken on massive interventions in the market, you could almost say that central banks are now the central counterparties in many markets. They are the ultimate buyer,"

     

    "Investors have been driven into investments where they have very little capability for dealing with what is on their plate and I think that is a sure reminder of where we were in a different asset class in 2007," he said.

     

    "So I think the central bankers need to be very careful that they do not continue to produce disturbances in the markets, which they acknowledge – it's a known side effect – but the perception that the underlying impact of monetary policy outweighs the potential side effect in my view is starting to be wrong," he added.

     

    Since the global financial crash of 2008, central bank policy has focused on buying up bonds in large quantities and cutting interest rates to record lows. The Federal Reserve has since looked to unwind its own policy which focused on the Treasury market and the yield curve, but the Bank of Japan and the ECB's large-scale bond-buying programs continue.

     

    "I don't think a single trader can tell you what the appropriate price of an asset he buys is, if you take out all this central bank intervention," Weber warned, adding that it often meant investors were making bad choices with where to put their money.

    UBS Chairman Axel Weber is a former policymaker at The ECB and was the president of Germany's Bundesbank.

  • When Might The Pillaging End?

    Authored by Jeff Thomas via InternationalMan.com,

    Recently, I published the comment that, when the present debt bubble eventually pops, “governments will lose the economic power to continue their advance against economic freedom.”

    The immediate reaction from one reader was, “What could we expect next?… The governments and Deep State aren’t going to ‘just go away.’”

    An excellent question—one which deserves an answer.

    We won’t need a crystal ball to find the answer; we can look at history. After all, this isn’t the first time a government has engaged in overreach. In fact, it’s the norm. Political leaders tend to expand countries if they can, then build them into empires, becoming increasingly oppressive along the way, then causing the collapse of the empire—generally through welfare and warfare.

    The dominant empire of the world today could be said to be the US and its allies, but the hub of the wheel is the US itself, so that’s where we’ll focus. The US is so powerful that it can demand that its citizens pay tax, no matter where they may live in the world. The level of US debt has made the government so flushed with money that it could create a money-collection system that’s beyond any the world has seen.

    At some point, however, debt always generates a major crash. What we can expect next will be that the governments will no longer be able to pay for all of their programmes, so they'll have to cut back. How much will they cut back? That will depend on the severity of the collapse. In my estimation, one of the first indicators will be a stock market collapse. Will it drop by 20%? If so, that will only be a correction, and nothing will change significantly. Will it drop 40%? That's an amount I consider very likely and would be an indicator that the economy in general will soon be taking a significant hit, with a knock-on effect as to government coffers. Will it drop 60%? That's quite possible and would be catastrophic. The economy would then go full-on into the Greater Depression.

    Unlike the Depression of the 1930s, the country will not be the largely agrarian, highly-productive country of (generally) hard-working people. It will be a society of entitlement-conscious people, who will fail to rise to the occasion. An unproductive society contributes little to its government. In addition, the worldwide credit bubble will pop and the petrodollar will be no more. That will serve to eliminate the false income that the government now relies on. The heroin syringe will be removed suddenly and the government will find itself severely strapped for cash.

    So, the government will cut back dramatically—because it has no choice.

    So, here’s where you get to picture yourself as the government. What areas do you maintain as sacrosanct and what others do you cut back on? It would make sense to hang on to those programmes that bring in the most revenue and cut the others, but the big-ticket items are welfare and warfare. You no longer have enough money to maintain those in full. You’ll have to cut back on them, but they’re the programmes that allow you to continue in office. Without them, you not only won’t survive the next election, you might face revolts. So, you do what you have to. You dismantle every other department as much as is possible and hope for the best. After all, your primary concern is not the survival of your country’s economy. Your primary concern is your own retention of power.

    Historically, what you end up with is fewer departments surviving the cut, with each of the surviving departments operating on a skeleton crew, resulting in all of them being less effective. A good example today is Argentina. It was once the tenth most productive country in the world, but, in the 1950s, the Peróns collapsed the economy through socialism. It’s never recovered. Argentina today passes laws as regularly as any other country, but they’re considered a joke by Argentines. Especially in the outer areas, the laws are largely ignored. Whatever little the government does do is extremely inefficient.

    The US has, in recent years, gone way over the top with regard to the economic enslavement of its people, but it has funded the programme through massive heroin (debt) injections. When that debt collapses, the US government will drop dramatically in terms of its ability to control its people in every way, but its main focus will then be on riot and revolt control. That aspect will be fully funded—more so than at present.

    At that point, the investor who has a bit of gold or an account in Switzerland will be too costly to go after. Political leaders will be scrambling to save themselves, and there will be far more important priorities to fund.

    As a holder of wealth (no matter how small), your objective is to bridge the period from now until then. Diversify yourself as much as you can and then sit tight. The primary objective is to still have your skin on after the dust has settled.

    *  *  *

    Today, the US is driving itself straight into a debt-fueled economic crash. This historic financial meltdown will dwarf the Great Depression and 2008 financial crisis. It will wipe out countless investors, including many who thought they were prepared. Don’t let yourself be one of them… New York Times ­best-selling author Doug Casey and his team recently released a video with Doug’s strategy for what you can do to protect yourself. Click here to watch it.

  • A Graduation Message For A Tyrannical Age

    Authored by John Whitehead via The Rutherford Institute,

    “When the rivers and air are polluted, when families and nations are at war, when homeless wanderers fill the highways, these are the traditional signs of a dark age.” – Pema Chodron, When Things Fall Apart

    Those coming of age today will face some of the greatest obstacles ever encountered by young people.

    They will find themselves overtaxed, burdened with excessive college debt, and struggling to find worthwhile employment in a debt-ridden economy on the brink of implosion. Their privacy will be eviscerated by the surveillance state. They will be the subjects of a military empire constantly waging war against shadowy enemies and government agents armed to the teeth ready and able to lock down the country at a moment’s notice.

    As such, they will find themselves forced to march in lockstep with a government that no longer exists to serve the people but which demands they be obedient slaves or suffer the consequences.

    It’s a dismal prospect, isn’t it?

    Unfortunately, we who should have known better failed to guard against such a future.

    Worse, we neglected to maintain our freedoms or provide our young people with the tools necessary to survive, let alone succeed, in the impersonal jungle that is modern America.

    We brought them into homes fractured by divorce, distracted by mindless entertainment, and obsessed with the pursuit of materialism. We institutionalized them in daycares and afterschool programs, substituting time with teachers and childcare workers for parental involvement. We turned them into test-takers instead of thinkers and automatons instead of activists.

    We allowed them to languish in schools which not only look like prisons but function like prisons, as well—where conformity is the rule and freedom is the exception. We made them easy prey for our corporate overlords, while instilling in them the values of a celebrity-obsessed, technology-driven culture devoid of any true spirituality. And we taught them to believe that the pursuit of their own personal happiness trumped all other virtues, including any empathy whatsoever for their fellow human beings.

    No, we haven’t done this generation any favors.

    Based on the current political climate, things could very well get much worse before they ever take a turn for the better. Here are a few pieces of advice that will hopefully help those coming of age today survive the perils of the journey that awaits:

    Be an individual. For all of its claims to champion the individual, American culture advocates a stark conformity which, as John F. Kennedy warned, is “the jailer of freedom, and the enemy of growth.” Worry less about fitting in with the rest of the world and instead, as Henry David Thoreau urged, become “a Columbus to whole new continents and worlds within you, opening new channels, not of trade, but of thought.”

    Learn your rights. We’re losing our freedoms for one simple reason: most of us don’t know anything about our freedoms. At a minimum, anyone who has graduated from high school, let alone college, should know the Bill of Rights backwards and forwards. However, the average young person, let alone citizen, has very little knowledge of their rights for the simple reason that the schools no longer teach them. So grab a copy of the Constitution and the Bill of Rights, and study them at home. And when the time comes, stand up for your rights before it’s too late.

    Speak truth to power. Don’t be naive about those in positions of authority. As James Madison, who wrote our Bill of Rights, observed, “All men having power ought to be distrusted.” We must learn the lessons of history. People in power, more often than not, abuse that power. To maintain our freedoms, this will mean challenging government officials whenever they exceed the bounds of their office.

    Resist all things that numb you. Don’t measure your worth by what you own or earn. Likewise, don’t become mindless consumers unaware of the world around you. Resist all things that numb you, put you to sleep or help you “cope” with so-called reality. Those who establish the rules and laws that govern society’s actions desire compliant subjects. However, as George Orwell warned, “Until they become conscious, they will never rebel, and until after they rebelled, they cannot become conscious.” It is these conscious individuals who change the world for the better.

    Don’t let technology turn you into zombies. Technology anesthetizes us to the all-too-real tragedies that surround us. Techno-gadgets are merely distractions from what’s really going on in America and around the world. As a result, we’ve begun mimicking the inhuman technology that surrounds us and have lost our humanity. We’ve become sleepwalkers. If you’re going to make a difference in the world, you’re going to have to pull the earbuds out, turn off the cell phones and spend much less time viewing screens. 

    Help others. We all have a calling in life. And I believe it boils down to one thing: You are here on this planet to help other people. In fact, none of us can exist very long without help from others. If we’re going to see any positive change for freedom, then we must change our view of what it means to be human and regain a sense of what it means to love and help one another. That will mean gaining the courage to stand up for the oppressed.

    Give voice to moral outrage. As Martin Luther King Jr. said, “Our lives begin to end the day we become silent about the things that matter.” There is no shortage of issues on which to take a stand. For instance, on any given night, over half a million people in the U.S. are homeless, and half of them are elderly. There are 46 million Americans living at or below the poverty line, and 16 million children living in households without adequate access to food. Congress creates, on average, more than 50 new criminal laws each year. With more than 2 million Americans in prison, and close to 7 million adults in correctional care, the United States has the largest prison population in the world. At least 2.7 million children in the United States have at least one parent in prison. At least 400 to 500 innocent people are killed by police officers every year. Americans are now eight times more likely to die in a police confrontation than they are to be killed by a terrorist. On an average day in America, over 100 Americans have their homes raided by SWAT teams. It costs the American taxpayer $52.6 billion every year to be spied on by the government intelligence agencies tasked with surveillance, data collection, counterintelligence and covert activities. All the while, since 9/11, the U.S. has spent more than $1.6 trillion to wage wars in Afghanistan and Iraq and police the rest of the world. This is an egregious affront to anyone who believes in freedom.

    Cultivate spirituality, reject materialism and put people first. When the things that matter most have been subordinated to materialism, we have lost our moral compass. We must change our values to reflect something more meaningful than technology, materialism and politics. Standing at the pulpit of the Riverside Church in New York City in April 1967, Martin Luther King Jr. urged his listeners:

    [W]e as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a “thing-oriented” society to a “person-oriented” society. When machines and computers, profit motive and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered.

    Pitch in and do your part to make the world a better place. Don’t rely on someone else to do the heavy lifting for you. Don’t wait around for someone else to fix what ails you, your community or nation. As Gandhi urged: “Be the change you wish to see in the world.”

    Say no to war. Addressing the graduates at Binghampton Central High School in 1968, at a time when the country was waging war “on different fields, on different levels, and with different weapons,” Twilight Zone creator Rod Serling declared:

    Too many wars are fought almost as if by rote. Too many wars are fought out of sloganry, out of battle hymns, out of aged, musty appeals to patriotism that went out with knighthood and moats. Love your country because it is eminently worthy of your affection. Respect it because it deserves your respect. Be loyal to it because it cannot survive without your loyalty. But do not accept the shedding of blood as a natural function or a prescribed way of history—even if history points this up by its repetition. That men die for causes does not necessarily sanctify that cause. And that men are maimed and torn to pieces every fifteen and twenty years does not immortalize or deify the act of war… find another means that does not come with the killing of your fellow-man.

    Finally, prepare yourselves for what lies ahead. The demons of our age—some of whom disguise themselves as politicians—delight in fomenting violence, sowing distrust and prejudice, and persuading the public to support tyranny disguised as patriotism. Overcoming the evils of our age will require more than intellect and activism. It will require decency, morality, goodness, truth and toughness. As Serling concluded in his remarks to the graduating class of 1968:

    “Toughness is the singular quality most required of you… we have left you a world far more botched than the one that was left to us… Part of your challenge is to seek out truth, to come up with a point of view not dictated to you by anyone, be he a congressman, even a minister… Are you tough enough to take the divisiveness of this land of ours, the fact that everything is polarized, black and white, this or that, absolutely right or absolutely wrong. This is one of the challenges. Be prepared to seek out the middle ground … that wondrous and very difficult-to-find Valhalla where man can look to both sides and see the errant truths that exist on both sides. If you must swing left or you must swing right—respect the other side. Honor the motives that come from the other side. Argue, debate, rebut—but don't close those wondrous minds of yours to opposition. In their eyes, you're the opposition. And ultimately … ultimately—you end divisiveness by compromise. And so long as men walk and breathe—there must be compromise…

     

    Are you tough enough to face one of the uglier stains upon the fabric of our democracy—prejudice? It's the basic root of most evil. It's a part of the sickness of man. And it's a part of man's admission, his constant sick admission, that to exist he must find a scapegoat. To explain away his own deficiencies—he must try to find someone who he believes more deficient… Make your judgment of your fellow-man on what he says and what he believes and the way he acts. Be tough enough, please, to live with prejudice and give battle to it. It warps, it poisons, it distorts and it is self-destructive. It has fallout worse than a bomb … and worst of all it cheapens and demeans anyone who permits himself the luxury of hating.”

    As I make clear in my book Battlefield America: The War on the American People, the only way we’ll ever achieve change in this country is for the American people to finally say “enough is enough” and fight for the things that truly matter. 

    It doesn’t matter how old you are or what your political ideology is. If you have something to say, speak up. Get active, and if need be, pick up a picket sign and get in the streets. And when civil liberties are violated, don’t remain silent about it.

    Wake up, stand up, and make your activism count for something more than politics.

    You are the true guardians of the galaxy.

  • Trump Set To Nominate A Slate Of 10 New Federal Court Judges

    Having been dealt a number of legal defeats at the hands of Obama-appointed judges in the early days of his administration, Trump is preparing to fill roughly 120 vacancies on lower federal courts around the country.  The first of those new appointments will come later today in the first slate of 10 nominees, which will be followed by “monthly waves of nominations” according to a White House official quoted by the New York Times.

    One is Justice Joan L. Larsen, a former law clerk to Justice Antonin Scalia and law professor at the University of Michigan, who now serves on the Michigan Supreme Court. She will be nominated to the United States Court of Appeals for the Sixth Circuit, in Cincinnati.

     

    The other is Justice David R. Stras, a former law clerk to Justice Clarence Thomas and law professor at the University of Minnesota, who now serves on the Minnesota Supreme Court. He will be nominated to the Eighth Circuit, in St. Louis.

     

    The announcement on Monday will include three other nominees for federal appeals courts: Amy Coney Barrett, a law professor at Notre Dame and former law clerk to Justice Scalia, to the Seventh Circuit in Chicago; John K. Bush, a lawyer in Louisville, Ky., to the Sixth Circuit; and Kevin C. Newsom, a lawyer in Birmingham, Ala., who served as the state’s solicitor general and as a law clerk to Justice David H. Souter, to the 11th Circuit in Atlanta.

    Judges

     

    Many of the new appointments are expected to be pulled from the list of 21 “potential Supreme Court Justice picks” that Trump released back in September….so far, 3 of the 21 picks have been nominated for new positions.

    1. Keith Blackwell

    2. Charles Canady

    3. Steven Colloton

    4. Allison Eid

    5. Neil Gorsuch

    6. Raymond Gruender

    7. Thomas Hardiman

    8. Raymond Kethledge

    9. Joan Larsen

    10. Mike Lee

    11. Thomas Lee

    12. Edward Mansfield

    13. Federico Moreno

    14. William Pryor

    15. Margaret A. Ryan

    16. Amul Thapar

    17. Timothy Tymkovich

    18. David Stras

    19. Diane Sykes

    20. Don Willett

    21. Robert Young

    Of course, Democrats have called on the Senate to obstruct all new appointments from the Trump administration to the greatest extent possible.

    But liberal groups expressed alarm at the prospect of a federal bench filled with Mr. Trump’s appointees. “The Trump administration has made clear its intention to benefit from Republican obstructionism and to pack the federal courts with ultraconservatives given a stamp of approval by the Federalist Society,” said Nan Aron, the president of the Alliance for Justice, referring to the conservative legal group. “We’ll be scrutinizing the records of these nominees very carefully.”

     

    Ms. Aron said Democrats should be wary of Mr. Trump’s nominees. “Given the critical importance of the circuit courts,” she said, “it is incumbent upon the Senate to treat its duty to provide advice and consent very seriously.”

    That said, with Republicans controlling a majority in the Senate and the “nuclear option” barrier already breached, we suspect there is very little they can do other than appear on CNN every 15 minutes to complain about Republicans doing all the same things that Obama did for 8 years.

  • Mining CEO Explains Why Silver Could Reach Over $136

    Authored by Simon Black via SovereignMan.com,

    His remarks started off like dozens of presentations that I had heard so many times before. . .

    “Without silver,” began the speaker, “our entire society would go back to the Stone Age.”

    The speaker was the CEO of one of the largest silver mining companies in the world, and he was a special keynote at the annual closed-door meeting of the Atlas 400.

    CEOs of mining companies almost always start their presentations talking about how important their mineral is.

    “If we didn’t have cobalt we would all be cave men again. . .” or “Without molybdenum our modern technology would cease to exist.”

    It sounds impressive, but the same story applies to just about every industrial commodity in the world, from copper to lumber to recycled steel.

    It’s hardly an original argument and doesn’t impress me enough to be bullish on their mineral.

    The real investment thesis about silver is that it’s a precious metal that has industrial qualities and a long-standing tradition of value.

    Like gold, silver was an ancient form of money. And for good reason.

    Out of the 118 known elements that exist on the periodic table, gold and silver share certain chemical properties that made them ideal as a medium of exchange to our ancestors.

    Gold and silver are solid at normal temperatures (as opposed to Helium). They’re not radioactive (like Plutonium).

    They’re not explosive when they come into contact with water (like Cesium), nor do they rust when they get wet (like Iron).

    Most importantly, gold and silver are rare enough to be valuable, but not so rare that it would be almost impossible to mine more.

    Between the two, gold is obviously more rare… hence the higher price.

    There’s an old estimate from the US Geological Survey from the late 1960s suggesting that the ratio of silver to gold in the earth’s crust is about 21:1.

    (So assuming that’s true, the theoretical price ratio between the two should be around 21:1)

    And in ancient times the price ratio between the two metals was frequently in the range of about 15:1, i.e. one ounce of gold was worth 15 ounces of silver.

    Today the ratio is about 75, based on a gold price of about $1230 per ounce, and a silver price of $16.35.

    This is fairly high even by modern standards as the long-term average over the past several decades is about 50.

    This would suggest that silver should in increase in price relative to gold in order for the ratio to return to its historic average.

    (A ratio of 50:1 would imply a silver price of $24.60 based on a gold price of $1230.)

    Now, all of this is an argument that many of us have heard before.

    But I did learn something over the weekend from the mining CEO; he told us that the current mining production ratio between the two metals is about 9:1.

    This means that 9 ounces of silver are mined for every 1 ounce of gold that’s mined.

    This is very interesting from a supply/demand perspective.

    According to the Silver Institute, demand for silver hit an all-time high in 2016.

    But the price of silver, at least relative to gold, is hovering near a multi-year low at 75:1. (Again, the historic average is around 50:1).

    Moreover, even though the price is 75:1, the new supply of silver is only 9:1.

    In theory if the new metal supply is 9:1, then the price should be 9:1 (which would be a silver price of $136.67).

    Obviously that’s a purely academic postulate; reality rarely conforms to theory. And the mining CEO wasn’t projecting a $136+ silver price.

    But it seemed clear to him that there’s an unsustainably wide gulf between the gold/silver price ratio versus the gold/silver supply ratio, especially when silver demand is at an all-time high.

    Commodity prices tend to move dramatically when the market realizes there’s a serious supply/demand mismatch.

    That seems to be the case with silver right now.

    And while it would be silly to expect $100+ silver, there are certainly credible reasons why the ratio should close the gap and move MUCH lower.

    Do you have a Plan B?

  • Kushner Companies Seen Hawking Shady US-Visa-Buying-Residency Program To Wealthy Chinese

    Authored by Mike Krieger via Liberty Blitzkrieg blog,

    When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.

     

    – Frédéric Bastiat

    I’ve written about the EB-5 visa program previously, something I consider a total racket that allows wealthy foreigners to buy their way into U.S. residency while funding real estate catering to, you guessed it, wealthy Americans. It’s more or less a system by which really rich people abuse a government program simply to help out other really rich people. What a country.

    This wasn’t always the case. In fact the EB-5 visa program was originally meant to connect wealthy foreigns with projects to help the less fortunate here at home. Naturally, the entire thing has been completely corrupted.

    As I noted in the 2015 post, More American Cronyism – U.S. Government Selling Visas to Fund Luxury Apartment Buildings:

    Merging, on paper, the affluent midtown neighborhood and the struggling one uptown placed Hudson Yards in a community with an overall high unemployment rate, positioning developer Related Cos. to gain low-cost financing from foreigners seeking green cards.

     

    The program through which that happens, known as EB-5, enables foreign nationals to obtain U.S. permanent-resident status by putting up money for new business ventures that create American jobs. It gives ventures in high-unemployment and rural areas a special status to encourage investment. But as the program’s popularity has soared in recent years, the bulk of immigrant investment is going to projects that are located, like $20 billion Hudson Yards, in prosperous urban neighborhoods.

     

    At least 80% of EB-5 money is going to projects that wouldn’t qualify as being in Targeted Employment Areas without “some form of gerrymandering,” estimates Michael Gibson, managing director of USAdvisors.org, which evaluates projects for foreign investors.

     

    Increasingly, the money appears to be flowing to the flashiest projects, which the investors often see as safest, EB-5 professionals say. Among those getting EB-5 money are an office building set to host Facebook Inc. near Amazon.com Inc.’s Seattle headquarters, a boutique hotel in high-end Miami Beach, and a slim Four Seasons condo-hotel in lower Manhattan that sports a penthouse with an asking price above $60 million. In all of them, geographic districts were crafted to include higher-unemployment areas. 

    The Kushner Companies have been taking advantage of this program for years, and continue to do so despite Donald Trump being the current U.S. President.

    As reported by The Washington Post:

    Over several hours of slide shows and presentations, representatives from the Kushner family business urged Chinese citizens gathered at a Ritz-Carlton hotel to consider investing hundreds of thousands of dollars in a New Jersey luxury apartment complex that would help them secure what’s known as an investor visa.

     

    The tagline on a brochure for the event: “Invest $500,000 and immigrate to the United States.”

     

    And the highlight of the afternoon was Meyer, a principal for the company, who was introduced in promotional materials as Jared’s sister.

     

    The event underscores the extent to which Kushner’s private business interests have the potential to collide with his powerful role as a top official in his father-in-law’s White House, particularly when it comes to China, where Kushner has become a crucial diplomatic channel between Beijing and the new administration.

     

    The EB-5 immigrant investor visa program that Meyer discussed Saturday allows rich foreign investors who are willing to plunk down large investments in U.S. projects that create jobs to apply to immigrate to the United States.

     

    Bloomberg News reported in March 2016 that the program has been used to the benefit both the Trump and Kushner family businesses. Before joining the White House, as chief executive of his family’s real estate company, Jared Kushner raised $50 millionfrom Chinese EB-5 applicants for a Trump-branded apartment building in Jersey City, according to the report.

     

    The EB-5 program has been criticized by members of Congress from both parties who have said the program in essence sells visas to the wealthiest foreigners.

     

    The program has been extremely popular among rich Chinese, who call it the “golden visa” and are eager to get their families — and their wealth — out of the country. The fact that some use it to move their money out illegally, however, has made the program unpopular with the Chinese authorities.

     

    The program was launched with the goal of securing investment and creating jobs. But instead, in recent years, many real estate developers have used the program as a source of cheap financing by using foreign investors, especially from China, for flashy projects in Manhattan and other city centers.

     

    A Government Accountability Office report in 2015 found the EB-5 program carried a high risk of fraud, was rife with counterfeit documentation and had “no reliable method to verify the source of the funds of petitioners.”

     

    The program, however, is especially popular in China, with estimates in recent years showing that more than 80 percent of EB-5 visas were issued to Chinese investors.

     

    Saturday’s event in Beijing was hosted by the Chinese company Qiaowai, which connects U.S. companies with Chinese investors. Qiaowai is working with the Kushner company to secure funding for Kushner 1, the New Jersey project presented to investors, also known as One Journal Square. Promotional materials tout the buildings’ proximity to Manhattan and note that the project will create more than 6,000 jobs.

     

    At Saturday’s event, attendee Wang Yun, a Chinese investor, said the Kushner family’s ties to Trump were an obvious part of the project’s appeal.

     

    “Even though this is the project of the son-in-law’s family, of course it is still affiliated,” Wang said.

     

    Although the event was publicly advertised in Beijing, the hosts were exceptionally anxious about the presence of reporters.

     

    At one point, organizers grabbed a reporter’s phone and backpack to try to force that person to leave. Later, as investors started leaving the ballroom, organizers physically surrounded attendees to prevent them from giving interviews.

    The day after the above described Beijing event, the Kushner Companies held another in Shanghai.

    The New York Times reported:

    Kushner Companies’ China roadshow, promoting $500,000 investments in New Jersey real estate as the path to a residency card in the United States, moved to Shanghai on Sunday after a similar pitch on Saturday in Beijing. Security was tighter in Shanghai than it had been in Beijing, where reporters for The New York Times and The Washington Post briefly attended the event before being kicked out.

     

    At the event in Beijing, Mr. Kushner’s sister, Nicole Meyer, cited her brother’s service to the company, which he led as chief executive until January. She said the project in Jersey City “means a lot to me and my entire family.”

     

    But some who attended described an investor pitch similar to the one in Beijing, and Mr. Trump’s political power was palpable at the Shanghai event even if his name went unsaid. As on Saturday in Beijing, one slide that was presented to the Shanghai audience, describing who will decide the future of the visa program for foreign investors, included a photograph of Mr. Trump, as shown by a snapshot taken by an audience member.

