• Multiple Bubbles Are Going To Bring America To Its Knees: "The Warning Signs Are There"

  Authored by Daniel Lang via SHTFplan.com,

  If you’ve been paying attention to the ongoing degradation of the American economy since the last financial crisis, you’re probably flabbergasted by the fact that our economy has managed to make it this far without imploding. I know I am. I find myself shocked with every year that passes without incident.

  The warning signs are there for anyone willing to see, and they are flashing red. Even cursory research into the numbers underlying our system will tell you that we’re on an unsustainable financial path. It’s simple math. And yet the system has proven far more durable than most people thought.

  The only reasonable explanation I can think of, is that the system is being held up by wishful thinking and willful ignorance. If every single person knew how unsustainable our economy is, it would self-destruct within hours. People would pull their money out of the banks, the bonds, and the stock market, and buy whatever real assets they could while their money is still worth something. It would be the first of many dominoes to fall before the entire financial system collapses.

  But most people don’t want to think about that possibility. They want the relative peace and prosperity of the current system to continue, so they ignore the facts or try to avoid them as much as possible. They keep their money right where it is and cross their fingers instead. In other words, the only thing propping up the system is undeserved confidence.

  Unfortunately, confidence can’t keep an unsustainable system running forever. Nothing can. And our particular system is brimming with economic bubbles that aren’t going to stay inflated for much longer. Most recessions are associated with the bursting of at least one kind of bubble, but there are multiple sectors of our economy that may crash at roughly the same time in the near future. For instance:

  • Eric Rosengren, the president of the Federal Reserve Bank of Boston, recently made a startling tacit admission. We may be in the midst of yet another real estate bubble. Major financial institutions in this country are in possession of over $14 trillion worth of residential real estate loans. That’s well over $40,000 for every man woman and child in America.
  • Low interest rates have fueled a bubble in subprime auto loans, and that bubble appears to be reaching its limits. There are now over 1 million ordinary and subprime auto loans that are delinquent, a number that hasn’t been this high since 2009.
  • There is now well over a trillion dollars worth of student loan debt in this country; much of it owned by low income families. And there’s little hope that these students will ever see a return on their investment. That’s why at least 27% of student loans are in default. While more than one in four students are in default now, that number was one in nine a decade ago. And if current trends continue, there could be $3.3 trillion of student loan debt by the end of the next decade. Clearly, this isn’t going to go on for much longer.
  • And who could forget the stock market? Despite experiencing low GDP growth every year since the last recession, the stock market continues to break new records. Many of the companies on the stock market (especially tech companies), have a market cap that is between 20 and 100 times their sales or earnings numbers. Some are much higher, despite experiencing slow growth, or even no profits at all.

  Our economy is awash in cheap money and financial bubbles that threaten to wipe out tens of trillions of dollars worth of savings, investments, and assets. Everyone can close their eyes and hum while they hope that everything is going to be just fine, but it won’t be.

  I said before that if everyone knew how unsustainable this economy is, it would all come crashing down. But they’re going to find out one way or another when it comes crashing down anyway. Hope and confidence can only prop up a bubble-ridden economy for so long.

  

  

• California Senator Forced To Pull Bill Banning "Fake News" After Realizing It's Idiotic

  California is known far and wide for it’s wacky regulations.  In fact, just last fall we wrote about SB 1383, a very significant piece of legislation signed into law by Jerry Brown which requires a 40% reduction in methane gas emissions from cow flatulence by 2030 (no, really…you can take a look here: “Here Are Some Of The Ridiculous New State Laws That Will Take Effect January 1st – Happy New Year!“)

  But a recent piece of legislation introduced by California Assemblyman Ed Chau (D-Monterey Park), “The California Political Cyberfraud Abatement Act or AB 1104 for short, gives the “cow fart” bill a run for its money in terms of its complete idiocy.  The bill, filed Wednesday in the Assembly’s Committee on Privacy and Consumer Affairs, would have effectively made it a crime to be wrong on the Internet.

  The text of the bill implicated anyone who writes, publishes or even shares news stories that could be false, if those news stories are later found to have had an impact on an election.  From the bill:

  This bill would modify the definition of the terms “political cyberfraud” and “political Web site” to include Internet Web sites that urge or appear to urge the support or opposition of candidates for public office. The bill would also make it unlawful for a person to knowingly and willingly make, publish or circulate on a Web site, or cause to be made, published, or circulated in any writing posted on a Web site, a false or deceptive statement designed to influence the vote on any issue submitted to voters at an election or on any candidate for election to public office.

  And even though author Ed Chau described AB 1104 as “an important step forward in the fight against ‘fake news’ and deceptive campaign tactics”, the Electronic Frontier Foundation (EFF), a digital-rights advocacy group, said the bill was “so obviously unconstitutional, we had to double check that it was real.”

  Memo to California Assemblymember Ed Chau: you can’t fight fake news with a bad law.

   

  On Tuesday, the California Assembly’s Committee on Privacy and Consumer Affairs, which Chau chairs, will consider A.B. 1104—a censorship bill so obviously unconstitutional, we had to double check that it was real.

   

  This bill will fuel a chaotic free-for-all of mudslinging with candidates and others being accused of crimes at the slightest hint of hyperbole, exaggeration, poetic license, or common error. While those accusations may not ultimately hold up, politically motivated prosecutions—or the threat of such—may harm democracy more than if the issue had just been left alone. Furthermore, A.B. 1104 makes no exception for satire and parody, leaving The Onion and Saturday Night Live open to accusations of illegal content. Nor does it exempt news organizations who quote deceptive statements made by politicians in their online reporting—even if their reporting is meant to debunk those claims. And what of everyday citizens who are duped by misleading materials: if 1,000 Californians retweet an incorrect statement by a presidential candidate, have they all broken the law?

   

  At a time when political leaders are promoting “alternative facts” and branding unflattering reporting as “fake news,” we don’t think it’s a good idea to give the government more power to punish speech.
  

  As of right now it looks as if the legislation has been pulled after Chau just cancelled a hearing originally scheduled for Monday.  Presumably Chau got a little pushback from mainstream media outlets after they realized his bill would effectively ban them, and their fake “Russian hacking” narratives from California.

  Here is the full text of the bill for your reading pleasure: 

  

  

• Caught On Tape In Atlanta: "State Of Emergency, The Entire Bridge Is Compromised"

  Authored by Mac Slavo via SHTFplan.com,

  

  If you were looking for confirmation that the nation’s infrastructure needs a complete overhaul, a collapsing bridge in Atlanta may have provided it in stark imagery.

  Around 6:30 p.m. Thursday night, a fire broke out under a section of the highway bridge on busy I-85 in Atlanta, Georgia. Just thirty minutes later, a huge section of that bridge burst into flames and completely collapsed.

  Amazingly, no motorists were injured when this happened:

  “This is as serious a transportation crisis as we could have,” Mayor Kasim Reed said, noting that he had spoken with the FBI and terrorism was not suspected at this time.

  Authorities still don’t know what exactly caused the fire as the entire area is still too unsafe for crews to examine, but it is believed that PVC piping stored under the bridge (as shown on a screen capture from Google maps below) caught fire first.

  

  Georgia Governor Nathan Deal has declared a state of emergency, however, as authorities claim the entire transportation network in Atlanta has been significantly impacted, including five different public bus lines. In addition, DeKalb County Schools were canceled Friday, City of Atlanta government offices won’t open until 10 am, and all non-essential DeKalb County government workers will not be required to report in to work.

  City officials have no idea when the bridge in what is otherwise a heavy traffic area will be able to be fixed.

  In other words, traffic is going to be a bitch.

  Meanwhile, how’s that aging American infrastructure working out?

  

  

• 'Russiagate' Is Failing And Its Supporters Are Getting Concerned

  Submitted by Alexander Mercouris of The Duran

  ‘Russiagate’ is failing and its supporters are getting worried

  Three weeks ago I wrote a piece for The Duran in which I suggested that the corner appeared to have been turned in the fake ‘Russiagate’ scandal.

  What was a tentative conclusion then can now be firmed up.

  Though the leaders of the US security services have denied the President’s allegation that they wire-tapped him – though they were careful not to deny that they mounted surveillance on him and his associates – the President’s claim that they did, in effect smoked them out.

  Thus former DNI James Clapper admitted that he had seen no evidence of collusion between the Trump campaign and the Russians up to the point of his retirement on 20th January 2017, and former Acting CIA Director Michael Morell more recently has publicly trashed the whole story of collusion between the Trump campaign and Russia.

  Possibly the single most important admission that no evidence of collusion between the Trump campaign and the Russians has been found came however from within the FBI itself, though it has gone almost completely unnoticed.

  This came in the form of information deriving from an anonymous leak which appeared in an article in The New York Times on 5th March 2017.  This leak almost certainly originated with FBI Director James Comey himself.  The relevant sentence in the article reads as follows

  In addition to being concerned about potential attacks on the bureau’s credibility, senior F.B.I. officials are said to be worried that the notion of a court-approved wiretap will raise the public’s expectations that the federal authorities have significant evidence implicating the Trump campaign in colluding with Russia’s efforts to disrupt the presidential election.

  (bold italics added)

  In my article of 6th March 2017 discussing this comment I said the following

  This is very twisted language which shows that The New York Times is not reporting this part of the story straightforwardly.  However the meaning is clear enough.  The FBI is worried that the more discussion of its investigation there is – extending all the way to discussions by no less a person than the President himself of court approved wiretaps – the more people will fall for the false ‘no smoke without fire’ argument, and will feel let down by the FBI when it eventually announces that its investigation has drawn a blank.

   

  This is an entirely valid concern, and is one of several reasons why such investigations are supposed to be confidential.

   

  This is the second confirmation within a few hours from people who have held posts within the national security bureaucracy that the endlessly repeated claims of collusion between the Trump campaign and Russia are not supported by evidence.  The first was made by Clapper (see above) and the second was made anonymously to The New York Times by officials of the FBI.

   

  These admissions follow a continuous pattern of admissions from officials within the national security bureaucracy now stretching back months that inquiries into claims of collusion by the Trump campaign and Russia are drawing a blank.

  A further sign that the ‘Russiagate’ scandal is flagging is the way its supporters are latching on to non issues in order to keep it going.

  Thus following the House Intelligence Committee hearing on Monday 20th March 2017 the militantly anti-Trump news media latched on to FBI Director Comey’s formal confirmation that an FBI investigation was looking into the allegation of collusion between the Trump campaign and Russia, as if this was news, and made it the big story, even though the existence of this investigation has been public knowledge and the topic of exhaustive discussion in the media for months.

  No doubt this was done in order to avoid mentioning the fact that the Committee on 20th March 2017 heard no evidence even slightly damaging to the President, but did hear evidence which appeared to confirm the truth of the President’s claim that he and his campaign team had been placed under surveillance during the most critical months of the Presidential election campaign.

  Then there was the way Representative Adam Schiff used in his opening statement at the Committee hearing the discredited ‘Trump Dossier‘ – shot through with obvious falsehoods, uncorroborated by the intelligence agencies, and trashed by no less a person than Michael Morell – as his frame story for his whole narrative of secret collusion between the Trump campaign and Russia.  This is desperate, and shows how evidence-less and fact-free the whole ‘Russiagate’ story actually is.

  Then there are the claims – almost certainly originating in Ukraine – about the supposedly nefarious activities of Donald Trump’s former campaign chair Paul Manafort.

  Not only have these claims been emphatically and authoritatively denied by the two people involved – Manafort and Deripaska – with Manafort asking to give evidence to the House Intelligence Committee to put the record straight and Deripaska threatening to sue anyone who repeats them, but since they involve alleged actions which took place years before Donald Trump launched his Presidential campaign, and have no connection to him, their relevance to the ‘Russiagate’ scandal is not obvious.

  Lastly, there is the wholly bogus non-scandal around House Intelligence Committee chair Devin Nunes, who is obviously being targeted by the Democrats because of his increasingly openly expressed and entirely justified skepticism about the whole ‘Russiagate’ story.

  To be clear, Nunes’s decision to share information about surveillance of the President and his team during the transition period with the White House before he shared it with his Committee colleagues was no doubt a mistake – and one which Nunes has apologised for – but it is hardly a serious one, or one which would justify removing him from his chairing of the Committee.

  To my mind what this episode shows is how sensitive the Democrats are about the raising of the whole surveillance issue.  This lends further strength to my opinion – which I note is coming to be increasingly widely shared – that it is the surveillance carried out during the election of Donald Trump and his campaign team which is the real scandal in this affair, and that the fake ‘Russiagate’ scandal is the smoke-screen concealing it.

  Having increasingly given up on the House Intelligence Committee, the proponents of the ‘Russiagate’ scandal now seem increasingly to be resting their hopes on the Senate Intelligence Committee.

  They will be equally disappointed there.  These attempts to use Congressional committees as investigative and prosecutorial instruments suffer from a basic misconception: these are oversight committees, not investigative or prosecutorial committees, and they cannot be used in that way.  They cannot magic up evidence of collusion between the Trump campaign and Russia that the actual investigation – the one carried out by the FBI – says is not there.

  The single most important fact about the last few weeks, and the clearest possible sign that the ‘Russiagate’ scandal is flagging, is that there have been no more leaks from within the intelligence and security agencies since the ones at the beginning of March about Jeff Sessions’s meetings with the Russian ambassador.

  That suggests that the former Obama administration officials, who I suspect were the people who were physically communicating the information in the leaks to the media, are no longer being fed  information about Donald Trump and his associates or about the progress of the FBI investigation by their sources within the intelligence and national security bureaucracy.

  That could be because people within the intelligence and national security bureaucracy are being deterred by the investigation into the leaking of classified material which the President has been calling for but which the House Intelligence Committee hearing on 20th March 2017 suggested FBI Director Comey is resisting (almost certainly because people within the FBI were involved in the leaks), or it could be because increasingly there is no damaging information to leak.

  Regardless of what the explanation is, in the absence of any more leaks there has been nothing over the last few weeks for the supporters of ‘Russiagate’ to work with.  The result is that in the absence of anything new the effort to keep the ‘Russiagate’ scandal going and in the public eye is flagging.

  My best guess is that it will collapse entirely by early summer.

  

  

• American Jobs Once Again Flowing Into Mexico After Brief, Trump-Induced Pause

  After Ford scrapped plans for a new facility in Mexico and continues to flood the White House with press releases detailing normal course capital expenditures to be made on domestic plants, investments that would have been made irrespective of their outsourcing ambitions, it seems as though economics are making a comeback in  guiding the capital allocations of other companies as ‘outsourcing’ is once again picking up steam among American companies.

  Big announcement by Ford today. Major investment to be made in three Michigan plants. Car companies coming back to U.S. JOBS! JOBS! JOBS!

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

  //platform.twitter.com/widgets.js

   

  As Bloomberg points out today, after a brief pause, consultants who help American companies relocate to Mexico are once again finding themselves flush with business.

  But now the pace is picking back up. Illinois Tool Works Inc. will close an auto-parts plant in Mazon, Illinois, this month and head to Ciudad Juarez. Triumph Group Inc. is reducing the Spokane, Washington, workforce that makes fiber-composite parts for Boeing Co. aircraft and moving production to Zacatecas and Baja California. TE Connectivity Ltd. is shuttering a pressure-sensor plant in Pennsauken, New Jersey, in favor of a facility in Hermosillo.

   

  While Trump hasn’t stopped pounding his America First bully pulpit, and the future of Nafta remains uncertain, “there’s cautious optimism and a hopeful attitude that cooler heads will prevail in Washington,” said Ross Baldwin, chief executive officer of Tacna Services Inc., which facilitates relocations.

   

  Baldwin has seen the evidence: After business ground to a halt back in November, he’s now juggling two Mexico-bound clients. San Diego-based Tacna helps manage 4,500 workers in Mexico, where factory wages are about a fifth of those in the U.S. That may explain why Mexican manufacturing jobs rose 3.2 percent in January from a year ago as they dropped 0.3 percent in the U.S.

  In the end, of course, the massive wage divide between the U.S. and Mexico means that, even with a border tax, it’s still cheaper to manufacture certain products in Mexico.

  

   

  Moreover, we suspect that the renewed wave of outsourcing has been sparked, at lease in part, by Trump’s early failures to implement healthcare reform or impose his travel ban as companies grow increasingly comfortable that an import tariff will be harder to implement than the President once thought.

  Businesses haven’t dismissed a Nafta renegotiation or policies being considered in Washington that might prove costly. A plan by House Republicans to implement a 20 percent border adjustment tax has raised concerns, especially among retailers such as Wal-Mart Stores Inc. that import many of their wares. The tax would be applied to sales of imported goods to reduce the U.S. trade deficit, which reached $734 billion in 2016.

   

  Trump repeated to a joint session of Congress last month his refrain that that he will make it “much, much harder for companies to leave our country.” But his recent stumbles — travel bans blocked by courts and a health-care bill scuttled by his own party — underscore the limitations on presidential power and the difficulty he may have punishing companies or overhauling Nafta.

  While shocking, we suspect it’s simply never going to make sense to pay a UAW worker a fully-loaded wage $70 an hour to perform a low-skill task that someone else will do for less than $5 per hour.

  

  

• Buchanan Asks "Is Putin The 'Preeminent Statesman' Of Our Times?"

  Authored by Patrick Buchanan via Buchanan.org,

  “If we were to use traditional measures for understanding leaders, which involve the defense of borders and national flourishing, Putin would count as the preeminent statesman of our time.

   

  “On the world stage, who could vie with him?”

  So asks Chris Caldwell of the Weekly Standard in a remarkable essay in Hillsdale College’s March issue of its magazine, Imprimis.

  What elevates Putin above all other 21st-century leaders?

  “When Putin took power in the winter of 1999-2000, his country was defenseless. It was bankrupt. It was being carved up by its new kleptocratic elites, in collusion with its old imperial rivals, the Americans. Putin changed that.

   

  “In the first decade of this century, he did what Kemal Ataturk had done in Turkey in the 1920s. Out of a crumbling empire, he resurrected a national-state, and gave it coherence and purpose. He disciplined his country’s plutocrats. He restored its military strength. And he refused, with ever blunter rhetoric, to accept for Russia a subservient role in an American-run world system drawn up by foreign politicians and business leaders. His voters credit him with having saved his country.”

  Putin’s approval rating, after 17 years in power, exceeds that of any rival Western leader. But while his impressive strides toward making Russia great again explain why he is revered at home and in the Russian diaspora, what explains Putin’s appeal in the West, despite a press that is every bit as savage as President Trump’s?

  Answer: Putin stands against the Western progressive vision of what mankind’s future ought to be. Years ago, he aligned himself with traditionalists, nationalists and populists of the West, and against what they had come to despise in their own decadent civilization.

  What they abhorred, Putin abhorred. He is a God-and-country Russian patriot. He rejects the New World Order established at the Cold War’s end by the United States. Putin puts Russia first.

  And in defying the Americans he speaks for those millions of Europeans who wish to restore their national identities and recapture their lost sovereignty from the supranational European Union. Putin also stands against the progressive moral relativism of a Western elite that has cut its Christian roots to embrace secularism and hedonism.

  The U.S. establishment loathes Putin because, they say, he is an aggressor, a tyrant, a “killer.” He invaded and occupies Ukraine. His old KGB comrades assassinate journalists, defectors and dissidents.

  Yet while politics under both czars and commissars has often been a blood sport in Russia, what has Putin done to his domestic enemies to rival what our Arab ally Gen. Abdel-Fattah el-Sissi has done to the Muslim Brotherhood he overthrew in a military coup in Egypt?

  What has Putin done to rival what our NATO ally President Erdogan has done in Turkey, jailing 40,000 people since last July’s coup — or our Philippine ally Rodrigo Duterte, who has presided over the extrajudicial killing of thousands of drug dealers?

  Does anyone think President Xi Jinping would have handled mass demonstrations against his regime in Tiananmen Square more gingerly than did President Putin this last week in Moscow?

  Much of the hostility toward Putin stems from the fact that he not only defies the West, when standing up for Russia’s interests, he often succeeds in his defiance and goes unpunished and unrepentant.

  He not only remains popular in his own country, but has admirers in nations whose political establishments are implacably hostile to him.

  In December, one poll found 37 percent of all Republicans had a favorable view of the Russian leader, but only 17 percent were positive on President Barack Obama.

  There is another reason Putin is viewed favorably. Millions of ethnonationalists who wish to see their nations secede from the EU see him as an ally. While Putin has openly welcomed many of these movements, America’s elite do not take even a neutral stance.

  Putin has read the new century better than his rivals. While the 20th century saw the world divided between a Communist East and a free and democratic West, new and different struggles define the 21st.

  The new dividing lines are between social conservatism and self-indulgent secularism, between tribalism and transnationalism, between the nation-state and the New World Order.

  On the new dividing lines, Putin is on the side of the insurgents. Those who envision de Gaulle’s Europe of Nations replacing the vision of One Europe, toward which the EU is heading, see Putin as an ally.

  So the old question arises: Who owns the future?

  In the new struggles of the new century, it is not impossible that Russia — as was America in the Cold War — may be on the winning side. Secessionist parties across Europe already look to Moscow rather than across the Atlantic.

  “Putin has become a symbol of national sovereignty in its battle with globalism,” writes Caldwell. “That turns out to be the big battle of our times. As our last election shows, that’s true even here.”

  

  

• The Divergence Between 'Hard' & 'Soft' Data Explained (And Republican Bulls Won't Like It)

  Another dataset, another head-scratching disparity between ostensibly fulsome confidence and evidently sluggish activity.  While markets get whipsawed reacting to divergent hard and soft data points, the question that traders need to ask is whether this gap makes any sense.

  

  Bloomberg's Macro Strategist Cameron Crise may have the answer… If you're willing to believe that survey respondents allow their political beliefs to color their answers, then it very well might.

  I modeled U.S. economic growth since 1975 using the softest of the soft data releases: consumer confidence and the small business optimism survey. I omitted the ISM because it includes factual questions, i.e. are orders increasing?  The fit is actually pretty good for such a simple model, with an r-squared of 0.51.  As you can see, the model is now pretty upbeat.

   

  

   

  I then disaggregated the data and compared the model forecast to actual economic growth for each president since Gerald Ford. The results were fascinating.

  • Under Republican presidencies, average annual growth has been 2.7%…but the model has forecast it at 3%.
  • Under Democrats, growth has been a little higher, at 2.8%…but the model has forecast growth of just 2.3%.

   

  

   

  In fact, the model slightly underestimated growth during the Ford and Reagan years. Since George HW Bush, however, the trend is pretty pronounced: survey respondents have been optimistic relative to underlying growth for GOP presidents and pessimistic relative to growth for their Democratic counterparts.

   

  It seems likely that at least some of the recent boost to confidence is evidence of the same phenomenon manifesting itself.  That being said, the model currently projects growth of nearly 3.5%, so even if we were to knock off the usual half a percent for a post-Reagan GOP presidency that would still imply a marked uptick over the post-crisis run rate.

   

  Of course, achieving that growth will probably be contingent on the government enacting some of its more business-friendly campaign promises such as tax reform or deregulation. If they don't, then the "optimism gap" may close, and not in a way that the White House might like.

   

  Either way, traders will need to keep an eye on government policy and its implications. The efficacy of the Trump administration may not matter on a day-to-day basis for bond markets, but in the long run it probably will.

  A glance at the last 20 years or so of 'soft' and 'hard' data also helps confirm this over-confidence… it's the hope that pumps… then dumps… and never the reality that jumps…

  

  

  

• Intel Official Behind "Unmasking" Of Trump Associates Is "Very Senior, Very Well Known"

  Day after day, various media outlets, well really mostly the NYT and WaPo, have delivered Trump-administration-incriminating, Russia-link-related tape bombs sourced via leaks (in the hope of keeping the narrative alive and "resisting."). It now turns out, according to FXN report, that the US official who "unmasked" the names of multiple private citizens affiliated with the Trump team is someone "very well known, very high up, very senior in the intelligence world."

  As Malia Zimmerman and Adam Housley report, intelligence and House sources with direct knowledge of the disclosure of classified names (yes, yet another "unnamed source") said that House Intelligence Committee Chairman Devin Nunes, now knows who is responsible – and that person is not in the FBI (i.e. it is not James Comey)

  Housley said his sources were motivated to come forward by a New York Times report yesterday which reportedly outed two people who helped Nunes access information during a meeting in the Old Executive Office Building. However, Housley’s sources claim the two people who helped Nunes "navigate" to the information were not his sources. In fact, Nunes had been aware of the information since January (long before Trump's 'wiretap' tweet) but had been unable to view the documents themselves because of "stonewalling" by the agencies in question.

  Our sources: This surveillance that led to the unmasking of private names of American citizens started before Trump was the GOP nominee.

  — Adam Housley (@adamhousley) March 31, 2017

  //platform.twitter.com/widgets.js

  Our sources:The person who did the unmasking is "very well known, very high up, very senior, in the intelligence world & is not in the FBI

  — Adam Housley (@adamhousley) March 31, 2017

  //platform.twitter.com/widgets.js

  Our sources: Unmasking the names and then spreading the names was for political purposes that have nothing to do with national security

  — Adam Housley (@adamhousley) March 31, 2017

  //platform.twitter.com/widgets.js

  Our sources: "It had everything to do with hurting and embarrassing Trump and his team"

  — Adam Housley (@adamhousley) March 31, 2017

  //platform.twitter.com/widgets.js

  http://video.foxnews.com/v/embed.js?id=5380606763001&w=466&h=263

  Watch the latest video at video.foxnews.com

  For a private citizen to be “unmasked,” or named, in an intelligence report is extremely rare. Typically, the American is a suspect in a crime, is in danger or has to be named to explain the context of the report.

  “The main issue in this case, is not only the unmasking of these names of private citizens, but the spreading of these names for political purposes that have nothing to do with national security or an investigation into Russia’s interference in the U.S. election,” a congressional source close to the investigation told Fox News.

  The White House, meanwhile, is urging Nunes and his colleagues to keep pursuing what improper surveillance and leaks may have occurred before Trump took office. They’ve been emboldened in the wake of March 2 comments from former Obama administration official Evelyn Farkas, who on MSNBC suggested her former colleagues tried to gather material on Trump team contacts with Russia.

  White House Press Secretary Sean Spicer said Friday her comments and other reports raise “serious” concerns about whether there was an “organized and widespread effort by the Obama administration to use and leak highly sensitive intelligence information for political purposes.”

  “Dr. Farkas’ admissions alone are devastating,” he said.

  Clearly this confirms what Evelyn Farakas said, accidentally implicated the Obama White House in the surveillance of Trump's campaign staff:

  The Trump folks, if they found out how we knew what we knew about the Trump staff dealing with Russians, that they would try to compromise those sources and methods, meaning we would not longer have access to that intelligence.

  Furthermore, Farkas effectively corroborated a New York Times article from early March which cited "Former American officials" as their anonymous source regarding efforts to leak this surveillance on the Trump team to Democrats across Washington DC.

  * * *

  In addition, citizens affiliated with Trump’s team who were unmasked were not associated with any intelligence about Russia or other foreign intelligence, sources confirmed. The initial unmasking led to other surveillance, which led to other private citizens being wrongly unmasked, sources said.

  "Unmasking is not unprecedented, but unmasking for political purposes … specifically of Trump transition team members … is highly suspect and questionable,” according to an intelligence source. “Opposition by some in the intelligence agencies who were very connected to the Obama and Clinton teams was strong. After Trump was elected, they decided they were going to ruin his presidency by picking them off one by one."

  * * *

  So if the source isn't Comey, has anyone seen Jim Clapper recently? The answer should emerge soon, meanwhile the ridiculous game with very high stakes of spy vs spy, or in this case source vs source, continues.

  The report summarized below in video format:

  http://video.foxnews.com/v/embed.js?id=5380606763001&w=500&h=281

  Watch the latest video at video.foxnews.com

  

  

• How Chicago's Largest Pension May Run Out Of Cash In As Little As 4 Years

  Chicago’s pension funds, along with several other large public pensions around the country, are in serious trouble (we recently discussed the destruction awaiting our financial markets here: “Are Collapsing Pensions “About To Bring Hell To America”?“). 

  The problem is that the pending doom surrounding these massive public pension obligations often get clouded over by complicated actuarial math with a plan’s funded status heavily influenced by discount rates applied to future liability streams. 

  Take Chicago’s largest pension fund, the Municipal Employees Annuity and Benefit Fund of Chicago (MEABF), as an example.  Most people focus on a funds ‘net funded status’, which for the MEABF is a paltry 20.3%.  But the problem with focusing on ‘funded status’ is that it can be easily manipulated by pension administrators who get to simply pick the rate at which they discount future liabilities out of thin air.

  

   

  So, rather than lend any credence to some made up pension math, we prefer to focus on actual pension cash flows which can’t be manipulated quite so easily. 

  And a quick look at MEABF’s cash flows quickly reveals the ponzi-ish nature of the fund.  In both 2015 and 2014, the fund didn’t even come close to generating enough cash flow from investment returns and contributions to cover it’s $800mm in annual benefit payments…which basically means they’re slowing liquidating assets to pay out liabilities.

  

   

  Of course, like all ponzi schemes, liquidating assets to pay current claims can only go on for so long before you simply run out of assets. 

  So we decided to take a look at when Chicago’s largest pension fund would likely run out of money.

  On the expense side, annual benefit payments are currently just over $800 million and are growing at a fairly consistent pace due to an increasing number of retirees and inflation adjustments guaranteed to workers.  Assuming payouts continue to grow at the same pace observed over the past 15 years, the fund will be making annual cash payments to retirees of around $1.3 billion by 2023.

  

   

  Investment returns, on the other hand, are much more volatile but have averaged 5.5% over the past 15 years.  That said, the fund took big hits in 2002 (-9.3%) and 2008 (-27.1%) following the dotcom and housing bubble crashes. 

  But, just to keep it simple, lets assume that today’s market is not a massive fed-induced bubble and that the MEABF is able to produce consistent 5.5% (their 15-year average) returns every year in perpetuity.  Even then, the fund will only generate roughly $500mm per year in income compared to benefit payments growing to $1.3 billion…see the problem?

  

   

  Which, of course, means that the fund has likely just entered a period of perpetual cash outflows which will not stop until either (i) the city decides to cut back retiree payments or (ii) the fund runs out of money.

  

   

  And, putting it all together, even if Chicago’s largest pension generates consistent positive returns for the foreseeable future, it will literally run out of cash in roughly 6 years.

  

   

  And while we hate to be pessimistic, lets just take a look at what happens if, by some small chance, today’s market gets exposed as a massive bubble and we have another big correction in 2018.

  Such a correction would force the fund to liquidate over $1.5 billion in assets in 2018 alone….

  

   

  ….and the system would run out of cash completely within 4 years.

  

   

  The risk associated with America’s pension ponzi schemes have largely been overlooked by investors to date because so long as they can meet annual benefit payments then plan administrators can just continue to ‘kick the can down the road’ and pretend that nothing is wrong.   

  Of course, that strategy ceases to work when the pensions actually run out of cash…which could happen sooner than you think…and when it does, America’s retirees will suddenly find themselves about $5 trillion poorer than they thought they were.
  

  

  

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• Hispanic-Owned Businesses Dominate Bids For Trump's 'Xenophobic' Border Wall

  Trump’s proposed border wall has been described by many of the left as everything from “xenophobic” to just plain “racist” and pretty much everything in between.  That said, perhaps “equal opportunity employer” would be more accurate in light of a new analysis from the Wall Street Journal that took a look at who has submitted bids to help construct the wall so far…in a little dose of irony for the left, hispanic-owned businesses currently lead the charge with 32 bids.

  More than 200 companies have expressed interest in submitting plans to help design and build a wall along the U.S. border with Mexico, as the Trump administration seeks to fulfill a key campaign promise despite significant obstacles.

   

  The companies, whose names were published on a federal contracting website, vary widely in size and capability—from construction giants like Kiewit Corp. to smaller, family-owned businesses.

   

  Among those interested at this early stage are more than three dozen businesses owned by minorities, a Wall Street Journal analysis shows. Roughly 13% of the companies expected to submit proposals for the wall, for example, are owned by Hispanics.

  

   

  One such immigrant-owned business bidding on the border wall is run by Mario Burgos whose father immigrated to the U.S. from Ecuador.

  Mario Burgos,  the son of an immigrant, owns an Albuquerque, N.M., construction logistics company and plans to submit a proposal. He said he viewed the project as more geared toward border security than immigration, and a surefire way to boost employment in job-strapped New Mexico.

   

  “I am not against immigrants by any stretch of the imagination,” said Mr. Burgos, whose father came to the U.S. from Ecuador. “There isn’t a country in the world that doesn’t have borders and doesn’t want to enforce them.”

   

  Mr. Burgos noted that his company, Burgos Group LLC, which holds various defense contracts with federal agencies, has handled projects in southern New Mexico near the border and was familiar with operating in remote, rugged locations.

  Meanwhile the owner of Helix Steel said he’s not worried about the potential political fallout, saying “if fighting for American jobs is wrong, I’ll take that risk.”

  Other interested businesses have niche specialties, like Leesburg, Va.-based Helix Steel. Chief Executive Chris Doran said Helix’s products, which make concrete more resistant to blasts and other stresses, would suit what he called a “massive opportunity.”

   

  Mr. Doran, whose company has about 50 employees, said he wasn’t concerned with fallout from participating in the project. “All I can say is I’m fighting for American jobs, and if fighting for American jobs is wrong, I’ll take that risk,” he said.

  Of course, as we noted last week, just as Trump sent out RFP’s for his impenetrable, yet “aesthetically pleasing”, 30-foot border wall, Mexico’s government warned Mexican companies that it would not be in their best “interests” to participate in the project even though there will be no explicit legal restrictions or sanctions to stop them if they tried.  Per Reuters:

  “We’re not going to have laws to restrict (companies), but I believe considering your reputation it would undoubtedly be in your interest to not participate in the construction of the wall,” said Mexican Economy Minister Ildefonso Guajardo.

   

  “There won’t be a law with sanctions, but Mexicans and Mexican consumers will know how to value those companies that are loyal to our national identity and those that are not,” Guajardo added.

   

  His comments echo those of Mexico’s foreign minister Luis Videgaray, who said on Friday that Mexican companies that see a business opportunity in the wall should “check their conscience” first.

  Seems like the list of ‘racist’ companies in this country is growing very quickly.

  

  

• L.A. To Worsen Housing Shortage With New Rent Controls

  Authored by Ryan McMaken via Mises Institute,

  Los Angeles, home to one of the least affordable housing markets in North America, is now proposing to expand rent control to “fix” its housing problem. 

  As with all price control schemes, rent control will serve only to make housing affordable to a small sliver of the population while rendering housing more inaccessible to most. 

  Specifically, city activists hope that a new bill in the state legislature, AB1506, will allow local governments, Los Angeles included, to expand the number of units covered by rent control laws while also restricting the extent to which landlords can raise rents.

  Unintended Consequences

  Currently, partial rent control is already in place in Los Angeles and landlords there are limited in how much they can raise rents on current residents. However, according to LA Weekly, landlords are free to raise rents to market levels for a unit once that unit turns over to new residents. 

  This creates a situation of perverse incentives that do a disservice to both renters and landlords. Under normal circumstances, landlords want to minimize turnover among renters because it is costly to advertise and fill units, and it’s costly to prepare units for new renters. (Turnover is also costly and inconvenient for renters.) 

  By limiting rent growth for ongoing renters, however, this creates an incentive for landlords to break leases with residents — even residents who the landlords may like — just so the landlords can increase rents for new incoming renters in order to cover their costs of building maintenance and improvements. The only upside to this current regime is that at least this partial loophole still allows for some profit to be made, and thus allows for owners to produce and improve housing some of the time. 

  But, if this loophole is closed, as the “affordable housing” activists hope to do, we can look forward to even fewer housing units being built, current units falling into disrepair, and even less availability of housing for residents.

  Why Entrepreneurs Bring Products to Market

  The reason fewer units will be built under a regime of harsher rent control, is because entrepreneurs (i.e., producers) only bring goods and services to market if they can be produced at a cost below the market price. 

  Contrary to the myth perpetuated by many anti-capitalists, market prices — in this case, rents — are not determined by the cost of producing a good or service. Nor are prices determined by the whims of producers based on how greedy they are or how much profit they’d like to make. 

  In fact, producers are at the mercy of the renters who — in the absence of price controls — determine the price level at which entrepreneurs must produce housing before they can expect to make any profit. 

  However, when governments dictate that rent levels must be below what would have been market prices — and also below the level at which new units can be produced and maintained — then producers of housing will look elsewhere. 

  Henry Hazlitt explains many of the distortions and bizarre incentives that emerge from price control measures: 

  “The effects of rent control become worse the longer the rent control continues. New housing is not built because there is no incentive to build it. With the increase in building costs (commonly as a result of inflation), the old level of rents will not yield a profit. If, as often happens, the government finally recognizes this and exempts new housing from rent control, there is still not an incentive to as much new building as if older buildings were also free of rent control. Depending on the extent of money depreciation since old rents were legally frozen, rents for new housing might be ten or twenty times as high as rent in equivalent space in the old. (This actually happened in France after World War II, for example.) Under such conditions existing tenants in old buildings are indisposed to move, no matter how much their families grow or their existing accommodations deteriorate.”

  Thus, 

  “Rent control … encourages wasteful use of space. It discriminates in favor of those who already occupy houses or apartments in a particular city or region at the expense of those who find themselves on the outside. Permitting rents to rise to the free market level allows all tenants or would-be tenants equal opportunity to bid for space.”

  

   

  Not surprisingly, when we look into the current rent-control regime in Los Angeles, we find that newer housing is exempt, just as Hazlitt might have predicted. Unfortunately, housing activists now seek to eliminate even this exemption, and once these expanded rent controls are imposed, those on the outside won’t be able to bid for space in either new or old housing.

  Newcomers will be locked out of all rent-controlled units — on which the current residents hold a death grip — and they can’t bid on the units that were never built because rent control made new housing production unprofitable. Thus, as rent control expands, the universe of available units shrinks smaller and smaller. Renters might flee to single-family rental homes where rent increases might still be allowed, or they might have to move to neighboring jurisdictions that might not have rent controls in place. 

  In both cases, the effect is to reduce affordability and choice. By pushing new renters toward single-family homes this makes single-family homes relatively more profitable than multifamily dwellings, thus reducing density, and robbing both owners and renters of the benefits of economies of scale that come with higher-density housing. Also, those renters who would prefer the amenities of multifamily communities are prevented from accessing them. Meanwhile, by forcing multi-family production into neighboring jurisdictions, this increases commute times for renters while forcing them into areas they would have preferred not to live in the first place. 

  But, then again, for many local governments — and the residents who support them — fewer multifamily units, lower densities, and fewer residents in general, are all to the good. After all, local government routinely prohibit developers from developing more housing through zoning laws, regulation of new construction, parking requirements, and limitations on density. 

  And these local ordinances, of course, are the real cause of Los Angeles’s housing crisis. Housing isn’t expensive in Los Angeles because landlords are greedy monsters who try to exploit their residents. Housing is expensive because a large number of renters are competing for a relatively small number of housing units. 

  And why are there so few housing units? Because the local governments usually drive up the cost of housing. As this report from UC Berkeley concluded: 

  “In California, local governments have substantial control over the quantity and type of housing that can be built. Through the local zoning code, cities decide how much housing can theoretically be built, whether it can be built by right or requires significant public review, whether the developer needs to perform a costly environmental review, fees that a developer must pay, parking and retail required on site, and the design of the building, among other regulations. And these factors can be significant – a 2002 study by economists from Harvard and the University of Pennsylvania found strict zoning controls to be the most likely cause of high housing costs in California.”

  Contrary to what housing activists seem to think, declaring that rents shall be lower will not magically make more housing appear. Put simply, the problem of too little housing — assuming demand remains the same — can be solved with only one strategy: producing more housing. 

  Rent control certainly won’t solve that problem, and if housing advocates need to find a reason why so little housing is being built, they likely will need to look no further than the city council.

  

  

• Facial Recognition Tech Could Ensnare Millions Of Innocent Americans For Crimes They Didn’t Commit

  Authored by Daniel Lang via SHTFplan.com,

  It’s often the case that new technologies arrive on the scene faster than our society and its legal code can keep up. Sometimes this can be a good thing. For instance, 3D printing allows people to print out unregulated gun parts, thus allowing gun owners to circumvent the onerous laws of our government, which has struggled to come up with new laws to restrict the technology.

  When technology advances at a breakneck pace however, it can also be quite dangerous for our liberties. This is especially true in regards to privacy. If a new technology makes it easy for the government to track us, you can bet that the government is going to take its sweet time updating the legal code in a way that will protect us from surveillance.

  That certainly seems to be the case with facial recognition software. During a recent Congressional Oversight Committee hearing, members of both political parties sounded the alarm on the FBI’s use of the technology, and read the written testimony of Electronic Frontier Foundation senior staff attorney Jennifer Lynch:

  Lynch detailed the stunning scope of the FBI’s photo collection. In addition to collecting criminal and civil mug shots, the agency currently has “memorandums of understanding” with 16 states that mean every driver’s license photo from those states is accessible to the agency—without the drivers’ consent. The FBI also has access to photos from the U.S. State Department’s passport and visa records.

   

  Lynch argued that “Americans should not be forced to submit to criminal face recognition searches merely because they want to drive a car. They shouldn’t have to worry their data will be misused by unethical government officials with unchecked access to face recognition databases. And they shouldn’t have to fear that their every move will be tracked if face recognition is linked to the networks of surveillance cameras that blanket many cities.”

   

  “But without meaningful legal protections, this is where we may be headed,” Lynch stated. “Without laws in place, it could be relatively easy for the government and private companies to amass databases of images of all Americans and use those databases to identify and track people in real time as they move from place to place throughout their daily lives.”

  

   

  All told, law enforcement agencies around the country have access to 400 million photos in facial recognition databases, which are connected to roughly 50% of American adults. Most of these people have never committed a crime, and obviously haven’t given any consent to this.

  At first glance it may sound harmless to be in one of these databases. Movies and TV shows make it sound like this technology can help law enforcement swiftly and precisely nab suspects. So what do you have to fear if you haven’t committed a crime? It turns out that in real life, facial recognition is far from perfect.

  Internal FBI documents obtained in a Freedom of Information Act lawsuit by the nonprofit Electronic Privacy Information Center indicate that the FBI’s own database, called the Next Generation Identification Interstate Photo System, or NGI-IPS, had an acceptable margin of error of 20 percent — that is, a 1-in-5 chance of “recognizing” the wrong person.

   

  And research published in the October 2015 issue of the scientific journal PLOS ONE by researchers at the universities of Sydney and New South Wales in Australia found that the humans who interpret such data build in an extra error margin approaching 30 percent.

  If we ever allow our government to roll out facial recognition cameras on a wider scale, lots of innocent people are going to be hurt. Whether by mistake or by malice, it will become shockingly easy for law enforcement to identify ordinary people as criminals. The surveillance control grid will not only be inescapable, it will be unwieldy and rife with abuse.

  It’s often said that you should never trade freedom for safety. In this case, we wouldn’t receive any kind of safety.

  

  

• Is Public Equity A Broken Concept?

  Submitted by Nick Colas of Convergex

  Is Public Equity A Broken Concept

  David Einhorn’s proposal to GM that it split its stock into dividend and capital appreciation shares got us thinking about the bedrock principles of public equity ownership.  Other catalysts for this examination: recent IPO SNAP’s lack of shareholder voting rights, the reluctance of venture capitalists to list their “Unicorns”, and the dearth of IPOs generally.  The critical question here is “Does the traditional one-size-fits-all model of publicly-held equity still work in a world that increasingly values customization?”  Further, will other social and economic trends force a change in this structure, such as aging demographics in the US population and the investment-heavy nature of major technological developments like autonomous cars, workplace automation, and artificial intelligence?  Bottom line: “public equity” needs to be a fluid concept that responds to the changing needs of both providers and users of capital.

  If it is true that we learn the most from our mistakes, then I would posit that we can glean a lot of useful information from analyzing troubled industries rather than just focusing on commercial “Winners”.  For example, I have studied the US auto industry for the last 25 years as both a sell side and buy side analyst, and more recently in the context of the macro work I do in these notes.  It has been an education that has served me very well, even if the group has historically presented limited long term investment potential.

  Here is a summary of everything I know about this auto industry:

  • Demand is economically sensitive and volatile in major markets like the US, Europe and Japan. Since it takes years to design a new vehicle and that process is expensive, automakers have high fixed costs.  This leads to significant variability in earnings over a typical economic cycle and the threat of bankruptcy in a bad downturn is real.  “Hot” product offerings can mitigate this pressure, but not reliably so.
  • There is too much supply. The auto industry employs a lot of people both in final assembly and in the supply chain.  These tend to be good-paying jobs, which means governments are perennially throwing money at car companies to set up shop in their jurisdiction.  Moreover, those same governments don’t ever want to see a plant close.  This makes capacity very sticky, and in some places like Europe there are still too many auto plants.
  • Those two factors make it very hard to earn a decent return on capital over a cycle. Boom times bring excellent free cash flow, but those earnings are later consumed by the lean years.  As a result of both industry structure (point #2) and company-specific earnings volatility (point #1), public equities in the sector tend to have very low normalized valuations.

  I was therefore intrigued by investor David Einhorn’s proposal, made public today, to split GM’s stock into two pieces: a dividend paying equity and a capital appreciation “stub”.  To be clear, I have no idea if it would improve the company’s equity market valuation.  You can read a description here and see the slide deck from his firm, Greenlight Capital, as well: http://www.zerohedge.com/news/2017-03-28/david-einhorns-presentation-how-gm-can-unlock-between-13-and-38-billion-value

  Einhorn’s proposal got me thinking about the nature of public equity capital.  His thesis is that GM’s equity does not have a clean and distinct ownership base.  Dividend-seeking investors are put off by the company’s share buyback program since it drains cash for purposes they don’t value, and capital appreciation-focused investors would prefer that GM just use all their cash generation to repurchase shares.  Split the stock and the conflict goes away, or so the idea goes.

  Regardless of the merits of the idea for GM, Greenlight’s proposal raises a provocative macro question: “Is a one-size-fits-all equity structure really the best approach to both maximizing corporate value and giving shareholders the types of investments they desire?”  Once you pose the question that way, a raft of other capital market trends pop up:

  • Voting rights. The vast majority of public stocks feature a “One share, one vote” structure of corporate governance. Shareholders can elect Boards, vote on major corporate actions like takeovers and mergers, and lobby for changes in management if they feel the business is being mismanaged.
  • The recent high-profile SNAP IPO had an unusual feature, however: no voting rights at all.  While novel, this is the continuation of a trend among technology companies, which in many prominent cases have dual classes of stock with different voting rights.  The intention here is to limit public shareholders’ traditional rights in favor of management’s/core shareholders’ long term business plans and judgment.

  • Dearth of IPOs. Look at a long term chart of the number of Initial Public Offerings in US markets, and you’ll see a significant decline in the number of new issues from the 1990s to now.  The good times were in the late 1990s, of course, when it was customary to see 30-80 IPOs per month.  Now, that number is more like 10-20.
  • Venture capital’s reluctance to list “Unicorns”.   You might argue that capital markets are simply more selective now and the 1990s IPO cycle was an outlier.  But then why are so many truly revolutionary companies like Airbnb, Uber, Lyft, Palantir, and other “Unicorns” all still private?  These are transformational businesses, but the venture capitalists that fund them see no need to take them public. 

    Now, I am sure that Uber’s shareholders are happy just now that the company isn’t subject to the daily vagaries of the stock market, but on balance the absence of “UBER” as a symbol on the NYSE or the NASDAQ  is troublesome.

  At its core, the social compact between public equity markets and society is simple: over time, any investor should have access to the equity of important enterprises created by that society.  If that isn’t happening by virtue of some misalignment of incentives, then those need to be fixed.  The alternative – that the winners stay private but the losers are public – is untenable.  Investors will choose to hoard cash and capital will slowly stop circulating to its best possible use.

  Given the pace of innovation that seems to be on its way, this problem may only get worse.  If the futurists are correct, there are several societal sea changes just over the horizon, from artificial intelligence to workplace automation to driverless cars, all in various stages of development.  The home for that capital right now too often has a Sand Hill Road address rather than 11 Wall Street.

  We’ve come a long way from what now seems like a pretty humble proposal regarding one car company, so let’s put on bow on all this.  A few summary points:

  • For all the innovation on offer in American industry, the concept of public equity is perhaps overly reliant on an outdated concept where one equity security with proportional voting rights is the only flavor available. It is, at least, a topic worth discussing.
  • Investors, in their role as consumers, are used to custom solutions in every facet of their life – so why not think about how to apportion the value of a company to fit their needs? Yes, equity and debt are the traditional solutions.  But why do you think Exchange Traded Funds are so popular?  In part it is because they target investor needs in creative ways.  Corporate boards and investment bankers might take a page from that book.
  • Demographics and technology may force the issue. An aging US population might embrace novel approaches to accessing the corporate cash flows of public companies.  And if there is a new wave of innovation ready to drop on us, the only nature hedge might be to have access to the equity of those businesses.  Even if they don’t carry voting shares or other traditional features.

  Now, one caveat: all of this needs sufficient regulation to curtail abuse.  The mortgage market of the early 2000s is the cautionary tale here, of course.  Changes to the notion of public equity need careful scrutiny to make sure disclosures are complete and structures are sound.

  But in the end, “Equity” will need to evolve in the same way everything else does in a capitalist society – in a way that serves both investors and users of capital.

  
  

  

  

• China Manufacturing PMI Jumps To Five Year High

  China’s reflation story (on the back of a record amount of debt created last year) was put on display on Friday morning when both the Chinese manufacturing and non-manufacturing PMI rose more than expected, with the Manufacturing PMI rising to a level not seen since April 2012. According to the NBS, China’s Mfg PMI rose from 51.6 to 51.8 in March, the highest in almost five years, and above the 51.7 consensus estimate, while the non-manufacturing PMI also jumped, rising from 54.2 to 55.1, the highest in two years.

  The National Bureau of Statistics reported that New Orders rose from 53.0 to 53.3 while new export orders rose to 51, the highest since early 2012. Broken by firm size, the state-measured PMI showed largest enterprises were the strongest at 53.3, followed by medium-sized companies, while small firms remained in contraction at 48.6. Perhaps the most notable internal metric was the employment index, which hit the 50 level for the first time since May 2012, marking the first time the manufacturing sector has not lost jobs in nearly 5 years.

  As the chart below shows, the catalyst for the move higher has been the recent surge in producer prices, which have soared as much as 7% Y/Y on the back of soaring commodity prices; both have since peaked and it is expected that in the coming months, China’s inflationary pressures will subside especially given the recent efforst by Beijing to reign in out of control credit, especially shadow, issuance.

  

  A subindex for construction activity rose in March for the first time since the start of the year, hitting 60.5. As a reminder, and as Deutsche Bank explained two weeks ago, the only thing that matters for both China, and the rest of the world, is making sure China’s housing bubble, as explained in “Why The Fate Of The World Economy Is In The Hands Of China’s Housing Bubble,” does not burst.

  “The first quarter is off to a good start,” said Wang Qiufeng, an analyst at China Chengxin International Credit Rating in Beijing, quoted by Bloomberg. “The upbeat momentum may last through the first half of this year, as the government is pushing investment.”

  “The fact that the real strength is with the non-manufacturing PMI suggests that there’s fundamentally a good story going on here,” said James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology in Sydney. “Manufacturing is where you’d expect to see the effects of stimulus showing up.”

  So is China worried by the potential inflationary signals carried by today’s PMI prints? Oh yes, which is why the PBOC did not conduct a reverse repo liquidity injection for the sixth consecutive day, saying in a statement that the liquidity level if “relatively high” despite traditional month-end liquidity demands; as a result in the past 6 days, the PBOC has now drained some 320 billion yuan from the banking system.

  In recent days this has led to a sharp move higher in various repo tenors, most notably the benchmark 7-Day repo, which on Thursday fell w bps to 2.81%, but has jumped sharply in the past week as interbank funding problems have emerged, leading to the biggest drop in months in the Shanghai composite index overnight. Keep an eye on the the repo market in Friday’s session for any acute liquidity shortages, especially since China’s onshore market is closed on Monday and Tuesday.

  

  

• How To Protect Your Online Privacy Now That Congress Sold You Out

  Authored by Eric Limer via Popular Mechanics

  All your private online data—the websites you visit, the content of your chats and emails, your health info, and your location—just became suddenly less secure. Not because of hackers, but because Congress just blocked crucial privacy regulations. This will allow your internet service provider to collect all your data and sell that info to the highest bidder without asking you first. Welcome to a brave new world.

  A pair of resolutions, which passed through the Senate and House with exclusively Republican votes, roll back rules proposed by the Democratic leadership of the Federal Communications Commission during the Obama administration which, though passed in October, had not yet gone into effect.

  The rules—which will be completely dead following the expected signature of President Trump—would have required ISPs to get explicit opt-in approval from customers before selling the following “sensitive data”:

  

   

  This doesn’t just mean that sharing that information without your explicit permission will be fine and dandy. Since the rules were rolled back through the Congressional Review Act, the FCC is also barred from creating any “substantially similar” rules down the line.

  In theory, the information collected will be stored under some sort of ID separate from your actual name. But that’s a cold comfort considering the level of detail in this sort of information would make your identity a dead giveaway, and ISPs can hardly be trusted to keep your identifying information suitably safe from prying eyes. After all, they’ll be building dossiers any hacker would love to steal.

  What to do? There are a few things you can do to try and keep your data safe, and while they aren’t necessarily easy or free, they’re worth it if you value your privacy.

  Opt out with your ISP

  Your ISP may not need your permission to sell your data, but you can still go to them and tell them not to do it. The catch, of course, is this requires you to be proactive, and there’s no real guarantee that this will protect you completely. Still, do it. Get on the phone or visit the website of your ISP and opt out of every ad-related thing—and into every privacy-related thing—you can find. The process can be a little arduous—often requiring the use of your ISP-given email address that you probably never use—and it may not take effect immediately either. All the better reason to do it now.

  Time Warner/Spectrum customers can find their privacy dashboard here. Comcast customers can opt out of some targeted programs using these instructions. Verizon customers can find opt out options here. Remember, your phone company is technically an ISP too, so look up your options on that front as well.

  Opting out is an important first step, but it is not enough to actually preserve your privacy. Your ISP is not necessarily giving you the opportunity to opt out of all its ad-targeting programs. As the policy counsel at the Open Technology Institute, Eric Null, told Gizmodo, it is “highly unlikely” the new FCC will go after ISPs that aren’t offering robust opportunities to opt-out.

  Some smaller ISPs, which survive on small and satisfied customer bases as opposed to a large and captive audience, are more incentivized to protect your privacy with gusto. In fact, a whole host of small ISPs wrote a letter to Congress opposing this move. If you’re lucky enough to have the option of switching to one, now might be a good time.

  Keep your data out of your ISP’s hands in the first place

  Your ISP is uniquely suited to snoop on your information. Anything you put online has to pass through its hands. Email you send through Gmail, chats through Facebook Messenger—they all travel through your ISP before they reach the service that actually sends them on. But while it is impossible to cut your ISP out of this exchange entirely, you can hide the data as you are sending it.

  Apps with end-to-end encryption can encrypt your private information on the phone or computer you’re using, ensuring that it is coded and protected through the entire delivery process. So while your ISP can see the data go by, they can’t make sense of it.

  Secure chat apps like Signal will be crucial to keep your chats private not only from the government and hackers, but from your ISP. Just make sure these services have security measures that are open-source and trusted by experts who can help keep them honest. You can also encrypt data manually, using a standard like PGP, before you send it off into the web, but it can be an arduous process, because you have to ensure that the recipient has the means to decode that info and read it.

  The most seamless solution is to pay for a Virtual Private Network—a VPN—which allows you to encrypt all the data that passes through your ISP. This means that while your ISP is still doing the work of hauling your data around, it can’t understand any of it. The downside to this is that VPNs (at least any VPNs you can trust) are not free. Most good ones will require a yearly subscription. Furthermore, you aren’t hiding your personal data from everyone, you are just entrusting it to the VPN instead of your ISP, so do your research and choose a VPN you trust not to sell you out. Fortunately, since VPNs exist exclusively to keep your data private, they are pretty incentivized to keep you happy.

  The only one you can really trust to protect you is you.

  The short and uncomfortable truth is this: Until more robust privacy protections are put in place, the burden of protecting your online data falls on you. Keep it in mind, do your research, and remember that your monopolized ISP has every reason in the world to sell you out and wring your data for every dime that it is worth. The only one you can really trust to protect you is you.

  

  

• Starbucks Will Never Learn: New Program Encourages "Bipartisan Coffee Drinking"

  Seemingly no amount of brand destruction will ever be sufficient to convince Starbucks CEO Howard Schultz that while most adult-aged Americans seem to like his company’s coffee, roughly 50% of them couldn’t give a flying flip about his leftist political opinions that he’s constantly try to shove down their throats along with their morning java.

  The latest gimmick comes via a partnership with Boston-based startup “Hi From the Other Side” and offers free coffee to people with opposing political opinions who agree to meet up at Starbucks to “engage in a civil conversation” about their political differences.  Per The Hill:

  Participants who sign up (there’s currently a waitlist) for the app through Facebook are paired up with another local from the opposing political party.

   

  The app brings together “nice people across the political divide to talk like neighbors. Not to convince, but to understand,” the Hi From the Other Side website states. The company says it’s “hopeful there are people who really want to engage in a civil conversation.”

   

  As part of a recently launched, limited promotion, the startup says those who sign up and are matched will receive a Starbucks e-gift card.
  “This means you’ll have to show up and work together to unlock the gift card!” according to its site.

  And here’s “Hi From the Other Side’s” take on the program:

  “Hi From The Other Side has a way for you to make a connection over a great cup of coffee at Starbucks. If you are one of the first to be matched during this limited offer, you will receive a Starbucks e-gift card to redeem together at a nearby store. This means you’ll have to show up and work together to unlock the gift card!”

  

   

  Of course, all of this comes just a few weeks after Schultz’s public announcement to hire 10,000 refugees, a clear shot at the Trump administration’s immigration policies, seemingly backfired with his “brand perception” taking a sudden and massive hit (we wrote about it here: “Starbucks’ ‘Brand Perception’ Takes A Massive Hit After Announcing Plans To Hire 10,000 Refugees“).

  Credit Suisse’s Restaurant team, led by Jason West, also took note of the constant damaging political campaigns and warned that Schultz’s refugee stunt could cause the company to miss upcoming same-store-sales estimates.

  We have analyzed online “net sentiment” data (positive vs. negative online mentions) provided by NetBase to gauge changes in Starbucks’ brand perception. This follows recent media reports that SBUX’s decision to hire 10,000 refugees over the next five years could have upset some customers, perhaps negatively impacting sales trends. Our work shows a sudden drop in brand sentiment following announcement of the refugee hiring initiative on Jan. 29th, to flattish from a run-rate of ~+80 (on an index of -100 to +100). Net sentiment has since recovered, but has seen significant volatility in recent weeks. While this is only one data point, the analysis leaves us incrementally cautious on SBUX’s ability to meet consensus US SSS forecasts, which call for SSS to accelerate from +3% in F1Q17 (Dec. qtr.) to ~+3.5% in F2Q and ~+5.5% in 2H17.

   

  Potential impact to F2Q SSS: NetBase data show that net sentiment remained depressed for 10 days in late Jan. and early Feb. and was particularly volatile through the remainder of Feb. We see potential for a scenario in which US SSS slowed for a few weeks following news of the refugee hiring initiative, negatively impacting full-quarter SSS by ~70-80bps under a reasonable bear case. This assumes that (1) SSS during the initial 10-day stretch were ~flat, (2) SSS averaged +2% during the remaining 3 weeks of Feb. (when net sentiment saw particularly high volatility) and (3) SSS during the rest of the qtr (Jan. and Mar.) average +3.5% (in line with consensus forecasts for F2Q), putting F2Q US SSS at ~+2.8%. We caveat that we found little to no correlation over longer time periods between the net sentiment data and US SSS. However, in our past work on Chipotle (CMG: Neutral), we found that large and sudden spikes in net sentiment coincided with similar shifts in SSS trends.

  

   

  For those who missed it, here are some excerpts from the politically charged message drafted by Schultz to his employees with “deep concern and a heavy heart”:

  I write to you today with deep concern, a heavy heart and a resolute promise. Let me begin with the news that is immediately in front of us: we have all been witness to the confusion, surprise and opposition to the Executive Order that President Trump issued on Friday, effectively banning people from several predominantly Muslim countries from entering the United States, including refugees fleeing wars. I can assure you that our Partner Resources team has been in direct contact with the partners who are impacted by this immigration ban, and we are doing everything possible to support and help them to navigate through this confusing period.

   

  Hiring Refugees: We have a long history of hiring young people looking for opportunities and a pathway to a new life around the world. This is why we are doubling down on this commitment by working with our equity market employees as well as joint venture and licensed market partners in a concerted effort to welcome and seek opportunities for those fleeing war, violence, persecution and discrimination.  There are more than 65 million citizens of the world recognized as refugees by the United Nations, and we are developing plans to hire 10,000 of them over five years in the 75 countries around the world where Starbucks does business.

   

  Building Bridges, Not Walls, With Mexico: We have been open for business in Mexico since 2002, and have since opened almost 600 stores in 60 cities across the country, which together employ over 7,000 Mexican partners who proudly wear the green apron. Coffee is what unites our common heritage, and as I told Alberto Torrado, the leader of our partnership with Alsea in Mexico, we stand ready to help and support our Mexican customers, partners and their families as they navigate what impact proposed trade sanctions, immigration restrictions and taxes might have on their business and their trust of Americans.

  Apparently nothing will ever convince some of America’s leftist billionaires that, no matter how rich they become, they will never be able to force their political opinions on Americans who see through their propaganda…just ask all the rich people that just lost a fortune trying to elect Hillary.

  

  

• "He Certainly Has A Story To Tell" – Statement From Mike Flynn's Lawyer

  Hot on the heels of the WSJ report that Trump’s former National Security Advisor, Mike Flynn, has offered to testify in exchange for immunity from prosecution, Flynn’s lawyer, Robert Kelner of the law firm Covington, issued the following statement, in which judging by Kelner’s language, Flynn’s offer is not so much to “turn” on Trump, as to set the record straight, while putting an end to the ongoing “media witch hunt”, to wit:

  the media are awash with unfounded allegations, outrageous claims of treason, and vicious innuendo directed against him. He is now the target of unsubstantiated public demands by Members of Congress and other political critics that he be criminally investigated. No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch hunt environment without assurances against unfair prosecution.

  It is also notable that Flynn’s lawyer does not explicitly mention a request for immunity as the WSJ reported, instead it merely requests an environment which assures against “unfair prosecution.”

  The full statement by Robert Kelner is below

  Counsel to Lt. General Mike Flynn (Retired)

   

  General Flynn certainly has a story to tell, and he very much wants to tell it, should the circumstances permit.

   

  Out of respect for the Committees, we will not comment right now on the details of discussions between counsel for General Flynn and the House and Senate Intelligence Committees, other than to confirm that those discussions have taken place. But it is important to acknowledge the circumstances in which those discussions are occurring.

   

  General Flynn is a highly decorated 33-year veteran of the U.S. Army. He devoted most of his life to serving his country, spending many years away from his family fighting this nation’s battles around the world. He was awarded four Bronze Stars for actions in Iraq, Afghanistan and elsewhere in the war on terror. He received the Legion of Merit twice, and the Defense Superior Service Medal four times. He is a recipient of the Defense Department’s Distinguished Service Award and the Intelligence Community Gold Seal Medallion for Distinguished Service, as well as numerous other decorations.

   

  Notwithstanding his life of national service, the media are awash with unfounded allegations, outrageous claims of treason, and vicious innuendo directed against him. He is now the target of unsubstantiated public demands by Members of Congress and other political critics that he be criminally investigated. No reasonable person, who has the benefit of advice from counsel, would submit to questioning in such a highly politicized, witch hunt environment without assurances against unfair prosecution.

  h/t @ChuckRossDC

  

  

• Is War Between U.S. And China Brewing In The South China Sea?

  Authored by James Holbrooks via TheAntiMedia.org,

  

  Adding fuel to an already highly combustible situation in Southeast Asia, Reuters reported Tuesday that China has “largely completed major construction of military infrastructure on artificial islands it has built in the South China Sea,” and that the Asian superpower “can now deploy combat planes and other military hardware there at any time.”

  Citing satellite imagery analyzed by the Asian Maritime Transparency Initiative, part of Washington, D.C.’s Center for Strategic and International Studies, the news agency writes that “work on Fiery Cross, Subi and Mischief Reefs in the Spratly Islands included naval, air, radar and defensive facilities.”

  Sticking to the mainstream narrative that China is an aggressor in claiming sovereign rights to the majority of the South China Sea, Pentagon spokesman Commander Gary Ross says the new images confirm what the U.S. military already knows.

  “China’s continued construction in the South China Sea is part of a growing body of evidence that they continue to take unilateral actions which are increasing tensions in the region and are counterproductive to the peaceful resolution of disputes,” he told Reuters.

  China, as it has repeatedly, downplayed this notion and stuck to the position that it’s simply erecting defensive infrastructure within its own borders, as would any nation.

  “As for China deploying or not deploying necessary territorial defensive facilities on its own territory, this is a matter that is within the scope of Chinese sovereignty,” Foreign Ministry spokeswoman Hua Chunying said at a press briefing Tuesday.

  Despite comments such as these — and the very real fact that China hasn’t actually invaded anyone — the corporate media jumped on the news of the new images.

  Forbes, for instance, ran a piece that essentially listed all the reasons why China is a really bad actor in the region, and CNN talked to analysts who explained how the military buildup on the artificial islands will be gradual as China continues to exert its authoritarian influence over neighboring countries.

  That’s the narrative. Believe as you will.

  But the reality of the situation in the South China Sea – all geopolitical analysis aside – is that there’s about to be a hell of a lot of military hardware in those waters.

  As Anti-Media has been reporting, U.S. forces are already in the region, taking part in joint drills with ally South Korea that will last until the end of April. Then, at the beginning of May, Japan — another U.S. ally — will sail its navy’s most powerful warship through the South China Sea on a three-month tour.

  That means that just as the joint drills with South Korea end — which, incidentally, units from Delta Force, the Navy SEALS and Army Rangers are taking part in — Japan will shove off a warship aimed at waters claimed by China.

  If that timing seems a little curious, also consider that the U.S. just deployed its Terminal High Altitude Area Defense (THAAD) missile system in South Korea, which both China and Russia cared none too much for.

  With China showing no signs of backing away from its stance in the South China Sea — both ideologically and physically —  and with the corporate media willing and eager to push the “evil China” narrative that the U.S. military appears hell-bent on capitalizing on, it appears the long-dreaded collision course with China may, indeed, be not far off on the horizon.

  

  

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• Despite Record Highs, Brexit Still A Losing Bet For Dollar Investors

  One day after UK PM Theresa May officially unleashed the Article 50 letter proclaiming the beginning of the end of Britain within the EU, the UK stock market had rallied over 16% since the vote that elites said would bring armageddon. However, remove the support of a collapsed currency and things look very different for a US dollar investor.

  The UK’s FTSE 100 – whose megacap members get the majority of their revenue from outside the UK – looks very different when adjusted for the depreciation of the pound.

  

  In fact, for a dollar investor, they remain underwater since the Brexit vote, having never seen a ‘return to even’ since, thanks to the near 19% collapse in cable…

  

   

  Even as dollar investors in Japan, Germany, and the US seem to have done uniformly well…

  

  

  

• Iran's President Rouhani Visited Russia: Another Step To A Multipolar World

  Authored by Peter Korzun via The Strategic Culture Foundation,

  

  The significance of Iranian President Hassan Rouhani’s visit to Russia on March 27-28 goes far beyond the bilateral relationship. Iran is one of the main actors in Syria and Iraq. It has an importance place in the geopolitical plans of US President Donald Trump. Its relationship with Russia is an important factor of international politics. The future of the entire Middle East depends to a great extent on what Russia and Iran do and how effectively they coordinate their activities.

  Less than two months are left till the presidential election in Iran. The presidential race formally starts on April 17 and Rouhani has a good chance to win. True, the country’s foreign policy at the strategic level is defined by Iran's Supreme Leader, Ayatollah Ali Khamenei, but the executive branch of the government led by president implements it. The spiritual leader does not pay visits to other countries but Russian President Vladimir Putin met him in Tehran last year – the second time in the recent 17 years.

  This was Rouhani's first official visit to Russia and the first time he and Putin met within a bilateral framework. The trip took place against the background of growing partnership as both countries have become leading forces of the Astana process that made Iran, Russia and Turkey guarantors of the Syrian cease-fire.

  True, the cooperation in Syria is of utmost importance but there is each and every reason to believe that Russia and Iran will have to join together in an attempt to settle the conflict in Afghanistan. As a regional superpower, Iran will gain much by coordinating activities with Russia in that country after the US withdrawal that seems to be inevitable. Such cooperation would become a game-changing factor with far-reaching consequences for the region from the Mediterranean to Pakistan.

  The emerging triangle, including Russia, Iran and Turkey, becomes an alliance, could reshape the region. A ceasefire in Syria reached as a result of the Astana process led by the «big three» would reduce the clout of the US, the UK and France. Actually, their influence has already been diminished. The neighboring states will see that progress can be achieved without the «traditional players» representing the West.

  Russia is the country that can debunk the myth that the Middle East is threatened by a «Shia threat» emanating from Tehran. It can use its close and friendly relations with leading Sunni states – Egypt, Jordan, the UAE and, perhaps, Saudi Arabia – to play the stabilizing role of mediator between the Shia and Sunni camps. Russia has a unique position to act as an intermediary between Iran and Israel – something nobody else can do.

  It’ll take years to heal the wounds and mitigate the contradictions between Shia and Sunni Muslims in Lebanon, Syria and Iraq. Today, the West does not enjoy the clout it once had there. The borders drawn by Western countries caused many conflicts; direct military interventions made them lose trust and support. Under the circumstances, Russia is not exactly an outside actor. Moscow needs peace and stability in the region. This goal can be achieved in tandem with Turkey and Iran. Iraq and Syria can join the trio after they overcome the devastating results of wars. It makes the cooperation with Tehran an issue of paramount importance for Russia.

  The bilateral relationship is going to be strengthened by large-scale economic projects.

  Despite the importance of foreign policy issues, the talks mainly focused on prospects for deepening trade, economic and investment cooperation, including under large joint projects in energy and transport infrastructure. More than ten major trade and economic agreements were signed during the visit. Russia has already pumped about one billion euros into Iran' railway network, with serious financial injections into bilateral projects yet to be implemented.

  Exports to Iran stand at only around 1 percent of Russian foreign trade, but a trade surplus and the existence of a large market for Russian manufactured goods make Iran an important partner. The bilateral trade grew by 60 percent from $1.2 billion in 2015 to almost $2 billion in 2016.

  The resumption of weapons deliveries and participation in infrastructure projects financed by Russian loans have led to the doubling of exports of non-energy products from Russia to Iran. The first batch of S-300 air defense systems was delivered in April 2016.

  Russia has agreed to provide Iran with a loan of $2.2 billion for infrastructure projects involving Russian companies. It is planned to build a power plant and enhance generation at another in Iran in a contract worth several billion dollars. Under an agreement signed between the two sides, the Russians will improve efficiency at the Ramin power plant in Khuzestan province to 50-55% from 36% now. Another Russian company will build a 1,400-megawatt power plant in the Iranian city of Bandar Abbas in Hormuzgan province. Russian truck manufacturer Kamaz plans to export 300 trucks in 2017, GAZ signed a memorandum with the Iranian authorities for the supply of 900 buses.

  Russia’s role in reaching the Iran nuclear deal, the cooperation in Syria and the allegiance to the policy of rapprochement declared by President Putin provide ample evidence of Moscow’s desire to boost the bilateral ties.

  A momentous event to take place this year will provide an impetus to the development of Russia-Iran relations. Tehran is expected to become a full-fledged member of the Shanghai Cooperation Organization (SCO) this June. Iran also has expressed interest in signing a trade agreement with the Eurasian Union.

  Russia and Iran are united by common goals and interests. The development of relations between the two great powers is a significant contribution into creating alternative poles of power to change the world for the better.

  

  

• If Evelyn Farkas Resigned in 2015, How Did She Have Access to Trump-Russian Intelligence?

  This was making waves yesterday, after Evelyn Farkas admitted on The Morning Joe show that she told Mika that she strongly advised people ‘on the hill’ and in intelligence to tuck away intelligence regarding Russo-Trump ties for the sake of preservation, in an effort to protect it from the onerous bureaucracy she obviously finds to be deplorable.

   

  Former Obama DoD Deputy Evelyn Farkas reveals White House gathered intel on Trump campaign staff and then leaked it! https://t.co/W6FG4IFe5Q pic.twitter.com/VwaF2CnZzn

  — ZeroPointNow (@ZeroPointNow) March 29, 2017

  //platform.twitter.com/widgets.js

  “Get as much intelligence as you can before President Obama leaves the administration,” said Farkas in an interview yesterday on MSNBC.

  She was afraid the Trump people would gain access to their intelligence and whisk it away — because they’re all Russian spies, obviously.

  Aside from what appears to be a brazen confirmation of spying on the Trump team, the bigger red flag here is Dr. Farkas wasn’t employed by the Obama administration at the time the Russian allegations arose.

  According to Pentagon records, Dr. Farkas resigned in September of 2015.

  So how did this non-resident fellow at the Atlantic Council, member of the Council on Foreign Relations, and former deputy assistant secretary of defense for Russia, Ukraine and Eurasia, gain knowledge of intelligence regarding members of Trump’s team and their relations with Russia, when she was the senior foreign policy advisor for Presidential candidate Hillary Clinton?

  Farkas was the prime driver behind the anti-Russia phobia inside the Pentagon during the Obama years — shilling hard for the Ukraine — requesting that the President send them anti-tank missiles — which, essentially, would mean outright war with Russia.

  Back to the interview with Mika Brzezinski. Dr. Farkas said ‘we’ had good intel on Russia. Who does she refer to when she says ‘we?’

  

  Professional Deep Stater, Dr. Evelyn Farkas, Globalist Shill

  Here’s Mark Levin’s take on this scandal.

  Perhaps someone inside the Obama government was leaking to the Hillary campaign?

  I think we all know what the answer to what that question is, regardless of how uncomfortable a thought it may be.
  

  Content originally generated at iBankCoin.com

  

• Obamacare 'Explosion' Could Come On May 22nd, Here's Why

  After a stunning healthcare defeat last week, delivered at the hands of his own party no less, Trump took to twitter to predict the imminent ‘explosion’ of Obamacare.

  ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!

  — Donald J. Trump (@realDonaldTrump) March 25, 2017

  //platform.twitter.com/widgets.js

  The Democrats will make a deal with me on healthcare as soon as ObamaCare folds – not long. Do not worry, we are in very good shape!

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

  //platform.twitter.com/widgets.js

   

  As it turns out, that ‘explosion’ could come faster than anyone really expects as legislators and health insurers have to make several critical decisions about the 2018 plan year over the next 2 months which could seal Obamacare’s fate.

  As the Atlanta Journal Constitution points out today, the Trump administration has until May 22nd to decide whether they will continue to pursue the Obama administration’s appeal to provide subsidies to insurers who participate in the federal exchanges. 

  Of course, any decision to remove those subsidies would likely result in yet another massive round of premium hikes and further withdrawals from the already crippled exchanges where an astounding number of counties across the country have already been cut to just 1 health insurance provider.  And, as we’ve pointed out before, higher rates = lower participation = deterioration of risk pool = higher rates….and the cycle just repeats until it eventually collapses.

  As background, in 2014, House Republicans sued the Obama administration over the constitutionality of the cost-sharing reduction payments (a.k.a. “taxpayer funded healthcare subsidies”), which had not been appropriated by Congress.  Republicans won the initial lawsuit but the Obama administration subsequently appealed and now Trump’s administration can decide whether to pursue the appeal or not.

  One key to insurers selling plans in the marketplace are reimbursements they receive called cost-sharing reductions. These aren’t the same as the tax credits that people receive to help pay their premiums; it is financial assistance to help low-income people pay their out-of-pocket costs, such as deductibles. The Congressional Budget Office projected those payments would add up to $7 billion this year and $10 billion in 2018.

   

  But for insurers, there’s a question over how long that money will be delivered, due to an ongoing political and legal dispute about whether the cost-sharing money should be distributed at all.

   

  In 2014, House Republicans sued the Obama administration over the constitutionality of the cost-sharing reduction payments, which had not been appropriated by Congress. The lawmakers won the lawsuit, and the Obama administration appealed it. Late last year, with a new administration on the other end of the suit, the House sought to pause the proceedings — with a deadline for a status update in late May.

   

  The Trump administration and House lawmakers have to report to the judge this spring. If the Trump administration drops the appeal, it would mean the subsidies would stop being paid — a huge blow to the marketplaces and millions of people. If lawmakers wanted the payments to continue, they would have to find a way to fund them. One opportunity for that is coming up fast, the continuing resolution that must be passed by April 28. If the Trump administration continues the lawsuit, it will be in the odd position of fighting its own party.

  The CBO estimates the payments would total roughly $10 billion in 2018.

  As we’ve noted before, several large insurers, including UnitedHealth Group and Aetna, have already made the decision to exit Obamacare due to financial losses.  Now, Molina Healthcare is also pondering whether it would be able to continue to participate in the absence of federal subsidies.

  Big insurers like UnitedHealth Group and Aetna have mostly left the individual market over the years, citing financial reasons. Several counties across the country only have one insurer offering ObamaCare plans.

   

  Now Molina Healthcare is signaling it may downsize its presence in the market, or pull out altogether, if Congress or the administration doesn’t act to stabilize it. Molina has 1 million exchange enrollees in nine states this year.

   

  “We need some clarity on what’s going to happen with cost-sharing reductions and understand how they’re going to apply the mandate,” said Molina CEO Dr. Mario Molina.

   

  Asked if Molina would leave ObamaCare if the payments are stopped, the CEO said: “It would certainly play into our decision. We’ll look at this on a market-by-market basis. We could leave some. We could leave all.”

   

  Mario Molina, chief executive of Molina Healthcare, predicted that if the cost-sharing reductions are not funded, it could result in premium increases on the order of 10 to 12 percent.

  While all this uncertainty swirls, health insurers must decide — soon — whether to make rate filings to sell insurance in 2018. The deadline varies by state, but for those that have marketplaces run by the federal government, it is June 21. Filing doesn’t mean that insurers will participate; they’ll have months more to negotiate and could still drop out. But it’s the first step toward offering plans in 2018 and should provide a signal about what the marketplaces are likely to look like.

  Meanwhile, it seems pretty likely that Obamacare couldn’t survive another collapse in coverage like we saw in 2017 (charts per the New York Times):

  2016 healthcare insurance carriers by county:

  

   

  2017 healthcare insurance carriers by county:

  

   

  The first step is admitting you have a problem.

  

  

• Death At Your Door: Knock-And-Talk Police Tactics Rip A Hole In The Constitution

  Authored by John Whitehead via The Rutherford Institute,

  “It’s 4 in the morning, there’s headlights that are shining into your house; there’s a number of different officers that are now on the premises; they’re wearing tactical gear; they have weapons; and they approach your front door. Do you think that the ordinary citizen in that situation feels that they have an obligation to comply?”— Michigan Supreme Court Justice Richard Bernstein

  It’s 1:30 a.m., a time when most people are asleep.

  Your neighborhood is in darkness, except for a few street lamps. Someone—he doesn’t identify himself and the voice isn’t familiar—is pounding on your front door, demanding that you open up. Your heart begins racing. Your stomach is tied in knots. The adrenaline is pumping through you. You fear that it’s an intruder or worse. You not only fear for your life, but the lives of your loved ones.

  The aggressive pounding continues, becoming more jarring with every passing second. Desperate to protect yourself and your loved ones from whatever threat awaits on the other side of that door, you scramble to lay hold of something—anything—that you might use in self-defense. It might be a flashlight, a baseball bat, or that licensed and registered gun you thought you’d never need. You brace for the confrontation, a shaky grip on your weapon, and approach the door cautiously. The pounding continues.

  You open the door to find a shadowy figure aiming a gun in your direction. Immediately, you back up and retreat further into your apartment. At the same time, the intruder opens fire, sending a hail of bullets in your direction. Three of the bullets make contact. You die without ever raising your weapon or firing your gun in self-defense. In your final moments, you get a good look at your assailant: it’s the police.

  This is what passes for “knock-and-talk” policing in the American police state.

  “Knock-and-shoot” policing might be more accurate, however.

  Whatever you call it, this aggressive, excessive police tactic has become a thinly veiled, warrantless exercise by which citizens are coerced and intimidated into “talking” with heavily armed police who “knock” on their doors in the middle of the night.

  Poor Andrew Scott didn’t even get a chance to say no to such a heavy-handed request before he was gunned down by police.

  It was late on a Saturday night—so late that it was technically Sunday morning—and 26-year-old Scott was at home with his girlfriend playing video games when police, in pursuit of a speeding motorcyclist, arrived at Scott’s apartment complex, because a motorcycle had been spotted at the complex and police believed it might belong to their suspect.

  At 1:30 a.m., four sheriff’s deputies began knocking on doors close to where a motorcycle was parked. The deputies started their knock-and-talk with Apartment 114 because there was a light on inside. The occupants of the apartment were Andrew Scott and Amy Young, who were playing video games.

  First, the police assumed tactical positions surrounding the door to Apartment 114, guns drawn and ready to shoot.

  Then, without announcing that he was a police officer, deputy Richard Sylvester banged loudly and repeatedly on the door of Apartment 114. The racket caused a neighbor to open his door. When questioned by a deputy, the neighbor explained that the motorcycle’s owner did not live in Apartment 114.

  This information was not relayed to the police officer stationed at the door.

  Understandably alarmed by the aggressive pounding on his door at such a late hour, Andrew Scott retrieved his handgun before opening the door. Upon opening the door, Scott saw a shadowy figure holding a gun outside his door.

  Still police failed to identify themselves.

  Unnerved by the sight of the gunman, Scott retreated into his apartment only to have Sylvester immediately open fire. Sylvester fired six shots, three of which hit and killed Scott, who had no connection to the motorcycle or any illegal activity.

  So who was at fault here?

  Was it Andrew Scott, who was prepared to defend himself and his girlfriend against a possible late-night intruder?

  Was it the police officers who banged on the wrong door in the middle of the night, failed to identify themselves, and then—without asking any questions or attempting to de-escalate the situation—shot and killed an innocent man?

  Was it the courts, which not only ruled that the police had qualified immunity against being sued for Scott’s murder but also concluded that Andrew Scott provoked the confrontation by retrieving a lawfully-owned handgun before opening the door?

  Or was it the whole crooked system that’s to blame? I’m referring to the courts that continue to march in lockstep with the police state, the police unions that continue to strong-arm politicians into letting the police agencies literally get away with murder, the legislators who care more about getting re-elected than about protecting the rights of the citizenry, the police who are being trained to view their fellow citizens as enemy combatants on a battlefield, and the citizenry who fail to be alarmed and outraged every time the police state shoots another hole in the Constitution.