     

    Although the program was created as a way to finance projects in economically troubled neighborhoods, it has instead turned into a form of cheap financing for luxury real estate developers. Applicants are primarily seeking the visa, so they typically do not seek a significant return on their investment.

     

    The United States Government Accountability Office, the investigative branch of Congress, has criticized the visa program for its lax safeguards against illicit sources of money.

     

    Many people in China worry that the window for obtaining an EB-5 visa may be closing. Although Mr. Trump has softened his language considerably in recent weeks, he was a vociferous critic of China during his presidential campaign. He has said he will take a tough line on immigration, although he did not take aim at investors in real estate projects.

     

    The Kushner project promoted to Chinese investors, called Kushner 1, includes two towers and nearly 1,500 luxury apartments, with construction to begin early next year.

    Like so much else in this fake economy, the EB-5 visa program is an unethical racket that uses a government program originally designed to help struggling communities to further help the already wealthy by funneling cheap financing to luxury property development. It’s just another example of how screwed up our incentives are as a nation, and how completely corrupt the American Banana Republic has become.

    For more on the topic, see the following article published by Bloomberg earlier this year: Rich Chinese Race to Apply for a U.S. Golden Visa.

  • Some Chinese Banks Suspend "Interbank Business" As Regulator Demands That Collateral "Actually Exists"

    With “risk” in most of the developed world seemingly a long forgotten four-letter word, as seen by today’s plunge in the VIX to a level not seen in 34 years, traders hoping for some “risk event” have been confined to the recent turmoil in China, where overnight not only did trade data disappoint, with both imports and exports missing, but bond yields jumped to the highest level since 2015, dragging stocks lower even as the local commodity crash slammed iron ore and copper to new YTD lows.

    While largely a “controlled” tightening, meant to contain China’s out-of-control shadow banking system, the recent gyrations in Chinese capital markets are starting to have a profound impact on local funding, resulting in a collapse in new bond issuance, and according to FT calculations, in April the number of aborted issues rose to 154, up from 94 in March, 32 in February and 31 in January. 

    As DB added, “local bond markets are practically shut for corporates. In fact, YTD issuance is down 40%+ yoy and net issuance has been negative in three out of the first four months this year. A number of issuers are being forced to cancel bond issuances (over RMB100 billion YTD) and there were reports (Bloomberg) of even CDB halting issuance (though subsequently denied). Some AA corporates are now issuing at north of 7%.”

    These signs of mounting stress in China’s $9.3 trillion bond market come less than a month after the country’s banking regulator, Guo Shuqing, was quoted as supporting a campaign to sort out chaotic practices, and threatening to resign if the banking system became “a complete mess”.

    Overnight, Deutsche Bank’s China analyst Harsh Agarwal noticed the “gyrations” in the bond market, and compared the current selloff in onshore bonds to the similar episode one year ago, saying “this time, it’s sharper and longer – AAA yield & spreads are almost 200bp and 100bp wider respectively in the past 6 months or so – because of China’s focus away from growth to deleveraging. This is far from over in our view. Every day we see headlines on new regulations trying to control leverage in different parts of the system – WMPs, insurance companies, banks, etc. Having said this, we do believe in China’s ability to make a U-turn quickly if the situation goes beyond control, and see these changes as a long term positive, hence we are not overly worried as of now.”

    Maybe not as of now, but Agarwal is surely getting more concerned with every incremental negative news out of China, even as the PBOC refuses to inject more liquidity, as it just did moments ago when for the third day in a row, the central bank skipped open market operations.

    Meanwhile, confirming that Beijing is clearly concerned about developments behind the scene, potentially culminating in the worst possible case for China’s banking system – a shadow bank run -China Banking Regulatory Commission said in guidelines on banks’ collateral management posted on its website.

    Commercial banks should carry out pressure tests on collaterals at least once a year, China Banking Regulatory Commission (CBRC) posted new guidelines on banks’ collateral management, among which that banks should revalue collateral at least once a year; and that banks are being urged to prevent risks in the collateral business. Of course, since this is the country where due to “infinite rehypothecation” of collateral, thousands of tons of copper and aluminum were “found” to be missing at China’s Qingdao Port, urging Chinese banks to engage in collateral “quality control” seems like a lost cause.

    In fact, the banking regulator itself appears to be in on the joke, because as Bloomberg’s Tom Orlik points out, the CBRC requires that collateral accepted by banks must actually exist, as explicitly stated in Chapter 3 on “Risk Mangement” in the just released Collateral Guidelines:

    Article 15 The collateral received by a commercial bank shall meet the following basic conditions:

    • the collateral is real;
    • the relationship between the collateral is clear, the mortgage (pledged) has the right to dispose of the collateral;
    • the collateral conforms to the laws and regulations or the national policy requirements;
    • the collateral has a good ability to achieve liquidity.

    That’s not all.

    In a subsequent notice posted in the Securities Times, the Chinese outlet reports that some Chinese rural banks have suspended their interbank businesses including negotiable certificates of deposit (or NCDs) “temporarily” while regulators conduct spot checks. It further adds that at the end of March total interbank liabilities of 25 banks listed in China’s stock market dropped by 1.54t yuan from end-2016, report says, citing Wind Info data, suggesting a sharp contraction in shadow funding.

    While it was not immediately clear what the underlying catalyst for the unexpected move was, recall that at the end of March, Deutsche Bank reported that in the most recent troubling trend involving Chinese banks, numerous smaller banks had become acutely reliant on such shadow banking funding mechanism as Certificates of Deposit, which had become the primary source of short-term funding for many of China’s banks mid-size and smaller banks.

    As DB further explained, the banks most exposed to a shut down in this “shadow funding” pathway are medium-sized and small banks, for whome as of 1H16, wholesale funding made up 31% and 23%, a number that has risen substantially in the interim period.

    As Deutsche reflected just over a month ago, “we view banks that are more reliant on CDs as more vulnerable to rising rates and tighter regulations.”

    Reflecting tighter liquidity, the interbank CD rate has rallied
    strongly, with the 6-month CD pricing at 4.6% on average. Some CDs
    issued by smaller rural commercial banks have been priced close to 5%
    recently    . This would have pushed up the funding cost and notably for
    smaller banks. If banks invest in low-risk assets such as mortgages,
    discounted bills and treasury bonds, this would lead to a negative
    spread. Alternatively, banks can lengthen asset duration, increase the
    risk appetite, add leverage or slow down asset growth. Among these
    alternatives, we believe a slowdown in asset growth is the most likely    .

    And while it is tangential, here is a list of the banks most exposed to a sudden cardiac arrest involving CDs: INDB, SPDB and PAB are among the most exposed to interbank CDs.

    We would not be surprised if these are among the banks that as of this evening have “suspended their interbank businesses.”

    Which again brings us to the most important question: “Are we close to a “tipping point” in China?” For those who missed the answer the first time, here is Deutsche Bank’s conclusion as of mid-March. Note: since then the liquidity situation in China has gotten far more precarious.  Here’s Deutsche:

    For now, probably not, especially in a year of leadership transition. In our view, the risk of an uncontrollable liquidity event is low, as the PBOC will do whatever it takes to inject liquidity if needed. In the domestic liquidity market, the PBOC exerts strong influence in both the volume and pricing of liquidity. With 90%+ of financial institutions directly or indirectly controlled by the government, PBOC will likely continue to give liquidity support. In 2H15, the central bank established an interest rate corridor to contain interbank rates within a narrow range and pledged to inject unlimited liquidity to support banks with funding needs.

     

     

    However, continuing liquidity injections do not come without a cost. A bigger asset bubble, persistent capital outflow pressure and a lower yield curve over the longer term are side effects that China will have to bear. At the same time, the execution risk of PBOC itself is rising.

    In other words, whether or not China keels over and has a hard (or worse) landing, will depend on the PBOC; when (not if) the central bank gets involved, will depend on how soon China’s banks and various CD-funded financial institutions run out of collateral (whether it exists or not) to sell, such as iron ore, copper, precious metals, bonds and even stocks. This will hardly come as a surprise. As we showed last month, the only reason the Chinese banking system hasn’t imploded, is due to nearly CNY 10 trillion in central bank liquidity support for the local banks, just under 100% of China’s GDP.

     

    One thing, however, is certain: with western central banks refusing to let the market clear on its own, or deflate the $14 trillion liquidity bubble which has suppressed price formation for the past 8 years, the PBOC is merely doing what all of its “civilized” peers have been doing for years – kicking the can, and praying.

    Until then, however, things may be about to get a whole lot worse for China’s capital and commodity markets.

  • 'Hate Speech' Hypocrisy

    Presented with no comment…

     

    Source: Townhall.com

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May 08

Today’s News 8th May 2017

  • The One Thing We Can't Forget About North Korea (And Everywhere Else)

    Authored by James Holbrooks via TheAntiMedia.org,

    “It was easy enough to spot my cheerleader: She was the only person shouting in a crowd of quiet, curious, shy supporters. Her visage dug with deep wrinkles, but she was full of energy and smiles. When I saw her, I merged to the right and gave her a high-five. When I did, a group of women started to cheer me, (‘Bali! Bali!’), and a bunch of kids ran toward me to get their own high-fives. The ice was broken.”

    Nick Busca was a foreigner running a marathon, and up until that point, as he describes in an enlightening Quartz piece that ran Friday, the host country’s citizens had been standoffish. But as Busca would later explain, once the connection was made on the human level, everything else fell away.

    Considering this first-hand account — particularly within the context of the current mainstream news headlines — it may surprise readers to know that the host nation Busca is describing is North Korea.

    The marathoner opens his story with pain, explaining how his training had been inadequate for the Southeast Asia climate. Busca was in “all sorts of trouble,” he writes, when he heard his cheerleader’s words.

    “Bali! Bali!,” incidentally, means “Quicker! Quicker!”

    Busca explains that while he was still in physical agony, the simple human gestures were enough to bring his mind back into focus:

    “However, those few words of encouragement were able to distract me temporarily from the pain and bring me back to (sur)reality: I was running the North Korea Marathon.”

    This wasn’t the first time Nick Busca had run the Mangyongdae Prize International Marathon, which is held annually in the North Korean capital city of Pyongyang. He’s been running the 42-kilometer race for the past three years and says the positive feedback he got from locals this year is by no means atypical.

    “It wasn’t the first time I had bonded with fellow amateur athletes in North Korea,” he writes for Quartz. “In 2014, I found myself talking to an engineering student on a chairlift at the Masik Pass Ski Resort; on the flight there from Beijing, I also chatted with a few members of a women’s soccer team who were coming back from a tournament in Asia.”

    Continuing:

    “The day after this year’s marathon, with our legs begging for mercy, my tour group visited a soccer academy and played with six- and seven-year-old children. In all of these occasions, when the language barrier kept our cultures apart, sports functioned as a catalyst for social interaction.”

    Busca points out that the Olympic charter, which the marathoner notes is held up as “the pinnacle of how we value sports,” promotes a “peaceful society, the preservation of human dignity, and the celebration of friendship as its main values.”

    He also reminds readers that even among bitter enemies, sports can act as a vehicle to find common ground as negative, even violent tendencies among participants are being expressed in “a war with the bloodshed of real conflicts.”

    But perhaps the most deeply penetrating part of Busca’s narrative comes when he’s addressing the problems with the isolated country.

    Acknowledging the demonization of the Kim Jong-un regime in the press and admitting that sure, a lot of what’s being said may be true, the runner says it’s difficult to consider all the negativity when encountering the actual people of North Korea — and that if you do choose to condemn, then you should direct that condemnation toward those who actually deserve it.

    “It is hard to travel there without having these kinds of reports in my mind,” Busca writes of the Hermit Kingdom, “but through my journey, I learned that even when we legitimately condemn a regime, we must keep the top of its political pyramid separated from the bottom.”

    Then, in moments of almost stunning clarity — sad commentary on an age where reports of drone strikes killing civilians barely register a response from the public — Busca states what would be common sense in a sane world:

    “A country’s people may be subjugated to the decisions of their government, but they have their own lives and values — and deserve more than being held to the same ethical judgments we hold their leaders.”

    It must be noted here that the same logic should apply to the people of any and all nations.

    If you truly believe Bashar al-Assad is an evil dictator who gasses his own civilians, then hate him – but don’t let that hatred spill down to the women and children who are being blown apart by bomb-dropping robots in Syria.

    If you truly believe Saddam Hussein was a ruthless authoritarian who deserved to be ousted and eventually hanged, then run with that. But don’t for a second believe that the people in the streets of Baghdad had anything to do with the atrocities you associate with their country’s leader.

    Even in the United States, where Congress’ popularity stands somewhere between cockroaches and herpes — and the sitting president is the most unfavorable of all time — the public feels detached and in disagreement with the government on many issues.

    And if you choose to believe that North Korea is a nuclear threat to its surrounding neighbors, terrific. But try your best to not forget this one thing: The human beings living under Kim Jong-un’s rule play no part in the decision-making.

    I’ll close here with one of Busca’s lines that echoes the feeling he started the piece off with: pain.

    Because for many of us, the drone strikes do register. The innocent dead are felt. We didn’t know them, but we know they didn’t deserve to die. And so, their pain, and the pain of the loved ones left behind becomes ours. Or, as Nick Busca so truthfully states:

    “By the 30km mark, it doesn’t matter what country you’re from or what kind of life you live: You just want it to stop.”

  • War And Empire: The American Way Of Life

    Authored by Paul Atwood via The Strategic Culture Foundation,

    A few months ago I received a message from a professor at the Khomeini Institute for Education and  Research in Tehran, Iran, informing me that my 2010 book “War and Empire: The American Way of Life” (London, Pluto Press) had been translated into Farsi. He requested that I write an Introduction for Iranian readers. What follows is that Introduction. Two years ago the Xinhua Peoples’ Press in Beijing, China also published a translation in Mandarin.

    In the aftermath of Saddam Hussein’s 1991 attempt to annex Kuwait the U.S. deliberately destroyed much of Iraq’s water and sewer infrastructure. The Pentagon even admitted on its website that these acts would lead to mass outbreaks of disease. These were certifiable war crimes under international law. After Saddam’s defeat the U.S. also imposed widespread sanctions on his regime that included preventing necessary medicines from reaching Iraq. Hundreds of thousands of Iraqi citizens perished as a result. In an infamous interview in 1996 Madeleine Albright, then the Secretary of State, was asked to justify the deaths of 500,000 children. She defended these atrocities by saying “I think this is a very hard choice but we think the price is worth it.” Twenty-one years have elapsed since Albright uttered her rationalization of this vicious barbarity and it has been virtually “disappeared” from the collective memory of Americans. But it is far from being the only one.

    Today much the same is being visited upon the children of Mosul, Syria and Yemen. Fifty thousand more marines are slated for deployment to Afghanistan and the new Defense Secretary’s bellicose rhetoric threatens Iran.

    When I undertook to write this book I could not imagine that it would ever be translated into Farsi or Mandarin Chinese. Over the course of my teaching career I had become increasingly concerned about the vacancy of knowledge about their nation’s past on the part of my students and by extension many millions of my fellow American citizens. This condition of ignorance is the effect of the incomplete and, too often, dishonest orthodoxy in required school texts and by the distortion of the real past by popular culture, Hollywood films and corporate controlled network television, especially the purported “news.” George Orwell was correct. “Who controls the present controls the past.” What the majority of Americans are conditioned to think they know about their past (and that of many other peoples) is myth, and too often, sheer illusion. Misdirection and manipulation about proclaimed threats from abroad since 1945 has led directly into wars and unjust armed interventions and coups in many other nations. The results are always tragic on a colossal scale.

    None of this is accidental or new. Since the end of World War II the U.S. ruling elites have set forth an agenda claimed to foster what they call a “liberal world order” in which democracy and human rights for all are the declared goals. But little about real U.S. actions in the world supports these claims. Washington has overthrown elected governments and waged catastrophic war upon helpless civilians in many nations since 1945. The public is told that national security and “vital interests” are at stake and the corporate controlled media ensure that key realities are omitted, or distorted. It is no secret that today much of the human species is living in existential crisis-whether from war, economic exploitation or dire effects of climate change- and  the profound ignorance about how the past shapes the present is a major factor in our failure to fashion a more peaceful and beneficial future. This volume is simply an attempt to illuminate much of the hidden history of the United States in the hope that more citizens in the United States will realize that we cannot continue on this destructive path and must find a way to cooperate with other nations instead of seeking to dominate them or outcompete them in a self-defeating contest for diminishing resources. Many American officials pay lip service to international cooperation but they really mean collaboration with the overarching American agenda.

    The words of those who have formulated the grand strategy for American global dominance since the U.S. emerged as the most militarily dominant nation after WWII must be taken seriously but desires for global dominance were evident long before. Consider the oft-quoted language of George F. Kennan, the U.S. State Department’s architect of the Cold War with the Soviet Union immediately after World War II. In a top secret document circulated only to other key officials he took notice of the fact that the American population was (in 1948) only 6.3% of the world’s but that the U.S. effectively controlled about 50% of the world’s resources. The object of U.S. policy, he declared, should be to maintain that disparity and employ “straight power tactics” to enforce this global inequality, while avoiding all rhetoric about commitment to human rights, raising other peoples’ living standards, democratization and the like. Kennan’s vision, coupled with the U.S. creation of the World Bank and International Monetary fund, anticipated a globalized economy under firm control by American and allied European banks and industries, and backed by American firepower.

    Much closer in time to the present is the comprehensive plan for complete American dominance of the planet projected in brutally frank and exacting detail by former national security chief Zbigniev Brzezinsky in his book, The Grand Chessboard: American Primacy and Its Geo-strategic Imperatives.

    Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Asia would dominate two of the three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination…About 75 percent of the world’s people live in Eurasia and most of the world’s wealth is there as well…Eurasia accounts for about three-fourths of the world’s energy resources.

    Upon assuming the presidency of the U.S. in 2001 George W. Bush filled his administration with so called Neo-Conservatives, members of the Project for a New American Century, who, with their allies in the Pentagon, called for nothing less than “full spectrum dominance” of planet Earth. Exploiting the hysteria mounted in the U.S. after the events of September 11, 2001 Bush II then proceeded to call for all-out war against what he termed the “axis of evil.” General Wesley Clark, a 2004 Democratic Party candidate for president, later revealed that the Bush, Cheney, Rumsfeld Administration had secret plans all along to overthrow the governments of Libya, Syria, Lebanon, Somalia and Sudan, and “finish off” Iran. All that was needed was a “new Pearl Harbor” and the events of September 11, 2001 provided that pretext, launching a state of permanent war primarily against the Muslim world.

    Citizens of the U.S., like myself, who have long studied these matters and have opposed our nation’s imperial policies know that what these men, and many others like them, have proposed is exactly what they accused Nazi Germany and Communist Russia of attempting. Of course, proponents of what the first Bush deemed the “New World Order” in 1991 allege that this American imperium will constitute a radical departure from past empires and will instead usher in and guarantee a new age of democracy and human rights for all humanity. They assert this even as their bombs and those of their allies shatter the lives literally of millions in the Islamic world.

    The U.S. began its history as a colony of the early British Empire and an outpost of nascent capitalism though this essential fact is de-emphasized in standard accounts in favor of the claim that the primary incentive for the colonial project was “freedom of religion.” The earliest British colonies in North America, Virginia and Massachusetts, were established as joint-stock companies, precursors of the modern corporation, to return profits to the mother country from resources of fish, game, furs, lumber and later, tobacco, cotton and the industries that followed. Acquisition of these valued assets required the conquest, displacement or extermination of the native populations already living here. The name, Massachusetts, for example, the state where I live, is all that remains of the people who once inhabited the area of what is now Boston. Later, the profits derived from forcible acquisition of the land, and the slave labor to cultivate it underwrote the industrial revolution and this catapulted the United States into position as the richest nation on earth and soon the militarily most powerful.

    Only a century after breaking away from British rule the United States itself leapt upon the stage of empire to compete with other Europeans for dominance in the world, taking the former Spanish colonies of Cuba, Puerto Rico, the Philippines, and Guam by force, and annexing Hawaii. Brooks Adams, the descendant of two presidents, exulted that “this war is the first gun in the battle for ownership of the world.” In the Senate Albert Beveridge proclaimed that “The power that rules the Pacific rules the world.”

    U.S. entry into both World Wars and all subsequent armed interventions is almost always mystified and characterized as a defense of democracy and human rights. In no case was American national security remotely threatened if by that we mean the vulnerability to invasion and military defeat.

    Since the end of World War II the United States has waged numerous full scale wars and many smaller conflicts in the name of national security and claims of principle and high ideals. Americans are unremittingly habituated to believe  Madeleine Albright’s all-encompassing contention that the United States is “the indispensable nation.” The end result of our actions has been many millions dead, maimed, reduced to penury, and desolated with grief. Americans are encouraged to see ourselves as humanitarians yet the widespread denial of our collective responsibility for the raw misery for those on the receiving end of our military firepower is nothing less than indefensible.

    Until WWII the U.S. was perceived, if not exactly as a benevolent friend of Muslim peoples, at least it was not yet seen as one more imperial power set upon exploiting the greater Middle East. This positive estimation changed virtually the moment that war ended and the regional shift toward virulent anti-Americanism originated in Iran.

    During World War II Iran had been co-occupied by Soviet, British and American troops. The Allies violated Iran’s declared neutrality because they thought that the country’s ruler, Reza Shah, was too friendly with Nazi Germany and they wished to use Iranian territory to transship supplies from the Persian Gulf to the USSR. The British owned Anglo-Iranian Oil Company (now British Petroleum) had virtually monopolized production and profits from the industry and the Allies also wanted to prevent the country’s oil reserves from potential access by Germany. The three nations had agreed to withdraw from Iran within six months after the war’s end. In March of 1946 Soviet troops had still not withdrawn and Washington claimed that this was evidence of Stalin’s desire to expand communism and threaten the entire region. The reality was that the Soviet Union had suffered immense damage from the war and needed energy supplies to rebuild. Russians wanted some guarantee from Iran that they could purchase a certain quota of Iranian oil for this purpose and sought to gain an oil concession in the Azerbaijani region of Iran, which bordered the Soviet Republic of Azerbaijan. Washington and the Iranian government feared that the Soviets might act to annex the territory when Iranian Azerbaijanis declared a separate republic. President Truman later claimed that he threatened the USSR with American military intervention. The U.S. State Department advised the Iranian prime minister, Ahmad Qavam, to negotiate and when Iran accepted the oil concession the Red Army withdrew. However, the Iranian parliament, the Majlis, later disavowed the agreement.

    These actions undertaken by Washington constituted the first direct American intervention in the Middle East as well as the first skirmish of the post-WWII Cold War. Anti-Soviet rhetoric claimed that the Soviet Union was bent on “world conquest” and pointed to the occupation of Eastern Europe by the Red Army. Omitted was all mention of the fact that as Nazi Germany had marched through the nations of Eastern Europe it had subjected their governments and made them allies. Then many waged war themselves against the USSR. Thus, the Red Army was occupying those nations for the same reason the United States and Britain were occupying Germany, Austria and Italy. American elites had plans for the reconstruction of Europe that would reintegrate the entire region into a revived capitalist order under American authority and communist Russia’s occupation of Eastern Europe was seen to obstruct those goals. No consideration was given to the very real security concerns that the Soviets had, especially about their eastern borders from whence twice in the early 20th Century they had been invaded.

    In fact, Russian non-actions at the time, not only with respect to Iran, indicated exactly the opposite of what Washington wanted the world to believe. The Red Army could easily have re-entered Iranian territory after the Majlis reneged on the oil concession and there was nothing, short of the atomic bomb that could have dislodged them. But it did not. Within a few years Soviet troops also withdrew from Austria and Manchuria quite in contradiction to the American assertion that they were intent on global conquest. There was no evidence whatever of Soviet designs to expand beyond what it declared to be its security zone in Eastern Europe. The U.S. had committed itself to an adversarial relationship with its former ally, in the absence of which the Nazis would never have been defeated, and it had initiated its long-term intervention into the internal affairs of Iran and many other nations, which, of course, continue to this day.

    When the Shah was overthrown in 1979 few Americans had any sense of why this occurred, especially because most journalists supinely omitted any reportage of crimes committed by the “king of kings” against the Iranian people. The public had been conditioned to believe for decades that Mohammed Reza Shah Pahlavi was a benevolent sovereign, beloved by his people, a staunch ally of the United States, and a pillar of stability in the region. Most had no sense that the Shah was installed by the Central Intelligence Agency when it conspired with other Iranians to topple the elected government of Prime Minister Mohammed Mossadegh in 1953 because he had the temerity to insist that the oil resources of his nation were the birthright of the Iranian people rather than the property of western oil companies. The public had no understanding of how brutal the Shah’s dictatorship was in fact and no comprehension of the role Washington had played in enabling his feared secret police, the SAVAK, to terrorize all Iranians who objected to his policies. To the extent that the general public took any notice at all of Iran they accepted the claim that the Shah was America’s “policeman in the Gulf,” aiding the United States in its efforts to “contain” the threat of the Soviet Union.

    The real menace to the interests of American corporate elites emanated from the upsurge in nationalism among all peoples around the globe who had been victims of western colonialism. World War II effectively finished Europe’s empires and nations from Indonesia, Vietnam, India, to  Kenya, Congo, Guatemala, Cuba, Chile and many others were rising in the post-war period to obtain independence, and who, like Iran in the early 1950s, sought to nationalize their resources. From the perspective of the would-be American overlords this was their cardinal sin. Such appropriations of national reserves like Vietnam’s independence movement, Egypt’s nationalization of the Suez Canal, Mossadegh’s actions, or Qassim’s appropriations of oil in Iraq in 1956, if successfully carried out and allowed to stand, would have thwarted the grand strategy of the U.S. to exert American corporate control over such assets, markets and cheaper foreign labor and the immense profits that would acrue to American industrial and banking giants. Since communist ideology also promoted national independence for western colonies intense government and media propaganda convinced the American citizenry that resistance to the American agenda and global turmoil was all the work of the Soviet devil.