  What happened to Andrew Scott was not an isolated incident.

  As Supreme Court nominee Neil Gorsuch recognized in a dissent in U.S. v. Carloss: “The ‘knock and talk’ has won a prominent place in today’s legal lexicon… published cases approving knock and talks have grown legion.”

  In fact, the Michigan Supreme Court is currently reviewing a case in which seven armed police officers, dressed in tactical gear and with their police lights on, carried out a knock-and-talk search on four of their former colleagues’ homes early in the morning, while their families (including children) were asleep. The police insist that there’s nothing coercive about such a scenario.

  Whether police are knocking on your door at 2 am or 2:30 pm, as long as you’re being “asked” to talk to a police officer who is armed to the teeth and inclined to kill at the least provocation, you don’t really have much room to resist, not if you value your life.

  Mind you, these knock-and-talk searches are little more than police fishing expeditions carried out without a warrant.

  The goal is intimidation and coercion.

  Unfortunately, with police departments increasingly shifting towards pre-crime policing and relying on dubious threat assessments, behavioral sensing warnings, flagged “words,” and “suspicious” activity reports aimed at snaring potential enemies of the state, we’re going to see more of these warrantless knock-and-talk police tactics by which police attempt to circumvent the Fourth Amendment’s warrant requirement and prohibition on unreasonable searches and seizures.

  We’ve already seen a dramatic rise in the number of home invasions by battle-ready SWAT teams and police who have been transformed into extensions of the military. Indeed, with every passing week, we hear more and more horror stories in which homeowners are injured or killed simply because they mistook a SWAT team raid by police for a home invasion by criminals.

  Never mind that the unsuspecting homeowner, woken from sleep by the sounds of a violent entry, has no way of distinguishing between a home invasion by a criminal as opposed to a government agent.

  Too often, the destruction of life and property wrought by the police is no less horrifying than that carried out by criminal invaders.

  These incidents underscore a dangerous mindset in which civilians (often unarmed and defenseless) not only have less rights than militarized police, but also one in which the safety of civilians is treated as a lower priority than the safety of their police counterparts (who are armed to the hilt with an array of lethal and nonlethal weapons).

  In fact, the privacy of civilians is negligible in the face of the government’s various missions, and the homes of civilians are no longer the refuge from government intrusion that they once were.

  It wasn’t always this way, however.

  There was a time in America when a person’s home was a sanctuary where he and his family could be safe and secure from the threat of invasion by government agents, who were held at bay by the dictates of the Fourth Amendment, which protects American citizens from unreasonable searches and seizures.

  The Fourth Amendment, in turn, was added to the U.S. Constitution by colonists still smarting from the abuses they had been forced to endure while under British rule, among these home invasions by the military under the guise of writs of assistance. These writs were nothing less than open-ended royal documents which British soldiers used as a justification for barging into the homes of colonists and rifling through their belongings.

  James Otis, a renowned colonial attorney, “condemned writs of assistance because they were perpetual, universal (addressed to every officer and subject in the realm), and allowed anyone to conduct a search in violation of the essential principle of English liberty that a peaceable man’s house is his castle.” As Otis noted:

  Now, one of the most essential branches of English liberty is the freedom of one’s house. A man’s house is his castle; and whilst he is quiet, he is as well guarded as a prince in his castle. This writ, if it should be declared legal, would totally annihilate this privilege. Custom-house officers may enter our houses when they please; we are commanded to permit their entry. Their menial servants may enter, may break locks, bars, and everything in their way; and whether they break through malice or revenge, no man, no court can inquire. Bare suspicion without oath is sufficient.

  To our detriment, we have now come full circle, returning to a time before the American Revolution when government agents—with the blessing of the courts—could force their way into a citizen’s home, with seemingly little concern for lives lost and property damaged in the process.

  Actually, as I make clear in my book Battlefield America: The War on the American People, we may be worse off today than our colonial ancestors when one considers the extent to which courts have sanctioned the use of no-knock raids by police SWAT teams (occurring at a rate of 70,000 to 80,000 a year and growing); the arsenal of lethal weapons available to local police agencies; the ease with which courts now dispense search warrants based often on little more than a suspicion of wrongdoing; and the inability of police to distinguish between reasonable suspicion and the higher standard of probable cause, the latter of which is required by the Constitution before any government official can search an individual or his property.

  Winston Churchill once declared that “democracy means that if the doorbell rings in the early hours, it is likely to be the milkman.”

  Clearly, we don’t live in a democracy.

  No, in the American police state, when you find yourself woken in the early hours by someone pounding on your door, smashing through your door, terrorizing your family, killing your pets, and shooting you if you dare to resist in any way, you don’t need to worry that it might be burglars out to rob and kill you: it’s just the police.

  

  

• GHoST IN THe SMeLL…

  

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• Can Trump Turn Back Time On Coal Mining Employment?

  President Trump signed an executive order on Tuesday, repealing many of the environmental regulations introduced by his predecessor Barack Obama and rescinding a moratorium on the leasing of federal land to coal mining companies. In “ending the war on coal”, Trump tries to make good on his campaign promise to bring thousands of unemployed coal miners back to work and secure U.S. energy independence.

  As Statista's Felix Richter notes, Trump, like many of his supporters, blames Obama’s environmental policies for the coal industry’s decline, which, as the chart below illustrates, started long before Obama took office in 2009. While it is true that coal consumption and mining employment did drop significantly during Obama’s presidency, experts keep pointing out that the decline was caused primarily by the rise of natural gas and only secondarily by environmental regulation.

  

  You will find more statistics at Statista

  In the late 2000s, a boom in natural gas production, driven by new hydraulic fracturing (fracking) technology, drove down prices for natural gas and the demand for electricity produced from coal subsequently plummeted. In 2000, coal accounted for more than 50 percent of U.S. electricity generation. By 2016, that percentage had dropped to around 30 percent with natural gas going the opposite direction. When natural gas surpassed coal for the first time in 2016, the EIA concluded that the rise of gas “was mainly a market-driven response to lower natural gas prices that have made natural gas generation more economically attractive”.

  Repealing environmental regulation will likely slow down the decline of the coal industry, but it is highly doubtful that it will reverse a trend that has been ongoing for decades. By easing fracking limitations, President Trump’s anti-regulation policy may even worsen the coal industry’s situation as laxer extraction rules could drive down the price of natural gas even further.

  

  

• George W. Bush On Trump's Inauguration: "That Was Some Weird Shit"

  Perhaps just as memorable as the somewhat surreal Trump inauguration on Jan. 20, was the unforgettable crusade of George W. Bush to tame his poncho on that rainy Friday afternoon.

  Some of us are sad today, but others had a great time playing peekaboo with a plastic sheet. pic.twitter.com/yOE0RJkNx8

  — Kashana (@kashanacauley) January 20, 2017

  //platform.twitter.com/widgets.js

  Whether flustered by the elements, or simply due to this residual antagonism for the president, after Trump’s short and dire speech, Bush departed the scene and never offered public comment on the ceremony. Until now.

  According to a new report by New York magazine, three people present at the event say they heard Bush’s assessment of the swearing in ceremony.

  “That was some weird shit.”

  Bush attended Trump’s inauguration, sitting near former President and First Lady Bill and Hillary Clinton as well as former President and first lady Barack and Michelle Obama. He has kept a low profile since.

  

  

• Second Foundation: Empire Crumbling

  Authored by Jim Quinn via The Burning Platform blog,

  In Part One of this article I analyzed the similarities of Isaac Asimov’s Foundation Trilogy to Strauss & Howe’s Fourth Turning, trying to assess how Donald Trump’s ascension to power fits into the theories put forth by those authors. In Part Two of this article I compared and contrasted Donald Trump’s rise to power to the rise of The Mule in Asimov’s masterpiece. Unusually gifted individuals come along once in a lifetime to disrupt the plans of the existing social order. Despite the forlorn hope Donald Trump or some other savior can reverse our course, decades of missteps, dreadful decisions, ineffectual leadership, and unconcealed treachery have paved a path to destruction for the American Empire.

  American Empire Crumbling

  “Mr. Advocate, the rotten tree-trunk, until the very moment when the storm-blast breaks it in two, has all the appearance of might it ever had. The storm-blast whistles through the branches of the Empire even now. Listen with the ears of psychohistory, and you will hear the creaking.” – Isaac Asimov, Foundation

  

  “Now any dogma, based primarily on faith and emotionalism, is a dangerous weapon to use on others, since it is almost impossible to guarantee that the weapon will never be turned on the user.” – Isaac Asimov, Foundation

  The elitist ruling class gathers at Davos and their secretive Bilderberg meetings to plot the course of the world, divvying up the vast wealth plundered through their globalization schemes, and developing the newest propaganda narrative to keep the global masses confused, distracted, and powerless to fight back. Despite their wealth and power, an epic level of hubris is always their undoing.

  The normal people have begun to fight back but, like the rotten tree trunk Galactic Empire, the “mighty” American Empire, forged from the debris of two world wars, awaits the storm blast which will expose its true level of rot. The American Empire is crumbling under the weight of military overreach; the burden of unpayable debts; currency debasement; cultural decay; civic degeneration; diversity and deviancy trumping common culture and normality; pervasive corruption at every level of government; and the failure of shortsighted leaders to deal with the real problems.

  You can hear the creaking as the winds of this Fourth Turning winter howl through the branches of this dying empire. Trump may have forced the Deep State Second Foundation to reveal itself as they seek to destroy him, but the relentless decline of the American Empire continues unabated. Tinkering around the edges of a healthcare system designed to benefit mega-corporations and the Deep State will do nothing to reverse or even delay the decline.

  Slowing the growth of government when the national debt is already $20 trillion and headed to $30 trillion within the next decade won’t cure the rot in our tree trunk. Completely ignoring the $200 trillion of unfunded welfare state liabilities helps accelerate the inevitable collapse of this empire. Cutting taxes while expanding the war making machine known as the military industrial complex does nothing to reverse what is already in motion.

  

  In addition to the absolutely quantifiable reasons why the American Empire will collapse, there are demographic, cultural, and societal trends which will contribute dramatically to the fall. The rapidly aging populace, with 10,000 Americans per day turning 65 years old, is the driving force towards national bankruptcy, as this inexorable demographic tsunami sweeps over the fraying fabric of welfare state promises.

  The onslaught of illegal immigrants and purposeful execution of a plan by the effete liberal elite to weaken our common American culture through the insertion of Muslim refugees into our communities, is undermining the shared values which built the country. The immigrants who built this country assimilated, learned the language, worked hard, and adopted our common culture. The hordes invading America at this time hate our values and refuse to assimilate. This Soros funded effort to create diversity havoc throughout the world is part of the globalization one world order plan.

  As Europe disintegrates under the unrelenting wave of violent refugees creating upheaval, chaos, and spreading religious zealotry through viciousness, the next target is the mighty American Empire. Fighting in the streets between the normal law abiding Trump supporters and the Soros funded, draped in black, flag burning, social justice warrior criminals has begun. Widespread societal strife is just around the corner.

  When the next financial crisis, created by the Deep State to further their plans, destroys the remaining wealth of the barely surviving middle class, all hell will break loose in the streets. The 86% of the country occupied by red state, gun owning, Trump supporters will openly go to war against the condescending, left wing, violence provoking blue state liberals. Blood will be spilled in copious amounts. It always does during Fourth Turnings.

  

  Will Trump’s reign resemble the reign of The Mule? The Mule’s conquest was astonishingly fast. He defeated the Foundation and established the Union of Worlds after only five years. The unpredictability of his arrival and rare mental talents befuddled the Foundation. Then he inexplicably paused in his campaign of conquests. Instead he launched repeated expeditions in search of the Second Foundation. The mysterious Second Foundation inhibits The Mule from further conquest as he is consumed with finding their location and paralyzed with fear they can defeat his mentalic powers.

  The Second Foundation comes briefly out of hiding to face the threat of The Mule. It is revealed to be an assemblage of the most intelligent humans in the galaxy, descendants of Seldon’s psychohistorians. Using the force of its strongest minds, the Second Foundation ultimately wears down the Mule. They succeed in defeating the Mule, transforming him into a relatively harmless individual, lacking ambition, and no longer a threat to the Seldon Plan. His destructive posture is adjusted to a benign one. He returns to rule over his kingdom peacefully for the rest of his life, without any further thought of conquering the Second Foundation.

  Trump has had an astonishingly fast rise to power. He went from frivolous reality TV star to the most powerful leader on earth in the space of two years. With his clownish exploits and rhetoric, he rose to power through being underestimated every step of the way – infuriating his many enemies who miscalculated his level of political savvy and persuasion skills. Unless he is overthrown by the Deep State or killed, he will be able to put his imprint on the nation for at least four years and possibly eight.

  His first two months in power will likely reflect his entire presidency. The Washington establishment and sinister Deep State players will attempt to thwart Trump’s every move. They have already impeded his immigration controls and attempt to repeal and replace Obamacare, while using their illegal surveillance state techniques to undermine his administration.

  

  The Second Foundation, through unyielding pressure and generating fear of the unknown into the mind of The Mule, was able undermine his plans of conquest and turn him into a non-disruptive, toothless, nonthreatening, passive figurehead. As Trump’s best laid plans are obstructed, agenda foiled, and legislation hindered, will his enthusiasm for governance wane?

  The surveillance agencies who are supposed to act on his behalf are clearly trying to subvert his presidency. Leaks and fake news designed to sabotage the credibility of Trump and his administration will continue. Will the fear of retribution from mysterious surveillance state operatives convince Trump to fall into line and become a submissive lackey, no longer making waves for the Deep State?

  I have no illusions Trump is some sort of savior who will reverse decades of political corruption, currency debasement, financial market rigging, global military missteps, cultural decay, pervasive entitlement mindset, and out of control espionage operatives. At best, he will slow some aspects of the decline over a short time frame. More likely, he will provoke his enemies to such an extent the decline will be accelerated due to civil and/or global war breaking out. The oncoming financial collapse will further push the country toward the brink. It’s not a matter of if, but when. And the when is closer than most people imagine.

  The seeds of destruction for the American Empire were planted as Ben Franklin departed the Constitutional Convention two hundred and thirty years ago responding to a question from Mrs. Powell that they had given the people a republic, if they could keep it. The seeds were slow to take root, but the transition from republic to democracy insured long-term decline as the people voted for more benefits, paid for by their fellow citizens and financed by debt.

  With the secretive creation of the privately owned Federal Reserve in 1913, the debasement of our currency was begun. The true birth of the American Empire occurred with surrender of Germany & Japan at the conclusion of World War II. As the only major power not in physical and economic shambles, America dominated the world until its hubris kicked in during the late 1960s with the birth of the welfare/warfare state financed by debt. Closure of the gold window in 1971 sealed our fate.

  

  We’ve crossed our Rubicon with the preservation and expansion of empire bankrupting the nation. We just refuse to admit it. It’s already a done deal. Default is baked in the cake. It’s happened to the Greeks, Romans, Spanish, Dutch, British, and many other civilizations throughout history. The path to destruction is always the same because the actions of humans in large numbers are entirely predictable. The American Empire has exploited all of the productive people, leaving nothing left to invest in the future. Investment by corporate America today constitutes greedy CEOs buying back their stock to boost earnings per share and share price in order to earn multi-million dollar bonuses.

  The globalization scam was the last dying gasp to exploit the dwindling resources of the planet and the people. There is nothing left to fund the bread and circuses keeping the ignorant masses distracted, amused, and fed. The monetary machinations of the Federal Reserve have reached their limit. Economic crisis is inevitable before this Fourth Turning runs its course.

  The economic meltdown will likely result in the final breakup of the American empire. The best laid plans of Deep State billionaire intellectuals will be for naught. The law of large numbers will win again. All empires eventually die, and life will go on, unless the psychopaths controlling this country blow the planet up rather than relinquish their wealth and power. Is history already written or do we as individuals have a say?

  “Throughout you have invariably relied on authority or on the past—never on yourselves.” – Isaac Asimov, Foundation

  

  “But Empire building also bears the seeds of its own destruction. The closer a state comes to the ultimate goal of world domination and one-world government, the less reason is there to maintain its internal liberalism and do instead what all states are inclined to do anyway, i.e., to crack down and increase their exploitation of whatever productive people are still left.

  Consequently, with no additional tributaries available and domestic productivity stagnating or falling, the Empire’s internal policies of bread and circuses can no longer be maintained. Economic crisis hits, and an impending economic meltdown will stimulate decentralizing tendencies, separatist and secessionist movements, and lead to the break-up of Empire. We have seen this happen with Great Britain, and we are seeing it now, with the US and its Empire apparently on its last leg.” – Hans-Hermann Hoppe

   

  

  

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• Giulio Meotti: Islam, Not Christianity, Is Saturating Europe

  Authored by Giulio Meotti via The Gatestone Institute,

  • Jihadists seem to be leading an assault against freedom and against secular democracies.
  • Sunni Islam's most prominent preacher, Yusuf al Qaradawi, declared that the day will come when, like Constantinople, Rome will be Islamized.
  • It is Islam, not Christianity, that now saturates Europe's landscape and imagination.

  According to US President Trump's strategic advisor Steve Bannon, the "Judeo-Christian West is collapsing, it is imploding. And it's imploding on our watch. And the blowback of that is going to be tremendous".

  The impotence and the fragility of our civilization is haunting many Europeans as well.

  Europe, according to the historian David Engels will face the fate of the ancient Roman Republic: a civil war. Everywhere, Europeans see signs of fracture. Jihadists seem to be leading an assault against freedom and against secular democracies. Fears occupy the collective imagination of Europeans. A survey of more than 10,000 people from ten different European countries has revealed increasing public opposition to Muslim immigration. The Chatham House Royal Institute of International Affairs carried out a survey, asking online respondents their views on the statement that "all further migration from mainly Muslim countries should be stopped". In the 10 European countries surveyed, an average of 55% agreed with the statement.

  Mainstream media are now questioning if "Europe fears Muslims more than the United States". The photograph used in the article was a recent Muslim mass prayer in front of Italy's monument, the Coliseum. In echoes of the capture of the great Christian civilization of Byzantium in Constantinople, Sunni Islam's most prominent preacher, Yusuf al Qaradawi, declared that the day will come when Rome will be Islamized.

  Hundreds of Muslims engage in a mass prayer service next to the Coliseum in Rome, on October 21, 2016. (Image source: Ruptly video screenshot)

  Do civilizations die from outside or inside? Is their disappearance the result of external aggression (war, natural disasters, epidemics) or of an internal erosion (decay, incompetence, disastrous choices)? Arnold Toynbee, in the last century, was adamant: "Civilizations die from suicide, not by murder".

  "The contemporary historian of ancient Greece and ancient Rome saw their civilisations begin their decline and fall, both the Greeks and the Romans attributed it to falling birth rates because nobody wanted the responsibilities of bringing up children," said Britain's former chief rabbi, Lord Sacks.

  Everywhere in Europe there are signs of a takeover.

  Muslim students now outnumber Christian students in more than 30 British church schools. One Anglican primary school has a "100 percent Muslim population". The Church of England estimated that about 20 of its schools have more Muslim students than Christian ones, and 15 Roman Catholic schools have majority Muslim students. In Germany as well, there are fears of a massive Muslim influx into the school system, and German teachers are openly denouncing the threat of a "ghettoization".

  France saw 34,000 fewer babies born last year than in 2014, a new report just found. The number of French women having children has reached its lowest level in 40 years. A low fertility rate has become a plague all over Europe: "In 1995 only one country, Italy, had more people over 65 than under 15; today there are 30 and by 2020 that number will hit 35." Welcome to the "Greying of Europe".

  Additionally, if it were not for Muslim women, France would have an even lower birth rate: "With a fertility rate of 3.5 children per woman, the Algerians contribute significantly to the growth of the population in France", wrote the well-known demographer Gérard-François Dumont.

  Thanks to Muslim migrants, Sweden's maternity wards are busy these days.

  In Milan, Italy's financial center, Mohammed is the top name among newborn babies. The same is true in London, in the four biggest Dutch cities and elsewhere in Europe, from Brussels to Marseille. It is Islam, not Christianity, that now saturates Europe's landscape and imagination.

  Meanwhile, Europe's leaders are almost all childless. In Germany, Angela Merkel has no children, as British prime minister Theresa May and one of France's leading presidential candidates, Emmanuel Macron. As Europe's leaders have no children and no reason to worry about the future (everything ends with them), they are now opening Europe's borders to keep the continent in a demographic equilibrium. "I believe Europeans should understand that we need migration for our economies and for our welfare systems, with the current demographic trend we have to be sustainable", said Federica Mogherini, the European Union representative for foreign affairs.

  The Battle of Tours in 732 was the high-water point of the Muslim tide in Western Europe. If Christians had not won, "perhaps," wrote Edward Gibbon, "the interpretation of the Koran would now be taught in the schools of Oxford, and her pulpits might demonstrate to a circumcised people the sanctity and truth of the revelation of Mahomet". Does that sound familiar these days?

  Islamists take culture and history more seriously than the Westerners do. Recently, in Paris, an Egyptian terrorist tried to strike the great museum, the Louvre. He planned to deface the museum's artwork, he said, because "it is a powerful symbol of French culture". Think about an Islamic extremist shouting "Allahu Akbar" while slashing the Mona Lisa. This is the trend we need to start reversing.

  

  

• The Transformation Of Our Nation Into A Surveillance State Is Almost Complete

  Authored by Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

  

  The headlines are awash with the recent tensions with North Korea, and most are focused intently upon this act of the play that has been running hot for several years, now.  Akin to the proverbial frog in cold water, however, we are not paying as much attention to the surveillance state that is continuing to wrap its tentacles around us.  Eurasia is our ally, Eastasia is our enemy…and nobody notices that the chocolate ration has been diminished.  While everyone focuses on what is reported in the headline news, everybody misses what is happening right before their eyes.

  Point of Sale is the new jail, the ubiquitous surveillance system that records your every purchase and stores it in a personal database…an algorithm…in the government storage facility in Utah.  Look above that register.  It doesn’t matter whether you have a debit or credit purchase or not.  Paying cash?  Your anonymity only lasts until your image is captured in the little black dome camera right above your head…right next to the register.  The sale is recorded, as well as your image.

  Now the biometrics are becoming advanced enough to be able to measure the spacing between your eyes, the shapes of the ears, and other idiosyncrasies that are peculiar to each individual.  But these differences do not matter, as long as they can be catalogued.   All the states pretty much have Real ID, now, with driver’s licenses all linked into a central database and passed through the fusion centers and police departments at local, state, and national level.  1984 is now.

  Here is an excerpt from the Passports page of the State Department of January 12, 2016:

  The Department of Homeland Security (DHS) announced Friday that Real ID-compliant identification, such as a passport or a driver’s license from a Real ID-compliant state, will not be required to fly domestically until 2018.

  Yes, this is serious.  Laws are not in place yet to prevent you from disguising yourself or altering your appearance.  Yet.  They do make it a crime to alter your appearance in the commission of a crime.  The question becomes when do they make it a crime to vary from their THX-1138 program for us and keep them from recording you?  Probably very soon.

  In previous articles, it was mentioned that it is a rollercoaster with the administrations and the amount they can push the peoples’ perceptions of what is intolerable.  As many of you have pointed out, the political party doesn’t matter…the surveillance state inches forward in increments: steadily and without respite.  We are in a “slow” phase right now.  President Trump is “in,” and the people are riding the crest of their “newfound freedoms,” right?  Not so fast.  Bush Jr. was certainly better than Clinton; however, his actions enabled the Warner Defense Act of 2006 and the abrogation of Constitutional rights in that 100-mile buffer zone around the Continental United States.  The Patriot Act had already been in place, and many refinements were made to alter limitations on presidential actions concerning disclosure on actions overt and covert initiated by the Commander-in-Chief.

  Obama came in and took the driver’s seat, and took away so many more of our individual rights and protections that the staggering populace is just now beginning to realize exactly what he did.  Those actions have not been negated, and may even be promulgated.  Most of the limaceous public is unaware, because the handouts and entitlements keep them stultified and obedient to whatever politician throws them the free Gaines Burgers.

  The surveillance state is almost ubiquitous, and it has been made so through the efforts of our own complacencies.

  Let us return to the point of sale.  It isn’t simply for “inventory.”  The main reason these corporations claim to store your demographics is for “marketing purposes,” but all of them are (at a minimum) “back-doored” by the NSA and other agencies who are scanning your information.  They also have that cellular telephone to work with…the one that transmits a “pulse” every 4 seconds and stores information…metadata for large groups of people or geographic peculiarities…and personal information.

  The happy cell phone is off and in your blazer, but it has sent a pulse out with your GPS location…in front of Cabela’s.  When you go in and buy the ammo?  The camera records your image and there’s a tie-in with the real-time purchase on your receipt.  You’re known.  Your vehicle is known, your itinerary for the day is known.  It is also recorded.

  All your shopping habits, everywhere you drive, where you shop for gas, and stop for a coffee break.  All the cameras are recording.  In addition, our fellow citizens, the “Muppets” are always communicating with you and photographing things with their little cameras.  All of your activities, all of your banking, your entire life’s actions are all right there for them to paint a picture of you…and catalogue you for a later date…information stored and ready at their fingertips to access.

  Edward Snowden spilled the beans concerning the surveillance that is becoming even more out of control.  The satellites are being fine-tuned and honed, and it is occurring all over the world.  Whole generations are being taught to conform now, while they are in their youth…in the schools, that are merely cages where children are taught only what they need to be functional.  Children are made into obedient little beasts of conformity that can be controlled later…later, by those with power and money who were schooled to think creatively and to actually think, instead of regurgitating useless bits of information.

  The funding for all of these actions come right from our taxes.  We pay our jailers to create larger, more ingenious prisons to control us.  Eventually come the chains for the ankles, and the abattoir materializes.  There is less of a gap between total surveillance and “Soylent Green” than most people realize.  For a good read, check out an older article written by Brandon Smith entitled Low-Tech Solutions for High-Tech Tyranny.  It’s a good “starter piece” for your consideration if you have not thought of these things.  Pick up Citizen Four, a documentary about Edward Snowden.

  This stuff is happening now.  Just because we are rid of Obama does not mean we are rid of the Globalist agenda and the transformation of our nation into a complete surveillance state.  It is almost in place.  Almost.  The important thing is to know about it and not be lulled into a false sense of security that all is well, when it is not.  It hasn’t happened yet, but “yet” can mean that it happens tomorrow.  It is going to depend on us: seeing it for what it is, and refusing to go “gently into that good night.”

  

  

• "Something Stinks Here" – CrowdStrike Revises, Retracts Parts Of Explosive Russian Hacking Report

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

  

  Last week, I published two posts on cyber security firm CrowdStrike after becoming aware of inaccuracies in one of its key reports used to bolster the claim that operatives of the Russian government had hacked into the DNC. This is extremely important since the DNC hired CrowdStrike to look into its hack, and at the same time denied FBI access to its servers.

  Before reading any further, you should read last week’s articles if you missed them the first time.

  Credibility of Cyber Firm that Claimed Russia Hacked the DNC Comes Under Serious Question

  What is CrowdStrike? Firm Hired by DNC has Ties to Hillary Clinton, a Ukrainian Billionaire and Google

  Now here are the latest developments courtesy of Voice of America:

  U.S. cybersecurity firm CrowdStrike has revised and retracted statements it used to buttress claims of Russian hacking during last year’s American presidential election campaign. The shift followed a VOA report that the company misrepresented data published by an influential British think tank.

   

  In December, CrowdStrike said it found evidence that Russians hacked into a Ukrainian artillery app, contributing to heavy losses of howitzers in Ukraine’s war with pro-Russian separatists.

   

  VOA reported Tuesday that the International Institute for Strategic Studies (IISS), which publishes an annual reference estimating the strength of world armed forces, disavowed the CrowdStrike report and said it had never been contacted by the company.

   

  CrowdStrike was first to link hacks of Democratic Party computers to Russian actors last year, but some cybersecurity experts have questioned its evidence. The company has come under fire from some Republicans who say charges of Kremlin meddling in the election are overblown.

   

  After CrowdStrike released its Ukraine report, company co-founder Dmitri Alperovitch claimed it provided added evidence of Russian election interference. In both hacks, he said, the company found malware used by “Fancy Bear,” a group with ties to Russian intelligence agencies.

   

  CrowdStrike’s claims of heavy Ukrainian artillery losses were widely circulated in U.S. media.

   

  On Thursday, CrowdStrike walked back key parts of its Ukraine report.

   

  The company removed language that said Ukraine’s artillery lost 80 percent of the Soviet-era D-30 howitzers, which used aiming software that purportedly was hacked. Instead, the revised report cites figures of 15 to 20 percent losses in combat operations, attributing the figures to IISS.

   

  Finally, CrowdStrike deleted a statement saying “deployment of this malware-infected application may have contributed to the high-loss nature of this platform” — meaning the howitzers — and excised a link sourcing its IISS data to a blogger in Russia-occupied Crimea.

   

  In an email, CrowdStrike spokeswoman Ilina Dmitrova said the new estimates of Ukrainian artillery losses resulted from conversations with Henry Boyd, an IISS research associate for defense and military analysis. She declined to say what prompted the contact.

   

  Dmitrova noted that the FBI and the U.S. intelligence community have also concluded that Russia was behind the hacks of the Democratic National Committee, Democratic Congressional Campaign Committee and the email account of John Podesta, Hillary Clinton’s campaign manager.

  Here’s the problem. Yes, the FBI has agreed with CrowdStrike’s conclusion, but the FBI did not analyze the DNC servers because the DNC specifically denied the FBI access. This was noteworthy in its own right, but it takes on vastly increased significance given the serious errors in a related hacking report produced by the company.

  As such, serious questions need to be asked. Why did FBI head James Comey outsource his job to CrowdStrike, and why did he heap praise on the company? For instance, back in January, Comey referred to CrowdStrike as a “highly respected private company.”

  In a hearing with the Senate Intelligence Committee Tuesday afternoon outlining the intelligence agencies’ findings on Russian election interference, Comey said there were “multiple requests at different levels” for access to the Democratic servers, but that ultimately a “highly respected private company” was granted access and shared its findings with the FBI.

  Where does all this respect come from considering how badly it botched the Ukraine report?

  Something stinks here, and the FBI needs to be held to account.

  

  

• LA, Chicago, & New York Vow To Defy Trump Over Sanctuary City De-Funding

  "We are going to become this administration's worst nightmare." Leading officials from Los Angeles, Chicago, and New York have come out swinging a day after AG Sessions demanded yesterday that the country's so-called 'Sanctuary Cities' stop breaking Federal laws (or their funding will be cut, or worse).

  Attorney General Jeff Sessions made the surprise appearance at Sean Spicer's daily White House press briefing to announce that his DOJ will be taking steps to not only require that so-called "sanctuary cities" enforce federal immigration laws but would also be seeking to claw back past DOJ awards granted to those cities if they refuse to certify compliance.

  "Today, I'm urging states and local jurisdictions to comply with these federal laws.  Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards."

   

  "This policy is entirely consistent with the DOJ's Office of Justice Programs guidance that was issued just last summer under the previous administration."

   

  "This guidance requires jurisdictions to comply and certify compliance with Section 1373 in order to be eligible for OJP grants.  It also made clear that failure to remedy violations could result in withholding grants, termination of grants and disbarment or ineligibility for future grants."

   

  "The DOJ will also take all lawful steps to claw back any fines awarded to a jurisdiction that willfully violates Section 1373."

   

  Attorney General Sessions says sanctuary cities 'cannot continue' https://t.co/YiS9doT3IE pic.twitter.com/nGmICgmiA6

  — FOX Business (@FoxBusiness) March 27, 2017

  //platform.twitter.com/widgets.js

  Sessions' demands were not well met by the major cities' leaders…

  New York was vocal...

  "We are going to become this administration's worst nightmare," said New York City Council Speaker Melissa Mark-Viverito, who was among officials gathered in New York for a small conference that attracted officials from cities including San Francisco, Seattle, Denver, Chicago, Philadelphia and New York.

   

  Mark-Viverito and others promised to block federal immigration agents from accessing certain private areas on city property, to restrict their access to schools and school records and to offer legal services to immigrants in the country illegally.

  California was angry…

  California Senate leader Kevin de León called Sessions' message, "nothing short of blackmail. … Their gun-to-the-head method to force resistant cities and counties to participate in Trump's inhumane and counterproductive mass-deportation is unconstitutional and will fail."

   

  Mayor Eric Garcetti said Monday he will fight efforts by the Trump administration to take away federal funding needed for law enforcement in Los Angeles.

   

  Garcetti said that such actions would be unconstitutional, adding that the city’s policies are “designed to keep our residents safe.”

   

  “Slashing funds for first-responders, for our port and airport, for counterterrorism, crime-fighting and community-building serves no one — not this city, not the federal government, not the American people,” he said. “We will fight to protect the safety and dignity of all Angelenos, and we will work closely with our representatives in Congress to make sure that Los Angeles does not go without federal resources that help protect millions of people every day.”

  And Chicago was welcoming… to immigrants…

  Mayor Rahm Emanuel doubled down on his own promise that Chicago will “continue to welcome” immigrants.

   

  "I've always seen Chicago as a welcoming city,” Emanuel said in an interview from the Nasdaq stock exchange in New York on Monday.

   

  “It welcomed my grandfather 100 years ago, we continue to welcome entrepreneurs, immigrants, and I would just say think of it this way: Half the new businesses in Chicago and the state of Illinois come from immigrants, nearly half,” he added. “Half the patents at the University of Illinois come from immigrants, and so we want to continue to welcome people, welcome their ideas, welcome their families to the city of Chicago, who want to build the American dream for their children and their grandchildren.”

  As a reminder, in Sessions' view, these cities "make our nation less safe by putting dangerous criminals back on our streets."

  We are sure the tax-paying people of these great cities will be happy to support more taxation to pay for that loss of safety.

  Under Trump’s order, mayors defending their sanctuary city status are essentially imposing a defiance tax on local residents. On average, this tax amounts to $500 per man, woman and child. Major cities like Washington, D.C., New York and Chicago have the most to lose, and nearly $27 billion is at stake across the country.

  Here are the top 10 takeaways from our findings:

  1. $26.741 billion in annual federal grants and direct payments flowed into America’s 106 sanctuary cities (FY2016).
  2. On average, the cost of lost federal funding for a family of four residing in one of the 106 sanctuary cities is $1,810 – or $454 per person. A total population of 46.2 million residents live in the 106 sanctuary cities according to census data.
  3. Washington, D.C., and Chicago, Illinois governments received the highest amount of federal funding per resident and, therefore, have the most to lose by maintaining their sanctuary status.Washington, D.C. municipal government received the highest amount of federal funding on a per capita basis: $3,228 per person; $12,912 per family of four; or $2.09 billion total. The City of Chicago, IL received the second highest amount of federal funding on a per capita basis: $1,942 per person; $7,768 per family of four; or $5.3 billion total.
  4. In cities with populations of 100,000 and above, the communities with the least per capita federal dollars ‘at risk’ are St. Paul, Minnesota ($47 per person, $14.2 million total); Downey, California ($36 per person, $4.2 million total) and Miami, Florida ($67 per person, $29.7 million total).
  5. $15.983 billion in federal funds flowed into just twelve major American cities where 1 in 5 illegal entrants reside (FY2016).
  6. Department of Justice grants to law enforcement – i.e. city police departments – totaled $543.97 million (FY2016). Typically, this funding was only a small percentage of the local law enforcement budgets.
  7. $4.23 billion in federal funding of the 106 sanctuary cities flowed via the ‘direct payment’ type. These payments funded municipal services such as housing, education, community development, and schools.
  8. $21.5 billion in federal funding of the 106 sanctuary cities flowed via the ‘grant’ payment mechanism. These payments funded local police and fire departments, schools, housing, and city services.
  9. In Los Angeles, fully 1 in 5 city residents (22-percent) are illegal entrants. However, the amount of federal funding amounts to only $126 per resident; $504 per family of four; or $502.5 million total.
  10. In Newark, New Jersey, 19-percent of city residents are undocumented entrants. However, the amount of federal funding amounts to $733 per resident; $2,932 per family of four; or $206.7 million.

  The threat of losing nearly $27 billion in federal funding seems to be having an effect on some cities. In fact, Miami already reversed their sanctuary city policy.

  

  

• Foundation & Empire – Is Donald Trump 'The Mule'?

  Authored by Jim Quinn via The Burning Platform blog,

  In Part One of this article I analyzed the similarities of Isaac Asimov’s Foundation Trilogy to Strauss & Howe’s Fourth Turning, trying to assess how Donald Trump’s ascension to power fits into the theories put forth by those authors. Now I will compare Trump to the most interesting character in Asimov’s classic – The Mule.

  The Mule

  “A horse having a wolf as a powerful and dangerous enemy lived in constant fear of his life. Being driven to desperation, it occurred to him to seek a strong ally. Whereupon he approached a man, and offered an alliance, pointing out that the wolf was likewise an enemy of the man. The man accepted the partnership at once and offered to kill the wolf immediately, if his new partner would only co-operate by placing his greater speed at the man’s disposal. The horse was willing, and allowed the man to place bridle and saddle upon him.

  The man mounted, hunted down the wolf, and killed him. “The horse, joyful and relieved, thanked the man, and said: ‘Now that our enemy is dead, remove your bridle and saddle and restore my freedom.’ “Whereupon the man laughed loudly and replied, ‘Never!’ and applied the spurs with a will.” – Isaac Asimov, Foundation

  

  I had not thought about the Foundation Trilogy for decades, until someone recently mentioned it in a comment on my website. They pondered whether Trump’s arrival on the scene represented The Mule’s advent during the decline of the Galactic Empire. Trump’s numerous enemies would love to portray him as an evil mutant freakish warlord, bent on using his persuasion powers to mislead the populace into doing his bidding. I don’t necessarily see Trump as The Mule, but as a disrupting factor, disturbing the best laid plans of the establishment and helping reveal the hidden agendas of the Deep State.

  Seldon’s science of psychohistory was outstanding at predicting the behavior of large populations but worthless in trying to predict what an individual might do. The emergence of the Mule, a mentalic mutant with an acute telepathic ability to modify the emotions of human beings, could not have been predicted by the Seldon Plan, focused as it was on the statistical movements of vast numbers of peoples and populations across the galaxy.

  The Mule was the unpredictable variable in the equations of history and the greatest threat to the Seldon Plan. He disrupts the inevitability of the continued evolution of the First Foundation and potential early ending of the Dark Age. The Mule, through telepathic manipulation, defeats and takes over the Foundation’s growing empire, which has become increasingly control-oriented and out-of-touch with the outer planets in its rapidly expanding realm of influence.

  There are certainly parallels between Trump’s arrival on the scene and The Mule’s psychohistory defying disruption of Seldon’s Plan. The Mule was described as a freak and the subject of derision. This fueled his ambition to take over the galaxy. I believe Trump decided he was going to be president on April 30, 2011 during the Correspondence Dinner at the White House when Obama unrelentingly mocked and derided him in front of the corrupt Washington power establishment. This public ridicule from an empty suit community organizer president, who never worked a real day in his life, angered Trump to his core and propelled him to seek and win the presidency.

  

  The Mule enters the scene disguised as a clown named Magnifico Giganticus. Over time, he uses his psycho-manipulative abilities to sway the masses to his side and eventually takes over the galaxy. When Trump announced his candidacy, it was taken as a public relations stunt to further his faltering reality TV career. He has a magnificent gigantic ego. His persona was that of an irascible self-made billionaire with an enormous ego and hunger for the spotlight. He was the butt of many orange hair and orange skin jokes.

  For the most part, he went along with the joke, as any publicity is good publicity when you are selling yourself as a brand. He put his name on buildings, Chinese made clothing, scam universities, and just about anything that would produce a buck. He became more famous for his TV show The Apprentice, and his tag-line “You’re Fired”, than for the billion dollar real estate empire he had built.

  Like The Mule, Trump used the GOP establishment’s disdain and underestimation of his persuasion abilities to capture control of the party from the out of touch elitist party hacks. At the outset of his candidacy I was among the libertarian minded skeptics who didn’t take him seriously. I found him entertaining, but didn’t think he had the gravitas to be president. I liked his rhetoric about not interfering in foreign conflicts, protecting our borders, enforcing the rule of law, repealing the disastrous Obamacare law, and his relentless trashing of the left wing mainstream media and Washington establishment.

  I wasn’t a big fan of his bloviating about inconsequential matters. As time passed I began to realize he was probably the Grey Champion of this Fourth Turning and the regeneracy towards the next phase would be his unexpected election to the highest office in the land. He was the only person capable of destroying the fetid pustule known as the Deep State.

  

  The Mule’s tormented childhood of alienation, combined with his mental ability to alter human emotions led to his desire for power, in order to exact revenge upon the human race which caused him so much pain. Trump’s childhood was no walk in the park, but it was far from being tortured. His father did send him to military school at the age of 13 to instill some discipline in him. It does seem like his drive to succeed was spurred by a desire to prove himself to his father and be more successful than his old man. Unlike The Mule, his motivation is not revenge motivated, unless you consider it revenge upon Obama for the abuse he withstood during that dinner.

  The Mule had the mental capabilities to turn antagonists into followers, converting feelings of animosity into those of intense loyalty. He could also stimulate feelings of pervasive fear and panic among his enemies. He used the subtle influence of the subconscious to conscript individuals to his cause. The Mule used his mental powers to disrupt Seldon’s plan by invalidating his assumption no single individual could have a quantifiable impact on historical trends predicted by his theory of psychohistory. The Mule is a Grey Champion-like character rising to power at a crucial time in history as the disruptive factor to the best laid plans of over-confident elitists. The Mule uses his extraordinary cerebral abilities to conquer the unprepared and over-confident Foundation.