    Even before WWII ended key members of the ruling elite sought preventive measures against a return to depression and mass unemployment. Sixteen million veterans were returning to civilian life. Would they face renewed unemployment and soup kitchens as so many had in the Great Depression of the 1930s? The director of war production, who had formerly been chief executive officer of the General Electric Company, a giant in what President Dwight Eisenhower would later designate the “Military-Industrial Complex,” argued that the U.S. needed a “permanent war economy.” Many of the massive corporations that now dominate the American political economy either grew exponentially during WWII or got their start as a result of government contracts financed by new taxation and borrowing. Only such massive government intervention put citizens back to work or in the military regiments. Given the nature of capitalism few among elite decision makers in the postwar could imagine restructuring such production to meet purely domestic purposes primarily because there was less profit to be made. War or the manufactured threat of war is the lifeblood of the military corporations and their financiers.

    Thus the ally that had been indispensable in the defeat of Nazism overnight became the new menace to American national security, despite the fact that the USSR had suffered upwards of 30 million deaths and its principal cities lay in ruins. From that moment on the “Cold War” became the ideological organizing touchstone of American society. Even then many citizens resisted the new precepts. Henry Wallace, who had been vice president under Roosevelt, led the popular movement for cooperation between the two post-war giants but he was reviled by the high priests of political orthodoxy as a “fellow traveler” of the communists, as were any who dissented from the new agenda.

    Inside the inner sanctum of the new “National Security State” a top secret document, NSC-68, specified a comprehensive blueprint to militarize American society, called for a tripling of taxation to expand the military budget and achieve nuclear supremacy by creating the hydrogen bomb. Even so the populace resisted until in the words of Secretary of State Dean Acheson “Thank God Korea came along.” Though Acheson himself had declared that Korea was outside of America’s “defensive perimeter,” warhawks in Washington and on Wall Street declared that the civil war between Korean factions on the other side of the planet imperiled the “free world.” What actually was at risk was the new militarized superstate, and the tax guaranteed profits to the corporations embedded in the war economy. The war that followed left 3 million Koreans and 37,000 US soldiers dead, threatened China with nuclear destruction, leading the Chinese to deploy their own nukes in short order.

    To cite only some cases, from 1947 to the present the United States has intervened politically or violently in Iran, China, Ukraine, Italy, Greece, Egypt, Vietnam, Guatemala, Indonesia, Congo, Cuba, Brazil, Dominican Republic, Cambodia, Laos, Chile, Nicaragua, El Salvador, Honduras, and most recently has intruded brutally in Afghanistan, Iraq, Libya, Yemen, Somalia and Syria. Though internal domestic opposition to American interventions and wars has always surfaced the majority of the public historically succumbs to the incessant propaganda projected by U.S. governments of either party and their corporate allies and the media that military action is necessary for reasons of national security or to protect favored allies.

    Recently “humanitarian intervention” has surfaced as justification for American deployments in Muslim countries. The doctrine’s principal exponent, former UN ambassador Samantha Power, was instrumental in toppling the Libyan regime of Muammar Qaddafi, with catastrophic results for innumerable civilians. Along with her boss Hillary Clinton, and National Security adviser Susan Rice, these “gentle” women also encouraged the Obama administration to support and arm the rebellion against the Assad regime in Syria leading to today’s incessantly violent chaos, uncountable deaths, the outflow of hundreds of thousands of refugees and the destabilization of numerous nations from Africa to Europe.

    In 1991 the pretext of the communist menace disappeared with the dissolution of the Soviet Union. That brief window of peaceful cooperation closed rapidly and Russia was soon demonized again as the principal menace to “liberal order.” The Trump Administration won election in great part because it promised a more cooperative relationship with Russia, one of the only ray’s of light in that dismal campaign. But what is now termed the American “deep state” is fostering a renewed condition of militarized tension with that nation. Trump also promised millions that he would renew the American economy and bring back jobs for millions who feel betrayed and impoverished by the flight of investment capital overseas in search of cheaper labor and the robotization of such industries that remain. “America First” is Trump’s watchword. Yet he has turned management of the U.S. economy over to the very bankers who orchestrated the swindles that led to the near collapse of the world economy in 2008.

    As I write these words Trump has launched missiles at a Syrian airfield, employed the U.S.’s deadliest weapon short of nukes in Afghanistan, bombed Yemen, and sent troops to Somalia. His Secretary of Defense, former General James Mattis, affectionately called “mad dog” by his troops, threatens Iran, falsely accusing it of violations of the recently signed agreement on nuclear proliferation. Trump is recklessly threatening North Korea, potentially creating an extreme risk of a nuclear event that would certainly also engage China. He has called for an increase in military spending that by itself is almost larger than the entire military budget of any other country. Despite promises of prosperity for all the taxes to fund all this will fall on the shoulders of the broad American middle class and generations to come, not on the giant corporations that are all but tax exempt– as it appears Trump himself has been for decades. Rather than sanely reducing the risk of war as he promised his presidency looks increasingly worrying. As his foreign policies take shape they are indistinguishable from those of his Democratic Party opponents and the global dominance doctrines of Bush’s neo-conservatives. They are all fated to fail and unless derailed ensure yet more widespread war and suffering.

  • Iran Threatens To Destroy Saudi Arabia After Saudi Prince Warns Of "Moving Battle To Iran"

    An unexpected war of words erupted between two sworn Middle-Eastern rivals over the weekend, when Saudi Arabia and Iran threatened each other with military action, if not outright destruction.

    It started on Tuesday, when in “unusually blunt comments” delivered during a nationally-televised interview Saudi Deputy Crown Prince Mohammed bin Salman – the man who is now effectively in charge of Saudi oil policy – ruled out any dialogue with Iran and pledged to protect his conservative kingdom from what he called “Tehran’s efforts to dominate the Muslim world.”

    “We know that we are a main goal for the Iranian regime,” he said. “We will not wait until the battle comes to Saudi Arabia but we will work to have the battle in Iran rather than in Saudi Arabia.”

    Iran, never one to leave a lingering belligerent comment by its Saudi nemesis unanswered, responded when its defense minister said on Sunday that Iran would hit back at most of Saudi Arabia with the exception of Islam’s holiest places if the kingdom does anything “ignorant” according to Reuters.

    “If the Saudis do anything ignorant, we will leave no area untouched except Mecca and Medina,” Defence Minister Hossein Dehghan was quoted by the semi-official Tasnim news agency as saying. Taking a jab at the Saudi war in Yemen, the iranian said that “they think they can do something because they have an air force,” referring to Saudi attacks on Iran-aligned Houthi forces in control of the capital Sanaa.

    Dehghan, speaking to Arabic-language Al-Manar TV, was commenting on remarks by Saudi Deputy Crown Prince Mohammed bin Salman, who said on Tuesday any contest for influence between the Sunni Muslim kingdom and the revolutionary Shi’ite theocracy ought to take place “inside Iran, not in Saudi Arabia”.

    Was this just more “run off the mill” jawboning and theatrics, or a prelude to a more serious escalation between the two nations which periodically trade verbal barbs even if neither has been willing to test overt military action against its counerpart? The answer will be revealed in the upcoming OPEC negotiation on production cut extensions, and specifically whether the Saudis will grant Iran – which has been steadily gaining market share at Saudis’ expense during 2017 – another waiver from participation in the mandatory output cuts. Because when it comes to Saudi Arabia, while nationalistic verbal pyrotechnics are for popular consumption, when it comes to oil, and associated revenues – especially ahead of the critical Aramco IPO – nothing could be more serious.

  • Is This WalMart 'Free-For-All' A Taste Of Things To Come?

    by Stefan Stanford via AllNewsPipeline.com,

    In the new story over at Survival Dan called “During The Collapse: Where To Go And What Places To Avoid”, he reports that when IT hits the fan, America’s ‘population hubs’ will likely explode with violence, looting and the total breakdown of law and order as resources become next to impossible to get and the masses suddenly realize the government isn’t coming to save them.

    Whether that be via total collapse, WW3 coming home to roost upon US soil or a ‘grid event’ that leaves tens to hundreds of millions either without power or access to the money in their bank accounts, the video directly below from a WalMart in Mexico gives us a very small taste of what that world without law and order can quickly devolve into.

    Showing what happens when suddenly ‘lawless people’ realize that there aren’t enough security guards in a Wal Mart store to stop them, we witness the kind of all-out ‘free for all’ that we’ll likely see in a collapse event, though the smart people would be carrying out food, toilet paper and other necessities instead of flat screen TV’s. And in an all-out SHTF event, we’d expect that the people will likely be fighting with each other for the few remaining resources as they are now in Venezuela where children are literally starving to death.

    Following Alt Market’s Brandon Smith warning that ‘a full spectrum crisis is about to take place’ a Wal Mart in Mexico gives us a small glimpse of what might happen here once it all comes crashing down amid more signs that what we’re witnessing in Venezuela may be coming to America.

    As commenters on the live leak video clearly point out, we’ve already witnessed events in America similar to what happened in the video above with packs of roving gangs showing up in malls and convenience stores ‘en masse’, taking whatever they want and parading out as if laws don’t matter to them. Knowing such events are already taking place in 2017 America, how much worse might things get when SHTF? As Susan Duclos reported this morning on ANP, parts of America are already a boiling cauldron read to boil over. How many Americans are the frogs in the simmering water?

    In this December 2016 story on ANP called “Map Shows Us Where We Don’t Want To Be When It All Turns Ugly”, we reported that nearly 50% of Americans live in very small geographical locations. According to this story from the Daily Mail, half of the US population live within 146 counties while the other 157 million are scattered across the other 3,000+.

    The map seen directly below gives us a visual representation of what that looks like with the counties seen below in blue making up approx. 50% of the US population while the remaining 50% of Americans live across the rest of the country in counties seen in gray. When SHTF, does anyone want to be in the blue areas?

    As we also reported back in December, the map seen above showing the US counties with the biggest populations coincides quite eerily with the map of US counties won by Hillary Clinton during the last election seen below.

    The next map below from James Wesley Rawles’ Survival Blog shows US cities with approx. 100,000 population in yellow circles with the shaded areas surrounding them indicating the distances from those cities with each shaded increment representing approx 40 miles. Showing that most of the East coast and eastern half of the US are within 120 miles of big cities, it’s easy to understand why videographer The Prepared Mind selects some of the areas seen in the final video below as his ‘go to’ areas for when SHTF.

    As M.D. Creekmore over at the Survivalist Blog has previously brought to the attention of preppers, getting out of the cities may not be possible for some who are tied to their jobs when SHTF and many of the same areas mentioned in that videohave such low populations for a very good reason – a major lack of jobs in areas long ago hit by the globalists economy that has decimated much of America.

    According to Brandon Smith in this recent story over at Alt Market, “I continue to believe that a greater crisis is brewing that is economic and global in nature. With numerous financial bubbles artificially inflated over at least eight years of central bank stimulus, the question is not “if” but WHEN the system will enter the final stages of its ongoing collapse.“

    Smith’s warnings echo the warnings given by Doug Casey who recently stated “a civilization always collapses from within. World War 1, in 1914, signaled the start of the long collapse of Western Civilization. Of course, termites were already eating away at the foundations, with the writings of people like Jean-Jacques Rousseau and Karl Marx. It’s been on an accelerating downward path ever since….”

  • Emmanuel Macron Elected Youngest Ever President Of France With 65% Of The Vote

    Update: As Emmanuel Macron arrived in the courtyard of Paris’s Louvre museum to deliver his victory speech to thousands of supporters, the European Union’s anthem “Ode to Joy” played in the background.

    “Tonight, France won,” he said to rapturous crowds, adding that “Europe and the world are watching us.” Macron said, cited by the Telegraph, that France is facing an “immense task” to rebuild European unity, fix the economy and ensure security against extremist threats.

    “Our task is huge and it will require the courage of truth” he repeated. Speaking to thousands of supporters from the Louvre Museum’s courtyard, Macron said that Europe and the world are “watching us” and “waiting for us to defend the spirit of the Enlightenment, threatened in so many places.”

    “We have the force, the will… we will not give into fear, into lies… to the love of decline and defeat”

    Macron said  “everyone said it was impossible. But they didn’t know France!” and promised to work to unify France after a bruising presidential campaign and serve the country “with love.”

    He also vowed to the French public: “I will protect you in the fact of threats” and said “I will respect what everyone thinks and believes, because I want the unity of our country. I will serve you with humility, strength and in line with our motto: liberty, equality, fraternity… I will serve you with love.”

    His wife Brigitte then came up on stage with him, and she kissed his hand and waved to the crowd.

    * * *

    Live Feed from France 24:

    After an extraordinary election campaign full of twists and turns, Emmanuel Macron won a dramatic victory over Marine Le Pen in the French presidential election, taking 65% of the vote, with Le Pen collecting just over a third according to estimates from four separate French pollsters. Macron, 39, will become the youngest president of France’s Fifth Republic.

    As BBG notes, the firms sampled real votes as they were being counted and weighted their results to reflect the composition of the French electorate. Their projections were all within 1 percentage point. Indeed, all early polls all show Macron with at least 65% of the vote:

    • Elabe: 65.9%
    • Ifop: 65.5%
    • Ipsos: 65.1%
    • Kantar: 65.0%

    Abstention in Sunday’s election was expected to hit 26%, the highest rate since 1969, reflecting a lack of enthusiasm among many voters for the choice on offer.

    Macron was grateful and generous in his victory speech:

    “Thank you from the bottom of my heart to all those who voted for me,” begins Mr Macron in his victory speech. 

     

    “I salute my adversary Ms Le Pen, I know why people chose to vote for an extreme party. I know the doubt, the fear they expressed.

     

    “And it is my responsibility to take on those concerns and guarantee our unity and responsibility for our country.

     

    “From tomorrow we will modernise politics, recognise pluralism, revitalise democracy. This will be my first mission, respecting everyone.”

    Althought there was one small glitch…

     

    Moments after the results were announced, Le Pen conceded to Macron in a phone call and vowed to become major force of opposition,

    “The French have elected a new president and opted for continuity,” Le Pen told supporters just outside Paris. “I wish him success in the face of great challenges,” she said.

    The AFP reports that it has spoken to Macron since the election results. France’s president-elect says “a new page has turned, that of hope and of restored confidence”. 

    The reactions to Macron’s win are coming in fast and hard: French President François Hollande, former Prime Minister Manuel Valls, German Chancellor Angela Merkel, British PM Theresa May are just some of the major political figures and leaders who have been congratulating modern France’s youngest president-elect over the past few minutes.

    • BELGIUM’S CHARLES MICHEL SAYS ‘BRAVO EMMANUEL MACRON’ON TWITTER
    • GERMANY’S SIGMAR GABRIEL CONGRATULATES EMMANUEL MACRON
    • MACRON WIN STRONG SIGN FOR UNIFIED EUROPE: GERMANY’S SEIBERT
    • MACRON WIN A ‘SIGN OF HOPE’ FOR EUROPE, MOSCOVICI TWEETS

    European leaders hailed Macron’s victory as a vote for European unity and a blow to political forces that had sought to build on last year’s Brexit vote to tear apart the European Union.   

    “Your victory is a victory for a strong united Europe and for German-French friendship,” German Chancellor Angela Merkel’s spokesman Steffen Seibert tweeted to Macron shortly after the election results were published.

    Donald Tusk, the former Polish prime minister who chairs summits of European leaders, tweeted: “Congratulations to French people for choosing Liberty, Equality and Fraternity over tyranny of fake news” – an apparent reference to misleading stories about Macron that were spread on social media in the run-up to the vote.

    In a tweet from her spokesperson, British Prime Minister Theresa May warmly congratulated Macron. “France is one of our closest allies and we look forward to working with the new President on a wide range of shared priorities,” she said.

    Italian Prime Minister Paolo Gentiloni tweeted: “Hurrah Macron President! There is hope for Europe!”

    Even President Trump endorsed Le Pen in the election, but just fired off this conciliatory tweet:

    Geert Wilders, who stood as a Right-wing populist in the Dutch elections but lost out to Mark Rutte, has offered his commiserations to Ms Le Pen. He went on to predict both of them would win in the next election.

    As Reuters adds, Europe’s political establishment limped into 2017 fearful that the Trump and Brexit votes, fueled by anger over immigration and rising economic inequality, could be replicated on the European continent in a mega-election year in which the Dutch and Germans were also voting. As a result, the election in France, the second largest economy in the euro zone after Germany, was always seen as the litmus test for European politics. Had Le Pen won, many European officials acknowledged, it may have been the beginning of the end of the EU, Europe’s 60-year-old experiment in closer integration which delivered peace and prosperity for decades before succumbing to a series of crises over the past decade.

    As the FT put it. Macron’s victory is a “phenomenal achievement” for the 39-year-old former Rothschild banker, who has never before held elected office and whose political movement En Marche! was set up barely a year ago. He becomes the youngest ever French president.

    As for, Le Pen, she fell short of the 45% that she was projected to win at one point earlier in the year. But her score of 34.9% is almost twice the 18% won by her father Jean-Marie Le Pen in 2002, and points to a depth of disaffection and anger towards France’s political elite that could nourish the far-right for years to come, especially if President Macron fails to deliver on his promises.

    • LE PEN CONCEDES DEFEAT OVER MACRON IN FRENCH PRESIDENTIAL VOTE
    • LE PEN SAYS SHE THANKS THE 11M FRENCH VOTERS WHO SUPPORTED HER
    • LE PEN SAYS TRADITIONAL PARTIES HAVE FAILED TO REPRESENT FRENCH
    • LE PEN CALLS FOR ‘ALL PATRIOTS’ TO JOIN HER FOR COMING VOTE

    Macron, a former government adviser and economy minister in the Hollande administration, will now turn his attention to elections for the National Assembly on June 11 and 18. He needs to build a stable majority from a party that as yet has no MPs. On Friday, he said he already had in mind his nominee for prime minister, a choice that could help him build alliances with MPs from other parties.

    Shortly after the results were announced, BuzzFeed reported that LePen’s Front National is going to re-brand, and change its name after the election result. Le Pen said that “The National Front … must deeply renew itself in order to rise to the historic opportunity and meet the French people’s expectations. I will propose to start this deep transformation of our movement in order to make a new political force.”

    Meanwhile, the Leave EU campaign, which presumably preferred a Le Pen victory over Macron, has just tweeted the following picture and message:

    * * *

    MARKET REACTION

    Macron’s victory is in line with expectations, which according to several banks carries a “sell the news” risk, especially in EURUSD.

    In a note released earlier on Sunday, Barclays’ Giovanni Paci writes that “a Macron victory, in line with current polls, in the second round of the French Presidential election, carries risk of a “buy the rumor, sell the fact” downside move in EURUSD, given the current long EUR pre-positioning.” On the other hand, “this outcome would also likely bring temporary relief and a further reduction in volatility.” Because a VIX of 10 is high?

    Some further details below:

    Macron victory in line with polls carries risk of a “buy the rumor, sell the fact” downside move in EURUSD, given the current long EUR pre-positioning. The EUR political-risk premium was reduced significantly by the “benign” first round outcome, which supported a c.2% EUR NEER appreciation. EURUSD should depreciate mildly over the remainder of this year, as monetary policy divergence and some residual political-risk premia weigh on the common currency.

     

    With market attention to the ‘Politics of Rage’ likely to fade after the French election, and no other clear themes visible, we see risk of a significant decline in market volatility. Implied volatility is low across asset classes (Figure 1) and, for most major currencies, realized and implied volatility measures are well below their yearly averages (Figure 2). Although we do not believe the Politics of Rage has yet crested, the outcome of the Dutch elections and the expected victory of Emmanuel Macron in France, are likely to assuage market fear of radical political change, at least for the near term, as no other clear risk events are visible. Risk-taking began to deteriorate earlier this year as ambiguity brought about by the ‘Politics of Rage’ dampened strategic risk taking. However, the resolution of near-term risks, with no other clear themes or major risk events to trade tactically, is likely to take activity and volatility further down.

     

     

    … the election of Mr. Macron as president, combined with a potential hung parliament would leave in place long-held concern about reform, but remove acute risks that provided shorter-term trading opportunities. As long as short-term events bring about temporary relief and long-term risks, volatility is likely to remain depressed, but prone to sudden bursts.

    * * *

    Deutsche Bank’s director of FX strategy, Sebastien Galy, has chimed in with a similar tak saying that while EUR/USD will likely gap higher, looking to clean out the stop losses,  before eventually consolidating lower. He adds that equity flows are likely to increase into the euro zone,‎ but that will take time as much is already priced in.

    * * *

    Expect more sellside commentary as analysts react to the initial results.

    Here is another live feed, this time from the Telegraph:

  • April Was Cruel… To The US Treasury

    Submitted by Nicholas Colas of Convergex

    April Was Cruel… To the US Tre

    Our monthly review of tax data from the US Treasury’s Daily Statement shows three important points.  First, overall employment and wage trends in the US are still on a solid footing.  Individual tax/withholding payments from salaried/hourly workers rose 4.5% year over year in April and are up 3.7% on a three month rolling average basis.  Second, April tax season was a bit of a bust for Treasury, with receipts down 5.7% from last year and at the lowest levels in 5 years. We attribute that to the delayed realization of capital gains in 2016, with asset owners deferring sales ahead of anticipated tax changes this year. That also explains a bit of the slow US equity trading volume and low volatility of 2017 – those asset owners still don’t know what the new tax code may bring and may be continuing to defer sales.  Lastly, “Gig economy” tax receipts (not withheld, but paid directly by the worker) show this post-Financial Crisis labor market phenomenon is on the wane, down 5.5% in Q1 2017 after a 4.8% decline in Q4 2016.

    April is to the US Treasury what Christmas is to retailers: the busiest and most profitable time of the year.  In 2016, for example, the Treasury’s Internal Revenue Service took in $193 billion in payments from individuals as a result of the usual April deadline for filing personal taxes.  By comparison the IRS took in only $15 billion in the month before and $12 billion the month after from taxpayers sending their remittances to the US government.

    Last month, however, was not so good to the US Treasury. “Individual Income and Employment Taxes, Not Withheld” (the Treasury line item for receipts outside the customary withholding process) were down 5.7% year over year to $182 billion. Moreover, this is the lowest April haul since 2012. The April tax receipts of 2013 to 2016 ran between $193 billion (2014) to $219 billion (2015). This year’s receipt totals are far from those.

    That should seem strange to you.  After all, virtually all asset prices have risen in the past 5 years.  Stocks, bonds, real estate… Everything is higher.  And when individuals sell those assets, they need to pay the capital gains tax as part of their annual April true-up with the US Government.

    My explanation: asset owners are deferring sales while they wait for the details of Washington’s new tax plans. Why sell an asset (unless you have to) if you think the tax code might change in your favor?  Better to wait – especially if asset prices are in an uptrend – and see what develops.

    I have been writing a lot about US equity market volatility this week, and it strikes me that this phenomenon might have a role in creating the current low-vol environment.  Since the details of the President’s proposals to change the tax code are still not public, asset owners may be continuing to defer sales in the hopes of better tax treatment down the road.  It is a sort of “Sellers’ strike”, where individuals with capital gains in equities are waiting for a new (and hopefully more capital-friendly) tax code before selling stock.

    On the plus side of things, the same report we use for the tax receipt analysis (Treasury’s Daily Statement, https://www.fms.treas.gov/dts/index.html) shows that the US labor market is still humming along.  Looking at “Withheld Income and Employment Taxes” – the amounts deducted from employee paychecks every cycle – we see that April receipts were up 4.5% from last year and +3.7% on a three month rolling average.

    Withheld tax receipts are a function of the number of people employed and wage levels, so a positive comparison shows underlying strength in the labor market.  Yes, there is a mix issue here.  The top 10% of wage earners may be taking most of the wage gains and therefore paying those to Treasury in their regular withholding.  Even still, the annual increases in withholding to Treasury have been remarkably stable (see attached charts in the PDF link above) at +4-10% since 2013, mirroring the growth in overall US employment.

    Even as the overall US labor market has improved over the last year, one group seems to be left behind: those individuals who work in the “Gig economy”.  These workers pay Social Security/Medicare taxes just like those “Employed” by companies, but their remittances to Treasury tell a different story from the withholding data we described in the prior point.

    For the first quarter of 2017, tax payments by self-employed/contract workers to Treasury were down 5.5%.  In Q4 2016, they were down 4.8%. Compare that to the growth in withholding/tax payments for payroll workers, and you see the problem.  One group is seeing growth in total wages (people employed times wages earned); the other is not.

    Now, it could be that as the US economy has strengthened in the last year those previously in the “Gig” workforce have transitioned to traditional employment.  A few points here:

    • The Bureau of Labor Statistics has not done a study on “Gig economy” workers since 2005, so they are not much help in understanding the possible migration of workers between formal and “Gig” employment. Their work at that time showed “Contingent workers” represented 2-4% of the US labor force.  In addition, about 7% were “independent contractors”.  The BLS plans to update their findings with a study to take place this month.  Read the BLS piece here: https://www.bls.gov/careeroutlook/2016/article/what-is-the-gig-economy.h…
    • If workers are transitioning from “Gig” to traditional employment, they may still do occasional outside work as a means to augment their income and preserve their options; this trend should be visible in the BLS data. In fact, the number of Americans who report holding multiple jobs has started to rise in the last year. As of March 2017, 5.3% of the US workforce has more than one job, up from 5.0% a year ago. That is the highest reading since before the Financial Crisis.
    • Interest in typical “Gig Economy” jobs seems to be on the wane. Looking at the data from Google Trends, US searches for “Gig jobs”, “Uber driver”, “Delivery driver”, “Freelance work”, and “Online job” are all either flat or slightly down over the past year.
    • The one area of incremental interest: searches for “Work from home” were up 50% in 2016 from 2015.
    • McKinsey did an excellent study, published in October 2016, about the Gig economy in the US and Europe if that is a topic of interest for you: http://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy.

    In summary, the tax data we’ve reviewed sheds some useful light on a few critical capital markets questions.  First, the US labor market is still strong. It is proving strong enough, in fact, to pull “Gig” workers back into the salaried labor force. Second, lower April tax payments highlight the possibility that asset owners are reluctant to sell appreciated assets such as stocks until they know the details of any revision to the tax code.  This will likely continue until either equities become more volatile or changes in the tax code are clearly on their way to becoming law.

    While the tax data we’ve reviewed here is not typically part of the econometric toolbox used to analyze the US economy, it does provide an independent take on key issues. Who says there’s nothing good about taxes?

  • "Sell The News"

    After initial kneejerks higher in the euro and equity futures, it appears Macron’s victory is now a “sell the news” event as EURUSD has dropped 60 pips from post-election highs…

     

    S&P Futures are fading…

     

    And gold has bounced back to Friday’s highs…

  • Doug Casey On The Plague Of Cultural Marxists

    Authored by Nick Giambruno via InternationalMan.com,

    Nick Giambruno: What exactly are Cultural Marxists, and how are they, and political correctness, contributing to the decline of Western Civilization?

    Doug Casey: Economic Marxism was intellectually debunked decades ago. With the collapse of the USSR, and radical changes in China, the man in the street became aware that the “intellectuals” were fools. And that is reinforced by the ongoing disasters in Cuba, North Korea, and Venezuela. So, since they recognize that there’s nothing to steal if they implement Marxian economic policies, most “intellectuals” no longer talk about them.

    Cultural Marxism, however, is just as destructive. It divides people not into economic classes, but cultural classes. You’re no longer an individual—you’re part of a gender, or a race, or some other group. Undoubtedly one being discriminated against by white males who—not just coincidentally—are largely responsible for Western Civilization.

    I despise the wave of “politically correct” thought that’s washed over the world like a tidal wave of raw sewage. I remember when I first heard the term used. I believe it was on Saturday Night Live in the early 80’s. At the time I thought it was a joke…

    A word Cultural Marxists use a lot lately is diversity. “We’ve got to have diversity.” No, we don’t have to have diversity. There’s zero logical or moral reason why every room should have a quota of blacks, Hispanics, LGBT’s, women, or whatever. It’s extremely stupid to have people qualify for something based upon accidental characteristics. It encourages them to view themselves not as individuals, but members of a group. So it actually foments class warfare.

    I occasionally like to go to a men’s club. It’s odd that men are never invited to ladies’ functions – and I don’t care. Everyone should associate with whomever they like. People who use the State to impose their opinions on others, or approve of it, are essentially criminal personalities. I avoid them at all costs.

    In fact, birds of a feather usually flock together. This is perfectly natural. You don’t need diversity; it’s not a necessarily positive value, it’s a neutral preference. If you want it in your club, fine. But freedom of association is far, far more important.

    I form my friendships based upon neither diversity nor a lack of diversity, although there’s a natural, genetically based tendency to associate with people like yourself. I form my friendships based upon the character and the beliefs that a person has. The attributes that create diversity are stupid accidentals. The fact that diversity is emphasized draws attention to incidentals like race, sex, and gender, and diverts it from important things like character and beliefs. Diversity has become destructive. Cultural Marxists love “diversity” because, in fact, they actually hate people. And themselves. They want to cause conflicts that work to destroy Western Civilization—which they also hate.

    Nick Giambruno: How does the migrant crisis in Europe relate to all of this?

    Doug Casey: First, let me say that I’m all for immigration and completely open borders to enable opportunity seekers from anyplace to move anyplace else. With two big, critically important, caveats: 1) there can be no welfare or free government services, so everyone has to pay his own way, and no freeloaders are attracted 2) all property is privately owned, to minimize the possibility of squatter camps full of beggars.

    In the absence of welfare benefits, immigrants are usually the best of people because you get mobile, aggressive, and opportunity-seeking people that want to leave a dead old culture for a vibrant new one. The millions of immigrants who came to the US in the late 19th and early 20th centuries had zero in the way of state support.

    But what is going on in Europe today is entirely different. The migrants coming to Europe aren’t being attracted by opportunity in the new land so much as the welfare benefits and the soft life. When they arrive, they expect free food, shelter, clothing, and entertainment—totally unlike past immigrants. For the most part they are unskilled and poorly educated. And 99% of them will stay that way, because it takes generations to change cultural attitudes. Few of them will ever become self-supporting.

    What we’re talking about here is the migration of millions of people of different language, different race, different religion, different culture, different mode of living. If you're an alien and you're 1 out of 10,000, or 1,000, or 100, you're a curiosity, an interesting outsider. But an influx of millions of migrants is only going to destroy the old culture, and guarantee antagonism—especially when the locals have to pay for it. In many ways, what’s happening now isn’t just comparable to what happened 2,000 years ago with the migration of barbarians into the Roman Empire. It’s potentially much more serious.

    Nick Giambruno: What’s the welfare state’s role in all this?

    Doug Casey: The State now pays for food, housing, schooling, and even cell phones for the “disadvantaged.” The next step will likely be some type of guaranteed income. All these things only serve to relieve the “disadvantaged” of personal responsibility for their own lives, which acts to cement them to the bottom of society—while slowly bankrupting the country as a whole.

    The welfare state must be abolished, pulled out by its roots, and debunked intellectually and psychologically. If you want to help a deserving individual on your own, great. But to make it part of the State is idiotic—except, of course, for politicians that need votes.

    Nick Giambruno: I recently read an article by arch-neocon Charles Krauthammer. He claimed that the failure of the US to more forcefully interfere in Syria is an indication of the West’s decline. What’s your take?

    Doug Casey: I despise Krauthammer, and his ilk. But, that said, I believe he dislikes me much more than I do him. He’s one of those creatures who thrive within the swamp circled by the Washington Beltway. His prescriptions are almost universally wrong-headed. Which is to be expected from a neocon, a fan of both the warfare state and the welfare state.

    I’ve debated Charles on three separate occasions. He has a high IQ, but his ideas are quite stupid—if we define stupidity as an unwitting tendency to self-destruction. I recently discovered that he is also a leading bioethicist—which I didn’t know when I did an essay on that pernicious group of busybodies.

    Nick Giambruno: Webster’s defines bioethics as “a discipline dealing with the ethical implications of biological research and applications especially in medicine.” What’s so pernicious about that?

    Doug Casey: Bioethics is a phony science, recently concocted by people working for pharmaceutical companies, governments, and medical institutions looking for excuses to justify what they have already decided to do.

    A bioethicist is someone who's supposed to determine the right and wrong of these things. I consider them self-appointed censors pandering to dimwits apparently incapable of thinking out psychological/ethical/economic dilemmas on their own.

    That’s dangerous enough, but these are not just fools sowing confusion, they are mostly of a particular mindset—that is to say, they are a bunch of collectivists and statists—who pretend to be objective. Worse, they espouse policies with wide-reaching implications, almost universally wrong-headed and disastrous, which are a reeking part of the rotting fabric of what was once American society.

    But what really gets me about these bioethicists is that they are not technical experts contributing to debates among scientists—they're just a bunch of busybodies who want to tell everyone else what to do, based on their own opinions of morality and notions of political correctness. This is especially dangerous, because people make decisions and act based on their ideas of what is right and wrong—on moral grounds. By setting themselves up as the great determiners of what is ethically correct, these supposed experts become a sort of new secular priesthood to guide us all. They're worse than run-of-the-mill busybodies, however; they want to play the role of Gríma Wormtongue in counseling rulers. They are generally sociopaths who want us to accept their statist, collectivist ethics, and thereby exert control over the direction of society, taking it down paths they deem best.

    These so-called ethical experts insinuate themselves into the bureaucratic machinery of the State, into the flow of intellectual and academic debate, into the course material taught at universities, and they exert influence.

    It’s especially dangerous because when people read about a consensus of Ph.D.s agreeing that X or Y is ethical, they may be seduced into letting these others do their ethical thinking for them, instead of holding on to the vital responsibility of thinking through ethical matters for themselves.

    From the beginning of the Dark Ages up until the early 1500s, the Church of Rome was the arbiter of morality in the West; that was highly problematical, because it substituted the judgment of some priest for that of each individual. It's one reason that the medieval era was so backward.

    Individual responsibility to understand ethics and act accordingly is a cornerstone of Western Civilization, going all the way back to the Greeks. It's what the play Antigone is all about. This is one reason that Islamic countries are basket cases—they’re at the same stage of philosophical evolution as the West was in the medieval era.

    Anyway, the decline of religion in the West over the last century—a trend I applaud for many reasons, but won’t go into now—has left something of a moral vacuum. It’s been partially filled by secular religions like Marxism, but Marxism has been debunked everywhere but on college campuses… so the bioethicists are the latest fad trying to fill the space.

    Individual responsibility, rather than diffuse responsibility among classes of people, is a major reason for the individual accomplishments and innovations that led the West to global eminence. Bioethicists are trying to set themselves up as a new priesthood. If they succeed, it would reverse an essential element of Western thought. Bioethicists are irksome because they’re a visible cutting edge of the knife destroying the foundations of Western Civilization, and yet they are given unearned respect and material prosperity.

    Nick Giambruno: Can President Trump, or anyone, for that matter, reverse the decline of Western Civilization?

    Doug Casey: Once an empire starts falling apart, trying to stop it is like trying to stop a tree from falling once its roots have rotted. It can’t be done, and it’s best not to be around when it happens.

    The Cultural Marxists and other enemies of Western Civilization are in total control of the education system, so the next several generations of young people are corrupted. They control the media, so they control the prevailing intellectual climate. They control the NGOs, and the “think tanks” that infest DC and other major capitals. They control the Deep State.

    So, no, Trump can’t reverse it. Among other reasons because he himself doesn’t have a philosophical or ethical core. He’s just a businessman; his object is just to make things more efficient. Like Mussolini, to make the trains run on time, as it were. He’s a good influence in that he hates the Cultural Marxists, and they hate him. But it’s not like he can offer a positive alternative for people to believe in.

    Nick Giambruno: What’s the bottom line here?

    Doug Casey: I always like to try to turn a lemon into lemonade. But it’s impossible if someone drops a 500-pound bomb on your kitchen, and follows it up with a poison gas attack. That said, I like to do what I can. Not because I expect success, but because it’s the right thing to do. And that is as important, from a personal viewpoint, as anything in the world.

    Nick Giambruno: Thanks, Doug, until next time.

    Doug Casey: Thanks, Nick.

    *  *  *

    There’s major turmoil ahead for Western Civilization… and it could be catastrophic for global currency and stock markets. We expect the fallout to be far worse than 2008. Most investors can’t handle that sort of chaos. But Doug Casey and his team know how to turn it into huge profits. They’re sharing need-to-know information about the coming global economic meltdown in this time-sensitive video. Click here to watch it.

  • Which Jobs Have The Most Suicides?

    According to an ONS analysis commissioned by Public Health England, suicides are less common among women than men with the rate also varying considerably by occupation.

    Infographic: Which jobs have the most suicides? | Statista

    You will find more statistics at Statista

    Between 2011 and 2015, workers employed in skilled construction and building trades were found to have had the most suicides, followed by elementary administation and service occupations.

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May 07

Today’s News 7th May 2017

  • Thank God 'The People' Are Back in Power: Kushner Family Pitches 'Invest $500k, Immigrate to America' Visa Program in China

    Representatives from the Kushner family descended upon the Ritz Carlton in Beijing to pitch wealthy Chinese the EB-5 visa program aka crony capitalism.

    Nicole Kushner, Jared’s sister, was alleged to be in attendance.

    The pitch was “Invest early, and you will invest under the old rules,” according to the Washington Post.

    The event, which was closed to foreign press, was hosted by the Chinese company Qiaowai — who is working on behalf of the Kushner family for one of their projects in New Jersey.

    It’s dubbed the ‘Kushner 1’ project, like Airforce 1 only cooler: “This project has stable funding, creates sufficient jobs and guarantees the safety of investors’ money, read one of the promotional brochures.

    The materials painted Jared as a ‘celebrity’ in America, encouraging rich Chinese to trust their status and business acumen in America — which is funny considering the ruinous state of their crown jewel property 666 5th avenue (extra anti-Christ). The Kushner’s are trying to restructure the 666 deal, bringing in Chinese insurance giant Anbang, in an effort to finance a massive expansion and conversion of the top floors into posh condos.

    Thank God ‘the people’, plumbers, electricians and all of the other rubes, are running America again. Get the wall up, unless of course all Mexican migrants are willing to fork over $500,000 to invest.
    Content originally published at iBankCoin.com

  • How Volkswagen Quietly Stashed Half A Million Rigged Cars Around The Country

    Volkswagen bought back hundreds of thousands of emissions-cheating cars. We just discovered what it has done with them all…

     

    As Bloomberg reports, the German automaker agreed last year to buy back about 500,000 diesels that it rigged to pass U.S. emissions tests if it can't figure out a way to fix them. Except for a handful of 2015 models, VW dealers can't sell the cars until – and unless – the company comes up with repairs to satisfy regulators. The question they face then is – what to do with the hundreds of thousands of diesel cars it is being forced to buy back?

    Well, now we know… the company is hauling them to storage lots across America…

    VW spokeswoman Jeannine Ginivan said "the program is unprecedented in terms of its size and scope and we have devoted significant resources and personnel to help ensure that it is carried out as seamlessly as possible."

    As Jalopnik's David Tracy reports, after a bit of hunting on forums, and a couple of tips from readers and friends, I seem to have found three such “regional facilities”: one in Pontiac, Michigan; one in San Bernardino, California; and one in Baltimore, Maryland.

    The Pontiac Silverdome is a bit of a shitshow in southeast Michigan. It used to be the proud home of the Detroit Lions and the Pistons, and it was even the venue for Super Bowl XVI, multiple NCAA tournament games and some FIFA World Cup matches. But now the huge building lies dormant, with its interior decaying and its parking lots cracking after years of neglect. This makes it the perfect place for VW to stash their bought-back TDIs.

    See here for more images…

    On a remote part of Norton Air Force Base (in San Bernardino, California), which has been decommissioned for over 20 years now, as is now part of the San Bernardino International Airport, lie thousands of California-plated Volkswagens and Audis awaiting their fate…

     

    Google Street View even has the images..

    See here for more images…

    The Port of Baltimore is stuffed full of Volkswagens waiting to die. As one Jalopnik readers noted "a total of five storage lots with what had to be thousands of cars, ranging from older Mk5 Jetta models to high line Audi A3s, Passats and MQB Mk7 Golfs and a huge quantity of Jetta Sportwagens… Several of the lots stretched much farther than I could see."

    See here for more images…

    The images above bring to mind the apocalyptic scenes from 'where cars go to die' during the last crisis in America, but for VW, this seemed to sum it all up nicely…

    "The public doesn’t realize the monumental undertaking that they’ve pulled off to do this in a year and a half," said Matthew Welch, general manager of Auburn Volkswagen near Seattle.

     

    "Nothing like this has ever been done."

    And while VW has only itself (and government regulations) to blame for this scene, we wonder how long before we see the same images for GM vehicles… after all, with inventories at 10-year highs as sales start to collapse, we are feeling a terrible sense of deja vu all over again…

  • France Warns Media Not To Publish Hacked Macron Emails, Threatens With Criminal Charges

    After 9 gigabytes of Macron-linked documents and emails were released on an anonymous pastebin website on Friday afternoon in what Macron’s campaign said was a “massive and coordinated” hacking attack, France – fearing a similar response to what happened with Hillary Clinton after 35,000 John Podesta emails were released one month before the US presidential election – cracked down on the distribution of the files, warning on Saturday it would be a “criminal offense” to republish the data, and warning the French media not to publish content from any of the hacked emails “to prevent the outcome of the vote being influenced.”

    Quoted by Reuters, the French election commission said in a statement that “on the eve of the most important election for our institutions, the commission calls on everyone present on internet sites and social networks, primarily the media, but also all citizens, to show responsibility and not to pass on this content, so as not to distort the sincerity of the ballot.” Following a rushed meeting on Saturday morning, the commission which supervises the electoral process, said that the data been “fraudulently obtained and could be mixed with false information.” It is unclear, however, how it hopes to enforce any punitive claims, especially when much of the initial document distribution appears to have taken place offshore.

    Domestically, in a similar reaction to the US media’s response to the Podesta emails, French TV news channels chose not to mention the hack, although the left-leading Liberation prominently featured the news on its website. Liberation author Cedric Mathiot wrote that the leak, and its timing, “wants to create chaos” adding that the information was distributed in an “unethical method.”

    On Friday night, as news of what has been hashtagged as @MacronLeaks on twitter spread, Florian Philippot, deputy leader of the National Front, tweeted “Will Macronleaks teach us something that investigative journalism has deliberately kept silent?” In a tweeted response, Macron spokesman Sylvain Fort called Philippot’s tweet “vile”.

    In another parallel to the Clinton leaks, Macron’s En Marche! party said the leaked documents dealt with “the normal operations of a campaign and included some information on campaign accounts.” It said the hackers had mixed false documents with authentic ones to “sow doubt and disinformation.”

    But in the biggest parallel to the Clinton hacking, few have touched upon the actual contents of the documents, which some say confirm prior allegations of illicit financial dealings and offshore accounts, and instead merely sought to attack the messenger. Indeed, as journalist Kim Zetter noted overnight, “Telling journos to not report on hacked emails misses point that nearly all important leaks occur because someone broke law or a contract” and then followed up with the following rhetorical question, flipping the situation by 180 degrees: “If GRU, intending to assault dem., hacks Trump & publishes emails showing his direct connection to Russia, should journos report on those.“

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    As reported on Friday evening, WikiLeaks tweeted that the leak contained “many tens of thousands” of emails, photos and attachments dated up to April 24, but it noted that it had come “too late” to affect the election results. In a follow up tweet, the controversial whistleblowing organization posted a tweet sharing the location of all #MacronLeaks archives which are “now available as uncensorable magnet links http://archive.is/aULcm“

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    Since there has been no suggestion WikiLeaks is responsible for this hack, speculation about the source of the hack has grown, with Russia once again emerging as the “usual suspect.”

    Cited by Reuters, Vitali Kremez, director of research with New York-based cyber intelligence firm Flashpoint, said his review indicates that APT 28, a group tied to the GRU, the Russian military intelligence directorate, was behind the leak. He cited similarities with U.S. election hacks that have been previously attributed to that group. Kremez also said that APT28 last month registered decoy internet addresses to mimic the name of En Marche, which it likely used send tainted emails to hack into the campaign’s computers. Those domains include onedrive-en-marche.fr and mail-en-marche.fr.

    “If indeed driven by Moscow, this leak appears to be a significant escalation over the previous Russian operations aimed at the U.S. presidential election, expanding the approach and scope of effort from simple espionage efforts towards more direct attempts to sway the outcome,” Kremez said.

    We expect the Kremlin to deny all allegations shortly.

    To cover all bases, others have also accused the “Alt Right” of being responsible for the leak:

    Ben Nimmo, a UK-based security researcher with the Digital Forensic Research Lab of the Atlantic Council think tank, said initial analysis indicated that a group of U.S. far-right online activists were behind early efforts to spread the documents via social media. They were later picked up and promoted by core social media supporters of Le Pen in France, Nimmo said.

     

    The leaks emerged on 4chan, a discussion forum popular with far right activists in the United States. An anonymous poster provided links to the documents on Pastebin, saying, “This was passed on to me today so now I am giving it to you, the people.”

     

    The hashtag #MacronLeaks was then spread by Jack Posobiec, a pro-Trump activist whose Twitter profile identifies him as Washington D.C. bureau chief of the far-right activist site Rebel TV, according to Nimmo and other analysts tracking the election. Contacted by Reuters, Posobiec said he had simply reposted what he saw on 4chan.

     

    “You have a hashtag drive that started with the alt-right in the United States that has been picked up by some of Le Pen’s most dedicated and aggressive followers online,” Nimmo told Reuters.

    Sunday’s election, whose result is expected in just over 24 hours, is seen as “the most important in France for decades, with two diametrically opposed views of Europe and the country’s place in the world at stake.” Tune in then to find out if Wikileaks is correct, and the #MacronLeaks is nothing more than a tempest in a teapot, unable to chisel away at Macron’s lead over Le Pen which the latest polls calculate to be as much as 25 points.

  • Paul Craig Roberts: 'Sauron' Rules In Washington

    Authored by Paul Craig Roberts,

    “The problem is that the world has listened to Americans for far too bloody long.” – Dr. Julian Osborne, from the 2000 film version of Nevil Shute’s 1957 book, On the Beach

    A reader asked why neoconservatives push toward nuclear war when there can be no winners. If all die, what is the point?

    The answer is that the neoconservatives believe that the US can win at minimum and perhaps zero damage.

    Their insane plan is as follows: Washington will ring Russia and China with anti-ballistic missile bases in order to provide a shield against a retaliatory strike from Russia and China. Moreover, these US anti-ABM bases also can deploy nuclear attack missiles unknown to Russia and China, thus reducing the warning time to five minutes, leaving Washington’s victims little or no time in which to make a decision.

    The neoconservatives think that Washington’s first strike will so badly damage the Russian and Chinese retaliatory capabilities that both governments will surrender rather than launch a response. The Russian and Chinese leaderships would conclude that their diminished forces leave little chance that many of their ICBMs will be able to get past Washington’s ABM shield, leaving the US largely intact. A feeble retaliation by Russia and China would simply invite a second wave US nuclear attack that would obliterate Russian and Chinese cities, killing millions and leaving both countries in ruins.

    In short, the American warmongers are betting that the Russian and Chinese leaderships would submit rather than risk total destruction.

    There is no question that neoconservatives are sufficiently evil to launch a preemptive nuclear attack, but possibly the plan aims to put Russia and China into a situation in which their leaders conclude that the deck is stacked against them and, therefore, they must accept Washington’s hegemony.

    To feel secure in its hegemony, Washington would have to order Russia and China to disarm.

    This plan is full of risks. Miscalculations are a feature of war. It is reckless and irresponsible to risk the life of the planet for nothing more than Washington’s hegemony.

    The neoconservative plan puts Europe, the UK, Japan, S. Korea, and Australia at high risk were Russia and China to retaliate. Washington’s ABM shield cannot protect Europe from Russia’s nuclear cruise missiles or from the Russian Air Force, so Europe would cease to exist. China’s response would hit Japan, S. Korea, and Australia.

    The Russian hope and that of all sane people is that Washington’s vassals will understand that it is they that are at risk, a risk from which they have nothing to gain and everything to lose, repudiate their vassalage to Washington and remove the US bases. It must be clear to European politicians that they are being dragged into conflict with Russia. This week the NATO commander told the US Congress that he needed funding for a larger military presence in Europe in order to counter “a resurgent Russia”. 

    Let us examine what is meant by “a resurgent Russia.” It means a Russia that is strong and confident enough to defend its interests and those of its allies. In other words, Russia was able to block Obama’s planned invasion of Syria and bombing of Iran and to enable the Syrian armed forces to defeat the ISIS force sent by Obama and Hillary to overthrow Assad.

    Russia is “resurgent” because Russia is able to block US unilateral actions against some other countries.

    This capability flies in the face of the neoconservative Wolfowitz doctrine, which says that the principal goal of US foreign policy is to prevent the rise of any country that can serve as a check on Washington’s unilateral action.

    While the neocons were absorbed in their “cakewalk” wars that have now lasted 16 years, Russia and China emerged as checks on the unilateralism that Washington had enjoyed since the collapse of the Soviet Union. What Washington is trying to do is to recapture its ability to act worldwide without any constraint from any other country. This requires Russia and China to stand down.

    Are Russia and China going to stand down? It is possible, but I would not bet the life of the planet on it. Both governments have a moral conscience that is totally missing in Washington. Neither government is intimidated by the Western propaganda. Russian Foreign Minister Lavrov said yesterday that we hear endless hysterical charges against Russia, but the charges are always vacant of any evidence.

    Conceivably, Russia and China could sacrifice their sovereignty for the sake of life on earth. But this same moral conscience will propel them to oppose the evil that is Washington in order not to succumb to evil themselves. Therefore, I think that the evil that rules in Washington is leading the United States and its vassal states to total destruction.

    Having convinced the Russian and Chinese leaderships that Washington intends to nuke their countries in a surprise attack (see for example), the question is how do Russia and China respond? Do they sit there and await an attack, or do they preempt Washington’s attack with an attack of their own?

    What would you do? Would you preserve your life by submitting to evil, or would you destroy the evil?

    Writing truthfully results in my name being put on lists (financed by who?) as a “Russian dupe/agent.” Actually, I am an agent of all people who disapprove of Washington’s willingness to use nuclear war in order to establish Washington’s hegemony over the world, but let us understand what it means to be a “Russian agent.”

    It means to respect international law, which Washington does not. It means to respect life, which Washington does not. It means to respect the national interests of other countries, which Washington does not. It means to respond to provocations with diplomacy and requests for cooperation, which Washington does not. But Russia does. Clearly, a “Russian agent” is a moral person who wants to preserve life and the national identity and dignity of other peoples.

    It is Washington that wants to snuff out human morality and become the master of the planet. As I have previously written, Washington without any question is Sauron. The only important question is whether there is sufficient good left in the world to resist and overcome Washington’s evil.

  • Visualizing America's Retail Apocalypse

    The steady rise of online retail sales should have surprised no one. As Visual Capitalist's Jeff Desjardins notes, back in 2000, less than 1% of retail sales came from e-commerce. However, online sales have climbed each and every year since then, even through the Great Recession. By 2009, e-commerce made up about 4.0% of total retail sales, and today the latest number we have is 8.3%.

    Here’s another knowledge bomb: it’s going to keep growing for the foreseeable future. Huge surprise, right?

    Courtesy of: Visual Capitalist

     

    SIGNS OF A RECKONING

    Retailers eye their competition relentlessly, and the sector also has notoriously thin margins.

    The big retailers must have seen the “retail apocalypse” coming. The question is: what did they do about it?

    Well, companies like Sears failed the shift to digital altogether – in fact, it is even widely speculated that the former behemoth might file for bankruptcy later this year.

    The majority of other companies, on the other hand, are trying to combine “clicks and bricks” into a cohesive strategy. This sounds good in theory, but for established and sprawling brick and mortar retailers with excessive overhead costs, such tactics may not be enough to ward off this powerful secular trend. Target, for example, has had impressive growth in online sales, but they still only make up just 5% of total sales. As a result, the company’s robustness is also in doubt.

    Wal-Mart took another route, which could potentially be the smartest one. The company hedged their bets by buying Jet.com, which was one of the fastest growing online retailers at the time. Later, they followed up by buying an online shoe retailer to help fill a perceived gap in footwear. Recent reports have surfaced, saying that these acquisitions are leading to staff shakeups, as the company re-orients its focus.

    After all, going online is not just a tactic to boost sales in the new era of retailing. It has to be a mindset, and one that is central to the company’s strategy. Hopefully Wal-mart gets that, otherwise they will also be in trouble as well.

    APOCALYPSE NOW

    In the midst of all of this is what is described as the “retail apocalypse”.