  

  Trump has been underestimated every step of the way for the last two years. He has thrown sand into the gears of the political establishment, made up of both parties, and controlled by Deep State players used to getting their way. Trump was able to use his powers of persuasion to overcome the left wing media propaganda and motivate a large swath of disaffected Americans to come over to his side. The never ending barrage of misinformation and fake news spewed by the Deep State controlled media ignores the fact he won 53% of the white women vote, along with huge numbers of union workers from blue collar states like Michigan, Ohio, Wisconsin, Pennsylvania, and Indiana.

  As documented during the campaign by Scott Adams, Trump’s phenomenal power of persuasion overcame all obstacles thrown in his way by the crooked establishment. He had no support from the GOP power players, was despised and ridiculed by the horribly corrupt Democratic establishment machine, scorned and mocked by the fake news corporate media, and undermined by the surveillance apparatus at the behest of the rancid resentful reprobate occupying the oval office. Their pure unadulterated hatred for the man resulted in them becoming blindsided and baffled by his tactics, strategy, and Svengali-like ability to draw huge crowds of normal Americans in flyover country.

  Trump has disrupted the ongoing Deep State capture of our political, economic, financial, social, and cultural systems as a once in a lifetime figure destined to govern during a time of domestic disorder, global upheaval, civil chaos and ultimately war on a grand scale. The looting and pillaging campaign of the ruling class, disguised as free market capitalism and democracy, has been put at risk by an uncontrollable unpredictable outsider who doesn’t act according to their Plan.

  The staged violent response by the billionaire funded left wing faux anarchists, fake news Russian conspiracy propaganda, and NSA/CIA/FBI campaign to discredit and/or overthrow the Trump presidency is the kind of response you would expect from a dangerous threatened animal backed into a corner. The establishment will not relinquish control without a bloody drawn out fight to the finish.

  Since we know Asimov modeled the trilogy on Gibbons’ The Decline and Fall of the Roman Empire, there has been much conjecture as to who The Mule represented. He has historical parallels with Attila the Hun, Tamerlane, Charlemagne and Roman Emperor Augustus. Based on the historical time frame in which he was writing (1941 – 1950), I think it is safe to assume he modeled some of The Mule’s traits after Adolf Hitler. His disturbed childhood, trauma during the First World War, hypnotic ability to manipulate the emotions of the German people, boldness in attacking his perceived enemies, and attempt at world conquest, parallels much of The Mule’s story.

  

  When I try to find parallels to our current situation and the role Trump is playing, I see the Foundation trilogy in a different light. Isaac Asimov was an intellectual. He had a PhD in biochemistry and was a life-long member of Mensa. He was a university professor for most of his life. Academics believe in theories and academic mumbo jumbo, as we can see from decades of academics running the Federal Reserve, destroying our currency and forcing millions into economic servitude.

  Hari Seldon is an intellectual who creates the Foundation, made up of other academic intellectuals. Then he sets up a Second Foundation of even more talented intellectuals as a backup plan in case the Foundation fails. The true ruling powers on this planet always have a backup plan. You never know whether the leaders or organizations you support are really part of a bigger plan you have not considered. Keeping the populace off-balance, confused, and seeking unseen enemies is just part of the plan.

  The inevitable decline of the Galactic Empire was entirely predictable by Seldon, as every empire in world history has ultimately declined. Whether the Roman Empire was ruled by a despot, wise man, or idiot, it continued its centuries long decline from glory to destruction. Empires are created by fallible men whose failings, weaknesses, and desires never change. John Adams foresaw the future of an American Empire two centuries before it became an empire. The American Empire is in the process of committing suicide and a single individual, no matter how bold and resolute, will not be able to save it from its inevitable destruction.

  “I do not say that democracy has been more pernicious on the whole, and in the long run, than monarchy or aristocracy. Democracy has never been and never can be so durable as aristocracy or monarchy; but while it lasts, it is more bloody than either. … Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy.

  It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty. When clear prospects are opened before vanity, pride, avarice, or ambition, for their easy gratification, it is hard for the most considerate philosophers and the most conscientious moralists to resist the temptation. Individuals have conquered themselves. Nations and large bodies of men, never.” – John Adams, The Letters of John and Abigail Adams

  I don’t see Trump as an evil Mule character in this Shakespearian tragedy, as it progresses towards its ill-fated denouement. I also don’t see Seldon and his ensemble of elitist intellectuals as the saviors of the universe. I see The Foundation as the Washington and Wall Street elite who are the face of the establishment – Pelosi, Schumer, Ryan, McConnell, Yellen, Dimon, Blankfein, Immelt, Gates, Buffet, etc. The Second Foundation was hidden in plain sight, operating in the shadows, unknown to the masses, and controlling the galaxy from behind the curtain. They were the Galactic Deep State.

  The Seldon Plan smells like a current day Soros Plan. Wealthy, highly educated, egotistical, hubristic, evil snakes who believe they are the smartest men in the world operate behind the scenes as the invisible government, manipulating the mechanisms of society and pulling the wires controlling the public mind. Soros, along with other shadowy smug billionaires, are not fans of populism.

  They believe they are entitled to run the world as they choose, with no input or resistance from the ignorant masses. With the basket of deplorables rising up and electing Trump, the Deep State players are now openly fighting back and revealing their warped thought process. Elitist billionaire Ray Dalio recently revealed his populism fears and those of his fellow billionaires. He doesn’t consider himself a common man.

  

  Populism is a political and social phenomenon that arises from the common man, typically not well-educated, being fed up with 1) wealth and opportunity gaps, 2) perceived cultural threats from those with different values in the country and from outsiders, 3) the “establishment elites” in positions of power, and 4) government  not working effectively for them.  These sentiments lead that constituency to put strong leaders in power.  Populist leaders are typically confrontational rather than collaborative and exclusive rather than inclusive.  As a result, conflicts typically occur between opposing factions (usually the economic and socially left versus the right), both within the country and between countries.  These conflicts typically become progressively more forceful in self-reinforcing ways.  

  In other words, populism is a rebellion of the common man against the elites to some extent, against the system. The rebellion and the conflict that comes with it occur in varying degrees. Sometimes the system bends with it and sometimes the system breaks.  Whether it bends or breaks in response to this rebellion and conflict depends on how flexible and well established the system is.  It also seems to depend on how reasonable and respectful of the system the populists who gain power are. Classic populist economic policies include protectionism, nationalism, increased infrastructure building, increased military spending, greater budget deficits, and, quite often, capital controls.

  

  Dalio, Soros and their fellow billionaires see populism as a threat to their wealth, power, and control of the world. But, it’s much ado about nothing. It’s like jockeying for the best seat on the Titanic as it sinks into the frigid ocean depths of the Atlantic. The American Empire is in shambles and no one can reverse its course at this point. I’ll address that distressing situation in Part Three of this article.

  

  

• New Study Says Robots Took All Of Detroit's Jobs, Not Mexico

  As Trump gets ready to renegotiate NAFTA and impose tariffs on companies looking to outsource production to Mexico, a new study from MIT and Boston University suggests that industrial robots, not Mexico, may be the bigger factor contributing to the high levels on unemployment in the Midwest. 

  Entitled “Robots and Jobs: Evidence From US Labor Markets,” the authors of the study found that the addition of 1 robot per 1,000 workers results in an 18-35 bps reduction in the employment-to-population ratio and 25-50bps reduction in wages.  Per Bloomberg:

  One additional robot per thousand workers reduces the employment-to-population ratio by 0.18 percentage points to 0.34 percentage points and slashes wages by 0.25 percent to 0.5 percent, based on their analysis. To put that in context, the U.S. saw an increase of about one new industrial robot for every thousand workers between 1993 and 2007, based on the study.

   

  “The employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education,” the authors write. “Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups.”

   

  Worth noting: the authors estimate that robots may have increased the wage gap between the top 90th and bottom 10 percent by as much as 1 percentage point between 1990 and 2007. There’s also room for much broader robot adoption, which would make all of these effects much bigger.

  

   

  While the study found that only 360,000-670,000 jobs had been lost to robots over the past couple of decades, estimates indicate that an additional 3.5 million permanent jobs losses could occur over just the next 10 years which would increase the natural unemployment level by over 2%.

  Because there are relatively few robots in the US economy, the number of jobs lost due to robots has been limited so far (ranging between 360,000 and 670,000 jobs, equivalent to a 0.18-0.34 percentage point decline in the employment to population ratio). However, if the spread of robots proceeds as expected by experts over the next two decades (e.g., Brynjolfsson and McAfee, 2012, especially pp. 27-32, and Ford, 2016), the future aggregate implications of the spread of robots could be much more sizable. For example, BCG (2015) offers two scenarios for the spread of robots over the next decade. In their aggressive scenario, the world stock of robots will quadruple by 2025. This would correspond to 5.25 more robots per thousand workers in the United States, and with our estimates, it would lead to a 0.94-1.76 percentage points lower employment to population ratio and 1.3-2.6 percent lower wage growth between 2015 and 2025.

  Of course, the impact is even more dramatic when you consider that the job losses are heavily concentrated in a handful of industries.  The automotive industry employs 39% of existing industrial robots, followed by the electronics industry (19%), metal products (9%), and the plastic and chemicals industry (9%).
  

   

  Meanwhile, the following maps help to highlight the exposure of various regions of the country to industrial automation, imports and offshoring of jobs.  Not surprisingly, the heaviest concentration of robots has developed in the rust-belt region where they’ve replaced 1,000s of UAW workers.

  

   

   

  Of course, this wouldn’t be the first time that economists had prematurely predicted the demise of labor markets due to technological advances:

  “We are being afflicted with a new disease of which some readers may not have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment” – Keynes, 1930

   

  “Labor will become less and less important. . . More and more workers will be replaced by machines. I do not see that new industries can employ everybody who wants a job” – Leontief, 1952

  

  

• Brodsky: "A Socialized Market With Guaranteed Positive Returns For All Must Fail"

  Submitted by Paul Brodsky via Macro-Allocation.com

  “Selfishness is a virtue.”

         – Ayn Rand

  “Selfishness is profitable, but for institutionalized investors it takes courage to be selfish.”

         – Paul Brodsky

  Self-Serve

  In Passive Aggressive, we made the case that ETFs can be useful vehicles for thoughtful active investors. A few people agreed with our self-assessment in the piece that we were being self-serving because we are launching a modestly priced pro-volatility fund that actively manages ETFs. To some this might raise the issue of whether the report was truly objective. It was, and in fact we would argue that opening a fund using the approach endorsed in Passive Aggressive shows our high level of conviction towards it. It would be unconscionable were we not to not share an opportunity we see as worthy of opening a business.

  Objective analysis is objective because the ideas and conclusions are free of bias, not because the analyst is free of a potential conflict of interest. Full-disclosure separates self-interest from self-dealing.
  We have argued recently that US and global output growth are declining fast, Trump’s economic initiatives would have little impact (best case), long-duration Treasuries should be bought and high yield credit sold, gold should be owned, US housing and retail sectors should be shorted, as well as other macro trends and applications. Most of our suggestions have been counter-consensus and would benefit from a general increase in economic and market volatility. By discussing the ETF approach within the context of MAI, it is our hope that subscribers value the overall strategy enough to consider acting on it in some measure, whether it is with us, with someone else, or on their own. But enough about that…

  Who pursues which investment strategies and why got us thinking about a broader question: can an alternative-investment style without widespread acceptance have merit, or should it be avoided by practical investors? The crux of the issue is when should an investor consider an unconventional approach she has not considered before? Our answer: now, at least for a portion of the portfolio.

  A Precarious Setup

  On one level, it is satisfying to watch investors migrate to lower-cost passive investment vehicles because higher-cost active management has consistently under-performed. One might say the market for investment intermediation is rational. One might also argue passive investing is not rational at all because it is not forward looking. Rising markets, an unwillingness to acknowledge fat tails (unlikely knowns), and the inability to model Black Swans (unknown unknowns) have concentrated popular wealth into a narrowly distributed range of highly vulnerable assets and investment strategies.

  The trend towards passive investing implies the preponderance of a type of investment behavior called reflexivity – basically, an established trend begets the continuance of it. This mindset is typically embraced by traders, but less prevalent among investors who generally regard themselves as fundamental long-termers. The irony is that for long-term investors, the broad migration to passive investment vehicles is occurring in full revolt against longer term macroeconomic and commercial fundamentals.

  When we step back and look at the broad macroeconomic setup, characterized by aging populations in the world’s largest economies, declining overall birth rates among the world’s wealth holders, record sovereign and household leverage, the continued economic emphasis of finance over production, the reliance on over-accommodating central banks (even during the Fed’s current rate hike phase), historically high equity, bond and real estate prices and record low asset and liability values (in real terms); we cannot help but conclude that asset prices are generally rising due mostly to inertia, in spite of unreason, and that the most likely outcome will be something unexpected and disappointing.

  Even though it is a rejection of the established secular bull market in assets and the social, economic, political and financial cultures established and tweaked over the span of our career (almost to the day), our heart and mind (not to mention the vast sweep of investment and economic history) tell us structural change is coming. We can use our experience to forecast specific events and new trends that might occur, and we have, but we cannot know exactly what form structural change will take or when it might begin.

  Into the Breach

  A socialized market framework with implicitly guaranteed perpetual positive returns for all must fail. The best approach is to confront the point of criticality head-on, where “wealth” seems to be permanent but is not. Turning popular passive instruments on themselves to take advantage of great market distortions promises to be an aggressive hedge against misguided inertia – an effective portfolio offset that strikes at the belly of the beast. ETFs are here to stay, but their market prices and liquidity profiles are not.

  Serve yourself. All investors and trustworthy market professionals should be expected to act selfishly by seeking to identify and profit from unsustainable distortions. If investors must put that in a more virtuous context to satisfy their consciences (or fiduciary charters), then they can make themselves feel better by knowing that helping to close unsustainable distortions is the only way capitalism can survive. Capitalism without failure is like Catholicism without hell. In this case, investors can do well by doing good if/when market hell arrives.

  Selfishness is profitable, but for institutionalized investors it takes courage to be selfish.

  

  

• House Committee Passes Bill To "Audit The Fed"

  The Republican-controlled Committee on Oversight and Government Reform approved a bill earlier today to allow for a congressional audit of the Federal Reserve’s monetary policy, a proposal Fed policymakers have opposed and likely faces a difficult path to final approval in the Senate.  Under the bill, the Fed’s monetary policy deliberations could be subject
  to outside review by the Government Accountability Office. 

  While similar bills have garnered some support from Democrats in the past, they uniformly spoke against the current proposal during a meeting of the House of Representatives suggesting the current iteration would face stronger resistance from an increasingly polarized environment in Washington D.C..

  The House previously passed similar versions of this legislation twice before in 2012 and 2014, with dozens of Democrats joining nearly unanimous Republican support.  That said, those bills both died in the Senate and likely would have faced a Presidential veto from Obama had they survived anyway.

  That said, Trump expressed interest in passing such legislation multiple times during the 2016 campaign cycle which means the 3rd time might just be the charm for Republicans. 

  It is so important to audit The Federal Reserve, and yet Ted Cruz missed the vote on the bill that would allow this to be done.

  — Donald J. Trump (@realDonaldTrump) February 22, 2016

  //platform.twitter.com/widgets.js

  President-elect @realDonaldTrump has stated his support for #AuditTheFed. Let’s send him the bill this Congress. https://t.co/1twVBMv37u

  — Senator Rand Paul (@RandPaul) January 4, 2017

  //platform.twitter.com/widgets.js

   

  And while proponents of the bill argue that the Fed wields too much power over the U.S. economy with minimal oversight, opponents assert that Fed decisions should be informed purely by economic indicators and completely insulated from “political pressure”…and we presume those same opponents would argue that Yellen’s decision to wait until just after the conclusion of the 2016 Presidential election to start hiking rates had absolutely nothing to do with politics.  Per Reuters:

  Proponents of the measure argue that the Fed is too powerful and lacks sufficient oversight for its interest rate decisions. But Fed officials from Yellen on down, as well as other critics, have warned that such a policy could subject the Fed to undue political pressure and discourage it from taking unpopular steps for the good of the overall economy.

   

  “We should not in any way hinder their independence,” said Representative Carolyn Maloney, a New York Democrat, echoing the sentiment of Fed policymakers who say they could come under political pressure to avoid making unpopular decisions such as raising interest rates to slow growth and control inflation.

  The next step for the bill would be a floor vote by the entire House, where Republicans hold a solid majority, followed by a Senate vote that would be much more difficult given Republcans’ narrow lead.

  

  

• Congress Poised To Obliterate Broadband Privacy Rules

  Authored by Lauren McCauley via TheAntiMedia.org,

   Privacy advocates on Monday are urging Americans to call their elected officials, warning that there are only 24 hours left to “save online privacy rules” before the U.S. House of Representatives votes on a measure that would allow major telecom companies to collect user data and auction it off to the “highest bidder.”

  Wasting no time, the House is expected to begin debate late Monday on S.J. Res. 34, a Congressional Review Act (CRA) resolution to repeal the Federal Communications Commission’s (FCC) privacy provision, implemented under former President Barack Obama, which requires that providers such as Comcast, AT&T, and Verizon get a user’s permission before collecting or selling sensitive data.

  As Common Dreams reported, 50 Republican senators voted to advance the resolution last week.

  “We are one vote away from a world where your [Internet Service Providers or ISP] can track your every move online and sell that information to the highest bidder,” Kate Tummarello, policy analyst for the Electronic Freedom Foundation (EFF), said Monday.

  Explaining how the FCC’s “commonsense” rules would have prevented ISPs from doing a “host of creepy things,” Tummarello wrote: “Those rules were a huge victory for consumers. Of course, the ISPs that stand to make money off of violating your privacy have been lobbying Congress to repeal those rules. Unfortunately, their anti-consumer push has been working.”

  Meanwhile, the opposition is responding with a campaign of its own to pressure lawmakers—said to be in the pocket of the telecom industry—to protect #broadbandprivacy.

  On Monday, the grassroots advocacy Fight for the Future announced that it will unleash billboards in Washington, D.C. and other select districts exposing any Congress member who votes to gut internet privacy rules.

  “Congress should know by now that when you come for the internet, the internet comes for you,” said Evan Greer, the organization’s campaign director, who added that “these billboards are just the beginning. People from across the political spectrum are outraged, and every lawmaker who votes to take away our privacy will regret it come Election Day.”

  Similarly, encrypted communications provider Private Internet Access has taken out a full-page ad in the New York Times naming the senators who “voted to monitor your internet activity for financial gain.”

  Private Internet Access, a VPN provider, takes out a full page ad in the @nytimes calling out 50 senators #Broadbandprivacy pic.twitter.com/Gg62Fwycb7

  — Zuri Berry (@zuriberry) March 26, 2017

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  Meanwhile, in a series of tweets, the American Civil Liberties Union (ACLU) enumerated on the implications of the resolution, concluding that House lawmakers should “stand up against industry pressure to put profits over privacy & reject the resolution to overturn the FCC’s privacy rule.”

  The resolution also prohibits the FCC from issuing rules that are substantially the same in the future.

  — ACLU National (@ACLU) March 27, 2017

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  Without FCC rules, companies would be able to sell your sensitive data to advertisers, big data brokers, and even the government.

  — ACLU National (@ACLU) March 27, 2017

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  The House should stand up against industry pressure to put profits over privacy & reject the resolution to overturn the FCC’s privacy rule.

  — ACLU National (@ACLU) March 27, 2017

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  Further, Muhammad Saad Khan at The Next Web explained how a rollback of privacy rules could usher in a new wave of cyber attacks.

  “Considering what is at stake here, and how much data ISPs already have on us, it will not come as a surprise if in the long run, the number of cyberattacks increase by leaps and bounds,” Khan wrote. “Monitoring activities and data theft will rise significantly, as if they were already not a menace. With gadgets, households and even cars being connected to the internet as part of the IoT (the Internet of Things), it is not that hard to imagine how deadly a cyberattack could possibly be if things turn for the worst; which they will, as history suggests.”

  

  

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• The Countries Where "Made In America" Really Matters

  With President Trump’s America First agenda, we thought it would be useful to understand which other nations value America highly.

  As Statista’s Martin Armstrong details, the Made-In-Country-Index (MICI) 2017 has shed light on the reputation of products produced in 49 countries (plus the EU) worldwide. In the overall ranking, the U.S. placed in a ‘could do better’ joint 8th with France and Japan.

  The infographic below takes a look at the countries in which ‘Made in USA’ is determined to have the best reputation of all of the surveyed labels.

  

  You will find more statistics at Statista

  In total there are eight countries full of respect for U.S. made goods, including Brazil, Argentina, India, and of course the United States itself. For perspective, the top rated label is ‘Made in Germany’ which finds itself the most popular in thirteen countries.

  

  

• Russia Conspiracy Theorists May Want To Take A Look At John Podesta

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

   

  Dot connectors, Twitter diagram creators and newly minted Russia-conspiracy sleuths from sea to shining sea take note.

  

  Since anything connected to Russia is now considered treasonous, I’ve got a great story for you to sniff out.

  It relates to John Podesta, but somehow I doubt you’ll be interested in this one…

  The Daily Caller reports:

  John Podesta, former Secretary of State Hillary Clinton’s 2016 national campaign chairman, may have violated federal law by failing to disclose the receipt of 75,000 shares of stock from a Kremlin-financed company when he joined the Obama White House in 2014, according to the Daily Caller News Foundation’s Investigative Group.

   

  Joule Unlimited Technologies — financed in part by a Russian firm —  originally awarded Podesta 100,000 shares of stock options when in 2010 he joined that board along with its Dutch-based entities: Joule Global Holdings, BV and the Stichting Joule Global Foundation.

   

  When Podesta announced his departure from the Joule board in January 2014 to become President Obama’s special counsellor, the company officially issued him 75,000 common shares of stock.

   

  The Schedule B section of the federal government’s form 278 which — requires financial disclosures for government officials — required Podesta to “report any purchase, sale or exchange by you, your spouse, or dependent children…of any property, stocks, bonds, commodity futures and other securities when the amount of the transaction exceeded $1,000.”

   

  The same year Podesta joined Joule, the company agreed to accept 1-Billion-Rubles — or $35 million — from Rusnano, a state-run and financed Russian company with close ties to President Vladimir Putin.

   

  Anatoly Chubais, the company CEO and two other top Russian banking executives worked together with Podesta on the Joule boards. The board met six times a year.

   

  Ron Hosko, a former FBI assistant director said because of the Kremlin backing, it was essential Podesta disclose the financial benefits he received from the company.

   

  “I think in this case where you’re talking about foreign interests and foreign involvement, the collateral interest with these disclosure forms is put in the forefront of full disclosure of any foreign interest that you may have,” he told TheDCNF in an interview.

   

  The existence of the 75,000 shares of Joule stock was first revealed by the Government Accountability Institute report issued last year.

   

  But Podesta didn’t pocket all the shares. Correspondence from Podesta to Joule instructed the firm to transfer only 33,693 shares to Leonidio Holdings, a brand-new entity he incorporated only on December 20, 2013, about ten days before he entered the White House.

   

  Leonidio is registered in Delaware as a limited liability corporation. Podesta listed the address of his daughter, Megan Rouse, in the incorporation papers. His mother and father also appear to be co-owners of Leonidio.

   

  TheDCNF made multiple inquiries to OGE and received no reply. TheDCNF inquiries to Mr. Podesta were not returned.

  Personally, I doubt any of the above is a huge deal, and I certainly don’t think Podesta is working for Vladimir Putin under the table. However, just imagine the hysteria if the above narrative could’ve been connected to anyone in Trump’s orbit. It would’ve been plastered on the front page of The Washington Post and The New York Times with headlines like, “More Financial Ties Emerge Between Those in Trump’s Orbit and Putin.”

  Naturally, you won’t see this story hyped because it doesn’t fit the corporate media narrative, and the narrative is all they care about.

  

  

• Dick Cheney Says Russian Meddling in American Election Could Be Considered 'An Act of War'

  Congratulations democrats! This is the moment in your life when you come to realize you’ve become one and the same as everything you’ve always hated about humanity. You and Dick Cheney, professional neocon war monger, are in agreement that Russia waged war against America this past election, by way of hacking into John Podesta’s email box and then providing that information to Wikileaks to publish and help humiliate an already beleaguered democratic party.

  Bear in mind, the black hats in the CIA have yet to actually prove to the American people an actual connection between Wikileaks and the Russian government. The only evidence they’ve publicly provided us with is laughable circumstantial evidence — backed up and supported by a sundry of unnamed sources deep from within our intelligence apparatus. But we should strongly consider going to war with a super nuclear power — because strategically — that’s the best way to end this charade of humanity once and for all.

  But here’s Dick Cheney, the man who started it all — war in the middle east — which has cost the lives of at least 1.3 million people (some estimate the total deathtoll could be as high as 4 million since the wars began after 9/11). Total treasury expenditure from the American pleb is in excess of $5 trillion — but it’s probably more. Some might say Dick Cheney is the single worst human to walk the face of the earth since Pol Pot.

  Nevertheless, he’s in agreement that Russian’s actions against our ‘democratic process’, one that was overtly rigged against Bernie Sanders, proven in the Wikileaks, was ian act of war. Fall in line little ducks, poor fat little ducks, and sign up your kids to fight in the coming Moscow offensive —  to defend the honor of John “Pizza map” Podesta.

  Content originally generated at iBankCoin.com

  

• Insider Reveals How DARPA Will Control Our Minds: "If Even 20% Of This Is True…"

  Things are so far gone, that we have no idea, warns SHTFplan.com's Mac Slavo, people have virtually no sense of how deeply we are being steered off the path.

  Our very opinions, the information we receive, and the way in which our brains determine the strength of our opinions is all being skewed by algorithms, and by deliberate manipulations.

   

  Science fiction is behind the curve of what they are actually attempting right now. A few more years of censorship and editing of content through social media, and a few more years of total integration with technology, and humanity may no longer be recognizable.

   

  It certainly won’t be free unless some very raw facts are quickly faced and dealt with.

  

  DARPA Insider Reveals the Coming Hive Mind Control Grid: “If Even 20% Of What This Guy Says Is True…”

  Via The Daily Sheeple

  The video below features a keynote by Dr. Robert Duncan regarding what can only be described as our coming hive mind control grid. He isn’t just talking about advances in transhumanism, the singularity, or artificial intelligence. He’s talking about how to control the minds of everyone on the planet and evolving humanity in a technological sense… whether they like it or not.

  Duncan professes with shame that he worked on “Voice of God” weapons for the US Department of Defense, weapons which can make people think they are hearing voices in their heads in an attempt to control them. He says such weapons were tested back during Desert Storm and were quite effective at getting Iraqi soldiers to lay down arms without a shot fired.

  And that’s just what they had 20+ years ago. Can you imagine what they’re working on today?

  Duncan also touches on Project Blue Beam, remote neural monitoring, smart dust, and electronic telepathy technology which uses extremely low frequency waves.

  Despite attempting multiple times to put a “positive spin” on this information as he nervously delivers it, what this man is saying really can’t be spun in a positive way, not with these kinds of technology in the hands of the military-industrial complex President Eisenhower once gravely warned us about. Duncan notes scientists “are brainwashed into believing that everything we are doing is of benefit to mankind, but look who pays our bills? The military. It’s all for war, it’s all for control, for government control…”

  If even 20% of what this guy has to say is true…

  Just… you’ve got to see this for yourself.

  

  

• Chinese Elites Scramble To Apply For US 'Golden Ticket' Visa

  As members of Congress in Washington debate raising the minimum required to obtain a U.S. immigrant investor visa from $500,000 to $1.35 million, Bloomberg reports concern about the hike has set off a scramble among wealthy would-be participants in China.

  China’s wealthy, using not-always-legal means to skirt capital controls to get their money out and at the same time gain residency in the U.S., are continuing to dwarf all others as the largest participants in the EB-5 program, despite heightened measures by the Chinese government.

  Chinese investors, several thousand a year, have made up as much as 85 percent of the annual EB-5 investor total, according to U.S. data provided by Rosen Consulting and the Asia Society. In 2015, China overtook Canada as the biggest foreign buyer of U.S. homes.

  

  Because Chinese individuals are limited to exchanging $50,000 worth of yuan a year, a 10th of what the EB-5 program requires, Bloomberg reports that some agents are advising clients who don’t already have assets offshore to use a means nicknamed "smurfing" to move their money.

  "Our suggestion to the client is to open three to four personal accounts in the U.S. or line up three to four friends’ accounts, so they can split the money and wire it to different personal accounts without being put on a blacklist by the Chinese authorities," said a Shanghai-based real estate agent who gave the surname Dong.

   

  "It may require a trip to the States to do so to facilitate the process."

  While the government in Beijing spent much of 2016 working to stop its citizens sending money abroad in order to stabilize its declining currency and foreign reserves, Chinese investors’ use of EB-5 continued anyway, totaling $3.8 billion in the fiscal year that ended Sept. 30, according to data from the U.S. State Department.

  EB-5 started decades ago as a way to create jobs in needy U.S. neighborhoods by attracting foreign investment. But it has run into political opposition amid charges the program is benefiting billionaire developers and being dominated by wealthy Chinese.

  "EB-5 has been a key program for capital flight that has been abused by Americans and Chinese people seeking to game the system," said Andrew Collier, an independent analyst in Hong Kong and former president of Bank of China International USA.

  While there’s no suggestion of wrongdoing by developers that receive funding from EB-5 (including the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser, who is seeking $850 million in EB-5 fundingrefinance and reconstruct its New York office building at 666 Fifth Avenue), a series of Securities and Exchange Commission cases against EB-5-linked immigrant investor centers led the U.S. Citizenship and Immigration Services to announce last week that they would audit the centers amid concern about fraud.

  Changes to the EB-5 minimum would affect property developers who rely on the program as a funding channel, said Michael Shaoul, chief executive officer at Marketfield Asset Management in New York.

  "Any interruption of the program or reduction in Chinese participation would have a meaningful effect on a development cycle that is already showing signs of strain in certain key U.S. cities," he said by email.

  

  

• Foundation – Fall Of The American Galactic Empire

  Authored by Jim Quinn via The Burning Platform blog,

  “The fall of Empire, gentlemen, is a massive thing, however, and not easily fought. It is dictated by a rising bureaucracy, a receding initiative, a freezing of caste, a damming of curiosity—a hundred other factors. It has been going on, as I have said, for centuries, and it is too majestic and massive a movement to stop.” – Isaac Asimov, Foundation

  

  “Any fool can tell a crisis when it arrives. The real service to the state is to detect it in embryo.” – Isaac Asimov, Foundation

  I read Isaac Asimov’s renowned award winning science fiction trilogy four decades ago as a teenager. I read them because I liked science fiction novels, not because I was trying to understand the correlation to the fall of the Roman Empire. The books that came to be called the Foundation Trilogy (Foundation, Foundation and Empire, and Second Foundation) were not written as novels; they’re the collected Foundation stories Asimov wrote between 1941 and 1950. He wrote these stories during the final stages of our last Fourth Turning Crisis and the beginning stages of the next High. This was the same time frame in which Tolkien wrote the Lord of the Rings Trilogy and Orwell wrote 1984. This was not a coincidence.

  The tone of foreboding, danger, dread, and impending doom, along with unending warfare, propels all of these novels because they were all written during the bloodiest and most perilous portion of the last Fourth Turning. As the linear thinking establishment continues to be blindsided by the continued deterioration of the economic, political, social, and cultural conditions in the world, we have entered the most treacherous phase of our present Fourth Turning.

  That ominous mood engulfing the world is not a new dynamic, but a cyclical event arriving every 80 or so years. Eight decades ago the world was on the verge of a world war which would kill 65 million people. Eight decades prior to 1937 the country was on the verge of a Civil War which would kill almost 5% of the male population. Eight decades prior to 1857 the American Revolution had just begun and would last six more bloody years. None of this is a coincidence. The generational configuration repeats itself every eighty years, driving the mood change which leads to revolutionary change and the destruction of the existing social order.

  Isaac Asimov certainly didn’t foresee his Foundation stories representing the decline of an American Empire that didn’t yet exist. The work that inspired Asimov was Edward Gibbon’s multi-volume series, The Decline and Fall of the Roman Empire, published between 1776 and 1789. Gibbon saw Rome’s fall not as a consequence of specific, dramatic events, but as the result of the gradual decline of civic virtue, monetary debasement and rise of Christianity, which made the Romans less vested in worldly affairs.

  Gibbon’s tome reflects the same generational theory espoused by Strauss and Howe in The Fourth Turning. Gibbon’s conclusion was human nature never changes, and mankind’s penchant for division, amplified by environmental and cultural differences, is what governs the cyclical nature of history. Gibbon constructs a narrative spanning centuries as events unfold and emperors’ successes and failures occur within the context of a relentless decline of empire. The specific events and behaviors of individual emperors were inconsequential within the larger framework and pattern of historical decline. History plods relentlessly onward, driven by the law of large numbers.

  Asimov described his inspiration for the novels:

  “I wanted to consider essentially the science of psychohistory, something I made up myself. It was, in a sense, the struggle between free will and determinism. On the other hand, I wanted to do a story on the analogy of The Decline and Fall of the Roman Empire, but on the much larger scale of the galaxy. To do that, I took over the aura of the Roman Empire and wrote it very large. The social system, then, is very much like the Roman imperial system, but that was just my skeleton.

  It seemed to me that if we did have a galactic empire, there would be so many human beings—quintillions of them—that perhaps you might be able to predict very accurately how societies would behave, even though you couldn’t predict how individuals composing those societies would behave. So, against the background of the Roman Empire written large, I invented the science of psychohistory. Throughout the entire trilogy, then, there are the opposing forces of individual desire and that dead hand of social inevitability.”

  Is History Pre-Determined?

  “Don’t you see? It’s Galaxy-wide. It’s a worship of the past. It’s a deterioration – a stagnation!” – Isaac Asimov, Foundation

  

  “It has been my philosophy of life that difficulties vanish when faced boldly.” – Isaac Asimov, Foundation

  The Foundation trilogy opens on Trantor, the capital of the 12,000-year-old Galactic Empire. Though the empire appears stable and powerful, it is slowly decaying in ways that parallel the decline of the Western Roman Empire. Hari Seldon, a mathematician and psychologist, has developed psychohistory, a new field of science that equates all possibilities in large societies to mathematics, allowing for the prediction of future events.

  Psychohistory is a blend of crowd psychology and high-level math. An able psychohistorian can predict the long-term aggregate behavior of billions of people many years in the future. However, it only works with large groups. Psychohistory is almost useless for predicting the behavior of an individual. Also, it’s no good if the group being analyzed is aware it’s being analyzed — because if it’s aware, the group changes its behavior.

  Using psychohistory, Seldon has discovered the declining nature of the Empire, angering the aristocratic rulers of the Empire. The rulers consider Seldon’s views and statements treasonous, and he is arrested. Seldon is tried by the state and defends his beliefs, explaining his theory the Empire will collapse in 300 years and enter a 30,000-year dark age.

  He informs the rulers an alternative to this future is attainable, and explains to them generating an anthology of all human knowledge, the Encyclopedia Galactica, would not avert the inevitable fall of the Empire but would reduce the Dark Age to “only” 1,000 years.

  The fearful state apparatchiks offer him exile to a remote world, Terminus, with other academic intellectuals who could help him create the Encyclopedia. He accepts their offer, and sets in motion his plan to set up two Foundations, one at either end of the galaxy, to preserve the accumulated knowledge of humanity and thereby shorten the Dark Age, once the Empire collapses. Seldon created the Foundation, knowing it would eventually be seen as a threat to rulers of the Empire, provoking an eventual attack. That is why he created a Second Foundation, unknown to the ruling class.

  Asimov’s psychohistory concept, based on the predictability of human actions in large numbers, has similarities to Strauss & Howe’s generational theory. His theory didn’t pretend to predict the actions of individuals, but formulated definite laws developed by mathematical analysis to predict the mass action of human groups. His novel explores the centuries old debate of whether human history proceeds in a predictable fashion, with individuals incapable of changing its course, or whether individuals can alter its progression.

  The cyclical nature of history, driven by generational cohorts numbering tens of millions, has been documented over centuries by Strauss & Howe in their 1997 opus The Fourth Turning. Human beings in large numbers react in a herd-like predictable manner. I know that is disappointing to all the linear thinking individualists who erroneously believe one person can change the world and course of history.

  The cyclical crisis’s that occur every eighty years matches up with how every Foundation story centers on what is called a Seldon crisis, the conjunction of seemingly insoluble external and internal difficulties. The crises were all predicted by Seldon, who appears near the end of each story as a hologram to confirm the Foundation has traversed the latest one correctly.

  The “Seldon Crises” take on two forms. Either events unfold in such a way there is only one clear path to take, or the forces of history conspire to determine the outcome. But, the common feature is free will doesn’t matter. The heroes and adversaries believe their choices will make a difference when, in fact, the future is already written. This is a controversial viewpoint which angers many people because they feel it robs them of their individuality.

  Most people don’t want to be lumped together in an amalgamation of other humans because they believe admitting so would strip them of their sense of free will. Their delicate sensibilities are bruised by the unequivocal fact their individual actions are virtually meaningless to the direction of history. But, the madness of crowds can dramatically impact antiquity.

  

  “In reading The History of Nations, we find that, like individuals, they have their whims and their peculiarities, their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.” – Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

  Many people argue the dynamic advancements in technology and science have changed the world in such a way to alter human nature in a positive way, thereby resulting in humans acting in a more rational manner. This alteration would result in a level of human progress not experienced previously. The falsity of this technological theory is borne out by the continuation of war, government corruption, greed, belief in economic fallacies, civic decay, cultural degradation, and global disorder sweeping across the world. Humanity is incapable of change. The same weaknesses and self- destructive traits which have plagued them throughout history are as prevalent today as they ever were.

  Asimov’s solution to the failure of humanity to change was to create an academic oriented benevolent ruling class who could save the human race from destroying itself. He seems to have been well before his time with regards to creating Shadow Governments and Deep State functionaries. It appears he agreed with his contemporary Edward Bernays. The masses could not be trusted to make good decisions, so they needed more intellectually advanced men to guide their actions.

  

  “The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized.

  Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays – Propaganda   

  In Part Two of this article I will compare and contrast Donald Trump’s rise to power to the rise of The Mule in Asimov’s masterpiece. Unusually gifted individuals come along once in a lifetime to disrupt the plans of the existing social order.

  

  

• Trump Asks Why Intelligence Committee Isn't Probing The Clintons

  Following a day of drama involving the Chair of the House Intelligence Committee, Devin Nunes, who has been under constant onslaught by Democrats ever since his disclosure last week that Trump had indeed been the object of surveillance, and whose Democrat peer at the Intel panel, Adam Schiff, on Monday night called for Nunes to recuse himself, moments ago Trump waded into the news cycle when he asked on Twitter why the House Intelligence Committee is not investigating the Clintons for various ties of their own to Russia. He then slammed the ongoing anti-Russian witch hunt, saying “the Russia story is a hoax.”

  “Why isn’t the House Intelligence Committee looking into the Bill & Hillary deal that allowed big Uranium to go to Russia, Russian speech, money to Bill, the Hillary Russian ‘reset,’ praise of Russia by Hillary, or Podesta Russian Company. Trump Russia story is a hoax. #MAGA!” Trump wrote in two tweets Monday night.

  Why isn’t the House Intelligence Committee looking into the Bill & Hillary deal that allowed big Uranium to go to Russia, Russian speech….

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

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  …money to Bill, the Hillary Russian “reset,” praise of Russia by Hillary, or Podesta Russian Company. Trump Russia story is a hoax. #MAGA!

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

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  Trump’s rhetorical questions come amid a news cycle which as discussed on various occasions today has focused on the Republican chair of the Intel Committee, Nunes, who is under fire for briefing Trump about classified material he reviewed last week without sharing the information with committee Democrats. On Monday it was revealed that Nunes had secretly visited the White House grounds one day before announcing incidental surveillance of President Trump’s transition team. His visit raised questions about whether the White House could have been was the source of the intelligence Nunes reviewed.

  Democratic lawmakers have now called on Nunes to recuse himself from the committee’s probe into Russia’s interference in the United States presidential election. Nunes on Monday evening said the chairman would not step aside from the investigation.

  The republican lawmaker has claimed that his findings had no relevance to the Russia probe, even as the committee examines the unmasking and leaking of surveillance information as part of that investigation.

  * * *

  In a follow up tweet, Trump took another stab at the House Freedom Caucus, who he said snatched “defeat from the jaws of victory” – following Friday’s failure to repeal and replace plan for ObamaCare.  That followed a Sunday tweet in which he said the conservative House Freedom Caucus, along with the Club for Growth and Heritage Action for America, had “saved” Planned Parenthood and ObamaCare.

  The Republican House Freedom Caucus was able to snatch defeat from the jaws of victory. After so many bad years they were ready for a win!

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

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  Finally, Trump brought it full circle, touching on Friday’s failure to repeal Obamacare, saying “the Democrats will make a deal with me on healthcare as soon as ObamaCare folds – not long. Do not worry, we are in very  good shape!

  The Democrats will make a deal with me on healthcare as soon as ObamaCare folds – not long. Do not worry, we are in very good shape!

  — Donald J. Trump (@realDonaldTrump) March 28, 2017

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• The Next Clash Emerges: Trump-Ryan Deeply Divided Over Tax 'Cuts'

  After failing to achieve Republican agreement over healthcare reform, The Washington Post reports that while President Trump and House Speaker Paul D. Ryan both want to rewrite the tax code, they are deeply divided over how much tax relief to give the middle class.