    There are two main metrics that are pretty black and white:

    Number of Bankruptcies: We’re not even one-third through 2017, and we already have about as many retail bankruptcies as the previous year’s total. If they continue at the current pace, we could see over 50 retailers bankrupt by the end of the year.

    Number of Store Closings: So far we’ve seen roughly 3,000 store closings announced in 2017, and Credit Suisse estimates that could hit 8,600 by the end of the year. That would easily surpass 2008’s total, which was 6,200 closings, to be the worst year in recent memory.

    Here’s some of the companies that have already filed for bankruptcy:

    • Gordmans Stores
    • Gander Mountain
    • Radioshack (again)
    • HHGregg
    • BCBG Max Azria
    • Eastern Outfitters
    • Wet Seal
    • The Limited
    • Vanity Shop of Grand Forks
    • Payless Inc.
    • MC Sports

    And here are the store closings occurring as a result of the retail apocalypse:

  • Doug Casey On The End Of Western Civilization

    Authored by Nick Giambruno via InternationalMan.com,

    Nick Giambruno: The decline of Western Civilization is on a lot of people’s minds.

    Let’s talk about this trend.

    Doug Casey: Western Civilization has its origins in ancient Greece. It’s unique among the world’s civilizations in putting the individual—as opposed to the collective—in a central position. It enshrined logic and rational thought—as opposed to mysticism and superstition—as the way to deal with the world. It’s because of this that we have science, technology, great literature and art, capitalism, personal freedom, the concept of progress, and much, much more. In fact, almost everything worth having in the material world is due to Western Civilization.

    Ayn Rand once said “East minus West equals zero.” I think she went a bit too far, as a rhetorical device, but she was essentially right. When you look at what the world’s other civilizations have brought to the party, at least over the last 2,500 years, it’s trivial.

    I lived in the Orient for years. There are many things I love about it—martial arts, yoga, and the cuisine among them. But all the progress they’ve made is due to adopting the fruits of the West.

    Nick Giambruno: There are so many things degrading Western Civilization. Where do we begin?

    Doug Casey: It’s been said, correctly, that a civilization always collapses from within. World War 1, in 1914, signaled the start of the long collapse of Western Civilization. Of course, termites were already eating away at the foundations, with the writings of people like Jean-Jacques Rousseau and Karl Marx. It’s been on an accelerating downward path ever since, even though technology and science have been improving at a quantum pace. They are, however, like delayed action flywheels, operating on stored energy and accumulated capital. Without capital, intellectual freedom, and entrepreneurialism, science and technology will slow down. I’m optimistic we’ll make it to Kurzweil’s Singularity, but there are no guarantees.

    Things also changed with the creation of the Federal Reserve in 1913. Before that, the US used gold coinage for money. “The dollar” was just a name for 1/20th of an ounce of gold. That is what the dollar was. Paper dollars were just receipts for gold on deposit in the Treasury. The income tax, enacted the same year, threw more sand in the gears of civilization. The world was much freer before the events of 1913 and 1914, which acted to put the State at the center of everything.

    The Fed and the income tax are both disastrous and unnecessary things, enemies of the common man in every way. Unfortunately, people have come to believe they’re fixtures in the cosmic firmament. They’re the main reasons—there are many other reasons, though, unfortunately—why the average American’s standard of living has been dropping since the early 1970s. In fact, were it not for these things, and the immense amount of capital destroyed during the numerous wars of the last 100 years, I expect we’d have already colonized the moon and Mars. Among many other things…

    But I want to re-emphasize that the science, the technology, and all the wonderful toys we have are not the essence of Western Civilization. They’re consequences of individualism, capitalism, rational thought, and personal freedom. It’s critical not to confuse cause and effect.

    Nick Giambruno: You mentioned that the average American’s standard of living has dropped since the early 1970s. This is directly related to the US government abandoning the dollar’s last link to gold in 1971. Since then, the Federal Reserve has been able to debase the US dollar without limit.

    I think the dollar’s transformation into a purely fiat currency has eroded the rule of law and morality in the US. It’s similar to what happened in the Roman Empire after it started debasing its currency.

    What do you think, Doug?

    Doug Casey: All the world’s governments and central banks share a common philosophy, which drives these policies. They believe that you create economic activity by stimulating demand, and you stimulate demand by printing money. And, of course, it’s true, in a way. Roughly the same way a counterfeiter can stimulate a local economy.

    Unfortunately, they ignore that, and completely ignore that the way a person or a society becomes wealthy is by producing more than they consume and saving the difference. That difference, savings, is how you create capital. Without capital you’re reduced to subsistence, scratching at the earth with a stick. These people think that by inflating—which is to say destroying—the currency, they can create prosperity. But what they’re really doing, is destroying capital: When you destroy the value of the currency, that discourages people from saving it. And when people don’t save, they can’t build capital, and the vicious cycle goes on.

    This is destructive for civilization itself, in both the long term and the short term. The more paper money, the more credit, they create, the more society focuses on finance, as opposed to production. It’s why there are many times more people studying finance than science. The focus is increasingly on speculation, not production. Financial engineering, not mechanical, electrical, or chemical engineering. And lots of laws and regulations to keep the unstable structure from collapsing.

    What keeps a truly civil society together isn’t laws, regulations, and police. It's peer pressure, social opprobrium, moral approbation, and your reputation. These are the four elements that keep things together. Western Civilization is built on voluntarism. But, as the State grows, that’s being replaced by coercion in every aspect of society. There are regulations on the most obscure areas of life. As Harvey Silverglate pointed out in his book, the average American commits three felonies a day. Whether he’s caught and prosecuted is a subject of luck and the arbitrary will of some functionary. That’s antithetical to the core values of Western Civilization.

    Nick Giambruno: Speaking of ancient civilizations like Rome, interest rates are about the lowest they’ve been in 5,000 years of recorded history. Trillions of dollars’ worth of government bonds trade at negative yields.

    Of course, this couldn’t happen in a free market. It’s only possible because of central bank manipulation.

    How will artificially low interest rates affect the collapse of Western Civilization?

    Doug Casey: It’s really, really serious. I previously thought it was metaphysically impossible to have negative interest rates but, in the Bizarro World central banks have created, it’s happened.

    Negative interest rates discourage saving. Once again, saving is what builds capital. Without capital you wind up as an empty shell—Rome in 450 A.D., or Detroit today—lots of wonderful but empty buildings and no economic activity. Worse, it forces people to desperately put their money in all manner of idiotic speculations in an effort to stay ahead of inflation. They wind up chasing the bubbles the funny money creates.

    Let me re-emphasize something: in order for science and technology to advance you need capital. Where does capital come from? It comes from people producing more than they consume and saving the difference. Debt, on the other hand, means you’re living above your means. You’re either consuming the capital others have saved, or you’re mortgaging your future.

    Zero and negative interest rate policies, and the creation of money out of nowhere, are actually destructive of civilization itself. It makes the average guy feel that he’s not in control of his own destiny. He starts believing that the State, or luck, or Allah will provide for him. That attitude is typical of people from backward parts of the world—not Western Civilization.

    Nick Giambruno: What does it say about the economy and society that people work so hard to interpret what officials from the Federal Reserve and other central banks say?

    Doug Casey: It’s a shameful waste of time. They remind me of primitives seeking the counsel of witch doctors. One hundred years ago, the richest people in the country—the Rockefellers, the Carnegies, and such—made their money creating industries that actually made stuff. Now, the richest people in the country just shuffle money around. They get rich because they’re close to the government and the hydrant of currency materialized by the Federal Reserve. I’d say it’s a sign that society in the US has become quite degraded.

    The world revolves much less around actual production, but around guessing the direction of financial markets. Negative interest rates are creating bubbles, and will eventually result in an economic collapse.

    Nick Giambruno: Negative interest rates are essentially a tax on savings. A lot of people would rather pull their money out of the bank and stuff it under a mattress than suffer that sting.

    The economic central planners know this. It’s why they’re using negative interest rates to ramp up the War on Cash—the push to eliminate paper currency and create a cashless society.

    The banking system is very fragile. Banks don’t hold much paper cash. It’s mostly digital bytes on a computer. If people start withdrawing paper money en masse, it won’t take much to bring the whole system down.

    Their solution is to make accessing cash harder, and in some cases, illegal. That’s why the economic witch doctors at Harvard are pounding the table to get rid of the $100 bill.

    Take France, for example. It’s now illegal to make cash transactions over €1,000 without documenting them properly.

    Negative interest rates have turbocharged the War on Cash. If the central planners win this war, it would be the final deathblow to financial privacy.

    How does this all relate to the collapse of Western Civilization?

    Doug Casey: I believe the next step in their idiotic plan is to abolish cash. Decades ago they got rid of gold coinage, which used to circulate day to day in people’s pockets. Then they got rid of silver coinage. Now, they’re planning to get rid of cash altogether. So you won’t even have euros or dollars or pounds in your wallet anymore, or if you do, it will only be very small denominations. Everything else is going to have to be done through electronic payment processing.

    This is a huge disaster for the average person: absolutely everything that you buy or sell, other than perhaps a candy bar or a hamburger, is going to have to go through the banking system. Thus, the government will be able to monitor every transaction and payment. Financial privacy, even what’s left of it today, will literally cease to exist.

    Privacy is one of the big differences between a civilized society and a primitive society. In a primitive society, in your little dirt hut village, anybody can look through your window or pull back the flap on your tent. You have no privacy. Everybody can hear everything; see anything. This was one of the marvelous things about Western Civilization—privacy was valued, and respected. But that concept, like so many others, is on its way out…

    Nick Giambruno: You’ve mentioned before that language and words provide important clues to the collapse of Western Civilization. How so?

    Doug Casey: Many of the words you hear, especially on television and other media, are confused, conflated, or completely misused. Many recent changes in the way words are used are corrupting the language. As George Orwell liked to point out, to control language is to control thought. The corruption of language is adding to the corruption of civilization itself. This is not a trivial factor in the degradation of Western Civilization.

    Words—their exact meanings, and how they’re used—are critically important. If you don’t mean what you say and say what you mean, then it’s impossible to communicate accurately. Forget about transmitting philosophical concepts.

    Take for example shareholders and stakeholders. We all know that a shareholder actually owns a share in a company, but have you noticed that over the last generation shareholders have become less important than stakeholders? Even though stakeholders are just hangers-on, employees, or people who are looking to get in on a shakedown. But everybody slavishly acknowledges, “Yes, we’ve got to look out for the stakeholders.”

    Where did that concept come from? It’s a recent creation, but Boobus americanus seems to think it was carved in stone at the country’s founding.

    We’re told to protect them, as if they were a valuable and endangered species. I say, “A pox upon stakeholders.” If they want a vote in what a company does, then they ought to become shareholders. Stakeholders are a class of being created out of nothing by Cultural Marxists for the purpose of shaking down shareholders.

    *  *  *

    There’s major turmoil ahead for Western Civilization.  We expect the fallout to be far worse than 2008. Most investors can’t handle that sort of chaos. But Doug Casey and his team know how to turn it into huge profits. They’re sharing need-to-know information about the coming global economic meltdown in this time-sensitive video. Click here to watch it now.

  • Why Charles Gave Expects "Total Mayhem" In France Even If Macron Is Elected

    Venerable French investor Charles Gave has been managing money and researching markets for over 40 years; as such France’s elder statesman of asset allocation perhaps best captures the mood ahead of the most crucial Presidential election in a generation. In conversation with Dr. Pippa Malmgren, Charles breaks down national politics to understand why voters have rejected the establishment and the market impact of both outcomes, and what to expect from tomorrow’s election.

    First, Gave, who says “I’m not so sure that Macron will win”, is asked by Malmgren to walk RealVision viewers through what Macron’s agenda would look like in case of a victory. Gave is unable to do so for several simple reasons:

    Well, first, nobody knows. Because during the whole campaign, all these talks were on one hand, on the other. I’m in favor of apple pie, and motherhood, you see. Basically he has, to my knowledge, very little program. So he’s running. That is what Hollande said. That he was going to make some fundamental changes without hurting people. And so Macron is a big, empty suit. That’s what he is. You did the right curriculum vitae, he went to the right schools. And you have the feeling that the guy never had an original idea in his life. He was always a good student.

     

    And moreover, there is a strong suspicion that he’s a kind of golem created by Hollande and all these guys. So since they knew they were going to lose the election, they created a guy in a hologram that would run for them and prevent them from losing power. So to a certain extent, the French political system has been captured by what you can call the Technocratic class. And whether from the left or the right, it didn’t make any difference. And this Technocratic class is presenting Macron as a brand new fellow. He is nothing brand new. These guys have been in power for 50 years for God’s sakes. So this is basically nothing.

    Gave is then asked for his take on the market’s reaction, first to the outcome which now appears to be fully priced in, i.e., a Macron victory. The French investor’s response should be concerning to those who believe France is in for a period of calm and stability.

    If Macron is elected, as I already said, I’m not sure it’s not going to be a triumphant election. So I’m not sure they will have that much legitimacy at first. And second thing is that just after, we have the election for the French Parliament. And then it’s going to be a total mayhem. Because you have four main different currents in France. The extreme left, the Macron left, you see? You have the Fillon right, and you have Le Pen’s right. So you have four. The way it’s done before is that you had only three. Extreme left and the left were joined. And you had the election, you had three guys, and if anyone from the Front National had any chance of being elected, then the worst position of the other two retired. Right away. And said, you must vote for my usual enemy, but we don’t want to. It’s what’s called the Front Republic.

     

    But you see, it’s kind of easy to organize if the organization of the parties are very strong and can force people to retire and to stop running. But if you have four, the organization of the parties having lost all credibility, then nobody is going to retire. Until we are going to have elections. And you could have a majority of MP’s from the Front National The majority of MP’s from Melenchen. Anything is possible. So the fact that Macron is elected doesn’t reduce at all. Not at all. The political risk in France. It may reappear at the election time, big time. So anybody who buys on the idea that the problem is solved in France, let’s move to the next one will have to wait till the middle of June.

    Alternatively, what if Le Pen wins:

    If Le Pen wins, it’s pretty simple. The bond market in France, Italy, Spain cannot open on Monday morning. And I suppose the euro is dead in the following week. And then you have to buy Europe like crazy. Southern Europe.

    Why Southern Europe? Because it is Germany’s markets that would bear the brunt of the selloff, as the dissolution of the euro and European Union would effectively bring about the end of Germany’s economic hegemony (while at the same time benefitting France).

    The Germans have made a colossal mistake, which is that they have all the production in Germany. So they’re extremely efficient, well-organized, and they have developed massive current account surpluses. Half of that surplus is in cars. The margin on cars is around 4%. Imagine that the euro breaks down. The deutschmark comes back. The deutschmark goes up 15, 20%. And the whole German industry, all the production base in Germany, becomes bankrupt in no time at all. Compare that to France. France we have magnificent big companies that have been intelligent enough to produce everywhere in the world, to operate from everywhere in the world, and be totally independent from what’s happening in France. What they have in France is their headquarters. And that’s about it. So if Europe breaks, you should be long France on the stock market, and short Germany. Big time.

    Would a Le Pen victory also mean the end of the EU? Gave answers:

    I wrote a book in 2002, sometime around then, called “Lions Led by Donkeys in France.” It was kind of a bestseller. And I made the point in the book that the euro is going to destroy Europe, the European institutions. And I said, we must get rid of the euro to save Europe. So name of the game, if we have some kind of a crisis like that, is to basically close the market for three weeks and organize an orderly dismembering of the euro. But to maintain what has been good so far, which is the kind of common market. And it’s a difficult call because the movement towards the euro was also a movement to create a European nation.

     

    And so the institutions today are basically federal in nature. But nobody in Europe has ever voted for them. So to a certain extent, the guys with power in Brussels have not been elected by anybody, and you cannot fire them. So it’s totally Technocratic. So we have a hell of a problem. We should not only destroy the euro, but should move back to what Europe was in 1988 or 1987 before they put all these Federalist legislations in. That is going to be a tall order. But if the euro disappears and Europe has a problem, then the negotiating between the UK and Europe is going to be amusing. Because UK is going to say, look, who are we going to negotiate with?

    Finally, on his big picture thoughts ahead of tomorrow’s decisive election:”it’s going to be a close call, a lot closer than people think. And then we have the elections afterwards, which are going to be a total gamble.” Gave adds that in a sense Le Pen has already won because the “worst case scenario” for her, the 2022 elections, is still achievable. As for the parliamentary elections, “Le Pen could have anywhere between 40 to 100 MP’s (she currently has two)…. which would be a total disaster for the ruling class.”

    In other words, even if Macron triumphs on Sunday, “the National Front isn’t going anywhere.” Furthermore, Le Pen’s niece Marion Le Pen is poised to inherit the mantle of party leadership in time for the next presidential election in 2022. The younger Le Pen, already a French MP, would have a distinct advantage over her astringent aunt:

    Marion, she’s very young. She’s 27, 28. She’s an MP in the French Parliament. She’s extremely pretty. And she represents what’s probably very good in the French Catholic Right. She’s very much a Christian person. Very much so. So a lot of people have problems voting for Mrs. Le Pen today. A lot of the Fillon’s elector would have absolutely no problem voting for Marion, you see what I mean? So she has a big appeal on the Classical French Right. Big one. Big one.

    His parting words:”be careful. If she wins, you will have a disaster in the lot of the European bond market. Doesn’t mean a total disaster for the good quality companies. But the risk is not on the stock market. The risk is on the bond market. So be careful. Don’t overstay on the bonds in Europe.”

    While these are the core excerpts from the interview with Charles Gave, there is much more in the full 40 minute version found on RealVision TV.

  • Shocking Footage: Venezuelan National Guard Truck Drives Through Crowd Of 'Dissidents'

    Authored by Daniel Lang via SHTFplan.com,

    For several weeks Venezuela has been rocked with protests and riots as the Maduro regime increasingly tightens its grip on the population. It seems as if security forces are brutally cracking down on dissidents on a daily basis now. Wednesday in particular, saw some incredibly tense clashes between protesters and government forces in the capital city of Caracas. According to Bloomberg:

    Injuries throughout the city included 134 traumas and 17 cases of people overcome by gas, Mayor Ramon Muchacho of the opposition-dominated Chacao municipality said in a post on his Twitter account. Those hurt included lawmakers Freddy Guevara and Julio Montoya. The opposition coalition, known as MUD, said in a statement that more than 300 people were injured in today’s clashes.

     

    The South American nation has been riven by protests for weeks, and President Nicolas Maduro has called for a popular assembly to write a new constitution, a fresh attempt to consolidate control. Hundreds of thousands have taken to the streets to protest what they say is a plummet into autocracy. Protests over the past month have resulted in at least 30 deaths, and opposition politicians have vowed to continue street actions.

    Of course, those are just statistics. To really appreciate the human costs of these events, you have to see it with your own eyes rather than just read about it. Take a look at what happened yesterday in Caracas, after an armored vehicle owned by the Venezuelan National Guard caught fire.

    This is what civil unrest really looks like. It’s dirty, chaotic, and bloody. Let’s hope it never escalates to this point on our streets.

  • The Last Time This Happened, China Devalued

    "It's quiet, too quiet", "the calm before the storm", "the deep breath before the plunge" – you name the idiom, there is nowhere it applies more than US equity markets (lowest closing range in 65 years).

    Dow has done nothing for 8 days… the longest streak since 1952…

     

    However, if ever there was a catalyst for chaos, it is the collapse in uncertainty around the Chinese Yuan…

    As Bloomberg notes, the eerie stability in the yuan is reminiscent of the period leading up to China’s unexpected currency devaluation in August 2015. The one-year implied volatility of the yuan has dropped to about 4.7 percent, from about 8 percent at the beginning of the year.

     

    Investors should be worried: The surge in volatility triggered by the yuan’s sudden depreciation two years ago rippled across the world and set off a rout in equities and other risky assets.

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May 06

Today’s News 6th May 2017

  • "The Brink Of War": The Horror Of The Deep State's Plan Exposed – Part 2

    Authored by Jim Quinn via The Burning Platform blog,

    In Part One of this article I detailed how propaganda has been utilized by the Deep State for decades to control the minds of the masses and allow those in control to reap the benefits of never ending war.

    In Part Two I will discuss recent events, false flags, and propaganda campaigns utilized by the Deep State to push the world to the brink of war.

    “We penetrated deeper and deeper into the heart of darkness” – Joseph Conrad, Heart of Darkness

    The use of graphic images, electronically transmitted across the world in an instant, along with a consistent false narrative promoted by the captured corporate media, is the preferred means of appealing to the emotions of those who want to believe atrocity propaganda. Instigating a march to war through the use of unfounded fear, misinformation, staged photo ops, and appealing to passions and prejudices was as revolting to Albert Einstein  in the 1930s as it is today to normal thinking individuals.

    “He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would fully suffice. This disgrace to civilization should be done away with at once. Heroism at command, senseless brutality, deplorable love-of-country stance, how violently I hate all this, how despicable and ignoble war is; I would rather be torn to shreds than be a part of so base an action! It is my conviction that killing under the cloak of war is nothing but an act of murder.” – Albert Einstein

    It seems the level and intensity of the propaganda campaigns has ratcheted up dramatically in the last half dozen years and appears to be reaching a crescendo as we speak. It’s almost as if the Deep State is frantically trying to maintain the status quo, even as the worldwide financial Ponzi scheme of debt approaches the point of collapse. The domestic conditions in Europe, North America, and Asia are deteriorating rapidly. The propaganda doled out trying to convince citizens their financial situation is not worsening has failed.

    The people realize they have been screwed and continue to be screwed by the politicians, bankers and corporate fascists running the show. This is the major reason Trump was elected. People were desperate for someone who offered them a promise of economic revival and reduced government interference in their lives.

    The problem is no one is capable of saving the US Titanic. The iceberg was struck sixteen years ago when the Deep State engineered a plundering campaign driving the national debt from $5.8 trillion to $20 trillion, and unfunded welfare liabilities to $200 trillion. Unpaid for tax cuts will not save us. Unpaid for shovel ready infrastructure projects will not save us. Threatening foreign countries with tariffs will not bring manufacturing jobs back. Excessively low interest rates will not spur investment, but it will create a pension crisis and impoverish senior citizens.

    Devaluing your currency when every country in the world attempts the same “solution” will not work. Passing an Obamacare lite healthcare plan that keeps mega-corporation insurance companies and hospitals in charge solves nothing. The demographic time bomb of boomers turning 65 cannot be reversed. Providing the appearance of normalcy and improvement by artificially boosting the stock and real estate markets to all-time bubble highs only makes the coming crash that much more devastating.

    It is clearly evident to me the drumbeat of war is louder than it has been in decades as this Fourth Turning enters its ninth year. Every previous U.S. Fourth Turning has climaxed with a more horrific war than the previous, as the technological “advances” allow the Deep State controllers to create cannon fodder more efficiently. The year 2011 seems to have been the nexus for the Deep State to create new enemies and sow the seeds of discontent and revolution around the globe. U.S. troops withdrew from Iraq in 2011, while troop levels in Afghanistan remained low.

    The neo-cons were running out of conflicts to keep the profits flowing. The U.S. economy was headed back into recession as the temporary effects of the Fed’s QE heroin injection and Obama’s massive porkulus plan were leading to the inevitable drug withdrawal and fall back into recession. The Deep State managers had to act fast. They needed new enemies, more wars and more QE.

    Was it just a coincidence Hosni Mubarak was overthrown in Egypt during 2011 while the U.S. stood by and did nothing? After the democratically elected replacement turned out to be a Muslim extremist, we fully supported the next coup which placed a military dictator in charge. He just got a grand welcome from Trump a few weeks ago. I guess military dictators are OK when they do what we say.

    A dictator who had the nerve to not honor the U.S. dollar as the currency of choice in his kingdom, Muammar Gaddafi, was swiftly overthrown and killed by a NATO force led by the U.S. in 2011. A stable country was turned into a terrorist haven overnight. It’s now a lawless hellhole inhabited by ISIS, Al Qaeda, and various other Muslim terrorist factions. Along with the vacuum left in Iraq, Libya became a breeding ground for terrorists, armed by the U.S.

    Shockingly, after decades of stability, factions within Syria began a civil war against Assad and his government in 2011. Do you see a connection yet? Just as U.S. military presence in the Middle East began to wane, all hell began breaking out across the region. McCain and his band of neo-con world changers helped arm the “moderate rebels” fighting against the suddenly evil Assad. These moderates became ISIS, who now suddenly became the new bogeyman to be feared by Americans, as professionally produced videos of beheadings and other atrocities began to be disseminated by the mainstream media.

    The War on Terror had a new jolt of gusto and increased funding for more military mis-adventures. The propagandists ignored the inconvenient fact Assad was fighting against ISIS and Al Qaeda. They ignored the fact Assad ruled over a secular country – not a country run by religious American hating Muslim zealots. Fighting against Assad and ISIS doubled the arms dealers’ profits.

    Then Russia threw a monkey wrench into the Deep State plans. They fully supported Assad as an ally because they need his ports. The real reason Assad was attacked was because Saudi Arabia and Qatar need to build their natural gas pipeline across Syria to reach Europe. Virtually all of Europe is dependent upon Russia to supply their natural gas. The Deep State’s retaliation for Putin’s support of Assad was to overthrow the democratically elected president of the Ukraine who had rejected NATO for a closer partnership with Russia. The U.S. instigated coup and installation of a subservient puppet led Putin to put Crimea under Russian control and support Ukrainian rebels as they fought the new regime. This dramatic increase in tensions between NATO and Russia again generated more profits for the military industrial complex. Missiles and troops are pouring into the NATO countries surrounding Russia.

    The American propaganda specialists now had their new enemies. Syria and Russia, with Iran and North Korea providing occasional fear mongering diversions, became the focus of the neo-cons and their pliant media mouthpieces. The false flag downing of a Malaysian airliner over the Ukraine was blamed on Putin and Russia. No radar proof or physical evidence was ever presented implicating the Ukrainian rebels. They were winning the civil war and the U.S./NATO needed to turn world opinion against Putin.

    The first attempt at a false flag gas attack in Syria occurred in 2013, as the U.S. backed rebels murdered over 500 innocent victims in an attempt to turn world opinion against Assad and provoke NATO involvement on par with Libya. When this atrocity propaganda failed to work, the Deep State turned to heartstring pulling photographs of dead and injured children, with a consistent narrative spewed by every media pundit as instructed by the controllers.

    The first atrocity propaganda photo was in 2015, functioning as twofer on the propaganda scale. The picture of a three year old Syrian boy who drowned when his boat from Turkey to Greece capsized was spread across the world on every media outlet for a week as faux outrage against Assad and Putin was ramped up to hysterical levels. The evil Assad had caused this refugee crisis, even though it was the rebels who started the war.

    The blame for this tragic death was solely due to his father’s recklessness. The entire family lived in Turkey for three years and was not forced to go to Europe. The father was being funded from a relative in Canada and wanted to go to Europe for dental work. The picture was also used to promote the continued Muslim invasion of Europe. How could Europeans turn away these nice people? George Soros’ master plan was working perfectly.

    A year later Aleppo boy was the latest atrocity photo used to reverse public opinion against Assad and Putin, as their military success against ISIS, Al Qaeda and the U.S. supported rebels endangered the Deep State plan. As usual, the American public swallowed the propaganda, hook, line and sinker. The picture suddenly appeared and was disseminated on every mainstream media outlet in the country for days, with pontificating pundits tearfully portraying Assad as a butcher. No context, no proof he was injured by government forces, and no proof it wasn’t just a staged photo op like previous attempts. This last ditch attempt to convince the world to support a Syrian invasion also failed. This atrocity propaganda game loses its impact on a video game addicted, ADD ridden, SJW populace fairly quickly.

    Private citizen Donald Trump was unequivocal in his opposition to Syrian intervention before being elevated to the presidency, as shown in these tweets:

    Many Syrian ‘rebels’ are radical Jihadis. Not our friends & supporting them doesn’t serve our national interest. Stay out of Syria!

    Don’t attack Syria – an attack that will bring nothing but trouble for the U.S. Focus on making our country strong and great again!

    Trump’s non-interventionist rhetoric regarding Syria and unwillingness to declare Putin an evil enemy of America during the campaign resulted in an all-out assault by the Deep State to derail his candidacy, falsely claiming he was a puppet of Russia. These unsubstantiated claims and vitriolic propaganda campaign against Trump to elect Deep State candidate of choice – crooked Hillary – led to a heroic effort by the alternate media across the internet countering the mainstream media propaganda with facts and reason.

    When the corporate media shills rolled out the “fake news” storyline to discredit the alternate truth telling media, it immediately blew up in their faces, as the majority of the public began to realize the fake news was being plied by CNN, MSNBC, CBS, and the rest of the captured corporate legacy media.

    The discontent with the status quo among the normal people in flyover America was so great, it overcame all the Deep State propaganda, fake news, vast sums of money behind Clinton, and liberal urban strongholds, to elect Donald Trump as an agent of change who would kick the bums out of Washington. The undermining of Trump’s presidency began before he took office as the propaganda machine kicked into overdrive, with non-stop media squawking about Russia hacking the U.S. election in favor of Trump.

    There were no facts, no evidence, no substance, but plenty of innuendo, plenty of unfounded accusations, and fake news reports at a fanatical level by faux journalists being paid millions to do their part. Putin as an evil manipulator, controlling Trump, was the meme flogged 24 hours a day by the Deep State to keep Trump on the defensive.

    The only question at this point is whether Trump has already been co-opted by the Deep State military industrial complex or whether he is being manipulated through false flags and traditional propaganda techniques. Based on the slow progress on his domestic agenda of immigration reform, Obamacare repeal, tax cuts, infrastructure spending, and trade reform, it appears Trump decided to take the advice of neo-cons within and outside his administration and distract the masses with some new military adventurism.

    The relentless pounding of the Russian hacking narrative put Trump on the defensive. As Syria and Russia were on the verge of crushing the ISIS/Al Qaeda/“moderate rebel” resistance, a new false flag was needed. As McArthur so accurately described seven decades ago, the incessant propaganda of fear is what enriches the military industrial complex.

    “Our country is now geared to an arms economy which was bred in an artificially induced psychosis of war hysteria and nurtured upon an incessant propaganda of fear.” – General Douglas McArthur

    In Part Three of this article I will discuss how Trump has been co-opted by the Deep State into doing their bidding with military intervention and bullying across the globe. It’s just a continuation of imperialism run rampant. Empires always decline and fall due to military overreach and economic bankruptcy. The American empire will be no different.

  • Bank Of Japan "Bought The Dip" Over Half The Time In The Last 4 Years

    A year ago, we noted that The Bank of Japan (BoJ) was a Top 10 holder in 90% of Japanese stocks. In December, we showed that BoJ was the biggest buyer of Japanese stocks in 2016. And now, as The FT reports, the real "whale" of the Japanese markets is stepping up its buying (up over 70% YoY) entering the market on down days more than half the time in the last four years.

    Since the end of 2010, The FT notes that the BoJ has been buying exchange traded funds (ETFs) as part of its quantitative and qualitative easing programme. The biggest action began last July, when its annual acquisition target was doubled to ¥6tn. Since then, the whale designation has seemed pretty obvious: the central bank swallows a minimum of ¥1.2bn of ETFs every single trading day (tailored to support stocks that further “Abenomics” policies), and lumbers in with buying bursts of ¥72bn roughly once every three sessions.
     

    Some traders say the bank’s supposedly targeted buying has cushioned the whole market. Last year, foreign investors were net sellers of ¥3tn of Japanese shares – a retreat that might have decimated benchmarks had the BoJ not swum in with ¥4.3tn of support via ETFs.

    In the afternoon sessions on days the BoJ comes in big, the average return on the index is about 14 basis points higher.

     

    Since the annual quota was increased to ¥6tn, Nomura says, the BoJ has provided a cumulative boost to the Nikkei of about 1,400 points.

    But, as we've noted in the past, it appears to be the flow, not the stock, that is the big driver…

    As in a casino, The FT's Joe Lewis concludes, the whale definition may hinge less on the cash on the table and more on the psychological impact on other gamblers. The BoJ has been at the game long enough for the market to know it reliably buys on weakness.

    Of the 1,038 business days between April 2013 and March 2017 there were 449 sessions where the market was down: the BoJ bought on more than half of them. Whale or not, investors are now primed to think they are swimming with one.

    So given that we know SNB is extremely active in stock markets, and The BoJ is the Japanese stock market, does anyone realistically doubt The Fed is/has been active?

  • A New Street Drug Can Kill You By Touching Your Skin: What You Need To Know

    Authored by Alice Salles via TheAntiMedia.org,

    The opioid epidemic is a real tragedy. It has been devastating states like West Virginia, Vermont, and Maine – among others – and it’s been the number one factor in a major incarceration shift that is still seldom discussed by the media.

    But as soon as the Centers for Disease Control and Prevention (CDC) released a new set of national standards for prescribing painkillers, yet another deadly drug threat is beginning to concern authorities in certain states.

    New Hampshire Governor Chris Sununu spoke at a press conference this week, warning that a drug that’s 10,000 times stronger than morphine has made its way into the state. As a result, many first responders have been left scrambling to find a way to handle this new threat.

    Carfentanil, a powerful new opioid, has already claimed three lives.

    Engineered to be used as an elephant tranquilizer, the drug’s lethal dosage is 20 micrograms. Since the product can cause deadly effects just by being sprinkled on someone’s skin, authorities are highly concerned.

    Manchester Fire’s EMS Director Chris Hickey is warning New Hampshire residents they must be “hyper, hyper vigilant of what is out there, hyper vigilant of where you put your hands, what you come in contact with.”

     

    “There is nothing out there other than going on in hazmat suits on every single overdose that is going to completely protect us. We just have to be super, super careful with it,” Hickey told his own crew.

    The drug is so powerful that first responders are even having a hard time reversing overdoses when they arrive at emergency locations.

    On one occasion, Hickey said, one of his men had to use six to eight doses of Narcan, an overdose reversal drug, to revive a victim – twice the dose used in most cases.

    As doctors and first responders notice a pattern, they are also warning the public that Narcan isn’t going to be enough from now on. So what is next?

    Fear, of course.

    As state and local authorities find themselves panicking over this issue, many will ask for tougher laws. Federal agencies will then intervene, adding further restrictions to the already heavily regulated drug market in the United States. Adding fuel to the fire, the drug war will continue to target opioids like heroin and opium while Congress continues the process of imposing strict limits on some opioid prescriptions.

    As more restrictions are applied, users will have a harder time gaining access to the substances they are already addicted to, forcing them to turn to the black market for their fix.

    With this, incidents like the ones we’re seeing in New Hampshire will become even more common, prompting further government involvement. As this snowballs into further restrictions, the opioid epidemic will reach unimaginable levels, killing a record number of people, making orphans out of countless children, and creating another boom in U.S. incarceration rates.

    While it’s easy to understand why locals in New Hampshire are afraid, the rhetoric and reality on the ground should not be used to push for more heavy-handed intervention from local and federal governments. Instead, it’s time to look deep into how the opioid crisis started, keeping in mind that the government’s own fruitless battle against drugs was the very root of what is now concerning New Hampshire authorities.

    Like New Hampshire’s Drug Lab Director Tim Pifer, we agree that “this is certainly unfortunately just the tip of the iceberg.” But just like any iceberg, its base lies in dark, cold waters. Unless we’re ready to be honest with ourselves, finding the courage to dive deep to find where it begins, we will never know how huge this problem really is. And if we’re not willing to look at the root of the problem, we won’t be able to find a proper solution.

  • Artist's Impression Of The Future Of Obamacare Repeal

    False summit?

     

    Source: MichalePRamirez.com

  • Axel Merk: "There's More To Investing Than Chasing Companies That Want To Make Mars Inhabitable"

    Authored by Axel Merk via MerkInvestments.com,

    How does one construct a portfolio in an era of seemingly ever rising and highly correlated asset prices? Years of asset prices moving higher has changed both retail and institutional investors; it has changed the industry; and, in my humble opinion, those changes spell trouble. The prudent investor might want to take note to be prepared.

    I allege that for many, investing is no longer about prudent asset allocation, but about expressing themes. If you like green technology, you tilt your portfolio towards green energy. If you are socially conscious, there’s an ETF for that. I have no problem with anyone allocating money to any specific theme. However, has anyone else noticed that it doesn’t matter what theme you allocate money to? Investors are all playing the lottery and guess what: everyone’s a winner!

    Now, clearly, that’s an over simplification, as not every industry does well all the time – just ask those who invested in MLPs (master limited partnerships) in pursuit of income from fracking. Let me rephrase: the more of a monkey you have been, i.e. the less you have been thinking, the better you’ve likely performed over the past nine years. “Buying the dips” has been a consistently profitable strategy.

    That has created numerous oddities:

    • Take the investor who diversifies, rebalancing part of a portfolio to near zero-income generating fixed income. Advisors pursing such strategies have seen their clients take money away, as they are not willing to pay a management fee for essentially holding cash.

    The problem: cash is discarded even if it may be a prudent investment choice.

    • Take the investor who diversifies, rebalancing part of a portfolio to alternative income streams.

    The problem: Anything that generates an income in a zero-income environment is, almost by definition, risky. That is, both stock and fixed income securities in such a portfolio are so-called risk assets, i.e. I believe they are likely to move in tandem, not providing desirable diversification in a downturn.

    • Take the prudent investment advisor who has allocated part of a portfolio to true alternatives, such as long/short equities or long/short currencies. While providing diversification, such portfolios have likely underperformed during the relentless rise of equities. Worse, when the markets have had a hiccup, such as in early 2016, many of those portfolios still lost money, as the volatility of risk assets overwhelmed the cushion provided by the alternatives. Read: clients have been abandoning advisors, lured by competitors showing how great their performance has been, investing 100% in equities since the spring of 2009.

    The problem: Those solicitations conveniently skip the inconvenient fact that their clients lost huge in 2008.

    • Take the investor who wants to participate in the upside, but be protected on the downside.

    The problem: they spend a small fortune buying insurance, even when they might be better off just holding a cash buffer (again, advisors don’t hold cash, as clients would withdraw that cash at some point).

    • If many want to buy insurance, someone needs to write insurance. The one thing more profitable than buying stocks may well have been to write insurance. Funds that “sell volatility”, amongst others, have been amongst the best performers in the first quarter. Mind you, we do not recommend you touch any such product with a broomstick unless you know exactly what you are doing and able to stomach some serious losses. The theory behind many of these funds is that you collect what amounts to an insurance premium when volatility is low; the periods when you have to pay up are short and intense, but those setbacks are ultimately temporary.

    The problem: Earlier this year, one such fund was in the news for substantial losses, not because volatility spiked, but because portfolio management got cornered when they tried to roll derivative contracts. Let’s just say: something that looks too good to be true, may well be. Interesting things may well happen (read “contagion”) if and when these positions unwind.

    • Active management is dead. Long live passive investing. Never mind that anything but an index fund on the broad market is an active investment choice. The point being that you don’t want to pay some smart cookie to try to beat the market. That’s because those so-called experts were wrong in 2008 (and many times since). What can they possibly know? Besides, your favorite green tech investment fund is doing just fine, thank you very much.

    The problem: Cautions provided by active managers help one frame possible risk scenarios. Managing risk is important, even if many risks never materialize.

    • Active managers are leaving the industry. Who needs anyone skilled in navigating rough waters when you have robots providing liquidity?

    The problem: it may be helpful to have a captain on board when the auto-pilot fails.

    • Brokers are increasingly hand-holding relationship people, with portfolio allocation decisions being made by a small group creating model portfolios. After all, why risk your job trying to go out on a limb for your client?

    The problem: there’s nothing wrong per se with this trend, except that it increasingly concentrates investment decisions for huge amounts of money into very few people. We hope they are smart. Importantly, we hope investors understand who makes the investment decisions and what the conflicts are. Let’s just say: when something goes wrong, class action lawyers will have their day in court.

    • An increasing number of investors are skipping advisers altogether. After all, why not cut out the middle man if they don’t know any better than you do?

    The problem: there’s no problem with do-it-yourself investing except, just as professionals, investors owe it to themselves to make prudent investment decisions. We think that many individual investors do a better job than some professional investors these days in allocating their money. That said, that’s a very low bar.

    • If you have enough money, you allocate some money to venture capital. At least you have something to talk about at cocktail parties. It might help if you knew what your venture capital fund invested in, but let’s not get distracted by details.

     

    The problem: no problem if you can afford it. May I make the suggestion, though, that you first try to understand your overall portfolio, before you dabble in illiquid investments?

    What could possibly go wrong?

    Quite simply, markets do go down, not just up. In my view there is an increased risk of a flash crash in an environment where we are ever more dependent on automated liquidity providers that might withdraw liquidity the instant there’s an anomaly in the market (read: if you place a market order to sell a security, don’t complain if the market price is dramatically below the most recent trade on an exchange).

    While regulators may be all over flash crashes and possibly bail you out by canceling your order, a more pronounced decline is something you might want to prepare for as well. We hear pundits proclaim that we cannot have a bear market unless there’s a recession. There are couple of problems with that:

    • First, it’s not true. There was no recession during the October 1987 crash.
    • Second, we often don’t know whether there’s a recession until we are well into it; there have been instances when we didn’t know there was a recession until it was over.
    • Third, we’ll only know we are in a “bear market” when the market is down 20%. That’s kind of late to prepare for a bear market. Except, of course, if the market tumbles much more than that, such as the Nasdaq after 2000; or the S&P 500 in 2008.

    Is there a better way?

    The other day, we met with an investor who has 40% of his portfolio in cash. He doesn’t like market valuations and has decided, he’ll put money to work if the market declines by 10%; then more money to work if it declines another 10%. We think this investment philosophy beats that of many. At least, he has taken chips off the table during the good times and has money to deploy. Before readers cry out: “There’s so much cash on the sidelines, this market must go up!”, I would like to caution that this investor is a rare exception of many investors I talk to – and I talk to retail investors, advisors, family offices, to name a few. The same person, by the way, told me he is at a loss on what to advise his friends, as he doesn’t want to encourage them to get into the markets given current valuations.

    Indeed, this appears to be a market where just about every pessimist is fully invested. Because folks have been wrong so many times calling the market top, we believe many market bears are fully invested.

    I think there’s a better way. The better way of investing is to take the long view. Sure it’s great to have one’s stock portfolio surge, but investing, in the opinion of yours truly, isn’t about gambling, but about asset allocation with humility. Passive investing is all right for certain things, but should not replace common sense. When the likely successor to Janet Yellen (we put our chips on Kevin Warsh) has complained that asset holders have disproportionally benefited from monetary policy, and that the focus has to shift, I think it’s but one indication to do a reality check on one’s portfolio, as headwinds to asset prices may well increase.

    The short answer is that investors may well look at their portfolios more like pension funds or college endowments do. Except, well, many pension funds and college endowments have fallen into the same traps individual investors and advisors have. Let me rephrase: investors might want to invest according to a philosophy a well-run endowment might have. Let me just mention a few principles here. Here’s the investment allocation of an endowment of a private college – I’m not suggesting this specific allocation is the right one for any specific person or institution, but want to provide it as food for thought:

    • 31% hedged strategies
    • 27% equities
    • 21% private equity
    • 8% real assets
    • 6% cash
    • 5% fixed income
    • 2% equity-like credit

    Note that the equity holdings are less than 30%, not the 60% often touted in a “60/40” portfolio (with 40% referring to bonds). The number can be larger or smaller for any one investor, but I believe we should get away from the notion that one needs to have a large portion invested in equities. Endowments are long-term investors, yet don’t go to 100% equities; so why should a young investor be all in equities? By allocating a far smaller portion, you don’t need to lose sleep over asset bubbles. Instead, you can indeed rebalance or make gradual shifts.

    Note the biggest bucket is “hedged strategies.” We have long advocated that investors need to look for uncorrelated returns. A long/short equity strategy or long/short currency strategy might generate such returns. Importantly, this bucket of alternatives is far higher than what many advisors choose. In an era of very expensive assets, we think this may be rather prudent. This doesn’t solve the issue of how to find the right hedged strategy – remember that those strategies will have under-performed the overall market. Important here is the investment process of the underlying ETF, mutual fund or whatever product one might want to consider.

    Private equity is obviously not accessible to many investors. Relevant though is that there’s a big bucket allocated to investments where one expects a long-term return without seeing the daily price moves. Sometimes it’s good not to have tick-by-tick data. An individual investor might be able to replicate this by opening another account, selecting a few long-term ideas, then throwing away the key to the account for a few years. Well, one should still review the investments periodically, but the point being: it is okay to invest different portions of a portfolio according to different philosophies. Say, be a day trader for a small portion, but do hold strategic positions. Some of this can be achieved by intentionally mixing up the styles of different investment products. If not all of them perform well at the same time, that’s a good thing!

    This particular portfolio has a small allocation to “equity-like credit”; we are not making a judgment whether this is too high or too low; the point again is that there’s a very broad allocation to different asset classes. Note, by the way, that ‘equity-like credit’ is likely to perform, well, like equities. Even with those assets added, the equity portion is still modest.

    Not mentioned in this particular portfolio, as least not in the headline numbers, is an allocation to precious metals or commodities. Those who have followed us for some time know that we encourage investors to consider gold as a diversifier. We have often referred to gold as the “easiest” diversifier because it’s easier to understand than some exotic long/short strategy. In our analysis, the price of gold has had a near zero correlation to the S&P 500 since 1970; however, over shorter periods, correlations can be elevated. In our analysis, gold has done well in every bear market since 1971, with the notable exception of the bear market in the early 1980s when then Fed Chair Volcker raised interest rates rather substantially.

    The point of all of this is not to suggest that investors need to add equity-linked credit or private equity to their portfolio. No, the point is that there’s more to investing than chasing high flying companies that promise to make Mars habitable.

    You might have also noticed that I squeezed in the word “humility” in asset allocation above. Have some respect that things that go up can also go down. Having respect means that one doesn’t adjust one’s lifestyle (expenditures) as a reaction to rising asset prices. Investors can control expenses more so than income. So maybe we should be spending far more time talking about how we spend our money rather than how we invest it. But I digress…

  • Crisis Meet China – China Meet Crisis

    By Chris at www.CapitalistExploits.at

    Earlier this week, Kyle Bass spoke on Bloomberg about the reckless expansion of the credit system in the Middle Kingdom.

    He warned about the ballooning asset-liability mismatch in the shady $4-trillion wealth management products (WMPs) market.

    And went on to say “this is the beginning of the Chinese credit crisis” while admitting it could take some time for things to really start unraveling.

    A fair call…

    How many of us have figured the trend out, only to allocate too much capital to a trade and even lose on a trade which finally works… eventually? I know I have. I’m pretty sure Kyle’s position sized pretty well. After all, this is far from his first rodeo.

    In the interview Kyle referenced an SCMP article from a few weeks ago that went largely unnoticed by most. It was on the Chinese government coming up with more and more creative ways to stem the capital outflow underway since mid-2014:

    “China’s foreign exchange regulator, SAFE, has asked for cooperation from multinationals, including Sony, BMW, Daimler, Shell, Pfizer, IBM and Visa, to manage and control the flow of capital out the country.”

    This all feels a bit deja vu-ish.

    Long-time readers will know we’ve been bearish on China and the renminbi for well over 2 years now. Back in October 2014 we said that:

    “I don’t know exactly how a breakdown in the renminbi will play out. However, it is a sure bet that all those markets that prospered over the last 15 years or so on the back of a China will do badly. Where things become shady is the collateral damage to other markets that have had nothing to do with the Chinese economic miracle.”

    A few months later, we took a closer look at the cracks appearing in China’s interbank lending market, indeed feeling (correctly in hindsight – lucky us) that timing had arrived to short the currency cross via the options market:

    “The interbank lending market is an integral part of any country’s banking system as it is where banks maintain their short-term liquidity requirements. Often a bank will have a mismatch between between short-term assets and obligations and as such they will have to enter the interbank lending market to maintain optimal liquidity. If a bank has excess short-term reserves they may want to lend these out to other banks who have a shortfall in short-term reserves. The opposite also occurs where a bank, with a short-term funding deficit, will enter the market to borrow funds to match short-term liabilities.

     

    The behavior of the interbank lending market can provide one with a good appreciation for the liquidity of the banking system as a whole. If there is a lot of liquidity in the system (more short term assets than liabilities) the interbank rate will fall, if there is scarcity of short term assets relative to liabilities then rates will rise. So a rising interbank rate is generally associated with contracting liquidity conditions. Rapid rises in interbank lending rates are often associated with banking or credit crisis. This happened in the lead up to the GFC. What happened was that as banks began to fear the ability of other banks, who are their counter-parties, to make good on their obligations they demanded higher rates especially from banks already facing liquidity problems which only compounded their original the situation.

     

    A rapid rise in a country’s interbank lending market is also a good predictor of the direction of a country’s currency, or at worst a confirming indicator. Let’s have a look at the interbank lending market of a few emerging nations over the last 12-18 months and then look at what is happening with the renminbi. I think it is instructive for what we have been positioning for in our funds.”

    In truth, it was an easy bet to make.

    Volatility was around 2%! NOT buying put options would have been like having Scarlett Johansson invite you into her bed and then falling promptly asleep. You just couldn’t do that. And so you had to buy.

    Taking a look at the Chinese interbank lending today:

    Not yet getting critical but worth watching.

    And pricing of the options:

    So a 6.6% move to make 100%. Seems reasonable but nowhere near as good as it looked in late 2014 – unfortunately.

    The problem – if there is one – is that 12 months is a long time to date an ugly girl, work for a nasty boss, or drive a Lada. But it isn’t a particularly long timeframe to hold an option for.

    And yet that’s the best the option market gives us.

    Sure, you can throw your towel into the ring in the futures markets but if, like me, you dislike leverage and margin calls (because you WILL get it wrong at some point), then you’re going to have to figure some better way to ride this pony.

    The answer, I think, is this.

    – Chris

    “What you see when the liquidity dries up is people start going down… and this is the beginning of the Chinese credit crisis.” — Kyle Bass

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  • College Enrollment Is Surging But Is It Really Worth It? (Aside From The Frat Parties, Of Course)

    College enrollment has been surging over the past 4 years with 67.4% of high school men enrolling directly in college after high school in 2016 versus only 61.3% in 2012. 

    Ask any economics professor at an Ivy League school what is driving the trend of higher college enrollments and you’ll get a quick response that implies that our young 18-year-old snowflakes are simply hedging their future employment opportunities against the devastating consequences of globalization and a deteriorating manufacturing base in the United States.

    And while their complex econometric models prove their point well beyond a shadow of a doubt (even though you’ll never understand them so don’t even try), we suspect the real answer may have something to do with the federal government throwing student loan dollars at anyone with a pulse while simultaneously offering to erase all that debt when you graduate.  Call us cynics. 

    Meanwhile, we find it absolutely shocking that a bunch of 18-year-old boys would happily take $40,000 from the federal government every year to do this:

    College

     

    But, whatever the reasoning, there is no doubt that college enrollment is soaring.  Per Bloomberg:

    College

     

    And while over-educated elitists of our liberal bastions of higher education are all too eager to explain why more kids are choosing college these days, you’ll rarely hear them comment on whether or not it’s actually worth it…it just wouldn’t progress any of their liberal narratives or serve their self interests, so why bother?

    So we decided to take a quick look at the math of a college education.

    First, according to Quora.com, attending college these days can cost anywhere from $22,500 per year for a public, in-state university to $75,000 for a private education.  So, lets just assume that, on average, our snowflakes are spending $30,000 per year on a 4-year bachelor, or $120,000.

    • Attend a public in-state university for four years, living on campus ($22,500 per year for four years) for $90,000
    • Attend a public out-of-state college for four years:  $35,000 per year for four years for a total of $140,000
    • Attend a private four year college in an expensive area like Manhattan at $75,000 per year for a total of $300,000

    So what do they get for that?  Well, per the Bureau of Labor Statistics, that $120,000 degree in Anthropology will earn you roughly $464 extra dollars per week or ~$24,000 per year.

    Wages

     

    So, doing some quick math, we find that $24,000 tax-effected at a 25% tax rate equals about $18,000 of extra annual earnings for a college grad and implies a 15% return on invested capital. 

    Not bad…but, unfortunately, the story doesn’t end there.  You see, by choosing the college route our snowflakes not only incur the cost of college, in the form of massive student loans, but also forgo 4 years of earnings, which equates to roughly $110,000 ($692*52*.75) on a tax-effected basis. 