  As WaPo details, Trump proposed a plan that would have reduced taxes drastically, especially for the wealthy but also for the poor and working class. Meanwhile, Ryan and his colleagues put together a plan that was equally generous to the rich but that would give poor and middle-class taxpayers less of a break. The speaker's plan would even have increased taxes on some in the upper middle class. The richest 0.1 percent of households would receive similar benefits from both politicians: an average of $1.4 million per household a year under Ryan's plan and $1.5 million annually under Trump's plan.

  

  After a decade, 99.6 percent of the tax relief Ryan proposed would have accrued to the wealthiest 1 percent of the country. In Trump's plan, 50.8 percent of the relief would have gone to that group, according to analyses by the nonpartisan Tax Policy Center. Most notably given the divisions within the Republican Party (i.e. fiscal conservatives rejection of the healthcare reform bill), Trump's plan would be extremely costly for the government, reflecting his conservative populist comments in the past that suggest he would be willing to put the federal government deeper into debt to fund breaks for the middle class.

  Ryan's plan would instead simplify and streamline the tax code in accordance with conservative orthodoxy, eliminating the goodies for households with modest incomes that Trump would preserve or expand.

  It's not all bad though as the two tax plans have important features in common, as WaPo's Max Ehrenfreund reports,

  In terms of taxes on the rich, both plans would reduce the marginal rate paid by the wealthiest taxpayers on individual income from 39.6 percent to 33 percent.

   

  The two plans would repeal some of the taxes that Obamacare imposed on the rich, and both plans also repeal the estate tax, which rich families pay when one of their members dies. Repealing the tax would return $300 billion or so to those families over a decade, according to the center, depending on the details of the plan.

   

  Meanwhile, both plans would increase the amount that many families can earn without paying taxes.

  The biggest reason for the discrepancy in the effects of the plans on the middle class is how Ryan's proposal would affect imports and exports.

  The plan includes a complex and controversial provision known as a "border adjustment", which some economists think would increase prices for goods and services imported from overseas.

   

  Eric Toder, an economist at the Tax Policy Center, said the group's initial analysis of this aspect of the plan treated it as a kind of tax on households' purchases, but many experts believe that Ryan's proposal would not have that effect over the long term.

   

  Ryan's plan would be better for the middle class on that more optimistic assumption. “When we do it that way, there actually is a bit of a cut for the middle class,” Toder said.

  So get ready America, it will be hard for Trump to temper his on-again, off-again support for Speaker Ryan if this division grows – and ironically, Trump may find more support from the other side of the aisle for his 'middle-class tax cuts' as the GOP splinters further.

  

  

• Thousands Of Americans Are Fleeing The Big Cities

  Authored by Michael Snyder via The Economic Collapse blog,

  

  Why are so many people suddenly moving away from major U.S. cities?  Recently, I wrote about the mass exodus that is happening out of the state of California, but the truth is that what is happening there is just part of a national phenomenon.  The populations of some of our largest cities are steadily shrinking, and many experts are completely mystified by the seismic demographic shifts that we are now witnessing.  Of course there are a whole host of reasons why people would want to move away from huge cities such as Chicago, Detroit, Baltimore and Cleveland.  For some families, it simply comes down to wanting a better life for their children.  But as you will see below, there are others that believe that things in this country are about to take an apocalyptic turn, and the big cities will not be a place that you want to be when economic collapse, rioting, looting, civil unrest and crime are all spiraling out of control.

  According to data just released by the U.S. Census Bureau, Chicago took the prize for the biggest population loss from 2015 to 2016, and it was followed by Detroit and Baltimore…

  The counties containing Chicago, Detroit and the independent city of Baltimore were the biggest population losers in the United States from 2015 to 2016, according to data released today by the Census Bureau.

   

  Cook County, Ill., where Chicago is the county seat, had the largest population loss of any county in the country from 2015 and 2016.

  Cook County alone had a “domestic migration” loss of more than 66,000 people.  That is a staggering number of people to lose in a single year.

  Cleveland and Milwaukee were also very high on the list, and some are pointing out that all of these cities are in relatively colder climates and are all struggling economically.

  So you certainly can’t blame people living in these cities for wanting to find somewhere warmer and more economically prosperous to live.

  But others that are moving away from large cities are deeply concerned about where things are ultimately headed in this country.  It doesn’t take a genius to see that anger, frustration and hatred are rising all around us, and many believe that conditions are ripe for civil unrest and civil conflict.  In fact, best-selling author Doug Casey believes that we could soon see a “civil war” that is set off by a “financial collapse”…

  Best-selling author Doug Casey wrote “Crisis Investing” at the time when the U.S. political landscape was transitioning from the Carter Administration to the Reagan Administration. Now, Casey sees a coming crisis that is equal or worse than the Civil War.  Casey explains, “In the U.S. right now, there seems to be so much antagonism it’s almost like pre-Civil War.  There is actually hatred in the U.S. at this point.  It used to be the Republicans and Democrats could disagree, but they could have a civil conversation about a difference of opinion.  Now, it’s active hatred between these two groups.  This is not going to end well.”

   

  Casey thinks the coming financial collapse will be the trigger. Casey says, “It’s going to come down eventually.  I am worried about that, but we are in a situation where the country seem like it is just before a civil war.  It will be more serious than just a financial collapse, and it is likely to be set off by a financial collapse.”

  Without a doubt, our financial system is certainly primed for a financial collapse, and when things get really, really bad in this country how will people respond?

  Many have decided that they want to get away from the major population centers before we find out the answer to that question.

  For example, not too long ago the Chicago Tribune ran a story about why so many preppers are moving to the Great Northwest.  One of the individuals profiled was an ex-resident of California named Trevor Treller who moved up to north Idaho prior to the recent election…

  Trevor Treller, 44, who carries a small Smith & Wesson pistol on his hip, moved to north Idaho last year from Long Beach, California, and recently paid a little less than $400,000 for a defensible three-bedroom house on five wooded acres.

   

  Treller, a sommelier at a local resort, said Obama was a key factor in his decision. He said the president has inflamed racial tensions in America, presided over a dangerous expansion of the national debt, been “hostile” to Second Amendment rights and failed to curtail the nuclear ambitions of North Korea and Iran.

   

  Treller said any one of those factors could lead to crippling chaos, so he and his wife have laid in food, weapons and ammunition and are installing an iron gate across their long gravel driveway.Of course it isn’t just ordinary Americans such as Treller that are deeply concerned about what is coming.

  Less than a week ago, CNN ran an article entitled “Billionaire bunkers: How the 1% are preparing for the apocalypse“…

  Many of the world’s elite, including hedge fund managers, sports stars and tech executives (Bill Gates is rumored to have bunkers at all his properties) have chosen to design their own secret shelters to house their families and staff.

   

  Gary Lynch, general manager of Texas-based Rising S Company, says 2016 sales for their custom high-end underground bunkers grew 700% compared to 2015, while overall sales have grown 300% since the November US presidential election alone.

  So why are Bill Gates and his billionaire friends so interested in buying luxury survival bunkers if everything is going to be just fine?

  Can someone explain that one to me?

  Everywhere you look, retail stores are closing and economic warning signs are flashing red, but those that sell survival bunkers to the elite are making tremendous amounts of money.

  And I certainly wish that I could afford one of these survival bunkers, because they sound quite appealing…

  One of those shelters, Vivos xPoint, is near the Black Hills of South Dakota, and consists of 575 military bunkers that served as an Army Munitions Depot until 1967.

   

  Presently being converted into a facility that will accommodate about 5,000 people, the interiors of each bunker are outfitted by the owners at a cost of between $25,000 to $200,000 each. The price depends on whether they want a minimalist space or a home with high-end finishes.

   

  The compound itself will be equipped with all the comforts of a small town, including a community theater, classrooms, hydroponic gardens, a medical clinic, a spa and a gym.

  These elitists plan to ride out the coming American apocalypse in style while the world above them is literally going insane.

  Meanwhile, most of the general population continues to be completely oblivious to what is about to happen to them, and so the events that are coming will close upon them suddenly like a trap and there will be no escape.

  

  

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• Trump Handed Merkel $375 Billion Invoice For NATO Defenses During Recent Visit

  A couple of weeks ago we wrote several notes about German Chancellor Angela Merkel’s painfully awkward visit to the White House.  After meeting in private, the pair sat down in the oval office for a brief press conference where you could cut the tension with a knife.  At one point someone from the media asked for a handshake but the request was promptly ignored.

  “Can we get a handshake?”

  *Merkel looks at Trump*

  *Trump grins*

  *Press is ushered out without any handshake* pic.twitter.com/dKxu5C5X9Y

  — Steve Kopack (@SteveKopack) March 17, 2017

  //platform.twitter.com/widgets.js

   

  Now, a couple of weeks later, we learn what may have prompted some of the tension in the room between Merkel and Trump that day.  According to a new report from The Times of London today, Trump apparently took advantage of Merkel’s visit to Washington D.C. to pass her a $375 billion invoice for ‘overdue’ NATO defense expenses.  Per The Hill, Merkel largely ignored the invoice though it certainly seems to have accomplished it’s goal of ruffling some feathers.

  “The concept behind putting out such demands is to intimidate the other side, but the chancellor took it calmly and will not respond to such provocations,” a German minister told the newspaper.

   

  Trump during his presidential campaign railed against the NATO alliance and has called for member countries to increase defense spending to support the organization.

   

  Merkel “ignored the provocation,” the Times said.

  As reported, the invoice was based on a 2014 pledge from NATO countries to spend 2% of their GDP on national defense.  As such, Trump allegedly instructed aides to calculate how much German spending fell below that 2% target for the past 12 years, added interest and created an invoice which he hand delivered.

  Meanwhile, with the benefit of this new information, Trump’s tweets from March 18th, after his meetings with Merkel, take on all new meaning.

  Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes…..

  — Donald J. Trump (@realDonaldTrump) March 18, 2017

  //platform.twitter.com/widgets.js

  …vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!

  — Donald J. Trump (@realDonaldTrump) March 18, 2017

  //platform.twitter.com/widgets.js

   

  And while Merkel has largely ignored the invoice, other German ministers have decided upon more aggressive responses.  Per the Independent:

  In response to the claims, German defence minister Ursula Von der Leyen rejected the notion the European nation owed the US or Nato.

   

  She issued a statement saying: “There is no debt account at Nato

   

  “Defence spending also goes into UN peacekeeping missions, into our European missions and into our contribution to the fight against [Isis] terrorism.”

   

  Her comments were backed by Ivo Daalder, permanent representative to Nato from 2009 to 2013 under the Obama administration, who queried the President’s understanding of the organisation.

   

  He tweeted: “Sorry Mr President, that’s not how Nato works. The US decides for itself how much it contributes to defending Nato.

   

  “This is not a financial transaction, where Nato countries pay the US to defend them. It is part of our treaty commitment.”

  Never a dull moment in the Trump White House.

  

  

• Are America And China Destined For War?

  Authored by Harry Kazianis via The Stratgeic Culture Foundation,

  In his recent book The Improbable War, professor Christopher Coker explains that it is “of vital importance that the possibility of a conflict between China and the United States continues to be discussed.” Coker’s rationale for this is simple: “If the United States and China continue to convince themselves that war is too ‘improbable’ to take seriously, it is not they but the rest of the world that may ultimately pay the price.”

  It would seem the good professor’s wish is about to be granted. We are about to be treated to what surely will be a media blitz over what can only be described as the most comprehensive book to ever tackle the question of not only whether a US-China war is possible, but what steps Washington and Beijing can take to avoid such a calamity.

  Written by one of the world’s most prominent political scientists and strategic thinkers of the day, director of Harvard University’s Belfer Center, Graham Allison, anyone who has been following China in recent years likely guessed such an effort was in the works. The book is hooked on Allison’s popular “Thucydides Trap” concept. The trap, as Allison described in a prominent piece for the Atlantic in 2015, is “the attendant dangers when a rising power rivals a ruling power — as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago.” Allison goes on to warn that in 12 of 16 cases he has studied throughout history, when such a situation takes place, war has been the result.

  US and China: A relationship in dangerous flux

  So what happens in case study number 17? Knowing the odds history has given us, is war between China and America unstoppable?

  To answer such questions, we first need to understand the complexity that is the US-China relationship. In fact, there are two US-China relationships.

  The first, is the economic relationship. At least until the election of Donald Trump, many scholars and Asia hands would argue that both sides prospered from their deep economic ties. US-China bilateral trade in goods and services has skyrocketed since the two nation’s opened their doors to each other in 1971 and is now more than US$600 billion per year. Trade between both Washington and Beijing has made both countries wealthier with millions of jobs created on both sides of the Pacific.

   

  The second part is the strategic relationship — something that was bound to become strained after the collapse of the Soviet Union, the real threat that brought America and China together. Without a common foe, tensions on both sides have begun to grow. Washington and Beijing now face off in various parts of the Asia-Pacific with no letup in sight.

  Such an odd, dual-sided relationship, filled with equal promise and peril, made sense for decades. When times got tough — look no further than the 1995-1996 Taiwan Crisis, the 1999 Chinese Embassy bombing, the 2001 EP-3 Crisis and many other smaller incidents — the dangers of severing the economic relationship always seemed to smooth out any talk of a rupture. But with Trump and advisers such as Death by China author Peter Navarro calling into question the economic benefits of trade with Beijing, the one thing that always seemed to anchor relations in times of trouble seems to be at an end.

  Why Destined for War is a must read:

  To be fair, there are many great articles, long-form pieces and books that detail the dangers of a US-China military clash and how to avoid it. So why read this one?

  I offer three reasons: Comprehensiveness, readability and telling hard truths most Asia experts here in Washington won’t want to hear.

  In the interests of full disclosure, I have published Allison’s works on many occasions as Executive Editor of the National Interest, but Allison’s efforts in Destined for War will surely be praised, and for good reasons.

  Any Asia hand will quickly be floored by the level of detail and research the manuscript includes. With a grounding in history, Allison takes his readers on a journey through many similar cases in the past where a rising nation challenged a status-quo power, detailing where things went wrong, and, in some instances, how war was avoided. This is all done in a style that makes the book a real page turner, written in a prose that is easy to understand, never getting bogged down in often pointless jargon, tables, graphs or pie-charts. Allison’s ideas flow easily, no matter how frightening they are.

  But some will likely have a problem with some of what the work offers. For example, he compares Xi Jinping and Donald Trump as two men who have similar goals: to make their nations great again. At the same time, Allison boldly, and quite correctly, couches China’s quest for primacy in Asia as something like what the United States did when it rose to power almost a century ago. While clearly stating that China has not acted as aggressively as America did in the past, especially back around the turn of century during the time of President Theodore Roosevelt, Allison skillfully hints at what could occur if China were to take such a step — and embark on a real path to war.

  Reasons for hope:

  While I don’t want to offer any spoilers, Allison offers four key ways to mitigate the possibility of conflict. One of my favorites, clarifying vital interests, is worth spoiling. What are America’s vital interests in the Asia-Pacific region? What are we willing to fight for? What are we willing to die for? And, perhaps, most importantly, what are we not willing to fight for? To this day, I would challenge any past Obama administration official to be able to explain that with clarity — they likely can’t, beyond mentioning the word pivot or rebalance — terms that are rightly relegated to the past. The Trump administration will need to take up this challenge fast, considering Xi and Obama have a big summit set for early next month.

  While many will sing the praises of Allison’s work, there is a much simpler reason why the good professor’s effort should be commended: it stands to reason a flood of op-eds, blogs, editorials and podcasts will flood the media as this books nears its release. We are finally about to have a real public debate about the very distinct possibility of a war between the US and China — and that itself might be the real accomplishment.

  

  

• Putting Pennies in the Fusebox, Report 26 Mar, 2017

  Back in the old days, homes had fuse boxes. Today, of course, any new house is built with a circuit breaker panel and many older homes have been upgraded at one time or another. However, the fuse is a much more interesting analogy for the monetary system.

  When a fuse burned out, it was protecting you from the risk of a house fire. Each circuit is designed for only so much current. The problem is that higher current causes more heat, and it can start a fire. So they put fuses in, which burn out before the wire gets hot enough to be dangerous.

  The problem is that it’s annoying when a fuse burns out, especially when it’s the last one and the hardware store is far away and/or closed for the weekend. So people all too often put a penny in the place of the fuse. And then, human nature being what it is, they left it there long-term. As an aside, pennies in those days were solid copper, not the copper plated zinc they use today because it’s cheaper.

  We would guess that a disproportionate number of house fires were started because an overloaded circuit became overheated, and the protective fuse was replaced with a penny that would keep the juice flowing no matter what.

  So, what has that got to do with gold and silver? A penny in the fuse box is a perfect analogy for what President Roosevelt did in 1933. Many believe when he confiscated gold, it was to grab the loot. While we have no doubt that he and his cronies lusted for the gold of the people, he had a more serious purpose.

  Until 1933, gold was the core monetary asset in the banking system. When people withdrew their gold coin—redeeming their gold, not buying gold—that forced the bank to sell a bond to raise the gold to redeem depositors. If a bank could not raise enough gold, perhaps because bond prices were going down, then the bank was bankrupt. Another problem is that falling bond prices mean rising interest rates.

  Roosevelt was trying to stop the run on the banks, and trying to push interest rates down.

  He did stop the run, and interest continued to fall through the end of World War II. However, his act was the monetary equivalent of the penny in the fuse box. In making it illegal to own gold, he made the dollar irredeemable for Americans. Gold is the only financial asset that is not someone else’s liability. Deprived of this outlet, people were forced to be a creditor. The only choice was to lend to the Federal Reserve, the US Treasury, a commercial bank, a corporation, etc.

  When people are running to the bank to withdraw their gold coin, it’s like a fuse burning out. You really should find out the root cause when a fuse keeps burning out, and not just jam a solid copper conductor into the circuit. You really should find out why people keep pulling money (i.e. gold) out of the banks, and not just outlaw it.

  The reasons were simple. The rate of interest was below the marginal time preference of the savers. This is, of course, the purpose for which any central bank is established: to enable the government and its cronies to borrow more cheaply. And the banks had become unsound (due in no small part to the actions of the Fed taken prior to 1933).

  By corralling everyone in the banking system, FDR put a penny in the monetary fusebox. In 1971, President Nixon realized there was one last fuse that could still burn out and thereby signal that all was not well. Americans could not withdraw gold, but foreign governments could. And, led by France, they were doing. So Nixon “closed the gold window”, thereby inserting a second penny.

  Now the system was perfect—perfectly irredeemable. Money is credit and credit is money and there is no longer a way for the market to express concerns about either interest rates or soundness. An individual can escape being a creditor if he buys gold (legalized in 1975, after gold was entirely demonetized), but his dollars simply trade hands. The seller of the gold gets the credit-dollars, and the buyer gives them up for the gold. There is zero effect on the banking system (other than causing the price of the dollar to go down).

  Unlike the simple and elegant mechanism of the bank run in the gold standard, buying gold is awkward, clunky, and risky for the participants. With dollar-credit no longer being tied to gold, there is a price risk. And of course, price is the motivator for many participants.

  Two people, call them Joe and Mary, could both be right that the dollar-credit system is headed towards a crisis. Joe bought at $1,060 in the last week of 2015. Unfortunately, Mary bought at $1,375 in July of 2016. Both bought because of the same reason. But Joe has a big fat gain of $183 and Mary has a loss of $132. This volatility makes people alternatively greedy and fearful, which is not really providing a good signal that the monetary system has problems urgently in need of addressing.

  And so the system goes, careening around, from crisis to crisis and nothing gets fixed and there is no signal that is clear to everyone the way a run on the banks is clear.

  With this backdrop, we note that the price of gold is on the rise again. Since its low around $1,120 late last year, it has been rising to its current price about $120 above that. What’s more, the fundamentals have been getting stronger at the same time. What could be causing this, and now?

  Rising interest rates (which we believe is just a correction in the long falling rates trend) are putting more and more stress on banks and corporations alike. If you have borrowed short to lend long (as all banks do nowadays, this is called “maturity transformation”) then rising rates cause immediate pain. Your cost of funding goes up instantly. However, the interest you earn on long-term bonds does not go up. Instead, the market price of those bonds drops. Equity is disappearing from your balance sheet.

  Now consider major corporations, who too often borrowed in the short term bond markets. Their cost of funding is rising. Nearly every carmaker now offers 0% financing to qualified buyers. Their cost to offer this is now obviously much higher than it was a year or two ago. And that does not even count if they had used short-term borrowing to finance those loans, in which case their existing book is bleeding cash too.

  This same pressure is occurring anywhere a vendor is financing its customers. The vendor can always try to pass through the increased cost. However, if buying volume was anemic previously with lower interest cost, it will only get worse when this cost goes up.

  In the housing market, most people are monthly payment buyers. A higher interest rate means a lower price to get the same payment.

  And what happens to lower credit corporations who issue junk bonds? Like most corporations they have to roll over their bonds when mature. So far, rising rates has passed over this market and junk bonds have held up. However, should this tide turn, many of these companies will be forced to default under a deluge of rising interest expense, if not softer demand for their products. They are junk credits for a reason, and higher rates can be the final straw.

  Or let’s look at the pension funds. They are already badly underfunded. That is, they are already destined to arrive at terra firma. Many have bought equities and real estate in an attempt to juice up their returns. What happens if the prices of those assets comes down significantly?

  Finally, let’s look at municipalities. They derive revenue from home building and turnover of not only homes but home furnishings, remodeling, etc. If these markets slow down significantly, their ability to service their debts is going to be taxed to the limits and beyond.

  No wonder people are buying gold. Fundamental demand, as opposed to speculative, is when people buy gold coins and bars, presumably not to bring back to the market soon.

  Below, we will show the only true picture of the gold and silver supply and demand. But first, the price and ratio charts.

  The Prices of Gold and Silver
  

  Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It moved down this week.

  The Ratio of the Gold Price to the Silver Price
  

  For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

  Here is the gold graph.

  The Gold Basis and Cobasis and the Dollar Price
  

  The price of the dollar fell another 0.3 milligrams gold (this is the inverse of the rising price of gold, measured in dollars, +$14). However, this week, the cobasis (our measure of scarcity) decreased a bit. Gold buying this week was biased towards speculation. Last week, we said fundamental buying was a trend but it’s “sputtering”. This is an example.

  Our calculated fundamental price of gold is up $3, or still about $160 over the market price.

  Now let’s look at silver.

  The Silver Basis and Cobasis and the Dollar Price
  

  The story is the same in silver. The price rose, a bit more than the price of gold did. With the rising price, we see decreasing scarcity this week.

  Our calculated silver fundamental price rose 4 cents, now about $0.85 over the market price.

  We leave on a question today. When interest returns to gold and silver, which metal will have the higher rate? We plan to publish something about this soon.

  © 2017 Monetary Metals

  

• RBC Emergency Market Update: "Big Trouble For Consensus Trades"

  Markets may not be turmoiling yet, but as per this “emergency” Sunday night “hot take” from RBC’s cross-asset head Charlie McElligott notes, things are certainly starting to break.

  SPECIAL EDITION RBC Big Picture: BIG TROUBLE FOR CONSENSUS ‘REFLATION’ TRADES AS ‘FISCAL POLICY’ FEARS CONFIRMED
   
  #HOTTAKE: ‘Risk-off’ in a sloppy Asian opening to start the week (ES1 -18 handles, $/Y -100pips to 110.34, UST 10Y ylds at 2.36), as markets digest the scope and viability of the US ‘fiscal policy’ narrative going-forward off the tremors of Friday’s failed healthcare repeal vote. 

  “Reflation” themes were already staggering in recent weeks off-the-back of the recent the crude oil sell-off (and the implications for weakened ‘inflation expectations’)—but to now see the longer-term ‘US fiscal policy upside kicker’ looking especially threatened, it is likely that the ‘big three’ trade expressions (longs in US Dollar US Banks and shorts in US Rates) are looking very exposed for an acceleration of recent drawdowns (in conjunction with longs in HY, ‘cyclicals / defensives’ L/S pairs, equities ‘value’ factor, equities high beta, US equities small cap).

  

  ‘Long Dollar’ trades are currently seen unwinding ‘real-time’ as ‘the world’s most crowded trade’ and ‘reflation’ proxy earlier this evening broke the convergence of both its 200dma and the 76.4% Fibo Retracement of the entire Dollar move since the US election—exposing significant downside.  Legacy shorts held against the US Dollar in Euro (making 2017 highs vs USD), Yen (making 2017 highs vs USD), Pound and Canadian Dollar are being painfully squeezed as traders are liquidating after ‘processing’ the implications of the Trump Administration’s failed ACA repeal Friday, with many ‘late-comers’ to these trades significantly ‘under water’ already and looking to ‘tap out’ on losers.  Tactical funds and discretionary macro were already pivoting ‘short USD’ last week on the new “policy CONVERGENCE” dynamic, and now with momentum having clearly pivoted in the other direction, one would expect systematic / trend / CTA to be heavily-involved now as well on the short-side of USD trades.

  The story that we were getting Friday from some buyside traders and sellside strategists (by-and-large) was that a “no” vote was almost irrelevant to risk-assets, as market participants want the US Administration to ‘move on’ and ‘focus its efforts’ on tax policy anyhow (versus being mired in further debate with the ‘repeal and replace’ of the ACA).  What many were missing here though (and noted by Mark Orsley Friday afternoon) is that the sequencing of ‘healthcare’ and ‘budget’ before ‘taxes’ was intentional and critical, as spending cuts from a repeal of the ACA were effectively a ‘requirement’ against the pending new administration’s tax-plan which will only further increase the deficit.  This is obviously an impediment then to efforts to keep any new tax plan ‘deficit neutral,’ so essentially, the GOP is starting in a bigger hole, some say to the tune of $1T dollars….and this of course is not including the extremely controversial BAT component, which too has lost much momentum over the past two months, despite projections that it could provide upwards of $1T of revenues over a 10 year period in order to fund the individual and corporate tax cut proposals (ironically, the same ‘Freedom Caucus’ of GOP’ers which symbolically defeated the ‘new’ healthcare plan on Friday are also against the BAT…yikes).

  What does it all mean?  Some of the talk emanating from DC policy-circles is now of the view that this now means an almost certainty of a ‘watered down’ tax plan, which instead of deep ‘headline’ cuts planned will now feature much more modest cuts (corporates as priority over individuals) and focus on “streamlining” tax code / loopholes.  This is not the ‘joy’ that many of those 2500 S&P targets ‘signed-up’ for.

  What is at risk?  I noted many of the ‘consensual longs’ which have already showed significant signs of being de-grossed in recent weeks.  But as we now see a high likelihood of the potential for a rates reversal to accelerate and long duration’ rallies in the face of the ‘rates short’ crowd, there will be major implications within equities too, as ‘low vol’ defensives (REITS / Utes / Staples / Telcos) and ‘anti-beta’ market neutral strategies are certain to see further escalation of their recent strength.  The good news for equities-longs  is that ‘secular growers’ like tech, consumer discretionary and biotech is too likely to benefit from money rotating out of ‘deep cyclicals’and ‘value.’  

  Stay tuned…
   
   

  

  

• Trump "Endorses" Jeanine Pirro's Call For Paul Ryan To Step Down

  Fox News host Judge Jeanine Pirro, whose show President Trump urged his followers on Twitter to watch earlier in the day, opened her program at 9pm on Saturday by calling for Speaker Paul Ryan’s resignation.

  “Ryan needs to step down as Speaker of the House. The reason, he failed to deliver the votes on his healthcare bill, the one trumpeted to repeal and replace ObamaCare, the one that he had 7 years to work on; the one he hid under lock and key in the basement of Congress; the one that had to be pulled to prevent the embarrassment of not having enough votes to pass.” Pirro said in her opening statement.

  “Speaker Ryan, you come in with all your swagger and experience and sell them a bill of goods which ends up a complete and total failure and you allow our president, in his first 100 days, to come out of the box like that, based on what?” Pirro said.

  What made Pirro’s fiery comments about Ryan especially notable is that they came hours after Trump tweeted to encourage his followers to watch “Justice with Judge Jeanine.”

  Watch @JudgeJeanine on @FoxNews tonight at 9:00 P.M.

  — Donald J. Trump (@realDonaldTrump) March 25, 2017

  //platform.twitter.com/widgets.js

  While Trump has urged people to watch TV shows in the past, typically it was when the president himself was appearing on them. However in a twist, Pirro suggested that she had not coordinated her statement with Trump in advance.

  “I have not spoken with the president about any of this,” Pirro said of her call for Ryan to step down on her show, where president’s counter-terrorism adviser Sebastian Gorka also appeared on Saturday evening.

  On Friday Trump told Ryan to pull the Republican healthcare bill, upon learning there were not enough votes in support among House Republicans. The move marked Trump’s first legislative defeat as president and followed seven years of rhetoric from Republicans who campaigned on a pledge to repeal and replace former President Barack Obama’s signature healthcare law.

  In the initial round of fingerpointing, Trump blamed Democrats for not backing the GOP healthcare bill, warning that Obamacare would “explode” on its own, and signaled that he would move on to other priorities such as tax reform. On Saturday, the NYT reported that the blame among Trump’s closest circles had fallen on Reince Priebus and Health and Human Services Secretary Tom Price, while Ryan was spared Trump’s anger. Trump and White House press secretary Sean Spicer also indicated that they appreciated Ryan’s effort to get the bill passed, amid criticism from some Trump allies over the failed effort.

  Following the Pirro statement, the blame now appears to have shifted back to Ryan, as Bloomberg originally reported on Friday.

  Pirro insisted in her first segment that the failure was on Ryan and not on Trump. “Folks, I want to be clear. This is not on President Trump,” she said. “No one expected a businessman to completely understand the nuances, the complicated ins and outs of Washington and its legislative process. How would he know on what individuals he could rely?”

  “Ryan has hurt you going forward, and he’s got to go,” Pirro said.

  

  

• Michael Hudson: Trump Is Obama's Legacy – Is This The End Of The Democratic Party?

  Authored by Michael Hudson via NakedCapitalism.com,

  Nobody yet can tell whether Donald Trump is an agent of change with a specific policy in mind, or merely a catalyst heralding an as yet undetermined turning point. His first month in the White House saw him melting into the Republican mélange of corporate lobbyists. Having promised to create jobs, his “America First” policy looks more like “Wall Street First.” His cabinet of billionaires promoting corporate tax cuts, deregulation and dismantling Dodd-Frank bank reform repeats the Junk Economics promise that giving more tax breaks to the richest One Percent may lead them to use their windfall to invest in creating more jobs. What they usually do, of course, is simply buy more property and assets already in place.

  One of the first reactions to Trump’s election victory was for stocks of the most crooked financial institutions to soar, hoping for a deregulatory scythe taken to the public sector. Navient, the Department of Education’s knee-breaker on student loan collections accused by the Consumer Financial Protection Bureau (CFPB) of massive fraud and overcharging, rose from $13 to $18 now that it seemed likely that the incoming Republicans would disable the CFPB and shine a green light for financial fraud.

  Foreclosure king Stephen Mnuchin of IndyMac/OneWest (and formerly of Goldman Sachs for 17 years; later a George Soros partner) is now Treasury Secretary – and Trump is pledged to abolish the CFPB, on the specious logic that letting fraudsters manage pension savings and other investments will give consumers and savers “broader choice,” e.g., for the financial equivalent of junk food. Secretary of Education Betsy DeVos hopes to privatize public education into for-profit (and de-unionized) charter schools, breaking the teachers’ unions. This may position Trump to become the Transformational President that neoliberals have been waiting for.

  But not the neocons. His election rhetoric promised to reverse traditional U.S. interventionist policy abroad. Making an anti-war left run around the Democrats, he promised to stop backing ISIS/Al Nusra (President Obama’s “moderate” terrorists supplied with the arms and money that Hillary looted from Libya), and to reverse the Obama-Clinton administration’s New Cold War with Russia. But the neocon coterie at the CIA and State Department are undercutting his proposed rapprochement with Russia by forcing out General Flynn for starters. It seems doubtful that Trump will clean them out.

  Trump has called NATO obsolete, but insists that its members up their spending to the stipulated 2% of GDP — producing a windfall worth tens of billions of dollars for U.S. arms exporters. That is to be the price Europe must pay if it wants to endorse Germany’s and the Baltics’ confrontation with Russia.

  Trump is sufficiently intuitive to proclaim the euro a disaster, and he recommends that Greece leave it. He supports the rising nationalist parties in Britain, France, Italy, Greece and the Netherlands, all of which urge withdrawal from the eurozone – and reconciliation with Russia instead of sanctions. In place of the ill-fated TPP and TTIP, Trump advocates country-by-country trade deals favoring the United States. Toward this end, his designated ambassador to the European Union, Ted Malloch, urges the EU’s breakup. The EU is refusing to accept him as ambassador.

  Will Trump’s Victory Break Up the Democratic Party?

  At the time this volume is going to press, there is no way of knowing how successful these international reversals will be. What is more clear is what Trump’s political impact will have at home. His victory – or more accurately, Hillary’s resounding loss and the way she lost – has encouraged enormous pressure for a realignment of both parties. Regardless of what President Trump may achieve vis-à-vis Europe, his actions as celebrity chaos agent may break up U.S. politics across the political spectrum.

  The Democratic Party has lost its ability to pose as the party of labor and the middle class. Firmly controlled by Wall Street and California billionaires, the Democratic National Committee (DNC) strategy of identity politics encourages any identity except that of wage earners. The candidates backed by the Donor Class have been Blue Dogs pledged to promote Wall Street and neocons urging a New Cold War with Russia.

  They preferred to lose with Hillary than to win behind Bernie Sanders. So Trump’s electoral victory is their legacy as well as Obama’s. Instead of Trump’s victory dispelling that strategy, the Democrats are doubling down. It is as if identity politics is all they have.

  Trying to ride on Barack Obama’s coattails didn’t work. Promising “hope and change,” he won by posing as a transformational president, leading the Democrats to control of the White House, Senate and Congress in 2008. Swept into office by a national reaction against the George Bush’s Oil War in Iraq and the junk-mortgage crisis that left the economy debt-ridden, they had free rein to pass whatever new laws they chose – even a Public Option in health care if they had wanted, or make Wall Street banks absorb the losses from their bad and often fraudulent loans.

  But it turned out that Obama’s role was to prevent the changes that voters hoped to see, and indeed that the economy needed to recover: financial reform, debt writedowns to bring junk mortgages in line with fair market prices, and throwing crooked bankers in jail. Obama rescued the banks, not the economy, and turned over the Justice Department and regulatory agencies to his Wall Street campaign contributors. He did not even pull back from war in the Near East, but extended it to Libya and Syria, blundering into the Ukrainian coup as well.

  Having dashed the hopes of his followers, Obama then praised his chosen successor Hillary Clinton as his “Third Term.” Enjoying this kiss of death, Hillary promised to keep up Obama’s policies.

  The straw that pushed voters over the edge was when she asked voters, “Aren’t you better off today than you were eight years ago?” Who were they going to believe: their eyes, or Hillary? National income statistics showed that only the top 5 percent of the population were better off. All the growth in Gross Domestic Product (GDP) during Obama’s tenure went to them – the Donor Class that had gained control of the Democratic Party leadership. Real incomes have fallen for the remaining 95 percent, whose household budgets have been further eroded by soaring charges for health insurance. (The Democratic leadership in Congress fought tooth and nail to block Dennis Kucinich from introducing his Single Payer proposal.)

  No wonder most of the geographic United States voted for change – except for where the top 5 percent, is concentrated: in New York (Wall Street) and California (Silicon Valley and the military-industrial complex). Making fun of the Obama Administration’s slogan of “hope and change,” Trump characterized Hillary’s policy of continuing the economy’s shrinkage for the 95% as “no hope and no change.”

  Identity Politics as Anti-Labor Politics

  A new term was introduced to the English language: Identity Politics. Its aim is for voters to think of themselves as separatist minorities – women, LGBTQ, Blacks and Hispanics. The Democrats thought they could beat Trump by organizing Women for Wall Street (and a New Cold War), LGBTQ for Wall Street (and a New Cold War), and Blacks and Hispanics for Wall Street (and a New Cold War). Each identity cohort was headed by a billionaire or hedge fund donor.

  The identity that is conspicuously excluded is the working class. Identity politics strips away thinking of one’s interest in terms of having to work for a living. It excludes voter protests against having their monthly paycheck stripped to pay more for health insurance, housing and mortgage charges or education, or better working conditions or consumer protection – not to speak of protecting debtors.

  Identity politics used to be about three major categories: workers and unionization, anti-war protests and civil rights marches against racist Jim Crow laws. These were the three objectives of the many nationwide demonstrations. That ended when these movements got co-opted into the Democratic Party. Their reappearance in Bernie Sanders’ campaign in fact threatens to tear the Democratic coalition apart. As soon as the primaries were over (duly stacked against Sanders), his followers were made to feel unwelcome. Hillary sought Republican support by denouncing Sanders as being as radical as Putin’s Republican leadership.

  In contrast to Sanders’ attempt to convince diverse groups that they had a common denominator in needing jobs with decent pay – and, to achieve that, in opposing Wall Street’s replacing the government as central planner – the Democrats depict every identity constituency as being victimized by every other, setting themselves at each other’s heels. Clinton strategist John Podesta, for instance, encouraged Blacks to accuse Sanders supporters of distracting attention from racism. Pushing a common economic interest between whites, Blacks, Hispanics and LGBTQ always has been the neoliberals’ nightmare. No wonder they tried so hard to stop Bernie Sanders, and are maneuvering to keep his supporters from gaining influence in their party.

  When Trump was inaugurated on Friday, January 20, there was no pro-jobs or anti-war demonstration. That presumably would have attracted pro-Trump supporters in an ecumenical show of force. Instead, the Women’s March on Saturday led even the pro-Democrat New York Times to write a front-page article reporting that white women were complaining that they did not feel welcome in the demonstration. The message to anti-war advocates, students and Bernie supporters was that their economic cause was a distraction.

  The march was typically Democratic in that its ideology did not threaten the Donor Class. As Yves Smith wrote on Naked Capitalism: “the track record of non-issue-oriented marches, no matter how large scale, is poor, and the status of this march as officially sanctioned (blanket media coverage when other marches of hundreds of thousands of people have been minimized, police not tricked out in their usual riot gear) also indicates that the officialdom does not see it as a threat to the status quo.”

  Hillary’s loss was not blamed on her neoliberal support for TPP or her pro-war neocon stance, but on the revelations of the e-mails by her operative Podesta discussing his dirty tricks against Bernie Sanders (claimed to be given to Wikileaks by Russian hackers, not a domestic DNC leaker as Wikileaks claimed) and the FBI investigation of her e-mail abuses at the State Department. Backing her supporters’ attempt to brazen it out, the Democratic Party has doubled down on its identity politics, despite the fact that an estimated 52 percent of white women voted for Trump. After all, women do work for wages. And that also is what Blacks and Hispanics want – in addition to banking that serves their needs, not those of Wall Street, and health care that serves their needs, not those of the health-insurance and pharmaceuticals monopolies.

  Bernie did not choose to run on a third-party ticket. Evidently he feared being accused of throwing the election to Trump. The question is now whether he can remake the Democratic Party as a democratic socialist party, or create a new party if the Donor Class retains its neoliberal control. It seems that he will not make a break until he concludes that a Socialist Party can leave the Democrats as far back in the dust as the Republicans left the Whigs after 1854. He may have underestimated his chance in 2016.

  Trump’s Effect on U.S. Political Party Realignment

  During Trump’s rise to the 2016 Republican nomination it seemed that he was more likely to break up the Republican Party. Its leading candidates and gurus warned that his populist victory in the primaries would tear the party apart. The polls in May and June showed him defeating Hillary Clinton easily (but losing to Bernie Sanders). But Republican leaders worried that he would not support what they believed in: namely, whatever corporate lobbyists put in their hands to enact and privatize.

  The May/June polls showed Trump and Clinton were the country’s two most unpopular presidential candidates. But whereas the Democrats maneuvered Bernie out of the way, the Republican Clown Car was unable to do the same to Trump. In the end they chose to win behind him, expecting to control him. As for the DNC, its Wall Street donors preferred to lose with Hillary than to win with Bernie. They wanted to keep control of their party and continue the bargain they had made with the Republicans: The latter would move further and further to the right, leaving room for Democratic neoliberals and neocons to follow them closely, yet still pose as the “lesser evil.” That “centrism” is the essence of the Clintons’ “triangulation” strategy. It actually has been going on for a half-century. “As Tanzanian President Julius Nyerere quipped in the 1960s, when he was accused by the US of running a one-party state, ‘The United States is also a one-party state but, with typical American extravagance, they have two of them’.”

  By 2017, voters had caught on to this two-step game. But Hillary’s team paid pollsters over $1 billion to tell her (“Mirror, mirror on the wall …”) that she was the most popular of all. It was hubris to imagine that she could convince the 95 Percent of the people who were worse off under Obama to love her as much as her East-West Coast donors did. It was politically unrealistic – and a reflection of her cynicism – to imagine that raising enough money to buy television ads would convince working-class Republicans to vote for her, succumbing to a Stockholm Syndrome by thinking of themselves as part of the 5 Percent who had benefited from Obama’s pro-Wall Street policies.

  Hillary’s election strategy was to make a right-wing run around Trump. While characterizing the working class as white racist “deplorables,” allegedly intolerant of LBGTQ or assertive women, she resurrected the ghost of Joe McCarthy and accused Trump of being “Putin’s poodle” for proposing peace with Russia. Among the most liberal Democrats, Paul Krugman still leads a biweekly charge at The New York Times that President Trump is following Moscow’s orders. Saturday Night Live, Bill Maher and MSNBC produce weekly skits that Trump and General Flynn are Russian puppets. A large proportion of Democrats have bought into the fairy tale that Trump didn’t really win the election, but that Russian hackers manipulated the voting machines. No wonder George Orwell’s 1984 soared to the top of America’s best-seller lists in February 2017 as Donald Trump was taking his oath of office.