    So lumping in that opportunity cost brings the true average cost of that Anthro degree up closer to $250,000, implying a roughly 7.2% ROIC. 

    Of course, that’s assuming that young Tripp Hollingsworth III actually graduates in 4 years and then promptly finds a job shortly thereafter rather than returning to mom’s basement.

    So you decide, is a 7.2% return on invested capital sufficient to take on a life time of debt?  In fairness, it is awfully difficult to calculate the present value of a frat party, which for an 18-year-old boy may be infinite.

  • Mike Krieger Asks: Can Bernie Sanders Be Convinced To Launch A New Political Party?

    Authored by Mike Krieger via Liberty Blitizkrieg blog,

    I am 100% in the camp that supports Bernie Sanders severing himself completely from the hopelessly captured and corrupt Democratic Party and launching an entirely new movement. I’ve spent a lot of time since the 2016 election writing about how worthless the Democratic Party is and why it will never fundamentally change. The sad truth when it comes to American politics at the moment is “we the people” have no political representation whatsoever. Both the Republican and Democratic parties are corporate and oligarch donor owned, and will never push forward the sort of sweeping change average Americans need in order to enjoy a higher quality of life.

    This post isn’t meant as an endorsement of Sanders or all of his policies, but it’s an endorsement of creating something new so that the public can enter a new era in which the needs of the people are addressed. Truth be told, we’ve been fooled into thinking that we have two distinct political parties proposing vastly different policy solutions to help the public. The reality is we have two political parties proposing various solutions to help the donors. Nobody represents the people. We need to discard these parties and form new ones, and the sooner we do so, the better.

    As I wrote in the post, In Defense of Populism:

    Despite my refusal to self-identify, I am comfortable stating that I’m a firm supporter of populist movements and appreciate the instrumental role they’ve played historically in free societies. The reason I like this term is because it carries very little baggage. It doesn’t mean you adhere to a specific set of policies or solutions, but that you believe above all else that the concerns of average citizens matter and must be reflected in government policy.

     

    Populism reaches its political potential once such concerns become so acute they translate into popular movements, which in turn influence the levers of power. Populism is not a bug, but is a key feature in any democratic society. It functions as a sort of pressure relief valve for free societies. Indeed, it allows for an adjustment and recalibration of the existing order at the exact point in the cycle when it is needed most. In our current corrupt, unethical and depraved oligarchy, populism is exactly what is needed to restore some balance to society.

     

    Whether people identify as on the “right” or the “left” there’s general consensus (at least in U.S. populist movements) of the following: oligarchs must be reined in, rule of law must be restored, unnecessary military adventures overseas must be stopped, and lobbyist written phony “free trade” deals must be scrapped and reversed.

    Trump was the first President in my lifetime to win the office on a populist wave. Unfortunately, his actual style of governing in practice looks a lot like authoritarian-corporatism, an ideology and mindset which I find nauseating and dangerous. As such, the best chance of an alternative populism in the near-term would come from a Bernie Sanders led party.

    I seriously hope he takes the plunge, because as recent reports from a Florida lawsuit against the DNC demonstrate, the Democratic Party is beyond repair.

    As the Observer reports:

    On April 28 the transcript was released from the most recent hearing at a federal court in Fort Lauderdale, Fla., on the lawsuit filed on behalf of Bernie Sanders supporters against the Democratic National Committee and former DNC chair Debbie Wasserman Schultz for rigging the Democratic primaries for Hillary Clinton. Throughout the hearing, lawyers representing the DNC and Debbie Wasserman Schultz double down on arguments confirming the disdain the Democratic establishment has toward Bernie Sanders supporters and any entity challenging the party’s status quo.

     

    Shortly into the hearing, DNC attorneys claim Article V, Section 4 of the DNC Charter—stipulating that the DNC chair and their staff must ensure neutrality in the Democratic presidential primaries—is “a discretionary rule that it didn’t need to adopt to begin with.” Based on this assumption, DNC attorneys assert that the court cannot interpret, claim, or rule on anything associated with whether the DNC remains neutral in their presidential primaries.

     

    Later in the hearing, attorneys representing the DNC claim that the Democratic National Committee would be well within their rights to “go into back rooms like they used to and smoke cigars and pick the candidate that way.” By pushing the argument throughout the proceedings of this class action lawsuit, the Democratic National Committee is telling voters in a court of law that they see no enforceable obligation in having to run a fair and impartial primary election.

    That’s your “Democratic” Party.

    As a result of the obvious sham, there’s a new movement afoot to “Draft Bernie” into a new political party. Its founder is Nick Brana, and here’s a great interview of him  by Jordan Chariton.

     

    Here’s my bottomline. If Sanders doesn’t do something like this and do it fast, the Democrats are going to nominate another corrupt loser in 2020, and Trump will win a second term no matter how unpopular he might be.

  • California Wants To Give More Money To Eric Holder To Fight Trump

    California Attorney General Xavier Becerra apparently doesn’t think that $858 million is nearly enough taxpayer money to fight the Trump administration.  That is precisely the amount that California’s state budget proposal, laid out by Governor Jerry Brown in January, allocated to Becerra’s Justice Department but in testimony before the Senate Budget committee yesterday Becerra said he needs even more to attract and keep qualified lawyers to defend the state.  Per The Hill:

    “No one anticipated the extent to which federal executive actions would impact the people of California and the Department of Justice. Who knew that the federal government would play so fast and loose with the law and taxpayers’ pocketbooks?”

     

    “I am operating with a budget that was assembled without addressing the needs of current mandates and before our new reality of dealing with federal executive orders,” Becerra said. “If it feels like the attacks are constantly coming, it’s because they are.”

    Becerra

     

    After taking over the state Justice Department in January, Becerra has joined or initiated several lawsuits challenging the Trump administration over everything from an immigration to changes to federal fuel efficiency standards.

    Meanwhile, after the passage of the Obamacare repeal bill yesterday, Becerra issued a statement defining healthcare as a “right” of all Americans and suggesting that the next front in his legal war against the Trump administration could come over the Republicans’ efforts to undo Obama’s legacy.

    “I believe health care is a right. Today’s House vote takes a dangerous step towards jeopardizing the health security of millions of people in our state and throughout the country.”

     

    “As a Member of Congress, I was proud to help expand health coverage and lower costs for hardworking Americans. Every Member of Congress who voted for today’s bill must answer why it is good to take away an American’s access to his or her doctor. Would they do this to themselves or their family?”

     

    “As California’s Attorney General, I will use every legal tool at my disposal to safeguard the healthcare the people of our state depend on.”

    And while we would never question Becerra’s brilliant legal mind, we would love it if he could point us to the specific language in the U.S. Constitution that guarantees every U.S. citizen the “right” to healthcare. 

    Of course, the additional funding request from Becerra is even more questionable in light of the fact that California recently retained the law firm of Obama’s former Attorney General, Eric Holder, to also fight the Trump administration.  You just have to wonder how much of that incremental funding over and above $858 million will make its way into Holder’s pocket?  Per our post from January:

    “With the upcoming change in administrations, we expect that there will be extraordinary challenges for California in the uncertain times ahead.  This is a critical moment in the history of our nation. We have an obligation to defend the people who elected us and the policies and diversity that make California an example of what truly makes our nation great.”

     

    “Having the former attorney general of the United States brings us a lot of firepower in order to prepare to safeguard the values of the people of California,” Kevin de León, the Democratic leader of the Senate, said in an interview. “This means we are very, very serious.”

    Meanwhile, the sole Republican on California’s budget committee asked what would seem like the most logical question following Becerra’s request, namely why should taxpayers provide more money to Becerra to fight laws that could ultimately result in the state losing access to millions of dollars of federal funding.

    State Sen. Joel Anderson, R-Alpine, the budget subcommittee’s sole Republican, pressed Becerra to quantify how much money his office receives from the federal government and how much could be put at risk by state policies, such as those embodied in Senate Bill 54, the “sanctuary state” bill.

     

    “It makes no sense to give you an increase if your sole focus is to pursue policies that cut off” potentially hundreds of millions of federal dollars. “I don’t see why I would want to backfill someone hellbent on having their budget cut.”

    Here’s a radical idea Mr. Becerrra, how about you just do your job and simply enforce the laws of the land rather than trying to bend them to fit your own personal political beliefs.  It would save California taxpayers a whole lot of money.

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May 05

Today’s News 5th May 2017

  • Where Is Craft Beer Most Popular In America?

    It’s difficult to miss the degree of variety beer lovers can enjoy at this moment in the US. This is due to the explosion of small breweries coming on to the scene, which emphasize experimenting with flavors and styles.

    As Priceonomics.com notes, over the past 40 years (thanks to deregulation in the beer industry) the number of breweries in America expanded from a post-prohibition low of under 100, to over 5,000 in 2016. The bulk of this growth comes from small breweries, the most familiar to consumers being the microbrewery.

    According to the Brewers Association, a trade group for American craft brewers, a microbrewery is any local and independent brewer that sells fewer than 15,000 barrels of beer per year and sells at least 75% through other bars, restaurants, and liquor stores.

    Unfortunately, it’s not the case that you can walk to your local liquor store and choose from 5,000 different breweries to bring home tonight. The reach of small breweries are confined to particular markets as most microbreweries have limited and local distribution. The variety from these small craft breweries is typically limited to the state or metro area the brewery where the brewery is located. The fact is, some areas of the country are just better for beer aficionados who want lots of options.

    So where do you have the best chance to sample the greatest variety of beer possible? Which states and cities have the most breweries overall?

    We analyzed business listing data from Priceonomics customer Datafiniti to offer some perspective into that. This data set included the listings of craft breweries along with their locations. We combined this with supplementary information from the Brewers Association catalog of breweries, to offer more specific details.  

    From our analysis, we are able to find out in what parts of America breweries reign supreme.

    So, which state has the most breweries?

    Number one is California by a serious margin, with over 600 breweries. Colorado and Washington are the next closest with about 350 each. With 15 or fewer breweries, Hawaii, Mississippi, Washington D.C. and North Dakota are at the bottom of our list. We found that cities in the Pacific Northwest and Colorado are your best bet for finding the most breweries in one place. Cities along the coasts and in the Midwest are also solid destinations. There are also some exciting small cities outside of this trend that should not be overlooked (like Asheville, NC). Vermont is the state with the most craft breweries per capita, while Boulder, Colorado is the city with the highest density of craft breweries.

    Looking at the information in absolute terms skews our list towards the larger states with greater population. It’s intuitive that states with more people (and therefore more beer drinkers) would be able to support more breweries.

    Understanding the number of breweries per capita will tell us where breweries are most plentiful relative to population…

     

    The title of most breweries per capita goes to Vermont. Even though they only have about 50 in total, since the state is so small, that equates to 8 breweries per person. Montana, Colorado, Maine, and Oregon all have about 6 breweries per person. Overall we see a strong presence of breweries in the Pacific Northwest, New England, and the Midwest.

    Read more details here…

  • Paul Craig Roberts Warns American Democracy Is "A Dead Man Walking"

    Authored by Paul Craig Roberts,

    Trump’s “sell-out,” as it is called, coming on top of Obama’s eight-year “sell-out,” is instructive. We have now had a Democratic president who sold out the people who elected him and a Republican president who has done the same thing. This is a very interesting point, the meaning of which most people miss.

    But not Russia’s president, Vladimir Putin. At the Valdai discussion club, Putin summed up Western democracy, which I paraphrase as follows:

    In the West, voters cannot change policies through elections, because the ruling elites control whoever is elected. Elections give the appearance of democracy, but voting does not change the policies that favor war and the elites. Therefore, the will of the people is impotent.

     

    People are experiencing that they and their votes have no influence on the conduct of affairs of the country. This makes them afraid, frusrated, and angry, a combination of emotions that is dangerous to the ruling elite, who in response organize the powers of the state against the people, while urging them with propaganda to support more wars.

    Obama promised to get out of Afghanistan or Iraq or perhaps it was both. He promised to reverse the police state created by the George W. Bush regime. He promised to focus American resources on American domestic problems, such as health care.

    But what did he do? He expanded the wars and launched new ones, destroyed Libya and attempted to destroy Syria, but was stopped by British non-participation and Russian objection. Obama overthrew democratic governments in Honduras and Ukraine. He expanded the police state. He began the demonization of Russia and Putin. He betrayed the American people again by allowing the private insurance industry to write his health care plan known as Obamacare. The private interests wrote a plan that diverts public monies from health care to their profits.

    All of this is forgotten when the ruling elites and the presstitutes that serve only them refocused the demonization on Trump. Suddenly, it was the president-elect of the United States who was the main danger to the US and the American people. Trump was a Russian agent. He had conspired with Putin to steal the US election from Hillary Clinton and make the White House a partner of Putin’s alleged reconsruction of the Soviet Empire.

    The nonsense was hot and furious, and it was effective. Trump succumbed to pressure and sacrificed his National Secuity Advisior, who was supportive of Trump’s promise to normalize relations with Russia. Trump replaced him with a Russophobic idiot who apparantly cannot wait to see mushroom clouds over cities all over the Western world.

    Why did two presidents in succession completely sell out the people who voted for them?

    The answer is that presidents are not as powerful as the interest groups who make the decisions.

    Trump was going to get us out of Syria, so he committed an unambigious war crime by gratuitously attacking Syria with Tomahawk missiles.

    Trump was going to normalize relations with Russia, so his Secretary of State announces that US economic sanctions will stay on Russia until Russia hands over to Ukraine the Russian Crimean naval base on the Black Sea.

    It is impossible to normalize relations when the cost to the other party of the normalization is national suicide.

    Despite Trump’s complete surrender to the powers that be, today (May 2) on NPR I heard raw propaganda dressed up as “expert opinion” that Trump is biased against the media, when what all of us have seen is massive media bias against Trump, including the program to which I was listening.

    For example, NPR had accumulated “experts” who said that Trump had slandered Obama by accusing him of intercepting his comunications. NPR said nothing about the Obama regime’s charge that Trump conspired with Putin to steal the election from Hillary Clinton.

    If anything was slander, this was, but all the talk was about how Obama could sue Trump.

    But, of course, both are public figures, and neither can sue the other.

    I wonder why NPR’s “expert” didn’t get around to this point.

    Why is the ruling oligarchy still using its presstitutes to campaign against a president who has surrendered to them?

    Perhaps the answer is that the real powers that be are going to make an example out of Trump so that never again does a person running for elected office make a populist appeal to the electorate.

  • "Someone Is Blowing Up": RBC Warns China-Induced Unwinds Are Escalating

    "Something is off," warns RBC's head of cross-asset strategy Charlie McElligott in the introduction to his latest market noting that the swing in US fiscal policy optimism is coming at a critical time as the China's liquidity tightening is spooking the reflation story.

    SUMMARY:

    Movement on US fiscal policy is currently driving US rates and equities higher, counteracting the tremendous negative implications of this ‘Chinese tightening / deleveraging’ story and the impact this is having upon commodities (industrial metals & crude) and thus, ‘inflation expectations.’

     

    ‘Connecting the dots’ between the crude oil / commodities selloff and a strong (negative) reversal in ‘mean reversion strategies’ both cross- and inter- sector (energy) within equities, as well as notable drawdowns in ‘momentum’ market-neutral strategies over the past few weeks.

    *  *  *

    FISCAL POLICY OPTIMISM SWING COMES AT CRITICAL TIME, AS CHINA LIQUIDITY TIGHTENING STORY IS SPOOKING REFLATION:

    The big +++ story overnight: Republicans are planning a ‘make or break’ vote on the ACA repeal today, as the GOP feels they now have the votes to pass the Trump campaign healthcare promise.  This sudden swing to ‘movement’ / optimism speaks to the ‘pessimistic overshoot’ seen across the Street with regards to the consensually negative view on ‘fiscal policy’ implementation, following the administration’s / Republicans’ self-inflicted wounds of the past few months.

    NOW, this opens the door again to not just tax reform (as it creates a much more benign revenue ‘starting point’ for tax-cut offsets), but potentially infrastructure as well, which might too be bundled into the tax plan.  Yes, none of this is ‘imminent’ per se, but the sentiment-inflection here is swift and of extreme importance to the ‘reflation’ trade. 

    As such, equity futures and US nominal rates are currently holding higher, despite what looks to be a total breakdown in crude oil and commodities turning outright ugly now.

    And today is seeing the move accelerate…

    with the biggest single day drop since Nov 2016…

     

    This newly-found ‘US fiscal policy optimism’ could not have come at a better time for the ‘reflation’ camp, who have been sweating bullets in recent days because our much-discussed ‘Chinese tightening / deleveraging’ theme is playing-out real-time and wreaking havoc on global commodities–particularly with industrial metals (Dalian Iron Ore limit-down overnight -8.0% and reopening down another -5% today).  Look at the carnage on the Shanghai Futures Exchange, particularly in the MTD / QTD columns: 

    This comes following the total meltdown in copper (-4.0%, and another -1.7% move this a.m.) during yesterday’s US session, while too we see the breakdown in the crude oil complex accelerating with WTI making YTD lows this morning while falling through its trend-support line dating back to last August.  BHP and RIO are the proxy for the breakdown in the equities-complex (while a popular US equities ‘inflation’ basket is crushed a massive -4.3% over the past five days), while too we see China- / resources- levered AUD come unglued in the FX space, now -2.3% month-to-date despite a very ‘meh’ USD.  At the same time, we’ve now seen weaker Chinese Manu PMIs and Caixin Composite PMIs over the past week, in conjunction with an ISM Manufacturing misses in US.

    All of this is tied-into the enhanced Chinese efforts to deleverage the economy via ‘measured tightening’ (higher money markets rates—see O/N SHIBOR again making new 2 year highs last evening) and reduced liquidity (net removals as MLF loans roll-off versus now-smaller / not offsetting RR cash injections and OMO’s).  In conjunction with these quantitative efforts, the Chinese are also ‘cracking down’ on shadow financing and wealth management products, both of which participate in the liquidity / commodity-price feedback daisy-chain (to my point yesterday and in the past on higher short-term rates acting as ‘margin calls’ on ‘commodities as collateral’ financing trades).

    Mark Orsley and I have been working on a “Chinese Liquidity Monitor” which tracks the PBoC’s various measures (repos, reverse repos, OMOs, SLFs, MLFs, Pledged Supplementary programs)—see below.  The key point here: it’s not just the sharp decline in the ‘rate of change’ of PBoC ‘lending’ / ‘financing’ / ‘credit creation’….it’s that liquidity is being outright REMOVED.

    It makes total sense too—the Chinese have recently used the ‘air-cover’ of the Fed’s own tightening to conduct their own–so the current timing is perfect, as a June FOMC hike became that much more of a ‘lock’ after yesterday’s hawkish message was successfully delivered (looking through the Q1 data softness as “transitory”).

    The simple fact is that global liquidity–and thus, financial conditions as well–are tightening.

    US real rates are gapping-tighter, as 5Y TIPS yields have swung from -24bps on April 12th to this morning’s +13bps.  3m LIBOR has MORE THAN DOUBLED since June and currently sits at highs since March 2009.  As mentioned earlier, overnight SHIBOR printed another new 2 year high, same for Chinese 10Y government bond yields.  US nominals are back approaching the upper end of their recent range as well.  Yes, if this was a pure reflection of growth, it would be an outright ‘risk-asset positive.’  But it’s much more nuanced than that, especially from the Chinese ‘demand driver’ impact on the global economy.  Tighter financial conditions à slower growth à lower inflation.

    From a risk-perspective though, this is then counter-balanced via by-and-large ‘still expansionary’ global PMIs, BIG corporate earnings growth and now, into the aforementioned (and SUDDEN) positive uptick in sentiment around US fiscal policy movement.  If fiscal can re-jigger ‘animal spirits’ (especially on the ‘optimism’- / confidence- side), then it becomes much more attractive to put those ‘reflation trades’ back on (rates shorts, long cyclicals / banks / value factor, potential to re-load USD length as well).  To this point, I will continue watching that 2.40 / .45 level (smack-dab btwn 50- and 100-dma’s in UST 10Y yields and the overhead resistance level since late-March—H/T Mark Orsley)…while still feeling confidence that this ‘Chinese tightening’ story (and the impact it is have on commodities and thus, global inflation expectations) will keep US rates ‘anchored’ despite the Fed’s hiking intentions.

    NOW LINKING THE ABOVE ‘COMMODITIES / CRUDE DISTRESS’ INTO A NOTABLE DEVELOPMENT IN EQUITIES FACTOR MKT NEUTRAL:

    In yesterday’s note, I pointed-out particularly acute ‘unwind’ price-action in US equity 1m ‘momentum’ factor market neutral strategies seen on Tuesday—as ‘momo leaders’ were splattered, while ‘momo losers’ squeezed sharply-higher.  We have now seen a ‘clustering’ of 1.5- to 2.0- standard-deviation drawdowns in the strategy over the past few weeks (almost dating-back to the start of the quarter frankly), which is anecdotally quite atypical in a ‘flat to up’ intraday tape.  It would be safe to surmise that there is either signaling a rotation that is playing-out in the market, or conversely, an unwind of some sort.

    Looking back to the start of the quarter though, we haven’t really seen that sector- or factor-level rotation generally-speaking, as thematically, ‘growth’ factors / sectors continue to lead, while at the bottom, we see cyclicals / value / anti-beta still lagging, as they have all year.   But if looking at a strategy such as ‘prior quarter mean reversion’ you begin to see something interesting.

    This is crude, but using a simple ‘Q1 mean reversion’ proxy (deployed in Q2), where I go long Energy (worst perf S&P sector Q1) vs short Tech (best perf S&P sector Q1), I see significant signs of ‘stress’ or outright unwind in recent weeks.  The above portfolio run $-neutral has experienced a near 5% swing over the past 3 weeks, with the loss doubling over the past week alone–it’s likely this ‘rate of change’ that is the problem from the risk management perspective.  This of course correlates with the breakdown occurring in crude oil, as WTI is now -11.8% over the past three weeks.

    Sector-specific within energy, you see signs as well.  Energy equities trader Ryan Businski noted the following ‘unwind’ behavior across Texas shale plays: “Seeing long sales across the Niobrara names today forcing unwinds/covering in Bakken names. WLL, OAS, CLR rallying with no news Bakken related.”

    With the sector now -10.4% YTD within the S&P / -20.3% within the Russell, alongside a lot of talk in recent-weeks of a number of multi-manager shops shuttering energy books, I feel comfortable in stating that somebody’s ‘mean-reversion’ strategy (likely a stat arb / quant fund) has triggered ‘stop outs’ as the underlying commodities space now ‘catches down’ to the behavior already exhibited across the energy equities space throughout the course of 2017.

  • Earth Overshoot: How Sustainable Is Population Growth?

    Authored by Mike Shedlock via MishTalk.com,

    For decades people have been predicting overpopulation would wipe out energy resources if not the entire planet. Every year the population bomb and peak oil crowd have been proven wrong. But how long can the status quo of generating growth by population explosion last?

    Every year the population bomb and peak oil crowd have been proven wrong. But how long can the status quo of generating growth by population explosion last?

    Reader Rick Mills at Ahead of the Herd addresses the subject in a guest blog that first appeared on his blog as Earth Overshoot Day.

    Earth Overshoot Day

    The second half of the 20th century saw the biggest increase in the world’s population in human history. Our population surged because of:

    • Medical advances lessened the mortality rate in many countries
    • Massive increases in agricultural productivity caused by the “Green Revolution”

    The global death rate has dropped almost continuously since the start of the industrial revolution – personal hygiene, improved methods of sanitation and the development of antibiotics all played a major role.

    Green Revolution

    The term Green Revolution refers to a series of research, development, and technology transfers that happened between the 1940s and the late 1970s.

    The initiatives involved:

    • Development of high-yielding varieties of cereal grains
    • Expansion of irrigation infrastructure
    • Modernization of management techniques
    • Mechanization
    • Distribution of hybridized seeds, synthetic fertilizers, and pesticides to farmers

    Tractors with gasoline powered internal combustion engines (versus steam) became the norm in the 1920s after Henry Ford developed his Fordson in 1917 – the first mass-produced tractor. This new technology was available only to relatively affluent farmers and it was not until the 1940s tractor use became widespread.

    Electric motors and irrigation pumps made farming and ranching more efficient. Major innovations in animal husbandry – modern milking parlors, grain elevators, and confined animal feeding operations  –  were all made possible by electricity.

    Advances in fertilizers, herbicides, insecticides, fungicides and antibiotics all led to better weed, insect and disease control.

    There were major advances in plant and animal breeding – crop hybridization, artificial insemination of livestock, growth hormones and genetically modified organisms (GMOs).

    Further down the food chain came innovations in food processing and distribution.

    All these new technologies increased global agriculture production with the full effects starting to be felt in the 1960s.

    Cereal production more than doubled in developing nations – yields of rice, maize, and wheat increased steadily. Between 1950 and 1984 world grain production increased by over 250% – and the world added a couple billion more people to the dinner table.

    The modernization and industrialization of our global agricultural industry led to the single greatest explosion in food production in history. The agricultural reforms and resulting production increases fostered by the Green Revolution are responsible for avoiding widespread famine in developing countries and for feeding billions more people since.

    The Green Revolution helped kick start the greatest explosion in human population in our history – it took only 40 years (starting in 1950) for the population to double from 2.5 billion to five billion people.

    We goosed agra machine’s growth and saved a billion people who birthed billions more.

    Malthusian pessimism

    “The power of population is indefinitely greater than the power in the earth to produce subsistence for man“. Thomas Robert Malthus

    Malthusian pessimism has long been criticized by doubters believing technological advancements in:

    • Agriculture
    • Energy
    • Water use
    • Manufacturing
    • Disease control
    • Fertilizers
    • Information management
    • Transportation

    would keep crop production ahead of the population growth curve. Malthus’s prediction hasn’t come true because, so far, rising agricultural yields have always outpaced population growth.

    Norman Borlang, Father of the Green Revolution, is on record as saying if we did everything right the Earth has a human carrying capacity of 10 billion people.

    Ester Boserup, an agricultural economist says don’t worry, that population growth is the driver of land productivity – our planet’s human carrying capacity is based on the capabilities of our social systems and our technologies more than environmental limits.

    Ester’s downgrading of environmental limits to second place doesn’t give me much comfort moving forward. It seems a little shortsighted.