  This propaganda paid off on February 13, when neocon public relations succeeded in forcing the resignation of General Flynn, whom Trump had appointed to clean out the neocons at the NSA and CIA. His foreign policy initiative based on rapprochement with Russia and hopes to create a common front against ISIS/Al Nusra seemed to be collapsing.

  Tabula Rasa Celebrity Politics

  U.S. presidential elections no longer are much about policy. Like Obama before him, Trump campaigned as a rasa tabla, a vehicle for everyone to project their hopes and fancies. What has all but disappeared is the past century’s idea of politics as a struggle between labor and capital, democracy vs. oligarchy.

  Who would have expected even half a century ago that American politics would become so post-modern that the idea of class conflict has all but disappeared. Classical economic discourse has been drowned out by their junk economics.

  There is a covert economic program, to be sure, and it is bipartisan. It is to make elections about just which celebrities will introduce neoliberal economic policies with the most convincing patter talk. That is the essence of rasa tabla politics.

  Can the Democrats Lose Again in 2020?

  Trump’s November victory showed that voters found him to be the Lesser Evil, but all that voters really could express was “throw out the bums” and get a new set of lobbyists for the FIRE sector and corporate monopolists. Both candidates represented Goldman Sachs and Wall Street. No wonder voter turnout has continued to plunge.

  Although the Democrats’ Lesser Evil argument lost to the Republicans in 2016, the neoliberals in control of the DNC found the absence of a progressive economic program to less threatening to their interests than the critique of Wall Street and neocon interventionism coming from the Sanders camp. So the Democrat will continue to pose as the Lesser Evil party not really in terms of policy, but simply ad hominum. They will merely repeat Hillary’s campaign stance: They are not Trump. Their parades and street demonstrations since his inauguration have not come out for any economic policy.

  On Friday, February 10, the party’s Democratic Policy group held a retreat for its members in Baltimore. Third Way “centrists” (Republicans running as Democrats) dominated, with Hillary operatives in charge. The conclusion was that no party policy was needed at all. “President Trump is a better recruitment tool for us than a central campaign issue,’ said Washington Rep. Denny Heck, who is leading recruitment for the Democratic Congressional Campaign Committee (DCCC).”

  But what does their party leadership have to offer women, Blacks and Hispanics in the way of employment, more affordable health care, housing or education and better pay? Where are the New Deal pro-labor, pro-regulatory roots of bygone days? The party leadership is unwilling to admit that Trump’s message about protecting jobs and opposing the TPP played a role in his election. Hillary was suspected of supporting it as “the gold standard” of trade deals, and Obama had made the Trans-Pacific Partnership the centerpiece of his presidency – the free-trade TPP and TTIP that would have taken economic regulatory policy out of the hands of government and given it to corporations.

  Instead of accepting even Sanders’ centrist-left stance, the Democrats’ strategy was to tar Trump as pro-Russian, insist that his aides had committed impeachable offenses, and mount one parade after another. “Rep. Marcia Fudge of Ohio told reporters she was wary of focusing solely on an “economic message” aimed at voters whom Trump won over in 2016, because, in her view, Trump did not win on an economic message. “What Donald Trump did was address them at a very different level — an emotional level, a racial level, a fear level,” she said. “If all we talk about is the economic message, we’re not going to win.” This stance led Sanders supporters to walk out of a meeting organized by the “centrist” Third Way think tank on Wednesday, February 8.

  By now this is an old story. Fifty years ago, socialists such as Michael Harrington asked why union members and progressives still imagined that they had to work through the Democratic Party. It has taken the rest of the country half a century to see that Democrats are not the party of the working class, unions, middle class, farmers or debtors. They are the party of Wall Street privatizers, bank deregulators, neocons and the military-industrial complex. Obama showed his hand – and that of his party – in his passionate attempt to ram through the corporatist TPP treaty that would have enabled corporations to sue governments for any costs imposed by public consumer protection, environmental protection or other protection of the population against financialized corporate monopolies.

  Against this backdrop, Trump’s promises and indeed his worldview seem quixotic. The picture of America’s future he has painted seems unattainable within the foreseeable future. It is too late to bring manufacturing back to the United States, because corporations already have shifted their supply nodes abroad, and too much U.S. infrastructure has been dismantled.

  There can’t be a high-speed railroad, because it would take more than four years to get the right-of-way and create a route without crossing gates or sharp curves. In any case, the role of railroads and other transportation has been to increase real estate prices along the routes. But in this case, real estate would be torn down – and having a high-speed rail does not increase land values.

  The stock market has soared to new heights, anticipating lower taxes on corporate profits and a deregulation of consumer, labor and environmental protection. Trump may end up as America’s Boris Yeltsin, protecting U.S. oligarchs (not that Hillary would have been different, merely cloaked in a more colorful identity rainbow). The U.S. economy is in for Shock Therapy. Voters should look to Greece to get a taste of the future in this scenario.

  Without a coherent response to neoliberalism, Trump’s billionaire cabinet may do to the United States what neoliberals in the Clinton administration did to Russia after 1991: tear out all the checks and balances, and turn public wealth over to insiders and oligarchs. So Trump’s his best chance to be transformative is simply to be America’s Yeltsin for his party’s oligarchic backers, putting the class war back in business.

  What a Truly Transformative President Would Do/Would Have Done

  No administration can create a sound U.S. recovery without dealing with the problem that caused the 2008 crisis in the first place: over-indebtedness. The only one way to restore growth, raise living standards and make the economy competitive again is a debt writedown. But that is not yet on the political horizon. Obama’s doublecross of his voters in 2009 prevented the needed policy from occurring. Having missed this chance in the last financial crisis, a progressive policy must await yet another crisis. But so far, no political party is preparing a program to juxtapose to Republican-Democratic austerity and scale-back of Social Security, Medicare and social spending programs in general.

  Also no longer on the horizon is a more progressive income tax, or a public option for health care – or for banking, or consumer protection against financial fraud, or for a $15-an-hour minimum wage, or for a revived protection of labor’s right to unionize, or environmental regulations.

  It seems that only a new party can achieve these aims. At the time these essays are going to press, Sanders has committed himself to working within the Democratic Party. But that stance is based on his assumption that somehow he can recruit enough activists to take over the party from Its Donor Class.

  I suspect he will fail. In any case, it is easier to begin afresh than to try to re-design a party (or any institution) dominated by resistance to change, and whose idea of economic growth is a pastiche of tax cuts and deregulation. Both U.S. parties are committed to this neoliberal program – and seek to blame foreign enemies for the fact that its effect is to continue squeezing living standards and bloating the financial sector.

  If this slow but inexorable crash does lead to a political crisis, it looks like the Republicans may succeed in convening a new Constitutional Convention (many states already have approved this) to lock the United States into a corporatist neoliberal world. Its slogan will be that of Margaret Thatcher: TINA – There Is No Alternative.

  And who is to disagree? As Trotsky said, fascism is the result of the failure of the left to provide an alternative.

  

  

• Your Pension Will Be At The Center Of America's Next Financial Crisis

  Authored by Jeff Reeves via The Hill

  I’m not a fan of the “greed is good” mentality of Wall Street investment firms. But the next financial crisis that rocks America won’t be driven by bankers behaving badly. It will in fact be driven by pension funds that cannot pay out what they promised to retirees. According to one pension advocacy organization, nearly 1 million working and retired Americans are covered by pension plans at the risk of collapse.

  The looming pension crisis is not limited by geography or economic focus. These including former public employees, such as members of South Carolina’s government pension plan, which covers roughly 550,000 people — one out of nine state residents — and is a staggering $24.1 billion in the red. These include former blue collar workers such as roughly 100,000 coal miners who face serious cuts in pension payments and health coverage thanks to a nearly $6 billion shortfall in the plan for the United Mine Workers of America. And when the bill comes due, we will all be in very big trouble.

  It’s bad enough to consider the philosophical fallout here, with reneging on the promise of a pension and thus causing even more distrust of bankers and retirement planners. But I’m speaking about a cold, numbers-based perspective that causes a drag on many parts of the American economy. Consider the following.

  Pensioners have no flexibility

  According to a Bureau of Labor Statistics report from 2015, the average household income of someone older than age 75 is $34,097 and their average expenses exceed that slightly, at $34,382. It is not an exaggeration, then, to say that even a modest reduction in retirement income makes the typical budget of a 75-year-old unsustainable — even when the average budget is far from luxurious at current levels. This inflexibility is a hard financial reality of someone who is no longer able to work and is reliant on means other than labor to make ends meet.

  Social Security is in a tight spot

  So who will step up to support these former pensioners? Perhaps the government, via Social Security, except that program itself is in crisis and will see its trust fund go to zero just 17 years from now, in 2034, based on the current structure of the program. If millions of pensions go bust and retirees have no other savings to fall back on, it will be nigh impossible to cut benefits or reduce the drag on this program. But won’t a pension collapse mean we desperately need Social Security, even in an imperfect form, well beyond 2034?

  

   

  The guaranty is no solution

  There is an organization, the Pension Benefit Guaranty Corporation (PBGC), which is meant to insure pensions against failure. However, it was created in 1974 as part of a host of financial reforms and is far from a perfect solution, primarily because it is funded by premiums from defined-benefit plan sponsors and assets seized from former plan sponsors that have entered bankruptcy.

  What happens when a handful of troubled pension funds turns into dozens or hundreds? Remember, the PBGC guarantees a certain amount that is decidedly lower than your full pension — as members of the Road Carriers 707 pension fund learned when the group “protected” their pensions by helping to pay benefits, which had been reduced from $1,313 per month to $570. That’s better than zero, but hardly encouraging.

  This is not about helping Baby Boomers fund an annual cruise to the Caribbean. Older, low-income pensioners are not saving their money. Instead, they’re spending it on necessities such as food, housing, healthcare and transportation. That means every penny you reduce from their budget means a penny in spending that is removed from the U.S. economy.

  Anyone who has taken Econ 101 knows about the “multiplier effect” where $1 in extra spending can produce a much larger amount of economic activity as that dollar circulates around businesses, consumers and banks … or in this case, how $1 less in spending causes a an equally powerful cascade of negative consequences.

  By helping ward against a pension crisis, America will be protecting its economy for everyone — plain and simple. But that requires some tough decisions on all sides. For instance, the U.S. Treasury denied a cut to New York Teamsters’ pension plan that was proposed last year. But now the fund is on the brink of collapse, and its recipients are facing benefits that are in some cases one-third what they were 15 years ago.

  Like Social Security, current workers can’t contribute enough to offset the big obligations owed to retirees. And as with the flagship entitlement program, it’s up to regulators and legislators to step in — even when it may not be easy — in order to keep the system from collapsing. Let’s hope they make both pension reform and Social Security reform a priority in the near future.

  

  

• On The Edge Of An "Uncontrollable Liquidity Event": The Definitive Guide To China's Financial System

  While most traders over the past month have been obsessing over developments in Washington, the real action – most of it under the radar – has played out in China, where as discussed over the past few weeks, domestic liquidity has tightened notably, culminating with an unexpected bailout by the PBOC of various smaller banks who defaulted on their interbank loans as interest rates, particularly on Certificates of Deposit (CD) – which have become a preferred funding conduit for many Chinese banks – but not only, spiked. Ironically, these mini PBOC bailouts took place only after the PBOC itself decided to tighten conditions sufficiently to choke off much of the shadow debt funding China’s traditional banks.

  As a result, the interbank CD rate rallied strongly, leaving a narrower or negative spread for some smaller banks, whose legacy carry trades (see below for details) suddenly became unprofitable. Also, as reported last Tuesday, several small banks failed to meet overnight repo obligations. This liquidity tightness has been mainly due to escalating financial deleveraging, as the PBOC has lifted market rates and rolled out stricter macroprudential policy rules.

  But all those events in isolation seem as merely noise against what otherwise appears to be a relatively benign, even boring, backdrop: after all, neither China’s stock, nor bond markets, has seen even remote volatility in recent months, and certainly nothing compared to what was experienced one year ago, when the Chinese turmoil nearly led to a bear market across developed markets. Then again, maybe the markets are simply once again behind the curve due to all the inherent complexity of China’s unprecedented, financialized and extremely complex pre-Minsky moment ponzi scheme.

  Last last week, Deutsche Bank analysts led by Hans Fan released what is the definitive research report summarizing all the latest troubling trends facing China, which judging by capital markets, nobody is paying any attention to. They should, because as Deutsche Bank puts it, if taken too far, they threaten an “uncontrollable liquidity event“, i.e., the financial cataclysm that Kyle Bass and other perma-china-bears have been waiting for.

  And, as usual, it all started with rising interest rates, which in turn is leading to increasing funding pressure, which if left unchecked, could lead to dire consequences for China’s underfunded banking system.

  Here is a fantastic explanation of everything that has happened in China in recent weeks, and more importantly, what may happen next, courtesy of Deutsche Bank. We urge readers to familiarize themselves with the content as we will refer back to this article in future posts.

  * * *

  Only in early stage of financial deleveraging

  China’s monetary policy has been shifting gradually towards a tightening stance since 2H16. Targeting the liabilities side of the banking sector, the PBOC hiked rates of monetary tools, such as MLF, SLF and OMO (Figure 1), and withdrew liquidity on a net basis after the Chinese New Year (Figure 2). At the same time, it targeted the asset side of the banking sector when it rolled out stricter MPA rules by including off-BS WMP credit in broader credit assessment and imposing stricter-than-expected penalties on banks that fail to comply.

  

  As a result, the key indicators in the money market, including repo and CD rates, all suggest stretched domestic liquidity. For example, the 7-day repo rate, which is the most representative liquidity indicator, has exceeded the interest rate corridor ceiling of 3.45% several times this year (Figure 3). Moreover, the interbank CD rate spiked to 4.6% on 20 Mar 2017, up c.180bps from last year’s low (Figure 4).

  

  We summarize in the below diagram recent financial deleveraging efforts by regulators.

  

   

  Why push forward financial deleveraging?

  We believe the PBOC aims mainly to contain the fast-growing leverage in China’s financial sector. In our view, the country’s financial leverage basically relates to speculators borrowing excessive wholesale funding to grow assets and chase yield, rather than relying on vanilla deposits. To measure this, we believe one of the good indicators of financial leverage is the credit-to-deposit ratio, calculated as total banking credit as a percentage of total deposits. The higher the ratio, the more fragile the financial sector, and the more likely the banking system will run into difficulties to finance unexpected funding requirements. Traditionally the loan-to-deposit ratio was widely used to measure system liquidity risk, but has become increasingly irrelevant in China, as banks are growing their bond investments and shadow banking books to extend credit.

  As shown in Figure 6, the credit-to-deposit ratio in China’s banking system has risen sharply by 27ppts since 2011 to reach 116% as of February 2017. We see the rising credit-to-deposit ratio basically is a function of increasing reliance on wholesale funding to support strong credit growth. As of end 2016, borrowing from banks and NBFIs accounted for 17% of total liabilities, against 8% 10 years ago (Figure 7).

  

  Which banks are more leveraged? Joint-stock banks and city/rural banks

  As we have long argued, the risks are not evenly distributed in China’s banking system; there are notable differences in the balance sheet structures of different types of banks. As shown in Figure 8, medium-sized banks, which mainly include joint-stock banks, recorded the highest credit-to-deposit ratios and hence are most reliant on wholesale funding. At the same time, small banks, which mainly include city/rural commercial banks, also delivered notable increases in credit-to-deposit ratios, despite a lower absolute level. The credit-to-deposit ratio for small banks has increased by 30ppts since 2010, vs. 14ppts for the big-four banks in the same period.

  On the liabilities side, medium-sized and small banks mainly rely on wholesale funding, i.e. borrowing from banks and NBFIs. As of 1H16, wholesale funding made up 31% and 23% for medium-sized and small banks, respectively, against only 13% for big-four banks, as shown in Figure 9.

  

  A closer look into interbank CDs – funding pressure ahead

  Wholesale funding for smaller banks has been obtained mainly by issuing CDs in the interbank market. Interbank CDs have supported 20% of smaller banks’ assets expansion over the past 12 months. Since the introduction of interbank CDs in 2014, CD issuance recorded strong growth and the balance jumped 89% yoy to Rmb7.3tr in Feb 2017 (Figure 10), or 3.4% of total banking liabilities.

  

  Joint-stock and city/rural banks account for 99% of issuance (Figure 12). In the coming months these banks have ambitious CD pipelines. More than 400 banks announced plans to issue CDs worth Rmb14.6tr in 2017. This represents 60% yoy growth from the issuance plan in 2016. Investor-wise, WMPs, various asset management plans and commercial banks themselves are the major buyers, which combined make up 79% of the total balance (Figure 13).

  

  However, 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.

  

  Caixin previously reported CDs are likely to be reclassified as interbank liabilities, capped at 33% of total liabilities. This potential regulation could add funding pressure for banks with a heavy reliance on interbank liabilities. With Rmb4tr interbank CDs to mature during Mar- Jun 2017 (Figure 16) and interbank liabilities exposure approaching the limit (Figure 17), joint-stock and city/rural banks are subject to notable funding pressure.

  

  We show the listed banks’ issuances in the chart below. INDB, SPDB and PAB are among the most exposed to interbank CDs.

  

  * * *

  What are the implications?

  Are we close to a “tipping point”?

  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.

  

  Implications on system credit growth

  We expect system credit growth to moderate from 16.4% yoy in 2016 (16.1% in Feb’17) to approximately 14-15% yoy in 2017 (Figure 23). As a result, the credit impulse is likely to trend lower from the current high level (Figure 24). The slower credit growth is mainly attributable to several factors: 1) a tighter liquidity stance to push up the funding cost of smaller banks and to force them to slow down asset growth; 2) further curbs on shadow banking; 3) a higher  bond yield to defer bond issuance; and 4) slower mortgage loan growth.

  

   

  Appendix A – Liquidity flows in China’s interbank market

  New deposits supported 55% of asset growth in China’s banking system in 2016. The remaining 45% of new assets were mainly funded by borrowing from PBOC (19%) and borrowing from each other (19%, including bond issuance). While borrowing from NBFIs remained flat for the entire system, it was the main funding source for medium-sized and small banks. We summarize the liquidity flows in China’s interbank market in Appendix A.

  

  Liquidity injection from PBOC. Over the past 12 months, to offset the liquidity drain from falling FX reserves, the PBOC has injected a huge amount of liquidity worth Rmb5.8tr into the banking system, which is equivalent to 400bps of RRR cuts (Figure 29). Of this injection, 30% and 24% have been made to support joint-stock banks and policy banks, respectively (Figure 30). For details, please see our report, PBOC liquidity facilities: Doing whatever it takes, 23 January 2017.

  

  Borrowing from interbank market. Policy banks and big-four banks are net interbank lenders, while joint-stock and city/rural commercial banks are net borrowers. Joint-stock and city/rural banks not only borrow from policy/big banks, but also from each other. This could potentially lead to stronger contagion effects if some of them run into liquidity stress.

  

  Lending/borrowing between banks and NBFIs. There has been a sharp rise in net claims to NBFIs from banks (Figure 33). We believe this is due to rising shadow banking transactions and also arbitrage activities with funds self-circulating within the financial sector. Clearly as shown in Figure 34, small banks are key lenders to NBFIs

  

  Appendix B – What is driving the financial leverage?

  From the accounting perspective, we believe the rising credit-to-deposit ratio is mainly due to bank credit circulating back into the banking system as non-deposit liabilities. In normal cases, when a bank makes a $100 corporate loan or purchases a $100 corporate bond, the bank books the credit to a corporate on the asset side while it also books a deposit on the liability side. We show a normal case in Figure 35. However, if a bank’s money circulates back into the banking system, just like in the two cases we illustrate in the diagram below, the $100 deposit is removed but interbank borrowing or borrowing from NBFIs would increase by $100. While there are likely to be many variants of bank credit circulation, we elaborate on two cases in detail.

  

  Case #1: Bank credit circling via NBFIs

  It is well known that NBFIs have been serving as SPVs to channel shadow banking credit from banks to corporates in past years. What is  insufficiently addressed though is that NBFIs also have been acting as channels for bank credit circling. Let us show a simple example below:

  • First, Bank A invests in an asset management plan packaged by an NBFI. This is booked as a receivable investment on Bank A’s balance sheet.
  • Second, the NBFI invests further in a CD issued by Bank B. Bank B books the CD under interbank borrowing. The money circulates back into the banking system and no deposit is generated.
  • In some cases, if the yield of the CD does not cover the cost of issuing the asset management plan, the NBFI will leverage up in the bond market by pledging the CD through repo transactions. The leverage could be built up by two transactions: 1) entrusted bond investment (“Daichi” in Chinese); or 2) entrusted investment (“Weiwai” in Chinese), which we discuss in detail in our 2017 outlook report.
  • In this case we use the investment in a bank’s CD as an example. In reality it applies to investment in interbank CDs, interbank negotiated deposits and financial bonds issued by banks, which are all circulating money back into the banking system.

  The bank credit circling through NBFIs is growing rapidly. This is evidenced by strong growth in banks’ receivable investments, which reached Rmb21tr as of end-2016 to account for 10% of commercial banking assets, as shown in Figure 36. This represents 80% CAGR in balance since 2013. The majority of these investments was made by medium-sized and small banks. Note that not all receivable investments are credit circling, but we believe it should make up a notable portion. We summarize the structure of banks’ receivable investments in Figure 38.

  The NBFI here could be any trust company, broker, fund subsidiary or insurance company. We believe brokers and fund subsidiaries should be the key players, as their bond trading leverage in the interbank bond market is much higher than other participants (Figure 37).

  

  

   

  Case #2: Bank credit circling via corporates

  Corporate loans may circle back into the banking system as well. This is because many corporates use borrowed but idle cash to buy bank WMPs. Below is a simple example:

  • Firstly, Bank A makes a loan to a corporate.
  • Secondly, the corporate uses the loan proceeds to buy a wealth management product issued by Bank A.
  • Thirdly, Bank A invests the WMP fund in a financial bond issued by Bank B. This corporate deposit would circle back to the banking system as a non-core liability.
  • To make this process economic, in many cases it would require leverage. The corporate borrowing cost may be at 4%, but the financial bond issued by Bank B may only yield 3.5%. To compensate the yield shortage, Bank A has to entrust the WMP fund to a third party and to leverage up by pledging the bonds through repo transactions. This process is called entrusted investment (“Weiwai” in Chinese, or entrusting to an external party).

  This type of transaction is not an individual case. As shown in Figure 39, corporates purchased Rmb7.7tr WMPs in 1H16. This accounted for 7% of total corporate debt in China, or 29% of total WMP AUM in the system. SOEs, large private corporate and listed companies enjoy ample bank lending resources with low interest cost. However, the lack of attractive investment projects in their own business prompts them to invest in the financial market (i.e. bank WMPs).

  

  

  

• Visualizing The World's Deepest Oil Well

  In the world’s deepest gold mine, workers will venture 2.5 miles (4 km) below the Earth’s surface to extract from a 30-inch (0.8m) wide vein of gold-rich ore.

  While these depths are impressive, Visual Capitalist's Jeff Desjardins notes that mining is limited by the frailty of the human body. Going much deeper would be incredibly dangerous, as limitations such as heat, humidity, logistics, and potential seismic activity all become more intense.

  Luckily, the oil industry does not have such human obstacles, and drilling deep into the Earth’s crust is instead limited by a different set of circumstances – how deep can the machinery and technology go before the unfathomable heat and pressure renders it inoperable?

  THE WORLD’S DEEPEST OIL WELL

  Today’s infographic comes to us from Fuel Fighter, and it helps to visualize the mind-boggling depths of the world’s deepest oil well, which is located in a remote corner of eastern Russia.

  

  Courtesy of: Visual Capitalist

   

  The world’s deepest oil well, known as Z-44 Chayvo, goes over 40,000 ft (12 km) into the ground – equal to 15 Burj Khalifas (the tallest skyscraper) stacked on top of each other. That’s also equal to 2x the record height for air balloon flight.

  Perhaps more importantly to the operator, Exxon Neftegas Ltd., the wells on this shelf are expected to produce a total of 2.3 billion barrels of oil.

  THAT’S SOME SERIOUS DEPTH

  Before the Z-44 Chayvo Well and other holes like it were drilled on the eastern side of Russia, the famous Kola Superdeep Borehole held the record for drill depth.

  Located in western Russia, this time just 10 km from the border with Norway, the Kola Superdeep Borehole was rumored to have been discontinued in 1992 because it actually reached “hell” itself. At its most extreme depth, the drill had pierced a super-hot cavity, and scientists thought they heard the screams of “damned souls”.

  All folklore aside, the Kola Superdeep Borehole is super interesting in its own right. It revealed many important things about our planet, and it still holds the record today for depth below the surface.

  

  

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• McCain: "The New World Order Is Under Enormous Strain"

  It was a bumper day for John McCain when on Friday Donald Trump’s Republican nemesis gloated as Trump’s “art of the deal” collapsed in the last minute, after the President and Ryan-led effort to repeal Obamacare suffered what appears to be a terminal setback. In the wake of Trump’s misfortune, McCain renewed his calls on Friday for a return to a legacy neocon status quo, when speaking at the Brussels forum, said that the world “cries out for American and European leadership” through the EU and Nato, and said that the EU and the US needed to develop “more cooperation, more connectivity”.

  

  In a “new world order under enormous strain” and in “the titanic struggle with forces of radicalism … we can’t stand by and lament, we’ve got to be involved,” said McCain who is now chairman of the armed services committee in the US Senate, quoted by the EU Observer. “I trust the EU,” he said, defending an opposite view from that of US president Donald Trump, who said in January that the UK “was so smart in getting out” of the EU and that Nato was “obsolete”. He said that the EU was “one of the most important alliances” for the US and that the EU and Nato were “the best two sums in history”, which have maintained peace for the last 70 years.

  Further attacking Trump’s global worldview, McCan said that “we need to rely on Nato and have a Nato that adjusts to new challenges.” He noted that “the EU has too many bureaucrats, not much bureaucracy,” but added that “it’s not the only place on earth with that problem.” He said that he was “still wondering what the overall effect of Brexit will be” and that he did not know “if this is the beginning of a serious problem for the EU”. McCain did not disagree, however, with Trump’s demand that European countries increase their defense spending for Nato.

  McCain also revealed he hasn’t met the President Donald Trump in person since he took office, and he urged Trump to reach out to his opponents—Democratic and otherwise—ala Ronald Reagan if he wants to repeal Obamacare. “Do some outreach. Get to know some of these Democratic leaders,” he said. “You can find common ground.” McCain said he’d met Trump “some years ago” when he was a businessman, but had not met him since. McCain said he did speak “almost daily” to National Security Adviser Lt. Gen. H.R. McMaster and Defense Secretary Jim Mattis, however.

  “He doesn’t seem to be that upset that he’s not talking to him,” said German Marshall Fund’s Derek Chollet, a former Obama Pentagon official. “He’s trying to run U.S. defense policy through Mattis and effectively ignore Trump.”

  That said, McCain also said it was “too early” to pass judgment on his presidency, although his series of critical comments in recent weeks have demonstrated his growing skepticism about the Trump administration.

  Furthermore, while McCain said he was “very pleased” by Trump’s picks for his national security team – despite suggesting that they were being bypassed by more ideological and less competent people – he took the opportunity to attack Trump’s decisionmaking, saying “the question is: who does the president listen to, who drives the tweets at 6 in morning?”, he said.Asked whether he thought that “Russia owns a significant part of the White House,” he said: “I don’t worry about that.”

  The unspoken suggestion: Russia.

  What worries McCain, he said, was “the Russian role in our elections”, even if he admitted that he has seen “no evidence they succeeded” in affecting the outcome of last year’s US vote. Noting that Russia was now trying to influence elections in France and in Germany, he said that if it succeeded it would be “a death warrant for democracy”.

  “It’s an act of destruction that is certainly more lethal than dropping some bombs,” he insisted. McCain, a Russia hawk, said that Putin wanted to restore the Russian empire: “He wants the Baltics, he has taken Crimea, he’s been in Ukraine.”

   

  “These are KBG thugs, my friends,” he said, referring to the former Russian spy service for which Putin used to work. He added that the US needed to “respond accordingly”. He said however that there was “nothing wrong” if Trump met Putin.

  “I’m not against meeting,” he said, reminding the Brussels forum that US presidents met Soviet leaders during the Cold War. But he added that “the best way to go to a meeting is with a strong hand” and that was not the case for the US right now.

  

  

• Pepe Escobar: Daesh, Creature Of The West

  Authored Op-Ed by Pepe Escobar via SputnikNews.com,

  James Shea, Deputy Assistant Secretary of Emerging Threats at NATO – now that’s a lovely title – recently gave a talk at a private club in London on the Islamic State/Daesh. Shea, as many will remember, made his name as NATO’s spokesman during the NATO war on Yugoslavia in 1999.

  After his talk Shea engaged in a debate with a source I very much treasure. The source later gave me the lowdown. 

  According to Saudi intelligence, Daesh was invented by the US government – in Camp Bacca, near the Kuwait border, as many will remember — to essentially finish off the Shiite-majority Nouri al-Maliki government in Baghdad.

  It didn’t happen this way, of course. Then, years later, in the summer of 2014, Daesh routed the Iraqi Army on its way to conquer Mosul. The Iraqi Army fled. Daesh operatives then annexed ultra-modern weapons that took US instructors from six to twelve months to train the Iraqis in and…surprise! Daesh incorporated the weapons in their arsenals in 24 hours.

  In the end, Shea frankly admitted to the source that Gen David Petraeus, conductor of the much-lauded 2007 surge, had trained these Sunnis now part of Daesh in Anbar province in Iraq.

  Saudi intelligence still maintains that these Iraqi Sunnis were not US-trained – as Shea confirmed – because the Shiites in power in Baghdad didn’t allow it. Not true. The fact is the Daesh core – most of them former commanders and soldiers in Saddam Hussein’s army — is indeed a US-trained militia.

  True to form, at the end of the debate, Shea went on to blame Russia for absolutely everything that’s happening today – including Daesh terror. 

  Mr. Sykes and Monsieur Picot, you’re dead

  Now let’s go back to the proclamation of the Daesh Caliphate in June 29, 2014. That was choreographed as a symbolic abolition of the Sykes-Picot border that split the Middle East a century ago. At the same time, abandoning the option of a military push to take Baghdad, Daesh chose to regionalize and internationalize the fight, creating their own transnational state and denouncing regional states as “impostors”. All that coupled with the amp up of any chaos strategy capable of horrifying Western public opinion. 

  For large swathes of a Sunni Arab audience, this was powerful stuff. Daesh was proclaiming themselves, in a warped manner, as the sole real heir of the different Arab Springs; the only totally autonomous regional movement, depending exclusively on its own local base, made up of numerous Bedouin tribes.

  But how did we get here?

  Let’s go back once again – now to Iraq in the 1990s, during the Clinton era. The strategic logic at the time spelled out an instrumentalization of UN resolutions — with Washington de facto controlling Iraq’s oil, manipulating the price as a means of pressure over trade competitors much more dependent on Iraqi oil such as China, Japan and selected European nations.

  9/11 turned this state of affairs upside down – leading to the 2003 neocon ideological stupidity and subsequent amateurism managing an occupation in total ignorance of history and the ultra-complex dynamics between the Iraqi state and society. Saddam Hussein was the de facto last avatar of a political arrangement invented by imperial Britain in 1920. With the invasion and occupation, the Iraq state collapsed. And the Cheney regime had no clue what to do with it.

  There was no Sunni alternative. So Plan B, under major pressure by Shiites and Kurds, was to give voice to the majority. The problem is political parties ended up being religious and ethnic parties. The partition of power, Lebanese-style — Shiites, Sunnis and Kurds – turned out to be a dysfunctional nightmare. 

  Between 2005 and 2008, this American attempt to rebuild the Iraqi state yielded a horrendous confessional civil war between Sunnis and Shiites. The Sunnis lost. And that largely explains the subsequent success of Daesh in creating a “Sunniland”.

  The US occupation-Arab Spring love affair

  Now let’s turn to the Syrian version of the Arab Spring in February/March 2011. Initial protests against Assad’s iron rule were peaceful – multi-communitarian and multi-confessional. But soon anti-Alawite rancor started to radicalize a significant part of the Sunni majority.

  As historian Pierre-Jean Luizard, a specialist in Iraq, Syria and Lebanon at the French CNRS reminds us, Syria was the favorite land of Hanbalism – a most conservative branch of Sunni Islam that highly influenced the emergence of Wahhabism in the Arabian Peninsula. That implies a virulent anti-Shiism. Thus the emergence among the Syrian armed opposition of multiple Salafi-jihadi groups, most of all Jabhat al-Nusra – a.k.a. al-Qaeda in Syria. 

  Meanwhile, Assad fine-tuned a message to the West and his own Sunni bourgeoisie oscillating between allegiance and dissidence; it’s me, or chaos. Chaos ensued, anyway; horrendous structural violence, all-around institutional decrepitude, total territorial fragmentation. 

  So it’s fair to argue that both US occupation and the Syrian Arab Spring ended up producing the same result. With some differences; in Iraq, Daesh enjoys the (silent) support of a majority of Sunni Arabs. In Syria, Sunnis are divided; Daesh may rule the desert — Bedouin culture, but it’s Jabhat al-Nusra that captured significant Sunni support in big urban centers such as Aleppo. In Iraq, the borders between the three large communities – Sunni, Shiite, Kurd – are more or less frozen. In Syria, it’s a never-ending jigsaw puzzle.

  What happens next is a mystery. The de facto independence of Iraq Kurdistan may solidify. The Baghdad government may increasingly represent only Shiites. Yet it’s hard to see Daesh consolidating its control of Sunni Iraq – not with the ongoing Battle of Mosul.

  Blowback rules the wilderness of mirrors

  It’s easy to dismiss Daesh as the apex of barbarian cultural idiosyncrasies. Even wallowing in gruesomeness, Daesh has been able to project a universalist dimension beyond its Sunni Arab Middle Eastern base. It’s like the clash of civilizations playing in a wilderness of mirrors. Daesh amplifies the clash not between East and West, or the Arab world and the Atlanticist hegemon, but mostly between a certain (warped) conception of Islam and assorted infidels. Daesh “welcomes” everyone, even Catholic Europeans while persecuting Arab infidels and bad Muslims.

  It’s no wonder the Caliphate — a concrete utopia on the ground – finds an echo among young lone wolves living in the West. Because Daesh insists on the colonial Franco-British – and then neocolonial American — history of Muslims being trampled upon by a dominating, infidel West, they manage to channel a diffuse sentiment of injustice among the young.

  Everyone – US, France, Britain, Russia, Iran — is now at war with Daesh (Turkey only half-heartedly, as well as the House of Saud and the GCC petrodollar gang; for them this not a priority.)

  But this is a war without a serious political long-term perspective. No one is discussing the place for Sunni Arabs in an Iraq dominated by the Shiite majority; how to put the Syrian state back together; or whether private donors to Daesh from Kuwait, Qatar, Saudi Arabia and the Emirates will simply disappear.

  The encirclement of Raqqa and the re-conquest of Mosul will mean absolutely nothing if the causes of Daesh’s initial success are not addressed. It starts with the West’s mission civilisatrice as the cover story for unbounded colonial domination, and it straddles the methodical, inexorable, slow motion American destruction of Iraq. Blowback will continue to reign over the wilderness of mirrors; an attack near the British Parliament by a knife-carrying lone wolf “soldier answering “its call” killing four people mirrored by US jets bombing a school near Raqqa killing thirty-three civilians.

  Petraeus may have trained them in the deserts of Al-Anbar. But most of all that rough beast, slouching towards Camp Bacca to be born, bore the touch of a Western mind.

  

  

• Trump Obamacare Repeal Blew Up Bigly Because of a House Divided Against Itself

  The following article by David Haggith is from The Great Recession Blog:

  

  Trump’s really big supporters openly grieved that the explosion of his emphatically promised Obamacare replacement bodes poorly for all of Trump’s plans. Fox’s Sean Hannity and Lou Dobb’s regaled the Republican party for failing to take the reins and lead now that the party finally has the chance to prove it can do what it has promised. Hannity stated that numerous high authorities told him this marks the end of any Obamacare repeal for 2017.

  This first attempt by Trump and his party to see if they can accomplish anything together was by everyone’s account (except Trump’s) a dismal failure. Even Paul Ryan, who drafted the plan that Trump endorsed, admitted the enormity of failure quite honestly. The least I can say for him (not being one who likes him in the slightest) is that he owned it.

  Ryan picked up the argument leveled against Republicans by Democrats when they were running congress, which said that it is easy to be an opposition party and simply stand against everything, but quite a different matter to be creative and actually govern. Democrats long argued that Republicans really have no plan to replace Obamacare that could possibly succeed — that they were all talk — and Republicans just proved them right. Since Republicans kept Democrats completely out of the discussion, it’s fair to say Republicans failed entirely on their own.

  Ryan failed embarrassingly, and I question whether his leadership will survive this failure, except for the fact that the faction most responsible for the failure (outside of Ryan himself) is the one that would likely seek his blood if Ryan had succeeded. Nevertheless, they cannot stand him and would probably join any other faction that now wants to bring him down.

  Trump failed bigly, too, because the truth is that he swore over and over to his supporters that he would get a “great” replacement through congress as one of his first orders of business. Granted he did not say he would succeed right away, but only that he would make it his first order of business. It is, however, now questionable that he will ever get a replacement through, much less a great one. He has three more years to try again, but a total failure within your own party to get your first order of business done, especially when it is something the entire Republican party has said it will do over and over for years and when you are in your honeymoon period, is no small failure.

  Ryan has manned up to that. The party needs to also. Trump blamed it on Democrats, but that actually is deplorable, because Trump knew every time he made the promise that he didn’t have a ghost of a chance at getting Democrat support, given how much he attacked them over the plan. How could he not know that unless he is delusional? The last group in the world that would help him repeal Obamacare would be Democrats. So, if the repeal’s failure is their fault, give that they were never even included in the discussion, the failure to realize the obvious — that they would never support him — was his own.

  Republicans could learn from this and do better, but it remains to be seen whether they are able and willing to learn. That requires humility, which is always scarce in congress. In the meantime, the failure to deliver Trump’s big promise of “immediate Obamacare repeal” is a death knell to the Trump Rally, and the clock is ticking against all of Trump’s plans.

  (It doesn’t guarantee that the stock market will immediately crash, though it easily could; but its rally days are over. My prediction last year was that the rally would end as soon as Trump and congress had to actually work together. That is when investors would be forced to grasp reality and see that nothing Trump has promised is anywhere near as likely to come to pass as they believe. That is when I expected they will start to let go of their Tumphoria. Candidate promises are easily made. Legislation is not, and congress has never been more divided. Neither has that congressional subset called Republicans.

   

  A house divided against itself

   

  Here is how it all came down.

  The proposed American Health Care Act (AHCA) died because the House Republican Conference (the official name for the entire Republican caucus in the House of Representatives) is divided into factions that aligned in three groups.  When the center group — the largest group of Republicans who solidly backed Paul Ryan’s bill — tried to move further right to appease the most conservative group, it lost votes from the group that is furthest left (more centrist with respect to American politics overall). There are nowhere near enough votes in the center group of Republicans to beat Democratic opposition, and compromise toward one faction lost the other; so no House majority could be built.

  It is hard to say exactly who was in each group because no vote was taken to put members on record, but this appears to be generally how things fell apart:

  1) By far the largest group would have consisted of the house’s largest conservative faction (172 members), known as the Republican Study Committee, probably joined by members of the House Republican Conference who do not identify with any particular faction. I’m talking here about the group that solidly supported President Trump and Speaker of the House Paul Ryan on the AHCA as originally drafted.

  The Republican Study Committee — formed in 1973 to keep an eye on the party’s moderate leadership during the Nixon-Ford years — is the House’s oldest active faction. It has allied itself over the years with the National Rifle Association, the Heritage Foundation, Focus on the Family, the religious right, Concerned Women for America, the conservative magazine National Review.  One might now categorize it as representing the center of the House Republican Conference (though the truest middle consists people who don’t belong to any faction).

  This caucus, as the House Republican Conference’s mainstay faction, has included such Republican luminaries as Vice President Dan Quayle, former Vice President Dick Cheney, Majority Leader Eric Cantor, former House Majority Leader Tom DeLay, and current Vice President Mike Pence. House Speaker John Boehner was not a member of the group.

  2) The smallest, rewest, and most conservative faction of the House Republican Conference, called the “Freedom Caucus,” was established in 2015 to battle then Speaker John Boehner, particularly to fight his approval of Obamacare (the Affordable Care Act). These members of congress can be seen as the present rabble rousers because this is the faction that was willing to shut down the government in the original fight against Obamacare. Naturally, this group remains set toward making sure Obamacare is completely repealed and is willing to shut down government again, including apparently the leader of the House and the President just to make sure Obamacare is fully repealed. Not compromising on abolishing Obamacare was more important to them than whether or not Trump succeeds by getting off to a strong start.

  The Freedom Caucus is tough enough that it forced John Boehner to remove his butt from the speaker’s cushion, which led to his exiting congress altogether, so Paul Ryan knows full well they could accomplish that again. This battle-hardened caucus embraces the tea party folks, but it is not the Tea Party Caucus, which is now nearly inactive because the official Tea Party Caucus was largely rejected by citizens in the tea party movement (including members of congress, such as Marco Rubio, who were elected by those citizens). It was rejected because the tea party movement saw the Tea Party Caucus as a Republican attempt to hijack a grass-roots movement. By nature, those who identify themselves as part of the tea party movement do not want to see their movement institutionalized or co-opted by the establishment.

  The Freedom Caucus currently has thirty-one members. The group that initially opposed the ACHA certainly included this faction and likely some of the Republicans’ more libertarian faction, formed by Representative Ron Paul, called the Liberty Caucus. These two factions overlap in membership. Michelle Bachman, for example, was a founder of the Tea Party Caucus (now largely subsumed by the Freedom Caucus) and a member of the Liberty Caucus.

  3) A larger faction of the House Republican Conference consists of about fifty people, who are the left-most Republicans in the House of Representatives (meaning only that they are moderates since no one in the Republican party is a leftist). This group was established in 1994 as the “Tuesday Group” when Republicans took control of the House under the more conservative leadership of Newt Gingrich. Gingrich rallied Republicans around his Contract with America. The Tuesday Group formed to resist Gingrich’s more conservative positioning of the Republican party.

  The actual battle went like this: Unquestionably, those aligned with the Freedom Caucus felt the original AHCA bill, as proposed by Paul Ryan, did not go far enough in repealing Obamacare. Therefore, the group of Republicans who were with Trump and Ryan modified the bill to strip out more of Obamacare by taking down some of its Medicaid provisions and other benefits in order go gain some of the more conservative votes. That resulted in those aligned with the Tuesday Group (the most moderate Republicans) feeling the bill now went further right than they could tolerate. As a result, the Republicans lost some moderate votes when they compromised to pick up more conservative votes, and they never gained all of the conservative votes. So, they could not find a majority that could agree on any bill, and they had already thumbed their noses at Democrats completely, so they certainly wouldn’t get any help there.

   

  Why Trump faces big-league troubles in enacting any of his stimulus plans

   

  As Lincoln said in quoting Jesus Christ, “A house divided against itself cannot stand.” (Lincoln was talking about government. Jesus was talking about the devil. Beg me to describe the difference.)

  One major accusation Democrats made against Republicans when Republicans ran an opposition government against Obama was that it is easy to simply be against everything. It is quite another job to govern — to have a clear vision, a good vision that will actually do something for America, and then to unite behind it. Anybody can oppose things without an idea in his or her head as to what will actually work to do some good.

  Now that he’s been knocked around by his own party, Paul Ryan co-opted the argument as his own: (See his comments at the start and then at the 6:30 time maker and especially 8:12 marker.)

   

   

  https://youtu.be/JDAphM1A228

   

   

  And this is exactly why Trump is going to have a hard time getting his legislation passed. Republicans could somewhat unite in opposing anything Democrats came up with because even enemies are known to unite around a common foe. However, the formation of the Freedom Caucus and its overthrow of John Boehner proves even that kind of unity is never complete and hard to achieve. Coming up with great ideas, which Trump entrusted to Ryan, and then uniting around something you can support, though not fully, is harder still.

  As the new opposition government, Democrats are solidly united against Trump, and the Republican party is too divided to create a large enough majority to overcome the Democrats. It has become increasingly divided since the tea-party movement began, so that will not easily change. It could change now that all Republicans should be able to see that, if they don’t unite around something, they will get nothing at all; but will it?

  The Freedom Caucus has not exactly shown itself to be a group that is amendable to softening its positions toward the party’s center, and the Tuesday Group, which might soften toward the party’s center, will never go as far right on anything as the Freedom Caucus demands. That said, other issues may be less polarizing than Obamacare, given that the Freedom Caucus largely formed around the intention of defeating Obamacare during the Boehner years.

  It took only took a matter of days for plan number one to fall embarrassingly flat on its face. That’s a bitter reality for both Trump and Ryan because promises to repeal and replace Obamacare or just abolish it entirely were the biggest and most frequent pledges heard from all Republicans. So, if they can’t get together on that …

  Trump also blinked on his get-tough negotiations with his own party. He said he was going to force a vote so that Republicans who voted against this repeal and replacement of parts of Obamacare would be held accountable on election day. He reneged and backed Ryan’s desire to simply pull the vote so that no one is held accountable and no one can see by what margin it actually failed. (Perhaps the failure was bigger than we know.)

  As a result, no one had to go on record as being the reason hope of an Obamacare repeal in 2017 failed. As Ryan announced in the video above, Obamacare now stands as the law of the land for the foreseeable future because Republicans could not find any plan around which they could form a congressional majority. (In other words, he will not approve another go at it in this session of congress because the votes are not there, nor is the hope of compromise; and any future party leader is going to be hesitant to take this battle on, seeing how Ryan got clobbered.)

  Due to a small faction demanding everything, no Republican got anything they could take back to their voters. Even strong supporters of President Trump like Lou Hobbs and Sean Hannity see this as a massive failure of the Republican House to accomplish anything:

   

   

  https://youtu.be/YbD4Cto4iF4

   

   

  As Hannity said to all congressional Republicans in the video above just before the bill’s final hour,

   

  It’s time for you to give the American people a bill that you have now promised them for almost eight years. I would argue tonight, Failure is not an option for the president of the United States and his first piece of legislation. If you don’t succeed, you will have nobody to blame but yourselves…. And here’s my message to you people in congress: For the love of God, after eight years, can you please do your job? Can you please find a way to work together? Can you please find a way to serve your country, not yourselves, not your re-election?

   

  They just couldn’t do it. They could not succeed even in the slightest compromise even with the promise that this was only phase one and more of their wishes would come later. Republicans now have all the reins of power, and they still accomplished nothing!

   

  What it all means for the Trump Rally

   

  This total fiasco — which was huge, really huge — demonstrates why I’ve said all along that Trump’s road to getting his plans enacted through congress, even with Republicans in control of both houses, is far from being the likelihood that has been priced into the stock market by the Trump Rally.

  While the AHCA defeat is not the end of the game for Trump’s plans, it shows exactly why I’ve said the Trump Rally is a clear case of irrational exuberance on the scale that precedes a major crash (said when writing about the stock market’s response to Trump’s stimulus plans back in December):

   

  Is the stock market irrational in its exuberance for shifting so much just because of Trump’s pledges, which are far, far from becoming reality? I think so. I haven’t even talked about Democrat resistance to Trump’s plans, and he’s already got resistance from the Republican leader of the senate…. That doesn’t mean the market won’t keep going up. Who knows what the maximum height or duration of irrational exuberance is (because who knows how crazy people can get); but I am certain of this much: the higher the stock market rockets upward on such irrationality, the harder it falls into the chasm of ever-growing debt from which it has been constructed…. There is nothing you’re going to do that can stop the markets (in stocks and bonds) from having their hangover when the bubbly stuff is over and irrational exuberance suddenly looks like delirium. Our greatest economic crashes have always happened when least expected. (“Irrational Exuberance in US Stock Market Grasps at 20K for Dow“)

   

  This past week proves the stock market was irrationally premature in rising to Trump’s stimulus talk. Trump has no possibility of any support from Democrats, who hate his guts on just about everything he stands for, and we have now seen proof that he has no majority support he can count on in his own party.

  This is one major reason I have refused to join those who believe things will and are now turning around economically because of Trump’s election, even though it has probably cost me readers (given that my audience is largely anti-establishment). For Trump’s plans to become reality, he has to build consensus around a plan that can save the economy, and he is far from either consensus or a plan that can save the economy from its fundamental flaws. The best his plan would do — if he could get it enacted — is pump it higher for a little longer. You can accomplish a little bit in the US by executive decree, but not much. Maybe Republicans will now join around a tax plan, but time is not on their side.

  So, my prediction remains that the economy, including the stock market, goes down this year for the numerous reasons I’ve given beyond the solitary reason that has just played out above. He hasn’t even started squaring off with the Democrat’s opposition. This one went down just from the opposition within his own party!

  It’s time to wake up and smell the ammonia!

  

• Colonel Shaffer: "I Believe This is Much Worse Than Watergate"

  The noose is tightening Obamafags. While you occupy yourselves by injecting heroin into your scrawny arms at one of your Antifa meetups, AG Sessions is preparing the groundwork to end the legacy of King Obama — sending him barreling towards a scandal far greater than anything Nixon ever did — crushing and poleaxing any hopes of rejuvenating the broken status of the democratic party.

  Here’s Tony Shaffer, former senior intelligence officer at the CIA, saying that the wiretapping scandal against Trump is ‘orders of magnitude’ worse than Watergate — alluding to Bob Woodward’s comments made earlier this week describing the offenses as being ‘felony level’ crimes that might wreak havoc throughout the former Obama administration.

  “This incidental, it’s accidental on purpose.’

  The unmasking of Trump and his cohorts means they specifically targeted him and his team. The political appointees at the CIA, aka black hats, aren’t laughing anymore.

  Meanwhile, continue to bask in your Obamacare victory. I’m certain the people will appreciate it going forward — as it cascades and cracks asunder amidst financial failure in the near term.

  Content originally generated at iBankCoin.com

  

• How The Surveillance Program Works, And Who Can Order It: Former Intel Chair Explains

  As the Russians-hacked-the-DNC narrative collapses, and evidence-less accusations of Trump-Putin relations fade fast, the circle of possible culprits behind the one crime that we know for sure that happened – the leaking of unmasked American's names in intelligence intercepts – is narrowing hour by hour.

  Former House intel chair Pete Hoekstra tells Fox Business, who could have ordered the wiretapping of Trump campaign and authorized the unmasking of Americans' names in the intercepts.

  Hoekstra goes on to tell The Wall Street Journal,

  "When I was chairman of the House Intelligence Committee, I was routinely involved in briefings as a member of the "Gang of Eight"—both parties' leaders in the House and Senate and on the intelligence committees. I cannot recall how many times I asked to see raw intelligence reporting and was refused because that stuff is just not made available to policy makers.

   

  But according to Mr. Nunes, such information made its way to the Obama White House before Inauguration Day. Few if any people working in the White House would ever need to see raw intelligence. Like intelligence committee members, they are typically consumers of intelligence products, not raw intelligence.

   

  The raw transcripts of masked persons – or unmasked persons, or U.S. persons who can be easily identified – making their way to the White House is very likely unprecedented. One can only imagine who, at that point, might be reading these reports. Valerie Jarrett? Susan Rice? Ben Rhodes? The president himself? We don't know, and the people who do aren't talking at the moment."

  The point here, as The Washington Examinder writes, assuming again that Nunes spoke truthfully in his presser, is that this could potentially become a huge story. This despite the extremely negative reaction that Nunes got from journalists on Twitter.

  If documents containing the unmasked names of Trump transition members were shared throughout the government, it would really be worrisome, as Nunes said it was. Intelligence agencies are generally supposed to avoid collecting information about Americans to the extent possible. Incidental collection happens, of course, because sometimes Americans talk to people under surveillance. But to share what is incidentally collected, on purpose, seems extraordinary, especially in this case, given Nunes' claims that the disclosures have little or no intelligence value, and that the information involved apparently has nothing to do with Russia or the Trump team's nefarious ties thereto.

  Even if what Trump said in the first place about having his wires tapped is only about 5 percent true (which is to say, it is completely false, but vaguely based on something factual), the story that Nunes outlined has real potential to be a big thing that blows up in the face of at least a few Obama administration officials. Assuming, of course, that Nunes represented the facts accurately.

  

  

• There Will Be Those Who Perish In The Next Crisis, And Those "Who Survive In Underground Luxury"

  Authored by Mac Slavo via SHTFplan.com,

  Ultimately, no one can stop what is coming.

  The haves and have nots of the next, gritty era of aftermath will be those who have the means to survive when the system has failed, and those who do not.

  For the wealthy, and prepper minded elite, hidden fortified layers purchased for insurance will preserve most of the luxuries of life above ground, and in the cities, even as society crumbles and burns to the ground.

  

  Others, without the means to purchase these luxuries, may have still set aside the necessary materials to live and thrive after a great collapse, where anything and everything from the electric grid, to the fuel supply to the food supply will fail.

  There will be tens of millions of starving, angry and bewildered people who face endangerment and extinction, and there will be a few who succeed not only in planning ahead, but in laying low enough to avoid being noticed and picked off by looters, marauders and misguided authorities.

  Finding the perfect location for your redoubt, and making your preps to get away if need be, amount to something of an art and a science. Nothing is guaranteed, everything has its advantages and disadvantaged, but just by doing anything at all, you’ll be way ahead of the masses.

  If the plans of the elite are anything to consider, they have decked out their bunkers with mementos and reminders of normal life, and not only enough to supplies not to feel the pain of a crumbling infrastructure, but to be distracted by the illusion of normalcy even in times of ultimate crisis.

  But ultimately, all successful redoubts invest in the means to provide for long-term survival and maximum self-sufficiency.

  As Health Nut News reports:

  Most “shelters” include enough food for a year or more, and many have hydroponic gardens to supplement. The developers also work hard to create “well-rounded communities with a range of skills necessary for long-term survival, from doctors to teachers.” (During the 2016 elections, Vivos received a flurry of interest in its shelters from both liberals and conservatives and completely sold out of spaces in its community shelters.)

   

  Many of the interiors are left as a blank slate so that each owner can create what they are looking for in terms of comfort and luxury- and it all comes at a cost. Base models can start at $25,000 and go up to almost $5 million dollars. Their footprints also vary from quaint to 5000 square feet.

  It isn’t just happening in the United States, but all over the world. And while the fastest growing part of this sector clearly caters to the rich and well adjusted, many shelters are also being constructed to house millions of masses during emergencies – at least in places like China, Switzerland and Russia.

  […] The Oppidum, billed as “the largest billionaire bunker in the world.” This top-secret facility, once a joint project between the former Soviet Union and Czechoslovakia (now the Czech Republic and Slovakia), was built over 10 years beginning in 1984. The premiere apocalypse dwelling is a place that billionaires can live out the horrors of the apocalypse- be it zombie or other- in luxury with every amenity you could ever hope for.

   

  […] Retail firm Survival Condos offers refuge at a re-purposed missile silo in Kansas, United States. The luxury apartments here are stacked underground and protected by blast doors designed to withstand explosions. Retail firm Survival Condos offers refuge at a re-purposed missile silo in Kansas, United States. The luxury apartments here are stacked underground and protected by blast doors designed to withstand explosions.”

   

  […] Vivos Europa One, in Rothenstein, is one of Germany’s largest repurposing projects. The 76-acre former Soviet bunker is capable of withstanding a nuclear blast, a direct plane crash or biological attack. It is being transformed into 34 five-star apartments, starting at 2,500 sq ft, which aim to protect the super-rich from any forthcoming apocalypse.

  Self-sustaining communities or networks of individuals can also plan around their budgets to make these concepts a reality. Many companies will customize and scale down projects to costs as low as $25,000… while basic home fortification and DIY applications can be done for much less money.

  In the end, those who prepared when nothing happened are only out what they invested on the principle of having a viable back-up insurance plan.

  But those who didn’t prepare for the worst when it did happen could very quickly lose everything they have, and many will perish during the next major crisis – which could be triggered at this point by almost anything.

  

  

• Priebus, Price Blamed For Healthcare Failure: NYT

  On Friday morning, when it was still unclear if the GOP would round up enough votes to pass the Republican healthcare proposal, we noted that Bloomberg reported that as a “Plan B” contingency plan, Trump was preparing to sacrifice Paul Ryan, to wit “several Trump associates have already laid groundwork to blame the speaker” as well as potentially Reince Priebus.

  Trump’s long-time friend, Newsmax CEO Chris Ruddy was quoted as saying “I think Paul Ryan did a major disservice to President Trump, I think the president was extremely courageous in taking on health care and trusted others to come through with a program he could sign off on. The President had confidence Paul Ryan would come up with a good plan and to me, it is disappointing.” Additionally, Bloomberg quoted a Trump associate who said that White House chief of staff Reince Priebus may also be imperiled.

  One day later, while the fate of Paul Ryan is still to be determined even as he will likely be responsible for setting the framework of Republican tax reform, the NYT confirms that the internal scapegoating has begun and that as hinted yesterday, the blame for the failure to get GOP support for ObamaCare repeal and replace legislation has increasingly fallen on White House chief of staff Reince Priebus and other top administration officials.  Specifically, the Times also reports that the blame for the legislative failure has fallen on Priebus, who was in charge of coordinating an initial plan on ObamaCare repeal with Speaker Paul Ryan, who for now appears to hve avoided Trump’s direct wrath. To wit:

  On Friday evening, a somewhat shellshocked president retreated to the White House residence to grieve and assign blame. He asked his advisers repeatedly: Whose fault was this? … Increasingly, that blame has fallen on Reince Priebus, the White House chief of staff, who coordinated the initial legislative strategy on the health care repeal with Speaker Paul D. Ryan, his close friend and a fellow Wisconsin native, according to three people briefed on the president’s recent discussions.

  Politico’s Tara Palmeri confirms as much:

  Source close to @POTUS says he’s being advised to replace @Reince45 & is open to possibility — healthcare was last straw

  — Tara Palmeri (@tarapalmeri) March 25, 2017

  //platform.twitter.com/widgets.js

  Health and Human Services Secretary Tom Price was also blamed for the failure, while the president was reportedly annoyed with Jared Kushner, his adviser and son-in-law, who returned to Washington on Friday from a family skiing trip in Colorado.

  Two other republican sources told the Times that Trump expressed annoyance that Kushner was absent during the vital discussions. A White House spokesman, however, denied that Trump was displeased with Kushner, according to CNN, which reported that Trump was “upset” by Kushner’s absence during the pivotal week. Kushner had said for weeks he thought supporting the GOP healthcare plan was a mistake, the Times added citing two sources,

  The report presents a different picture from Trump’s piblic posture, when both in his address to the media and on Twitter on Saturday morning, the president was quick to blame Democrats on Friday after Ryan pulled the GOP plan, repeating on various occasions that “ObamaCare will explode.” Several dozen Republicans had publicly opposed the plan, and Trump asserted that Democrats now “own ObamaCare.” The White House was also publicly supportive of Ryan’s efforts to rally support for the legislation, but West Wing aides told the Times they were “stunned” by the Speaker’s inability to master the politics of the GOP conference.

  

  

• "Policy Error" Is Back: Deutsche Warns Two Things Can Derail The Market's "Most Crowded Trades"

  Following the worst week for stocks since the US election, the reflation trade that was launched by the Trump election now appears solidly dead, with the dollar and commodities sliding, inflation expectations crumbling, and junk bonds – where investor euphoria had reached dramatic proportions – being hit the hardest. As Bank of America commented last Thursday, “the last few weeks we have seen wobbles in high yield; a full 2 months earlier than we anticipated. What began as the expected effects of rate risk on higher quality high yield bled to unexpected lower crude prices and a repricing of the Energy index by 87bp (5.98% to 6.85%) and has further morphed into an early second guessing of the optimism surrounding policy.”

  Shortly after this note, political uncertainty soared when Republicans failed to pass the healthcare bill, leading to questions over the passage of Trump’s tax reform. As explained on Friday, with Obamacare repeal on hiatus indefinitely, Republicans now have to find a $1 trillion offset in budget savings, or else Trump’s tax cut will have to be slashed by a similar cumulative amount: hardly a catalyst to restore confidence in the reflation trade.

  And yet, few are willing to throw in the towel on the most popular trade since November (which recently helped push the S&P to 2,400), and one bank went so far as to say that smooth sailing for Trumpflation remains: as Deutsche Bank’s Dominic Konstam wrote in his latest weekly fixed income piece, “we continue to expect higher yields and a steeper curve driven largely by tax reform and fiscal stimulus. We see scope for the Trump economic agenda to create a sort of “Keynesian accelerator” whereby a positive demand shock could induce greater domestic investment and, ultimately, higher productivity growth.”

  And yet, cracks are starting to appear in this most optimistic of theses, because on the very same page, Deutsche Bank, which has been one of the biggest supporters of the bullish implications of the reflation trade – and has been quite bearish on Treasuries as a result – admits that in addition to Trump, there is another potential source of policy error:

  There are naturally several avenues to policy error.

   

  The first and most prescient at the moment is failure to pass key elements of the Trump administration’s economic policy agenda.

   

  At the time of writing, markets seem inclined to look past the ongoing healthcare debate. The CBO’s scoring of Trumpcare’s savings relative to baseline has fallen from $337 billion to $180 billion, and anyway these “savings” are probably more material in providing a piggy bank to fund vote-winning amendments in the Senate debate than they are for funding corporate tax reform. Risk markets might flinch if Trumpcare fails to pass, but the far bigger deals for markets are tax reform and fiscal stimulus, and the experience of the Clinton administration suggests that an early misstep in healthcare won’t prevent the new administration from pivoting to other business. However, we note that the post election sell-off in bonds seems to presuppose a high probability that the administration will succeed in passing its legislative agenda,  and that the measures will work.

   

  Then there is the Fed. Aggressive hikes will push real yields and the dollar higher, both of which would be negative for commodities, breakevens, and risk more broadly.

   

  The dots tell us that the Fed hopes to get to 2% by the end of 2018, which would put real rates more or less at zero. We still see a strong chance that the Fed “misses” at least one hike priced by the dots along the way this year to take pressure off of real rates, the dollar, and risk assets.

  And while Deutsche Bank heavily hedged its cautious language, it is worth noting that as of the most recent Bank of America fund managers survey, virtually every trader is still on the same side of the Trumpflation trade, with managers themselves admitting that long USD, long banks, short TSYs remain the most crowded trades. That will not be the case for long if the dreaded “deflation monster” makes an appearance soon.

  

  Furthermore, should sentiment indeed be shifting – as Deutsche Bank’s statement indicates – and should the market begin to reprice the threat of “policy error”, there is a long way to go before all of these massively stretched trades renormalize.

  

  

• Turkish Hackers Threaten To Wipe Millions Of iPhones; Demand Ransom From Apple

  Apple can’t seem to catch a break lately.  Yesterday we noted the latest WikiLeaks release which exposed yet another CIA spying scandal, this time revolving around efforts to bug “factory fresh” iPhones before they even reach the hands of consumers (see “Wikileaks Releases “NightSkies 1.2”: Proof CIA Bugs “Factory Fresh” iPhones“).

  Also included in this release is the manual for the CIA’s “NightSkies 1.2” a “beacon/loader/implant tool” for the Apple iPhone. Noteworthy is that NightSkies had reached 1.2 by 2008, and is expressly designed to be physically installed onto factory fresh iPhones. i.e the CIA has been infecting the iPhone supply chain of its targets since at least 2008.

   

  While CIA assets are sometimes used to physically infect systems in the custody of a target it is likely that many CIA physical access attacks have infected the targeted organization’s supply chain including by interdicting mail orders and other shipments (opening, infecting, and resending) leaving the United States or otherwise.

  Today, courtesy of CIO, we learn that a group of hackers referring to themselves as the “Turkish Crime Family”, has been in direct contact with Apple and is demanding a $150,000 ransom by April 7th or they will proceed to wipe as many as 600 million apple devices for which they allegedly have passwords.

  The group said via email that it has had a database of about 519 million iCloud credentials for some time, but did not attempt to sell it until now. The interest for such accounts on the black market has been low due to security measures Apple has put in place in recent years, it said.

   

  Since announcing its plan to wipe devices associated with iCloud accounts, the group claimed that other hackers have stepped forward and shared additional account credentials with them, putting the current number it holds at over 627 million.

   

  According to the hackers, over 220 million of these credentials have been verified to work and provide access to iCloud accounts that don’t have security measures like two-factor authentication turned on.

  Of course, if credible, with an ask of just $150k, this is the most modest group of hackers we’ve ever come across.

  

   

  News website Motherboard reported seeing alleged emails between the hackers and Apple in which a member of the company’s security team said that the company does not plan to reward cybercriminals for breaking the law and that the communications have been archived and sent to the authorities.

  Meanwhile, the hackers apparently told CIO the ransom demand was intended to “spread awareness” for their ‘boys’ who got caught up in the Yahoo hacking scandal and likely face severe sentences. 

  “We are doing this because we can and mainly to spread awareness for Karim Baratov and Kerem Albayrak, which both are being detained for the Yahoo hack and one of them is most probably facing heavy sentencing in America,” a representative for the group said via email. “Kerem Albayrak on the other hand is being accused of listing the database for sale online.”

   

  The representative said that the group’s members are originally from Istanbul, Turkey, but that they now “rep” Green Lanes, an area in North London.

   

  Karim Baratov, a Canadian national, was indicted last week for allegedly hacking into email accounts at various email providers at the request of two officers from the Russian Federal Security Service, the FSB. The same indictment accuses the two FSB officers and a Russian hacker for breaking into Yahoo’s infrastructure and gaining access to over 500 million Yahoo accounts.

  As a concluding note, and not to suggest in any way that we’re experts on the subject matter, we would tend to question the underlying ‘value’ of a password database that could be rendered instantly useless by a forced password update from Apple…just a thought on negotiating tactics for future reference.

  

  

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• Alex Jones Acquiesces to Alefantis, Broadcasts Apology to Comet Ping Pong for Covering Pizzagate

  The head conspiracy theorist has surrendered to a cadre of heavy hitting D.C. lawyers, employed by the humble pizza parlor keeper, James Alefantis.

  Earlier this week, Alefantis’ former gay lover, David Brock from Media Matters and Shareblue, suffered a heart attack. Today, Alex Jones had a change of heart, especially in light of recent events that has placed Infowars.com in Facebook’s fake news genre and Adroll refusing to do business with him — likely due to his political leanings and fake news label, placed on him by the leftist media.

  Here’s Jones apologizing several times to James Alefontis and Comet Ping Pong and anyone else he might’ve offended.

  This video is, all of a sudden, trending on Youtube — #28 and rising.

  

  It’s over.

  Here is one of the more prominent Pizzagaters, David Seaman, responding to Jones’ apology.
  

  Content originally generated at iBankCoin.com

   

  

• Watch These Geopolitical Flashpoints Carefully

  Authored by Brandon Smith via Alt-Market.com,

  

  Anyone who has been involved in alternative geopolitical and economic analysis for a decent length of time understands that the establishment power structure thrives according to its ability to either exploit natural crises, or to engineer fabricated crises.

  This is not that hard to comprehend, but for some reason there are a lot of people out there who simply assume that global sea-change events just happen “at random,” that the elites are stupid or oblivious, and that all outcomes are a matter of random chance rather than being directed or manipulated.  I call these people “intellectual idiots,” because they believe they are applying logic to every scenario but they are sabotaged by an inherent bias which causes them to deny the potential for “conspiracy.”

  To clarify, their logic folds in on itself and becomes faulty.  They believe themselves objective, but they abandon objectivity when they staunchly refuse to consider the possibility of covert influence by organized special interests. When you internally dismiss the possibility of a thing, no amount of evidence will ever convince you of its reality.  This is how the “smartest” people in the room can end up being the dumbest people in the room.

  In the survivalist community there is a philosophy – there is no such thing as a crisis for those who are prepared. This is true for prepared individuals as much as it is true for prepared communities and prepared nations. The only way a society can fall is when it becomes willfully ignorant of potential outcomes and refuses to organize against them.

  By extension, it would make sense that by being prepared for a particular crisis or outcome an individual or group could not only survive, but also profit. It is not crazy or outlandish to entertain the idea that there are groups in power (perhaps for many generations) that aggressively seek to predict or even force particular outcomes in geopolitics for their own profit. And, by profit, I do not necessarily mean material wealth. In many cases, the power of influence and psychological sway over the masses might be considered a far greater prize than money or property.

  You can buy slaves or purchase the means to make demands of people at gunpoint, but you cannot put a price on fealty or adoration. This is what establishment elites ultimately want – voluntary servitude from the populace. They want us to beg for their leadership rather than begrudgingly accept it under threat.

  To this end, a Hegelian model of problem – reaction – solution is required. You cannot influence people to volunteer for servitude and submission unless they are sufficiently terrified of the alternative.

  The globalists tend to use what I call a “scattershot effect” when it comes to creating or managing chaos. They set the stage for multiple flashpoints around the world and wait to see which of them works and which of them fails. If you have enough of these flashpoints in place, statistically there is a high probability that at least some of them will succeed. We saw this in obvious form a few years ago when covert intelligence agencies instigated the “Arab Spring” insurgencies in Libya and Egypt among other nations, along with the funding and training of terrorist groups in Libya and Jordan that went on to become ISIS in Syria and Iraq, and at nearly the same time we had elitist lapdogs like John McCain in both Syria and Ukraine helping to foment unrest and civil war.

  All of these engineered events created a wave of global instability that exists to this day. Not only this, but one successfully executed flashpoint has the ability to give birth to dozens of new flashpoints. They tend to spread, like a cancer.

  That said, some flashpoints are more dangerous than others.  Here are just a few of the events I consider the most volatile right now.

  U.S. Debt Ceiling Battle Ahead?

  I realize we have seen this many times in the past eight years under the Obama administration; extreme media hype over possible conflict between Republicans and Democrats in extending the ongoing debt ceiling problem for another couple of months or another couple of years. In every instance, Republicans feigned attempts to reduce government spending and then rolled over to extend. The entire fight was purely theatrical and likely meant to distract the public.

  However, in this instance, certain elements are very different.

  With the deadline of March 15^th crossed, the clock is ticking on remaining funds and “extraordinary measures” designed to stretch the federal budget until a vote on a debt ceiling extension can take place. Funds are predicted to last perhaps until this fall. Treasury Secretary Steven Mnuchin, a Goldman Sachs alumni, has of course asked congress for a quick vote to raise the ceiling.  This is rather counter to Donald Trump’s original position that constant national debt increases are “embarrassing” to Republicans.

  Given, it is not Trump’s fault that he inherits the most massively inflated liability bubble in U.S. history after Barack Obama nearly doubled the national debt during his tenure (an incredible feat, to be sure). But, this does not change the reality that the U.S. is far beyond its means to balance the budget or maintain the current level of spending. And, I would remind everyone that the official debt does not even including the trillions in ongoing costs associated with entitlement programs or social security.

  With U.S. debt at a breaking point, it would seem prudent to institute considerable spending cuts. Of course, where those cuts are applied may become the excuse needed to drive the debt ceiling debate into crisis this time around.

  I am not at all surprised that Democratic senate minority leader Chuck Schumer has recently vowed to throw the debt ceiling talks into disarray if Trump continues to pursue a rollback of Obamacare, the building of the southern border wall, or the defunding of Planned Parenthood. Schumer has specifically warned of a government shutdown designed to prevent the Trump administration from instituting such policies.

  So, you can see why this particular debt ceiling fiasco might be different. With Trump in office, establishment elites do have a perfect opportunity to sow fiscal chaos and scapegoat conservatives in the process. Whether they will follow through or not remains to be seen…

  North Korean Wildcard Returns?

  They’re baaaaaaaack! Yes, North Korea pops up out of the geopolitical ether every two-three years or so to flood the mainstream media with headlines of apocalypse. Every new missile advancement or rocket test by Pyongyang conjures images of ICBMs and mushroom clouds. North Korea appears to be the globalist “ace in the hole” at times. If they ever need a war, North Korea is more than happy to oblige. If they ever need a villain to place at the forefront of a false flag terrorist attack, North Korea is a perfect candidate. And, with North Korea’s “unique” relationship with China, the diplomatic situation and potential for widespread conflict becomes even more tenuous.

  Like the debt ceiling, we have seen numerous instances of heightened tensions with North Korea fizzle out, overblown by the MSM and the Pentagon, perhaps to remind the world why we should continue to be afraid. That said, again, this time feels different.

  Secretary of State Rex Tillerson has stated quite blatantly that pre-emptive strikes against North Korea are immediately on the table. Meaning, the mere hint of a threat, whether real or imagined, could be used as a rational to strike kinetically. Not economically, or diplomatically, but a full bore shooting war.

  Do I think this is possible? This time, yes, more than ever before. If Trump is to be used by the establishment as a scapegoat for collapse as I predicted long before his election, then a situation must occur in which overt military force abroad and at home is solidified. War is the smokescreen by which terrorism, whether real or state sponsored, flourishes.  Martial law being the inevitable result. War can also be blamed for an economic crisis that was already many years in the making. And, war strains and destroys diplomatic ties with peripheral nations, causing more economic distress.

  A conflict with North Korea does offer the globalists a perfect petri dish for directed chaos.

  Oil Market Crash Returns?

  There are many economic analysts out there that are still waiting for an oil market “crash,” and it is baffling to me why they have not realize that the crash in oil markets has already happened. American oil consumption has been falling off the map since 2008. Projections of oil usage made by the Energy Information Administration have been way off the past several years.  Global increases in demand are also stalling.

  While the mainstream media and OPEC hyperfocus on supply and production, the real culprit behind the global oil glut is something that they do not want to address – collapsing consumption. This is why, despite OPEC oil cuts (if they are legitimate), prices have remained static and are now falling once again. Add to this the reality that certain producer nations have been lying about the level of cuts instituted, and yet another oil market reversal will take place.

  The initial oil price collapse from over $100 per barrel to around $30 per barrel was an incredible crash, yet no one seems to want to call it a crash.  Today, the price of around $50 a barrel is barely enough for the industry to break even in most cases. As I have been warning since last year, the $20 jump is temporary. OPEC cuts are minimal, if they are even being implemented at all, and demand continues to falter. Slow consumption plus inadequately adjusted production equals price deflation. There is no way around this fact.

  Why does oil matter?  This should be apparent to most people, but the stability of entire nations and regions relies heavily on the stability of the oil market.  In particular, the U.S. dollar’s world reserve status is tied inexorably to the fact that it is also the petro-currency. Oil market chaos will no doubt lead to a dump of the dollar itself. In fact, the last time oil fell into the $30 per barrel range, Saudi Arabia openly threatened to begin efforts to decouple from the dollar and shift into a basket of currencies as a means for international oil trade.

  The mainstream media tried to bury this story as “empty posturing,” and I think many MSM economists are actually stupid enough to believe that Saudi Arabia dropping the dollar as the petro-standard is inconsequential. What they do not consider is that where Saudi Arabia goes, most other oil producers will follow.

  The U.S. economy cannot survive without the dollar’s world reserve status, and by extension its petro-status. A dump of the dollar by OPEC nations would be absolutely devastating. This is why I highly suggest people take note of oil prices carefully this year, and not underestimate their importance to the wider geopolitical picture.

  Resurgence Of Terrorism?

  In my article 'Globalists Want To Destroy Conservative Principles – But They Need Our Help', I predicted increasing terrorist attacks over the course of the spring in Europe and the US.  I have also recently predicted that if there is a resurgence of terrorism in the EU, Marine Le Pen will win the French presidency.  So far there have been multiple small attacks in France, sporadic riots throughout the EU, and now the latest murders outside the UK Parliament.  Such attacks have not yet been sparked again in the U.S., but I still expect that these events will increase before summer.

  Terrorism in itself does not necessarily represent a "geopolitical flashpoint" unless we are talking about something on the scale of 9/11, but it does tend to act as a building catalyst for other major government and social shifts.  The rise of what the globalists call "populism" (their favorite scapegoat now for every crisis under the sun including crises that have been gestating for nearly a decade) could be directly linked in part to the forced mass immigration programs in the EU and the U.S., as well as expanding terrorism.  Every attack will bring certain western nations ever closer to a more nationalist government.

  As this process continues, the danger of globalists and central banks pulling the plug on stock market support surges.  From terrorism, to populism to economic collapse – this is the narrative that the public will be sold in the near future.  It is a narrative that could scar the world for generations to come if we do not continue to expose the REAL internationlist culprits behind our ongoing fiscal instability.

  Standing Watch

  Whenever any alternative analyst writes an article concerning threat assessment, we fully expect that some dimwits out there will jump to the accusation of “doom and gloom.” I’m not sure that anyone really takes them seriously, but let’s think critically for a moment, shall we?

  Civilization is fragile and finite. It always has been and most likely always will be. The continuation of peace and stability, even at a micro-level such as a neighborhood or a town, requires vigilance and preparedness. Governments spend billions on think-tanks and working groups whose sole function is threat assessment. They might only be assessing threats to the power elite and not the citizenry, but they exist all the same. No one accuses these think tanks of “doom and gloom” whenever they present an analysis that is not the most optimistic.

  I hardly see how it is logical to deny the common public the right to our own “think-tanks,” or to be skeptical of our current “stability.” The fact of the matter is, alternative analysts (myself included) have been proven right time and time again in our predictions and warnings, all while mainstream analysts regurgitating endless false optimism have been proven indelibly wrong. We do not promote “doom and gloom.” We present reality.

  Great social and political changes never happen in a vacuum. There are always triggers and warning signs.  Sometimes these events are naturally occurring, sometimes they are created. In either case, to stay watchful and mindful is pure common sense. This does not mean we need to be in a state of constant panic. On the contrary, as I mentioned in the beginning of this article, the prepared have no need to panic.

  

  

• Here Are The Reasons Why Today's Republican Debacle Makes Tax Reform Less Likely

  With Americans now “stuck with Obamacare for the foreseeable future“, attention shifts to Trump’s next agenda item: tax reform.

  This was confirmed by none other than the President himself who moments ago said that “Republicans will probably work on tax reform now.” To be sure, following today’s embarrassing fiasco, Trump will be eager to move on to a law which will be easier to pass, and according to market consensus, tax reform is precisely that. Alas, consensus may once again be wrong.

  Ignoring the fact that work on tax reform in earnest won’t start for 6-8 weeks as House Ways and Means member Merchant said moments ago, and may not even take place until fiscal 2018 (after August), the reality is that since Obamacare and tax reform are both parts of the Reconciliation process, as a result of not freeing up hundreds of billions from the deficit that the CBO estimated repealing Obamacare would do, it means that Trump’s tax cuts have been hobbled – by as much as $500 billion – before even starting.

  Furthermore, with the Freedom Caucus flexing its muscle and openly defying Trump, another major headache for Trump’s tax reform is that the Bordere Adjustment Tax – an aspect of the reform that the Caucus has been vocally against – is likely off the table. And since BAT was expected to generate over $1 trillion in government revenues, it means that a matched amount in tax cuts is also now off the table.

  In summary, between Obamacare repeal and BAT being scrapped, roughly $1.5 trillion in budget “buffers” are wiped out.

  And yet, when news hit that Obamacare repeal has failed, stocks surged, arguably on traders’ belief that this will accelerate tax reform. Alas, in addition to the above, Axios lists another four reasons why today’s healthcare debacle spells trouble for tax reform.

  • We now know that Congressional Republicans are willing to buck Trump and leadership on big-ticket legislative items.
  • Republicans will need to keep working on healthcare reform, even though Trump says that he’s done with it. They’ve campaigned for years on killing Obamacare, and can’t head into the mid-terms without giving it another go. Particularly when they keep insisting that the current scheme is collapsing?
  • CBO said that the Republican healthcare bill would shrink long-term budget deficits by hundreds of billions of dollars. Without it, filling the tax revenue hole becomes harder.
  • Sean Spicer today said repeatedly that Trump had talked to “everyone” and listened to “all” ideas, which reflects zero consideration of Congressional Democrats. If such sentiment persists ? it just raises the degree of difficulty for tax reform, particularly if the White House doesn’t change its position on keeping corporate tax reform tied to personal tax reform.

  Finally, here is Goldman’s persepctive. Despite the realities above, Jan Hatzius is his typically optimistic self about the potential for Trump’s agenda.

  Preliminary discussions on tax reform could begin soon but we do not expect legislative action on tax reform until June. This week’s events do not change our expectation that tax legislation will be enacted within the next year and actually suggest that enactment could come slightly sooner than we previously expected.

   

  1. The American Health Care Act (AHCA) has no path forward for now. House Republicans appear unable to reach a consensus on any bill to repeal the Affordable Care Act (ACA, or “Obamacare”); we believe reaching a consensus among Senate Republicans would have been even more difficult in any case. This would appear to signal an end to the Republican effort to repeal the Affordable Care Act (ACA). That said, addressing health care in some way will be politically necessary, so we do expect health legislation to be considered again at some point later this year or next year.

   

  2. Other issues must be addressed before Republican leaders can shift their full focus to tax legislation. The Senate is expected to consider the nomination of Judge Neil Gorsuch to the Supreme Court the week of April 3, which raises the risk of a Democratic filibuster, which Republicans might counter with a controversial rules change (the so-called “nuclear option” for Supreme Court nominations). Following a two-week recess, Congress will return the week of April 24 to consider extending spending authority, which expires April 28; inclusion of funding for the President’s proposed border wall would raise the risk of a government shutdown.

   

  3. Congress will also need to address the FY18 budget resolution before it can act on tax reform. This is necessary to provide the “reconciliation instructions” that allow Republicans to pass tax legislation with only 51 votes in the Senate (and therefore no Democratic support). As we have noted before, reaching an agreement on the FY budget resolution will not be easy; in the past, conservatives have demanded a balanced budget within ten years but this would require endorsing spending cuts (in non-binding form) that some centrist Republicans might oppose.

   

  4. Tax reform will probably not begin to move through the legislative process until June. In light of the other issues described above, we would not expect the House Ways and Means Committee to vote on a tax reform bill until late May (less likely) or June (more likely). The Committee is unlikely to release a detailed proposal until they are ready to vote, so details regarding the House proposal may not be known for at least another two months or so.

   

  5. Enactment of tax legislation looks just as likely as it did before this week. The health bill faced much different challenges than tax legislation will face. While the health bill would have reduced benefits (tax credits and Medicaid eligibility) and the deficit, the tax bill is likely to provide new benefits (tax cuts) and will probably increase the deficit. Ultimately, we believe that there will be broad support among Republicans in Congress for legislation that reduces the corporate tax rate and cuts personal taxes modestly.

   

  6. However, the defeat of the health bill indicates that complex and controversial tax reforms are likely to be difficult to pass and we note that the “Freedom Caucus” that opposed the health bill also opposes some of the most controversial aspects of the House Republican tax blueprint, like the border-adjusted tax (BAT). This suggests congressional Republicans might scale back their ambitions on tax reform, and pursue a simpler tax cut that includes selected reform elements (e.g. changes to the taxation of foreign profits of US multinationals and profit repatriation).