    Population

    In 1950 the world’s population stood at 2.52 billion people. Today there are over 7.5 billion of us living on Earth.

    Current World Population: 7,500,072,439

    According to United Nations predictions humans could number 9.7 billion people by 2050, and over 11 billion by 2100.

    The earth might be big enough for one billion people, four billion maybe even eight or nine or even the 10 billion as Borlang believed. But the time is quickly coming when our sheer numbers will demand more than the earth can possibly supply.

    Some say that number has already been surpassed.

    Ecological Overshoot

    For most of human history, there is no doubt we were consuming resources at a rate far lower than what the planet was able to regenerate.

    Unfortunately, we have crossed a critical threshold. The demand we are now placing on our planet’s resources appears to have begun to outpace the rate at which nature can replenish them.

    The gap between human demand and supply is known as ecological overshoot. To better understand the concept think of your bank account – you have $5000.00 paying monthly interest. Month after month you take the interest plus $100. That $100 is your financial, or for our purposes, your ecological overshoot and its withdrawal are obviously unsustainable.

    Humans are currently withdrawing more natural resources than our Earth bank is able to provide on a sustainable basis. How much more? At today’s rate of withdrawal, we need just over another half earth. We’re on track to require the resources of two planets by 2050.

    If today, everyone on earth were to start consuming the same amount of natural resources as the average Australian we’d need 5.4 planets, an ecological overshoot of 4.4 planets.

    Earth Overshoot Day

    According to the Global Footprint Network (GFN) August 8th was Earth Overshoot Day 2016 – the day when humanity exhausts our ecological budget, the day when our consumption exceeded the environment’s renewal capacity for the entire year.

    The rest of the year we’re in ecological overshoot and we currently use the renewable resources of 1.6 Earths.

    The GFN predicts that by 2030, Earth Overshoot Day will be in June – meaning it will take two entire Earths to sustain our species’ consumption.

    Loss of species

    Every two years, Global Footprint Network, WWF, and the Zoological Society of London publish the Living Planet Report. The Living Planet Report 2016 (October) is an eye opener:

      • The Global Living Planet Index shows a decline of 58% between 1970 and 2012 Trend in population abundance for 14,152 populations of 3,706 species monitored across the globe between 1970 and 2012.
      • The terrestrial LPI shows a decline of 38% 1970 and 2012 Trend in population abundance for 4,658 populations of 1,678 terrestrial species monitored across the globe between 1970 and 2012
      • The tropical forest species LPI shows a decline of 41 per cent 1970 and 2009 Trend in population abundance for 369 populations of 220 tropical forest species (84 mammals, 110 birds, 10 amphibians and 16 reptiles) monitored across the globe between 1970 and 2009.
      • The grassland species LPI shows a decline of 18 per cent between 1970 and 2012 Trend in population abundance for 372 populations of 126 grassland species (55 mammals, 58 birds, and 13 reptiles) monitored across the globe between 1970 and 2012.
      • The freshwater LPI shows a decline of 81 per cent 1970 and 2012 Trend in population abundance for 3,324 populations of 881 freshwater species monitored across the globe between 1970 and 2012.
      • The wetland-dependent species LPI shows a decline of 39 per cent between 1970 and 2012 Trend in population abundance for 706 inland wetlands populations of 308 freshwater species (4 mammals, 48 birds, 224 fish, 4 amphibians and 28 reptiles) monitored across the globe between 1970 and 2012.
    • The marine LPI shows a decline of 36 percent between 1970 and 2012 Trend in population abundance for 6,170 populations of 1,353 marine species monitored across the globe between 1970 and 2012.

    The Earth has gone through five major extinction events – from the Ordovician-Silurian (350 million years ago) to the Cretaceous-Paleogene (65 million years ago), in each event 70-90% of all species died.

    The Anthropocene, or the age of the humans, is considered by scientists to be a 6th extinction event. That’s real bad news long before even 50% extinction – loss of species means loss of pollinators – which is a real problem since so many varieties, and so much of our food crops rely on insects (ie. bees) to pollinate.

    The revolution wasn’t really green

    The modern agricultural complex spawned by the Green Revolution may have allowed us to grow more food, but dependence on this high-cost industrial input type of system extracts an extreme toll:

    • Agricultural output did increase as a result of the Green Revolution, but the energy input to produce a crop increased faster – the ratio of crops produced to energy input has decreased. This is because High Yielding Varieties (HYVs) of seeds only outperform traditional varieties when adequate irrigation, pesticides, and fertilizers are used
    • Green Revolution agriculture produces monocultures of cereal grains. This type of agriculture relies on the extensive use of pesticides because monoculture systems – with their lack of genetic variation – are particularly sensitive to bug infestations
    • The transition from traditional agriculture to GR agricultural meant farmers became dependent on industrial inputs – not made on the farm inputs. Farmers faced severely increased costs because they now had to purchase such items as farming machinery, fertilizer, pesticides, irrigation equipment and seeds
    • The increased level of mechanization on larger farms removed a large source of employment from the rural economy. New machinery – mass produced gas tractors, large self-propelled combines and mechanical cotton pickers – all combined to sharply reduce labor requirements
    • Less people were affected by hunger and died from starvation – but many more are affected by malnutrition such as iron or Vitamin A deficiencies. Green Revolution grains do not have the same nutritional values as traditional varieties. The switch from heavily rotated multiple crops to mono-cropping or dual cropping reduces total soil fertility and the nutritional value of our food
    • The Green Revolution reduced agricultural biodiversity by relying on just a few varieties of each crop. The food supply could be susceptible to pathogens that cannot be controlled by agrochemicals
    • Many valuable genetic traits, bred into traditional varieties over thousands of years, are now lost
    • Wild plant and animal biodiversity was hurt because the Green Revolution expanded agricultural development into new areas where it was once unprofitable or too arid to farm
    • The 20/80 phenomenon – the rapid increase in farm size and the concentration of production among large producers means 20% of producers generate 80% of the agricultural output
    • As a result of modern irrigation practices, aquifers in places like India (once Borlaug’s greatest triumph) and the US midwest have become depleted.  There are two types of aquifers: replenishable, most of the aquifers in India and the shallow aquifer under the North China Plain are replenishable – depletion means the maximum rate of pumping is automatically reduced to the rate of recharge. For fossil or nonreplenishable aquifers – like the U.S. Ogallala aquifer, the deep aquifer under the North China Plain, or the Saudi aquifer – depletion brings pumping to an end. In the more arid regions like the southwestern United States or the MiddleEast, the loss of irrigation water could mean the end of agriculture in these areas
    • Green Revolution techniques rely heavily on chemical fertilizers, pesticides and herbicides, some of these are developed from fossil fuels which makes today’s agriculture regime much more reliant on petroleum products
    • Farming methods that depend heavily on chemical fertilizers do not maintain the soil’s natural fertility and because pesticides generate resistant pests, farmers need ever more fertilizers and pesticides just to achieve the same results
    • The increased amount of food production and foods low price led to overpopulation worldwide

    I said earlier we currently use the renewable resources of 1.6 planets and that by 2030 we’ll use the renewable resources of two planets. We do that by agricultural inputs – the massive use of fertilizers, diesel, insecticides, pesticides, fresh water for irrigation etc.

    Has anyone thought about the further effects on our environment of ramping up fertilizer, pesticide, insecticide and herbicide applications even further?

    How about increasing use of pollution emitting fossil fuels and fresh water for irrigation to enable big agra to feed 2.2 billion more of us?

    Have you thought about the effects of the existing billions of people (who don’t live even close to a western lifestyle) all wanting to live, or at least consume, like an American or Australian does? What happens when urbanization increases all the newly minted urbanites living standards and all those new consumers start to climb the protein ladder alongside the future 2.2 billion coming to the table?

    It’s obvious the world needs a new farm – one the size of South Africa.

    Unfortunately, the UN also says that by 2030 an area twice the size of South Africa will become unproductive due to desertification, land degradation, and drought.

    Desertification

    Desertification is a phenomenon that ranks among the greatest environmental challenges of our time. Unfortunately, most people haven’t heard of it or simply don’t understand it. Desertification doesn’t refer to the advance of deserts which can and do expand naturally.

    Desertification is a different process where land in arid or semi-dry areas becomes degraded – the soil loses its productivity and the cover vegetation disappears or is degraded to the point where wind and water erosion can carry away the topsoil leaving behind a highly infertile mix of dust and sand.

    Desertification and land degradation is a global issue with desertification already affecting one quarter of the total land surface of the globe today

    Today the pace of arable land degradation is estimated at 30 to 35 times the historical rate. Desertification is degrading more than 12m hectares of arable land every year – the equivalent of losing the total arable area of France every 18 months.

    The issue of desertification is not new, it has constantly played a significant role in human history, even contributing to the collapse of the world’s earliest known empire, the Akkadians of Mesopotamia.

    Climate change can accelerate and intensify the degradation process.

    Climate Change

    When Norman Borlang made his estimate of our planet’s human carrying capacity Climate Change was not the huge driver behind his modeling as it would have to be today.

    According to science the world is going to continue to get warmer, polar ice caps will melt, so will the Greenland ice sheet and most glaciers. More sunlight will be absorbed by the Earth’s oceans, causing increased evaporation. Water vapor is a greenhouse gas and amplifies twofold the effects of other greenhouse gasses. With Earth’s ice gone there will be significantly less sunlight reflected back into space, vast expanses of Arctic tundra will thaw releasing unbelievable amounts of methane, a greenhouse gas twenty times more potent than CO2.

    The polar jet stream has already been altered, wide swinging north-south deviations (meanders) have become the norm – deviating far from its normal path and meandering north into Canada, the jet stream brings warm air while dipping far south over Europe, the polar jet stream brings record cold and snow.

    Ocean currents will be altered further impacting our climate and sea levels will rise – coastlines will be flooded forcing mass migrations inland. Freshwater aquifers will suffer from saltwater intrusion, once habitable zones will become uninhabitable.

    Because of increased average global temperatures, the tropical rain belt will have widened considerably and the subtropical dry zones will have pushed pole-ward, crawling deep into regions such as the American Southwest and southern Australia, which will be increasingly susceptible to prolonged and intense droughts.

    A report by the Intergovernmental Panel on Climate Change (IPCC) concluded that climate change will amplify extreme heat, heavy precipitation, and the highest wind speeds of tropical storms. Extreme weather events are going to happen with increasing frequency, the climate for the area you live in is, if it hasn’t started already, going to change. We are all watching and experiencing these events and changes in real time because changes that use to take tens and tens of thousands of years are now happening in decades.

    Conclusion

    We humans have been changing the world around us for tens of thousands of years. It’s pretty much what we do, we shape and we change the existing environment through design and then indifference to the results of our actions. One of the most basic, fundamental problems (other than the rapid depletion of our fresh water resources) we’ve created for ourselves is the impact of human activities on the land we need to cultivate for our very survival.

    Our exploding population, our accelerating demand for the world’s treasures (it’s natural resources) our ‘who cares’ attitude towards pollution and habitat destruction are all increasing what were once tolerable pressures towards, and sometimes already beyond, the breaking point in ecosystems all over the world.

    Are Norman and Ester right? Does population growth march lockstep into the future with technological advances keeping food production on the increase?

    Were they correct in their Malthusian pessimism?

    I don’t think so, but they might have been thinking about feeding you a diet of algae, jellyfish, and tofu. Bon appetite.

    Are food, fresh water and climate change on your radar screen?

    If not, maybe they should be.

    *  *  *

    Mish Comments

    The comments and concerns of Rick Mills are well thought out and well presented.

    In regards to Mills’ post I do not know what will happen, and since he ends with a slew of questions, he doesn’t pretend to either.

    That said, Mills asks the right questions thereby providing ample room for discussion.

  • The Toronto Housing Market Is About To Collapse By This Measure

    With the collapse of Home Capital Group focusing the world's attention on the Canadian real estate market, nowhere is the subprime debt time bomb more likely to go off than Toronto, which as we recently noted "has gone nuts."

    Even Bank of Canada Governor Stephen Poloz (who declined to comment on questions about Home Capital Group and whether he’s worried about contagion), noted that Toronto is out control tonight while answering questions following a speech in Mexico City…

    "pretty sure recent gains in Toronto home prices were not sustainable and that the city’s housing market had elements of speculation"

     

    "Financial stability is part of the Bank of Canada’s monetary policy decision making, but the central bank’s primary mission is inflation targeting,… it would be odd to use interest rates to target home prices in just one city."

    Perhaps Mr. Poloz… But, as we noted previously, it doesn’t take a genius to figure out that this will end in tears.  Even the big Canadian banks are fretting. “Let’s drop the pretense. The Toronto housing market and the many cities surrounding it are in a housing bubble,” Bank of Montreal Chief Economist Doug Porter warned clients. But the bubble’s deflation would push the city into a fiscal and financial sinkhole

     

    Jason Mercer, TREB’s Director of Market Analysis, explained the basic supply and demand problem:

    “Annual rates of price growth continued to accelerate in March as growth in sales outstripped growth in listings,” he said.

     

    “A substantial period of months in which listings growth is greater than sales growth will be required to bring the GTA housing market back into balance.”

    And that is exactly what Capital Economics is pointing out is occurring – in a very accelerated manner… as listings flood the market and an extreme lack of affordability means homes remains unattainable to all but the oligarchs seeking safe-haven for their 'hard'-hidden gains, prices will have to adjust rather rapidly.

    Additionall, Mercer told policy makers to tread carefully: “As policy makers seek to achieve this balance, it is important that an evidence-based approach is followed,” he said. This is a gravy train, and it must be allowed to speed on until the last cent has been extracted.

    What we don’t know yet is when it will end in tears, and whose tears it will end with. But we already know: When it does end in tears, real estate organizations will first be denying it, and then they’ll be clamoring for a bailout of their stakeholders – so it will end in the tears of others.

  • "Chicago Is A War Zone": Police Suicide Rate Surges To 60% Above The National Average

    During his early days on the force, 30-year-old, rookie Chicago police officer, Scott Tracz, was described by colleagues as an “upbeat” cop who had always dreamed of becoming a police officer to help people in his city.  That is, until he sat in a black sports car outside his girlfriend’s suburban house late last year, put his gun to his head and took his own life.  Per Reuters:

    Tracz had long dreamed of becoming a police officer to help others. But working in the violence-stricken Chicago Lawn district, he came face to face with the city’s violent crime. The area accounted for 58 of the city’s more than 760 murders last year, as well as 228 shootings.

     

    “He would say, ‘You can never imagine what the human race is capable of doing,’ then he would just put his head down,” said his cousin Maciaszek, 46.

    Chicago

     

    Unfortunately, stories just like the one of Scott Tracz are becoming all too common on the Chicago police force as officers deal with the psychological side effects of having to go to work every single day in Chicago’s “war zone.”

    “Chicago is a war zone,” said Alexa James, the executive director of the National Alliance on Mental Illness-Chicago. “They (officers) are seeing the worst day of everybody’s life every day.”

     

    “Suicide is killing officers, alcohol is killing officers, at a far greater rate than ambushes, but there is not the same sense of urgency around this issue,” said Christy Lopez, a former Justice Department official who led the Chicago federal probe.

     

    Chicago police’s suicide rate was 29.4 per 100,000 department members between 2013 and 2015, the report said, citing police union figures. The department disagreed in the report, putting the rate at 22.7 suicides per 100,000 members. Both estimates were higher than the national average of 18.1 law enforcement suicides per 100,000.

     

    As we’ve noted many times in the past, Chicago’s homicide rate in 2016 soared to levels not seen since the mid-90s when gang wars plagued the streets of cities all around the nation (charts via HeyJackAss!).

     

    And, things aren’t getting any better so far in 2017…

    Chicago

     

    …particularly in the city’s South and West side neighborhoods.

     

    To add insult to injury, because of Chicago’s onerous gun laws that permanently prohibit anyone who has been involuntarily committed for in-patient mental health treatment from carrying a gun, a requirement for cops, the folks working for the Chicago PD generally refuse mental health services out of fear of losing their job.

    Some officers believe that seeking counseling will result in the loss of their Firearm Owner Identification Card, a requirement to carry a firearm under state law, according to current and former officers, as well as health officials. That view is mistaken, say Justice Department officials.

     

    Still, “If someone thinks I have talked to EAP they think I’m unstable, so I’m not going to call,” said one veteran officer, who asked not to be identified.

     

    Chicago Police Superintendent Eddie Johnson said in February the department’s past approach to mental health was wrong. In a report issued in March, the department said it would review mental wellness support services.

     

    “Law enforcement historically has been seen as a very macho profession,” Johnson said at a public forum about police reform. “To say you needed help was seen as a sign of weakness and we were wrong for looking at it that way, we were simply wrong.”

    But hey, at least the Obama administration sought to help Chicago Police officers by dropping a DOJ study, one week prior to departing the White House, effectively labeling their department as nothing more than a bunch of racist, hate-mongering bullies who routinely resort to the use of “deadly force” in violation of the Fourth Amendment of the Constitution.

  • ALERT: Euro impending collapse, but don't worry – FX is simple

    Forex is the most simple market in the world.  As we explain in our book Splitting Pennies – Forex is the underpinning of the world’s financial system.  Although it is also the least understood market, there’s nothing ‘sophistocated’ about FX.  Take a dollar, exchange it for a euro.  The rate changes – exchange it back.  Simple!  Trading money.

    There is no ‘2 day settlement’ in Forex, a custodian, there’s no Reg D, no Reg NMS – there’s no HFT front running your orders, there’s no ‘order types’ – there’s no exchange rules (because there’s no exchange).  Actually, when you strip away the complexities of most markets like securities, bonds, real estate, commodities, FX is many times over the most simple market.  

    Understandably, the securities market is the most widely promoted to investors because of the potential for making high returns from participating in corporate ownership (and thus ownership of profits).  But securities are a derivative.  Investors don’t really own the companies – they own the shares.  And actually to be technical, they don’t own the shares too – they are controlled by a huge custodian DTCC.  The securities, bond, and futures markets are the core of modern capitalism.  But they aren’t a necessity, they are an abstration and thus – have complex rules.  Or to say differently – the banking system needs the real economy – the real economy doesn’t need the banking system.

    How do these abstract markets drive inflation?  Here’s how.  QE doesn’t directly go into the economy.  However, by keeping interest rates low, both in real terms and buy the Fed’s various asset purchase programs – it means money has never been cheaper.  With cheap money, it’s easy for i-banks to borrow at zero or near zero rates, invest in any index at 2x or 4x leverage and get their 20% – 40% per year with virtually no risk (that is, no seen risk – there is huge tail risk that one day the market will collapse, which it will for sure, like the big bubble that it is.)  

    The ‘stock markets’ have become so intertwined with the real economy, they have made themselves a necessity.  Like a virus that has taken over a host, now it would be practically impossible to kill the market without affecting the overall economy.  All of this has become so complicated, with so many involved parties – it has become a giant spider web.

    On the topic of the Fed and their direct stock market alleged manipulation, consider the following.  The Fed is owned by the member banks.  The Fed gives it’s QE to the member banks, almost all of which are now publicly traded companies.  Here’s where the paper trail begins for the ‘conspiracy crowd’ about the Fed being owned by nefarious 13 families:  Public disclosure rules mean that anyone can lookup what’s going on at Bank of America (BAC).  Hiding significant information at public companies is very difficult, and becoming more and more difficult with the digitization of records, communications, and basically all aspects of business, which by the way is all ‘doubled’ and recorded on a network level by ATT (T) another public company – and stored in an NSA database.  America Inc. is technically a corporation and the states such as South Carolina are more like countries (hence the name ‘states’) – although you can’t buy and sell shares of America Inc. you sort of can, it’s called immigration – citizens of USA are sort of like shareholders.  And there’s a short side too, record numbers of US Citizens are giving up their citizenship.  So, does the Fed manipulate the stock market?  It’s not a fair question, because Fed ownership and operations are completely intertwined with the stock market.  During the time when the Fed was created, America was just passing the wildcat banking era, where there were thousands of private banks.  Do not confuse ‘private banking’ with a ‘privately owned bank’ – private banking is discreet services for rich people who may want to hide their assets or not let others know how rich they are.  Privately owned banks are nearly non-existant in the USA today, for a number of reasons – mostly caused by generational wealth transfer and generally a trend towards the institutionalization of assets.  What does that mean?  It means that 100 years ago, things were in YOUR name, if you were JP Morgan or Andrew Carnegie.  Today, it’s all in tax havens, the Carnegie foundation, trust funds, and almost nothing is in YOUR name.  That includes banks, which are mostly publicly traded and thus, publicly owned.  The individual has become obsolete.  

    So all these tendencies, make the market so complicated it’s even confusing to describe.  

    All this drama created by Nixon is really in the eye of the beholder – this idea of ‘economic collapse’ is a fantasy promulgated by religious types in armaggedon style packaging, as if the Earth will explode and burn in a big singularity event.  The reality is that ‘economic collapse’ is happening every day, simply that only some of us notice it.  

    Forex simply guages the tides as they ebb and flow, EUR/USD rate changes, but not really that much.  Brexit gave us a 9% move which is huge for FX but not really statistically significant in the grand scheme of things.

    Take a look at EUR/GBP for last 10 years:

    forex

    This is a monthly chart.  You can see why FX is not interesting for the general public.  But it takes a lot less time to understand FX than the stock markets.  FX is simple.

    As we head into a potential complete meltdown of the Euro, and tomorrow’s NFP, we’re heading into an event that may change the face of FX forever.

    Dear Trader,

    With the upcoming second round of the French Presidential Election this
    weekend, we require that your account balance plus any open profit or loss
    covers at least 3% of the total notional exposure across all EUR crosses and
    EUR Equity Index CFDs by 4pm (UK time) Friday, 5th May 2017. Where
    the cover is lower than 3%, we may reduce your positions to increase the
    cover on your account before the market close.

    Exit polls will be released prior to the market open on Sunday, 7th
    May 2017 and there is increased risk of wide spreads and large price gaps on
    the market open and through the night. Please ensure you are comfortable with
    the exposure on your open positions leading into the market close on Friday,
    5th May 2017.

    If you have any queries, please do not hesitate to contact Client Services by
    calling +44 20 3192 XXXX or emailing XXXXXX.

    FX and CFDs are leveraged products that can result in losses exceeding your
    deposit. They are not suitable for everyone so please ensure you fully
    understand the risks involved.

    Kind regards

    LMAX Exchange
    Client Services Team

    To get a primer on what this FX is all about and how it’s really more simple than any other market – checkout Splitting Pennies – Understanding Forex.

  • Italian Prime Minister Secretly Meets With George Soros In Rome Amid Migrant Transport Scandal

    Submitted by Gefira

    In the past few weeks, the transport of migrants from the African shores has become a case of national importance for Italy, and is now under investigation from the prosecutor of Catania, who recently testified to the Defence Committee of the Italian Senate and will meet soon with the Superior Council of the Magistrates.

    Harsh criticism of the activities of the NGOs has come from opposition parties Forza Italia, Lega Nord and even Movimento 5 Stelle, normally more neutral on immigration issues, while Prime Minister Gentiloni has opted to let the judicial system run its course.

    Yet, a new element will further exacerbate the situation; George Soros, a billionaire who is incredibly active politically on both sides of the Atlantic, met in secrecy with Prime Minister Gentiloni, less than a week after the latter had commented on the NGOs activities. The meeting was not listed on the website of the Italian government as official and its timing is at the very least suspicious.

    George Soros had penned multiple arguments in favour of immigration, suggesting that Europe should welcome “at least one million refugees a year” and that the EU should create EU-bonds to support attendant expenses.

    He’s no stranger to NGOs either: one of them, MOAS (Migrant Offshore Aid Station), facing the harshest criticism , received half a million dollars from Avaaz, another NGO, co-founded by MoveOn, an online community, receiving donations from none other than George Soros himself.

    Save The Children, another NGO involved in the Mediterranean migrant shipping, lists among its partners Open Society Foundation, George Soros’s primary NGO. Finally, even, Médicins Sans Frontiéres is listed among the partners of Open Society and the Soros network.

    Soros had already been named by Lega Nord leader Salvini as the secret financier behind the NGOs and his well-timed arrival is bound to create further controversy.
    No information has been leaked so far about the content of the meeting between Soros and Gentiloni.

    Is the cat out of the bag?

  • Macron Document Leaker Releases New Images, Promises More Information

    Via Disobedient Media

    The anonymous source of documents alleging Emmanuel Macron’s involvement with an operating agreement for a Limited Liability Company (LLC) in the Caribbean island of Nevis returned to release several high quality images of the purported documents along with promises to identify account locations and the extent of the assets Macron is supposedly hiding from regulatory authorities.

    The images, released anonymously less than an hour ago on online messageboard 4chan, are higher resolutions of alleged documents leaked yesterday which claimed to show that Emmanuel Macron had entered into an operating agreement for a Limited Liability Company (LLC) in the Caribbean island of Nevis, and that the company may have had a business relationship with a bank which has been previously involved in tax evasion cases in the Cayman Islands. The anonymously released PDF files purported to show corporate records of a company named La Providence LLC apparently created by Mr. Macron in Nevis, a noted offshore tax haven.

    The new images are of the second document, a fax between La Providence Ltd. and First Caribbean International Bank, as well as the first page and signature from the purported operating agreement.

    Screenshot of image showing the alleged Macron signature on the operating agreement

    The leaker revealed that Macron’s assets were not located in the Bahamas as was been reported by some media outlets, but in the Cayman Islands, another known hotspot for tax evasion. They further stated that they were taking measures to conceal their identity because they are located in the European Union and did not wish to be arrested. The leaker also explained that they were one of a small group of individuals working online with a source in the Cayman Islands to expose the leaked information. They claimed that they were in possession of SWIFTNet logs dating back for several months, and would soon not only know where Mr. Macron’s alleged accounts are located but also the “extent of the money he is hiding from [France’s] government.”

    Macron has strenuously denied the authenticity of the leaks, telling France Inter radio “I have never had accounts in any tax havens whatsoever, firstly because it is not in my nature and secondly because I have always wanted to return to the public domain.” His team has further alleged that the news was being disseminated by an “obviously Russian” network, without providing any proof of this contention. French prosecutors described the leak as “a suspected attempt to tar presidential candidate Emmanuel Macron” and have opened a probe into the origin of the leaks after Mr. Macron filed a complaint.

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