   

  7. The timing on tax legislation might be pulled slightly forward. Compared to our prior expectation that a tax bill would not be enacted before Q4 2017 and could easily slip to early 2018, with the health issue no longer in play, our central expectation remains that it will be enacted in Q4 2017. However, the risk to that timing now appears more evenly balanced, since there no longer appears to be a risk that the health debate will drag out for several more months.

  However, if today’s events are any indication (and weighting item 6 above more heavily than Goldman), don’t hold your breath for a law being concluded this calendar year.

  

  

• China Bans Buying Of Hong Kong Property On Credit Cards

  In China's latest effort to control capital flight, authorities have banned Chinese citizens from buying property in Hong Kong using their credit cards.The use of Chinese credit cards to pay for a portion of property transactions is widespread in Hong Kong.

  

  Willy Liu, chief executive of local real estate agent Ricacorp, said 15-20 per cent of new property buyers were mainland Chinese. The majority use UnionPay cards to pay for 5 per cent of the home price as a mortgage deposit in Hong Kong. Most of those transactions are worth at least HK$500,000 ($64,371), Mr Liu said, surpassing the $50,000 annual limit for personal foreign exchange imposed by China’s regulators.

  UnionPay cards have been a common conduit for mainland Chinese to move cash offshore, and the company has sought to shutter those channels. In October, it said it had barred the use of its credit and debit cards to purchase investment-linked insurance products.

  And so, as The FT reports, Beijing has stepped up curbs on capital flight by banning this use of cards for real estate deals…

  UnionPay, China’s sole clearing house for bank card transactions, told property agents in the city that customers would no longer be allowed to swipe their cards for real estate transactions.

   

  “It is strictly prohibited to use a UnionPay card issued in Mainland China for cross-border acquisition of property”, UnionPay said on Friday.

   

  The crackdown by the state-controlled company comes as regulators grow anxious over the level of China’s foreign exchange reserves, which in January dipped below $3tn for the first time in five years.

  Finally, while this is yet another effort by Chinese authorities to control capital flight (which we note seems to be something the Chinese are absolutely desperate to do, while western mainstream media keeps pumping the Chinese investment, growth narrative), it also seems like a common-sense cap of the madness of Chinese trend-following crowds.

  

  

• Trump On What Happens Next: "Obamacare Will Explode"

  After the Republican ObamaCare replacement bill failed to generate enough Republican support to pass a House vote Friday, President Trump announced his planned path forward: “Let ObamaCare explode.” 

  Having insisted there is no Plan B in case the bill failed, the White House found itself in a situation with no backup plan now. “We’re going to go back and figure out what the next steps are,” House Speaker Paul Ryan told reporters at a press conference just minutes after the shocking news that the GOP was pulling the bill hit the wires. Ryan called the failure of his bill “a setback, no two ways about it.” Looking forward, Ryan said Obamacare is “going to remain the law of the land until it’s replaced. We didn’t have the votes to replace this law. So yeah, we’re going to be living with ObamaCare for the foreseeable future.”

  A disappointed and embarrassed House Energy and Commerce Committee chairman Greg Walden was blunt with reporters: “This bill’s done.”

  In a statement to the media, Trump said that if things get bad enough, Democrats will come aboard the reform effort. At that point, Trump said, it will become possible to pass a bill even better than Ryan’s. “They’re going to reach out whenever they’re ready.”

  Until then, Trump said that “we were very close and it was a very, very tight margin. We had no Democrat support. We had no votes from the Democrats. They weren’t going to give us a single vote so it’s a very difficult thing to do.”

  Putting a positive spin on events, Trump then said that “I’ve been saying for the last year and a half that the best thing we can do politically speaking is let ObamaCare explode,” Trump said of the path forward. “It is exploding right now. Many states have big problems, almost all states have big problems. I was in Tennessee the other day and they’ve lost half of their state in terms of an insurer. They have no insurer. And that’s happening to many other places.”

  “I was in Kentucky the other day and similar things are happening,” he continued. “So, ObamaCare is exploding with no Democrat support. We couldn’t quite get there with just a very small number of votes short in terms of getting our bill passed.”

  “People will see how bad it is and it’s getting much worse,” Trump added. “I said the other day when President Obama left, ’17, he knew he wasn’t going to be here. ’17 is going to be a very bad year for ObamaCare, very, very bad. You’re going to have explosive premium increases and your deductibles are so high people don’t even get to use it.”

  “But we’re very, very close,” he said. “And, again, I think what will happen is ObamaCare, unfortunately, will explode.”

  Trump also said the losers from Friday’s failed vote are Democrats. “The losers are Nancy Pelosi and Chuck Schumer because now they own ObamaCare,” Trump said. “They own it, 100 percent own it. And this is not a Republican health care, this is not anything but a Democrat health care, and they have ObamaCare for a little while longer until it ceases to exist, which it will at some point in the near future.”

  Pelosi did not agree and called today’s aborted ObamaCare repeal a “great day for our country.”  “What happened on the floor,” she said, “is a victory for the American people.”

  “I don’t know what else to say other than ObamaCare is the law of the land,” Ryan told reporters late Friday. “It’s going to remain the law of the land until it’s replaced. We didn’t have the votes to replace this law. So yeah, we’re going to be living with ObamaCare for the foreseeable future.”

  

  

• Russophobia – Symptom Of US Implosion

  Authored by Finian Cunningha, via The Strategic Culture Foundation,

  

  There was a time when Russophobia served as an effective form of population control – used by the American ruling class in particular to command the general US population into patriotic loyalty. Not any longer. Now, Russophobia is a sign of weakness, of desperate implosion among the US ruling class from their own rotten, internal decay.

  This propaganda technique worked adequately well during the Cold War decades when the former Soviet Union could be easily demonized as «godless communism» and an «evil empire». Such stereotypes, no matter how false, could be sustained largely because of the monopoly control of Western media by governments and official regulators.

  The Soviet Union passed away more than a quarter of a century ago, but Russophobia among the US political class is more virulent than ever.

  This week it was evident from Congressional hearings in Washington into alleged Russian interference in US politics that large sections of American government and establishment media are fixated by Russophobia and a belief that Russia is a malign foreign adversary.

  However, the power of the Russophobia propaganda technique over the wider population seems to have greatly diminished from its Cold War heyday. This is partly due to more diverse global communications which challenge the previous Western monopoly for controlling narrative and perception. Contemporary Russophobia – demonizing Russian President Vladimir Putin or Russian military forces – does not have the same potency for scaring the Western public. Indeed, due to greater diversity in global news media sources, it is fair to say that «official» Western depictions of Russia as an enemy, for example allegedly about to invade Europe or allegedly interfering in electoral politics, are met with a healthy skepticism – if not ridicule by many Western citizens.

  What is increasingly apparent here is a gaping chasm between the political class and the wider public on the matter of Russophobia. This is true for Western countries generally, but especially in the US. The political class – the lawmakers in Washington and the mainstream news media – are frenzied by claims that Russia interfered in the US presidential elections and that Russia has some kind of sinister leverage on the presidency of Donald Trump.

  But this frenzy of Russophobia is not reflected among the wider public of ordinary American citizens. Rabid accusations that Russia hacked the computers of Trump’s Democrat rival Hillary Clinton to spread damaging information about her; that this alleged sabotage of American democracy was an «act of war»; that President Trump is guilty of «treason» by «colluding» with a «Russian influence campaign» – all of these sensational claims seem to be only a preoccupation of the privileged political class. Most ordinary Americans, concerned about making a living in a crumbling society, either don’t buy the claims or view them as idle chatter.

  Kremlin spokesman Dmitry Peskov this week dismissed the Congressional hearings into alleged Russian interference in US politics. He aptly said that US lawmakers and the corporate media have become «entangled» in their own fabrications. «They are trying to find evidence for conclusions that they have already made», said Peskov.

  Other suitable imagery is that the US political class are tilting at windmills, chasing their own tails, or running from their own shadows. There seems to be a collective delusional mindset.

  Unable to accept the reality that the governing structure of the US has lost legitimacy in the eyes of the people, that the people rebelled by electing an outsider in the form of business mogul-turned-politician Donald Trump, that the collapse of American traditional politics is due to the atrophy of its bankrupt capitalist economy over several decades – the ruling class have fabricated their own excuse for demise by blaming it all on Russia.

  The American ruling class cannot accept, or come to terms, with the fact of systemic failure in their own political system. The election of Trump is a symptom of this failure and the widespread disillusionment among voters towards the two-party train wreck of Republicans and Democrats. That is why the specter of Russian interference in the US political system had to be conjured up, by necessity, as a way of «explaining» the abject failure and the ensuing popular revolt.

  Russophobia was rehabilitated from the Cold War closet by the American political establishment to distract from the glaring internal collapse of American politics.

  The corrosive, self-destruction seems to know no bounds. James Comey, the head of the Federal Bureau of Investigation, told Congress this week that the White House is being probed for illicit contacts with Russia. This dramatic notice served by Comey was greeted with general approval by political opponents of the Trump administration, as well as by news media outlets.

  The New York Times said the FBI was in effect holding a «criminal investigation at the doorstep of the White House».

  Other news outlets are openly airing discussions on the probability of President Trump being impeached from office.

  The toxic political atmosphere of Russophobia in Washington is unprecedented. The Trump administration is being crippled at every turn from conducting normal political business under a toxic cloud of suspicion that it is guilty of treason from colluding with Russia.

  President Trump has run afoul with Republicans in Congress over his planned healthcare reforms because many Republicans are taking issue instead over the vaunted Russian probe.

  When Trump’s Secretary of State Rex Tillerson was reported to be skipping a NATO summit next month but was planning to visit Moscow later in the same month, the itinerary was interpreted as a sign of untoward Russian influence.

  What makes the spectacle of political infighting so unprecedented is that there is such little evidence to back up allegations of Trump-Russia collusion. It is preponderantly based on innuendo and anonymous leaks to the media, which are then recycled as «evidence».

  Devin Nunes, the ranking Republican on the House Intelligence Committee, said earlier this week that he has seen no actual evidence among classified documents indicating any collusion between the Trump campaign team and the Russian government.

  Even former senior intelligence officials, James Clapper and Michael Morell who are no friends of Trump, have lately admitted in media interviews that there is no such evidence.

  Yet, FBI chief James Comey told Congress that his agency was pursuing a potentially criminal investigation into the Trump administration, while at the same time not confirming or denying the existence of any evidence.

  And, as already noted, this declaration of open-ended snooping by Comey on the White House was met with avid approval by political opponents of Trump, both on Capitol Hill and in the corporate media.

  Let’s just assume for a moment that the whole Trump-Russia collusion story is indeed fake. That it is groundless, a figment of imagination. There are solid reasons to believe that is the case. But let’s just assume here that it is fake for the sake of argument.

  That then means that the Washington seat of government and the US presidency are tearing themselves apart in a futile civil war.

  The real war here is a power struggle within the US in the context of ruling parties no longer having legitimacy to govern.

  This is an American implosion. An historic Made-in-America meltdown. And Russophobia is but a symptom of the internal decay at the heart of US politics.

  

  

• US Debt of $20 Trillion Visualized In Stacks Of Physical Cash

  The faith and value of the US Dollar rests on the Government’s ability to repay its debt.

  $20,000,000,000,000 is a number so large that it is beyond comprehension for most.

  And so here it is stacks of dollar bills…

  Just remember “the money in the video has already been spent.”

  

  

• Why Precious Metals Will Protect Wealth During The Global Energy Collapse

  

  By the SRSrocco Report,

  There will be very few assets worth owning when the “Energy Collapse” begins in earnest.  Precious metals will be one of the few assets that will protect wealth as the U.S. and global oil industry disintegrates.

  I had the pleasure of being interviewed by Doug and Joe Hagmann
  about the upcoming energy collapse at what that will look like in the
  future.  Very few people truly understand how bad the situation will
  become as the low oil price continues to gut the U.S. and global oil
  industry.  Oil is the lifeblood of our economy.  In addition, a
  significant portion of the coal we use to generate electricity to power
  homes and business is transported by trucks constantly running up and
  down the interstates and highways.

  http://www.youtube.com/v/mbuKtVo2NI8

  LINK HERE: https://www.youtube.com/watch?v=mbuKtVo2NI8

  I explained in the interview that 99% of investors have their wealth in
  Stocks, Bonds and Real Estate.  These three assets will collapse along
  with the disintegration of the U.S. and global oil industries.  The
  reason physical gold and silver will protect wealth is because they are
  stores of “Economic Energy”, while Stocks, Bonds & Real Estate are
  “Energy IOU’s.”

  Lastly, if you haven’t checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

  Check back for new articles and updates at the SRSrocco Report.

  

• Canada Passes 'Blasphemy' Bill To Silence Critics Of Islam

  Despite polls showing that 71% of Canadians would not have voted for the measure, Canada's Parliament, with the strong backing of Justin Trudeau's Liberal government, passed a motion this week 201 to 91 that critics say singles out Islam for special protection. Tabled by Muslim liberal MP Iqra Khalid, M-103 urges the federal government to “condemn Islamophobia” and to “develop a whole-of-government approach to reducing or eliminating systemic racism and religious discrimination including Islamophobia.” The term “Islamophobia” is nowhere defined in the motion.

  A petition on CitizenGo asking MPs to stop the “restrictive ‘anti-blasphemy’” motion has been signed by 79,500 people.

  “This motion will encourage legislation that would criminalize speech deemed ‘islamophobic’ and lay the groundwork for imposing what is essentially a Sharia anti-blasphemy law on all of Canada,” the petition states.

   

  "If that happens, criticism of Islam would constitute a speech crime in Canada,” it states, adding that this “kind of content-based, viewpoint-discriminatory censorship is unacceptable in a Western liberal democracy.”

  

  As LifeSiteNews reports, while the motion does not change existing laws or create new ones, it empowers a committee to study the issue of “eliminating…Islamophobia” and the federal government to collect data on Islamic ‘hate crimes’ for further study.

  A Conservative alternative to the motion that condemned racism and discrimination against Muslims, Jews, Christians, and other religious groups — without including the word “Islamophobia” — was defeated by the Liberals in February. Liberals argued at that time that the Tories were simply trying to “water down” the very purpose of M-103, reported Huffington Post.

   

  A number of Conservatives running for the the party's leadership have been outspoken about the problems they see in M-103.

   

  Brad Trost said he could not support the motion because it “will only serve to strengthen extremist elements within the Muslim community itself that seek to preserve and promote their own form of hate and intolerance.” He added that any “serious plan to combat religious discrimination in Canada should include all faith groups, including Christians and Jews.”

   

  Pierre Lemieux said that Canadians should be wary of the language in the motion.

   

  “Do you have a valid concern about Islam? Do you disagree with Sharia Law? Uneasy about radical Islamic terrorism? The Liberals may very well classify you as Islamophobic,” he wrote in an email to supporters.

   

  Lemieux, who called on supporters to pressure MPs to force a recorded vote on M-103, called it a “great day for accountability and for freedom of speech in Canada” when almost two dozen MPs stood up on Tuesday to demand such accountability.

   

  Leadership contender Andrew Scheer also added his voice of opposition to the motion shortly before the vote, saying that it “could be interpreted as a step towards stifling free speech and legitimate criticism” of Islam.

   

  “M-103 is not inclusive. It singles out just one faith. I believe that all religions deserve the same level of respect and protection,” he wrote in an email to supporters.

   

  “I will be voting against it because I believe in Freedom of Speech,” he wrote.

  Finally, we leave it to Rebel Media's Faith Goldy to react to this attack on Canadians' most precious freedom– the freedom of speech

  

  

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• Six Dangerous Leftist Concepts

  Authored by ReturnOfKings.com via The Burning Platform,

  The left is intrinsically conflict-mongering. It always existed against a particular state of thing, whether real or fantasized. Early on, though, it dissimulated its conflictive essence by posing as positive or “progressive.” To this end, generations of leftists twisted language to give themselves a good appearance whereas the enemy-of-the-day looked to everyone like something really bad.

  Eighteenth century libertines claimed to defend “freedom” while faith became “fanaticism” and “superstition.” Later ones came across as “intellectuals” or siding with “the people.” Some manipulated the proclivity to empathy to pretend they were “oppressed” and thus entitled to sympathy when they were actually hateful, anti-middle-class Marxist or deviant family-hating lesbians.

  The whole theory of “progress” as one can find it in Marx—society ought to go from capitalism to an ideal communist society—is little more than wishful thinking, yet it worked tremendously for leftists eager to cast themselves into a self-favoring view of history. Marxist “progress” has been used to kill millions of innocent people, just like globalist or cultural Marxist “progress” serves to destroy white homelands. As long as people are entrapped into positive words masquerading and fostering grim realities, Leftism retains its grip over their minds.

  Here are some pseudo-positive concepts or buzzwords that are actual ploys for sinister projects.

  1. Equality

  Perhaps the most massive totem pole of it all. Written, shouted, used as a talisman an indefinite number of times, “equality” has been put forth to justify various mass killings from eighteenth century terror to twentieth century Bolshevism, and closer to us served to unleash female hypergamy and alien millions of young straight-white-males from the societies they should belong in.

  Equality exists in mathematics. A number can be equal to another because an abstract unit can be replaced with another abstract unit without change. Mathematical equality exists because abstract units are identical with each other. Outside from the realm of pure quantity, qualitative differences emerge, and thus equality ought to be defined negatively as the absence of difference both in quantity and quality.

  It is easy to see that equality between individual beings—not numbers—is a fiction, an attempt to perceive individuals as abstractions or numbers, void of any quality, personality or specificity. Equalitarianism stems from a rather incomplete view of the beings it pretends to apply to, and gets quickly used as a mask for envy or the will to grab something or exert power over someone.

  Although equality can enter into the definition of true justice as equanimity—see Aristotle’s Nicomachean Ethics, quote—, more than often, the word is used to foster particular interests at the expense of the wider social equilibrium, to fan the flames of division and sedition, and later, to deny vocations, human biodiversity, complementarity as it implies differences in nature and functions, not to mention ugly tradeoffs where some manipulative group plays the victim or claims rights to what doesn’t belong to them.

  2. “Social” “justice”

  Are you a victim? Are you victim of a particular inequality? Then you are living an injustice, and this wrong ought to be compensated. This simple framing has been widely used by anti-white, anti-male, anti-Western leftists to create a feeling of victimhood among various social categories. They used this powerful feeling to mount new social identities, inspired from Marxist classes—feminism isn’t about femininity but about women identifying as a separate, adversarial group, whose interests would be antagonistic to men’s—, and perpetual charges hung over the majority’s heads—reyciss! Sexiss! And so on.

  “Social justice” covers a blending of several features: an accusatory, anti-white, anti-male, anti-Western narrative, that taints and darkens past history; a feeling of victimhood and class identity for so-called “minorities” integrated into the wider narrative; the systematic, and very real, disenfranchisement and displacement of the majority that finds itself condemned to play the role of the bad guy—and hence charged—in said narrative. In this sense, “social justice” is deeply divisive, defamatory, aggressive, and amounts to a Moloch that eats families, nationhood, and most men.

  Actual justice, call it social or not, is of course far from such a terrible conception. Methinks true justice should acknowledge the fact that we are the sons of the Western civilizations, its human substance and legitimate heirs, and that we have a prime right over it. We should have jobs, freedom of speech, protection over violent crowds, a right to fair judgment instead of getting screwed over by HR, “minority” impunity and pussy pass, a right to chances to thick relationships with at least some women instead of clowning our ways through hypergamy… Don’t forget we need to formalize at least some of our intuitions about what’s fair or not to replace the wicked theory of “justice” the Left shatters us with.

  3. “Progress” (and the “reactionaries”)

  This overrated buzzword has been straightforward long ago. Its Latin root, progressus, stems from the root verb gradior (walk, advance) and was mostly used in a military context, as in the sentence “the army is progressing into enemy territory.” Since then, it has been used analogically to qualify any advancement, even purely relative or fantasised ones.

  The Left, following pompous Philosophes and Marx, enshrined its own notion of progress into a general theory of history, thus making it absolute rather than relative. When various strands of modernity clash—for example, individual freedom and collective well-being—, which one is “progressive”? Each can be used to fulfill a particular notion of progress. Aside perhaps from blatant technological breakthroughs, “progress” is deeply relative. Even the most shining realizations of genius imply the sacrifice of thousands of potential choices that have been discarded during the process. The Left chose to forget this truth in order to judge everything and everyone from its own authoritarian, pedestalized perspective.

  If you do some research about such characters as, say, Ayn Rand and Lothrop Stoddard, you’ll notice they have been widely labelled “reactionary.” Yet each of them was a progressive in his own right. Rand considered industrial development and individual freedom as obvious landmarks of progress: she opposed vehemently to the environmentalist and collectivist—that is, anti-industrial, anti-economic growth, anti-conservative rights—as a “return of the primitive.”

  As for Lothrop Stoddard, he rebuffed Bolshevism and environmentalism as pre-scientific ratiocinations that willingly ignored human differences and the proper value of civilization. These “mistakes”, he said, are older than biological discoveries and stem from “degenerate” elements who would rather destroy civilization than letting it progress without them.

  The only new thing about Bolshevism is its ” rationalizing ” of rebellious emotions into an exceedingly insidious and persuasive philosophy of revolt which has not merely welded all the real social rebels, but has also deluded many misguided dupes, blind to what Bolshevism implies. (Stoddard, Revolt Against Civilization, chap.8)

  I also remember an old-fashioned Marxist who claimed feminism was “reactionary” because, he said, it comes from the wealthy and urbanized bourgeoisie, and hijacks the attention and care given to working classes for the benefit of actual exploiters. This guy’s progressivism has fallen out of grace, likely because it showed unable to destroy Western countries, but he is no less right according to his own logic.

  Now, of course, we could say that MRAs are the real progressives as men’s rights are a progress, or that asserting our identities and associated rights are a progress, perhaps more so than SJW savagery and unrestrained hypergamy.

  4. Openness or open-mindedness

  We all heard about how being “open to new ideas” and possibilities, or being “open-minded” was good. In practice, what the liberals mean when they talk about openness or open-minded is “be a Leftist and believe in our notion of progress.” You have to be uncritical, hyper-sympathetic towards the last tranny or BLM activist that whines about how mistreated and misunderstood he is—and if you are “open” to wasting your money on the latest trendy fashion, it is even better.

  But try being open-minded towards what the Left tags as “far right” or “extreme”, for example men’s right, race realism, skepticism on their dogmas such as anthropogenic global warming, or tradition… and it won’t be long before they shriek at you, in a typical display of rather irrational dirtiness psychology. “These ideas are impure! They are contagious!”

  Open-mindedness along their lines means being gullible to media and college propaganda. You have to let the managers and social engineers fabric your consent, as Chomsky would put it. They want your mind to be open so they can fulfill it with self-hate and garbage. When it comes to better things libtards suspend open-mindedness, to the point of refusing any objective inquiry and hiding behind their biased, accusatory rhetoric.

  In itself, openness or open-mindedness is a double-edged sword. It can, and should be used by those who are intelligent or morally structured enough to toy with potentially dangerous ideas. As to the others, those who are too easily tempted or misdirect by demagogues, especially women—who by their vote always favoured an anti-family, economy-devouring Big State—, the low-IQ and the unhinged, I think they should follow the lead of more qualified individuals.

  5. Modern nationhood and citizenship

  Since time immemorial peoples have been ethnocultural groups. Romans used the term natio to refer to a particular people, say, the Gaul, the Goths or the Basque. They also used the term civis to refer to a man as a member of his city, thus belonging to it.

  Both words have been emptied of their substantial meaning. “Nation” is now mostly used to denote an abstract, bureaucratized State whom anyone can be a national if the bureaucrats hand him a stamped piece of paper. “Citizenship” refers to the pretense to identify with a particular public responsibility or to a world under globalist power: Leftists often claim to be “just citizens” or speak “in the name of the citizens of X place” when they are actually carrying cultural warfare. Remember when a bunch of hateful swindlers tried to rob Sherry Spencer, Richard Spencer’s mom, of her real estate by forcing her to sell it at a cheap price? Complacent media said they were just citizens, or that “the town” was doing it. Yeah, sure.

  Citizenship today is a mean to virtue-signal when you are an urban elf. It has become empty, fictitious—it refers to a world of nowhere and more subtly to belonging to a globalist class that abandoned its actual fellow citizens or ethnic brothers long ago.

  6. “Social struggles” and “achievements”

  When they referred to actually good causes, such as trade unions maintaining a high standard of living for most workers and fostering a meritocratic middle-class, these words ringed well. Today, they seem to refer more to the unwarranted privileges of State officers—when theft through taxes and economic rent are presented as something “social.”

  The heroic epic of “social achievements”, which conveniently forgets that there is no free lunch and that if a particular segment of population benefits much from them it must be at the expense of the others, covers a host of barely examined ill effects. When it is used to glorify the welfare State, it forgets how such a State tends to disintegrate organic social life by taking away charity or generosity, how it fosters a big parasitic and paternalist State, how it allows females to destroy their families, or how it attracts immigrants eager to get a check and imposes unfair burdens on the productive citizens—I’m thinking about, say, the middle classes who paid for Obamacare, not about cutting taxes for Monsanto.

  Conclusion

  From fake smiles and cute façades to seemingly innocuous buzzwords such as “you go girl”, “sex positivity” or “self-acceptance” – which sounds better than complacency – the culture conflict-mongerers managed to push their disruptions and degeneration into normality. One step at a time, from actual normalcy to an alien nation, all this believing they were cool or on the good side of history.

  Shatter the illusion by explaining what stands behind and unveil the inner vacuity or potentially polymorphous use of the word. May progress not be “progress” and may the mainstream view of justice not be the anti-white, misandric “social justice.” They aren’t smarter than we are, just more manipulative.

  

  

• China's Largest Dairy Operator Suddenly Crashes 90% To Record Low, Muddy Waters Says "Worth Close To Zero"

  In December 2016, Muddy Waters’ Carson Block said China’s largest dairy farm operator, Hong-Kong listed China Huishan Dairy Holdings Co., is “worth close to zero” and questioned its profitability in a report. Today, with no catalyst, it suddenly almost is. The stock collapsed over 90% in minutes to a record low.

  The sudden crash wiped out about $4.2 billion in market value in the stock, which is a member of the MSCI China Index.

  

   

  In December, Muddy Waters alleged that Huishan had been overstating its spending on its cow farms by as much as 1.6 billion yuan to “support the company’s income statement.” The report also alleged that the company made an unannounced transfer of a subsidiary that owned at least four cow farms to an undisclosed related party and Muddy Waters concluded that Chairman Yang Kai controls the subsidiary and farms. Those findings came from several months of research including visits to 35 farms and five production facilities, drone flyovers of Huishan sites and interviews with alfalfa suppliers, according to the report. Muddy Waters said it has shorted Huishan’s stock.

  “It will be even harder for Huishan to get funded in the capital market after the report, amid a couple of earlier allegations that have raised some red flags to investors,” said Robin Yuen, an analyst at RHB OSK Securities Hong Kong Ltd. Still, Huishan’s shares and operations are unlikely to “collapse” due to its high share concentration and sufficient cash flow generated by its dairy business, he said by telephone.

  About 73 percent of Huishan’s shares are held by Champ Harvest Ltd., a company that’s in turn 90-percent owned by Yang. A buying spree by Yang had supported the shares last year, making it a painful trade for short sellers. A one-year rally of about 80 percent through a peak in June had made the shares expensive.

  Well that is all over now!!

  

  

• SNB Spent $68 Billion On Currency Manipulation In 2016

  While Donald Trump has repeatedly expressed his displeasure with China for manipulating its currency, he appears to have recently figured out that over the past 2 years Beijing has been spending hundreds of billions in dollar to strengthen, not weaken, the Yuan and to halt the ~$1 trillion in capital flight from China. But while everyone knows that the biggest currency manipulation in the world, and perhaps the Milky Way galaxy is Japan, which now owns 40% of all JGBs in its ongoing attempt to pressure the Yen lower and explains why Abe was trembling when he met with Trump, terrified the US president would tell him to stop, one place where Trump may want to look is Europe’s famously “neutral” country, which however continues to be quite bellicose when it comes to currency warfare. Overnight, the SNB announced that in 2016 it spent 67.1 billion Swiss francs, or $67.6 billion, to purchase foreign currencies in an effort to weaken its currency.

  The amount, published in the central bank’s annual report on Thursday, was roughly CHF20 billion lower than the 2015 total of 86.1 billion francs and a record of 188 billion spent in 2012. What is notable is that in 2015, the Swiss National Bank ended its 1.20 EURCHF peg, which ended up costing the SNB tens of billions in FX losses.

  As shown in the chart below, the SNB has used interventions for the better part of a decade to keep the franc, Europe’s preeminent flight to safety currency, in check and lessen the risk of deflation. After it gave up its currency cap in early 2015, the SNB has also relied on a negative deposit rate to counter appreciation pressure. It reaffirmed that two-pillar policy stance last week.

  

  Additionally, as part of its annual report, the SNB reported that at the end of 2016, the SNB’s assets hit a record CHF 747 billion, compared to CHF 641 billion the previous year, higher than the country’s total GDP. The central bank’s assets consisted almost exclusively of currency reserves, that is gold and foreign currency investments. Currency reserves were up by CHF 89 billion year-on-year to CHF 692 billion, principally due to inflows from foreign currency purchases and valuation gains.

  And since the SNB is the only central banks which admits it is an aggressive hedge fund, it also reports both the composition of its balance sheet and the return on assets, and in 2016 it generated a profit on currency reserves of 3.8%. Meanwhile, returns on gold and foreign exchange reserves were 11.1% and 3.3% respectively.

  

  What is paradoxical is that despite gold generating the SNB’s highest return not only in 2016 (11.1%) and over the entire 2002-2016 period, at 6.5%, the central bank has been aggressively reducing the relative size of its gold-denominated assets over the past 7 years, mostly as a result of purchases of USD-denominated stocks and bonds.

  

  In 2016, both fixed income investments and equities contributed to the SNB’s bottom line. On the other hand, the slight appreciation of the Swiss franc reduced the return.

  The SNB also revealed that in 2016, the SNB held 20% of its foreign exchange reserves in the form of equity investments. Measured in Swiss francs, the average annual return on equities since their introduction in 2005 has been 2.8%; the return on bonds has averaged 0.7%.

  

  Finally, for those confused that the SNB is so open about its purchases and holdings of mostly US stocks, this is how the central bank justifies its policy of active stock management:

  The contribution of equities to preserving the value of the currency reserves and building the SNB’s equity base has thus been very substantial during this period.

  We look forward to how this boilerplate language will change after the next equity market crash which will wipe out tens of billions in “value” from the SNB’s balance sheet.

  

  

• Paul Craig Roberts: "In America Today, Facts Cannot Compete With Lies"

  Authored by Paul Craig Roberts,

  Unable to provide an ounce of evidence that a Trump/Putin conspiracy stole the presidential election from Hillary Clinton, the corrupt US “intelligence” agencies are shifting their focus to social media and to Internet sites such as Alex Jones and Breitbart. Little doubt the FBI investigation will trickle down to Glenn Greenwald at The Intercept, Zero Hedge, the Ron Paul Institute, Nomi Prins, Naked Capitalism, Lew Rockwell, Global Research, antiwar.com, and to others on the PropOrNot, Harvard Library, and Le Monde lists, such as top Reagan administration officials David Stockman and myself. It is extraordinary that the FBI is so desperate to protect the budget of the military/security complex that it brings such embarrassment to itself. Who in the future will believe any FBI report or anything a FBI official says?

  Those behind this “investigation” understand that it is so ridiculous that they must give it gravity and credibility. They selected two reporters, Peter Stone and Greg Gordon, in the McClatchy News Washington Bureau, who fit Udo Ulfkotte’s definition of “bought journalists.” Hiding behind anonymous sources—“two people familiar with the inquiry” and “sources who spoke on condition of anonymity”—the presstitutes fell in with the attack on independent media, reporting that one former US intelligence official said: “This may be one of the most highly impactful information operations in the history of intelligence.” http://www.mcclatchydc.com/news/politics-government/white-house/article139695453.html

  Wow! A totally ridiculous “investigation” is one of the most important in history. The implication is that the Russians are operating through scores or hundreds of independent media sites to control how Americans vote.

  There was once a time in America when people were skeptical of anonymous sources. It was widely understood that anyone could tell a reporter anything and that a reporter could claim an anonymous source whether or not the source existed. Perhaps it was the Watergate “investigation” by the Washington Post that gave anonymity credibility. The Post’s reports made it sound like any sources ratting on Nixon’s perfidy was at risk of their lives, and the subtle emphasis on risk gave anonymity credibility.

  The real story under our noses is not a Trump/Putin/independent media conspiracy to steal the presidential election. The real story is the totally obvious collusion between the Hillary forces, the US print and TV media (with the partial exception of Fox News), and the CIA and FBI to steal the Democratic nomination from Bernie Sanders, the presidential election from Donald Trump, and to delegitimize Trump’s election.

  The theft of the nomination from Sanders is precisely what the leaked Podesta emails show. The totally one-sided presstitute support for Hillary and full-scale assault on Trump clearly show the presstitutes participation in the collusion. The extraordinary lies told in public by Obama’s CIA Director John Brennan clearly demonstrate the CIA’s lead in the attempted frame-up of Trump and his team. FBI Director Comey’s statement the day before the presidential election that the FBI had once again cleared Hillary of criminal charges sent the Dow up 371 points and set the stage for a Hillary election victory.

  Why are not any of these hard facts in the news?

  Why, instead, do the presstitutes and “intelligence” agencies report nothing but fake news, supported by anonymous “sources”? Why is a false reality being constructed, and the hard facts ignored?

  Note another extremely strange feature of our strange time. Elements of the liberal/progressive/left portray President Trump as a member of the One Percent operating for the One Percent against the people and filling his government up with generals and his budget with more military spending. Why then is Trump under full-scale assault from the military/security complex? Why are they working to contradict, delegitimize and impeach their own agent?

  If Americans were a thinking people, or even a people capable of thought, how could such inconsistent disinformation dominate public discussion?

  What we should be scared about is that in America today, facts cannot compete with lies.

  The McClatchy story describing a pointless investigation as one of the most important in history is working its way through the media. See:

  http://www.latimes.com/politics/washington/la-na-essential-washington-updates-some-right-wing-sites-under-1490115530-htmlstory.html

  http://dailycaller.com/2017/03/21/fbi-probing-breitbart-infowars-in-russian-influence-investigation/

  http://news.antiwar.com/2017/03/21/fbis-russia-probe-turns-focus-on-social-media-bots/print/

  Are we to conclude that America’s corrupt and disloyal “intelligence” agencies are a direct threat to democracy, that they are committed to overthrowing Trump’s presidency in a “color revolution,” that, unable to provide any evidence whatsoever for their conspiracy theory of a Trump/Putin collusion to steal the presidential election, the “intelligence” agencies have moved on to the discredit the independent Internet media that are in the way of the “intelligence” agencies’ control over explanations?

  It is a hard fact that the Democrats, US “intelligence,” and the presstitutes are absolutely determined to control the explanations given to the American people and the wider world.

  The Agents are out in force, and Neo is nowhere in sight.

  The demonization of Russia and the extraordinary level of tension that the ignorant and foolish Clinton, George W. Bush, and Obama regimes created with Russia are disconcerting, indeed, frightening to those, such as myself, Patrick Buchanan, and Stephen Cohen, who experienced the long decades of the Cold War. We have never seen such highly provocative, entirely gratuitous behavior of one nuclear power toward another as the behavior of the US toward Russia over the past six presidential terms. What the Cold Warriors of the time experienced was a gradual buildup of mutual trust that enabled Reagan and Gorbachev to end the Cold War and remove the threat of nuclear Armageddon.

  In contrast, the Clinton, Bush, and Obama regimes, the FBI, CIA, NSA, the New York Times, Washington Post, CNN, NPR, MSNBC, and the rest of the presstitutes, the right-wing Republicans, such as Lindsey Graham, John McCain, and Ben Sasse, the Democratic Party, and the liberal/progressive/left have convinced Russia, in the words of Russia’s President Putin, that “we cannot trust the United States.”

  This “achievement” of these idiots comprises the greatest crime humans have committed in their entire history. The atomic bombs with which the Americans gratuitously destroyed two Japanese cities are mere pop guns compared to the thermo-nuclear weapons of today. Some of the crazed neoconservatives erroneously believe that Russia is not sufficiently well-armed to respond to US aggression, but the fact of the matter is that Russia’s strategic weapons are superior and more powerful than those of the US.

  How can it be anything other than a death wish for European governments to be egging on conflict with Russia, for women marching not against war but against Trump for wanting to reduce tensions with Russia, for US “intelligence” to be totally committed to orchestrating a “Russian threat” that all but guarantees thermo-nuclear war? One would think that people would be marching in favor of reduced tensions with Russia and demanding that Trump deliver on this promise, not that they would be out opposing Trump. What is the importance of Identity Politics compared to nuclear war?

  How can Americans, Democrats, Republicans, Greens, Europeans, Canadians, Australians, New Zealanders, and Japanese contain their outrage against the governments that are putting the life of the planet at risk for nothing except the budget and power of the US military/security complex? Trump is silly to roll back environmental protections, but this pales in comparison to the environmental damage of thermo-nuclear war.

  How can the left-wing be lost in Identity Politics while the life of the planet is being put at extreme risk?

  Why did CounterPunch recently and suddenly abandon the working class and peace and take up the cause of the victim groups of Identity Politics— women, blacks, homosexuals, lesbians, transgendered, and Muslim refugees (see Eric Draitser CP, Vol. 24, No. 1), the cause of the EU and globalism (see http://www.counterpunch.org/2017/03/20/brexit-nationalism-and-the-damage-done/ ) which benefits only the One Percent, and the demonization of Trump and Putin? Perhaps it is only a coincidence, but CounterPunch’s collapse coincides with CP being put on and removed from the PropOrNot list of Russian agents/dupes. My columns, for years a welcome feature on CounterPunch, suddenly ceased to appear. We have had no explanation from CounterPunch why the site suddenly gave up on peace and bread.

  One might think that the audacity of the lies from the FBI, CIA, NSA and their media whores would provoke a powerful response from the liberal/progressive/left and from European populations, but it hasn’t.

  What about Trump himself? Has he been forced to abandon his goal of normal relations with Russia, as this article in the Intercept suggests? https://theintercept.com/2017/03/21/revolving-door-military/ If not, is Trump filling top Pentagon and Homeland Security positions with generals and defense contractors in order to neutralize the military from participating in a CIA/presstitute coup against him?

  If Trump is eliminated, with Pence as VP and the list of appointees provided by the Intercept, the US government will pass into the hands of the military/security complex for the remainder of its existence.

  Is Trump now focused on protecting himself instead of protecting all of us from a deadly conflict with Russia?

  If so, this is the achievement of the US “intelligence” services, the Democratic Party, right-wing Republicans, the presstitute media, and the liberal/progressive/left.

  If anyone remains to write the history of the Great Incineration, the identity of those responsible is completely clear.

  

  

• Death & Taxes… And Debt

  Nothing in this world is certain, except death and taxes… and $62,000 debt.

  

  According to December 2016 data provided to Credit.com by credit bureau Experian, 73% of consumers had outstanding debt when they were reported as dead.

  Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. Among the 73% of consumers who had debt when they died, about 68% had credit card balances.

  The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%). These were the average unpaid balances: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391.

  That’s a lot of debt, and, as Fox Business reports, it doesn’t just disappear when someone dies.

  For the most part, your debt dies with you, but that doesn’t mean it won’t affect the people you leave behind.

   

  “Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might.

   

  That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. (For example, federal student loan debt Opens a New Window. is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.)

   

  There are lots of ways things can get messy. Say your only asset is a home other people live in. That asset must be used to satisfy debts, whether it’s the mortgage on that home or a lot of credit card debt, meaning the people who live there may have to take over the mortgage, or your family may need to sell the home in order to pay creditors. Accounts with co-signers or co-applicants can also result in the debt falling on someone else’s shoulders. Community property states, where spouses share ownership of property, also handle debts acquired during a marriage a little differently.

  The bottom line – even after you're dead, debt servitude is stil an anchor around your neck.

  

  

• A New Trend Emerges – Digital Gold "Gifting" Gains Popularity In China

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

  

  I rarely write about gold these days, but the following from Reuters caught my attention.

  BEIJING/SHANGHAI, March 7, China’s virtual gifting market, typically the domain of plugged-in young consumers celebrating special occasions or flirting, is luring major financial institutions keen to boost trade of another auspicious commodity: gold.

   

  Tencent’s digital gold packets, known as “microgold”, are backed by the country’s biggest bank, Industrial and Commercial Bank of China (ICBC). They allow users to send funds that track the real-time value of gold to friends over the firm’s popular messaging platform WeChat.

   

  It’s a financial innovation on the concept of virtual gifts, such as digital roses and chocolates, more commonly used in online communities and which have more sentimental value than any tangible economic worth.

   

  For financial institutions, China’s booming virtual goods and smartphone-driven exchanges offer new markets to boost trading volumes in everything from banking services to gems.

   

  ICBC, in an internal memo seen by Reuters and sent to staff on Friday, said the WeChat microgold platform had helped drive “explosive growth” in new gold accounts.

   

  Over the recent Lunar New Year period, WeChat users sent 70,000 microgold packets worth just under 100 million yuan ($14.51 million) across the chat platform, the ICBC document said. It expects over 300,000 new gold accounts to be opened as a result of the Tencent tie-up. Neither ICBC nor Tencent were immediately available for comment.

   

  While the volumes are relatively small, the take-up of similar virtual products on the WeChat platform suggests room for growth.

   

  Kong Lingxin, a 20-year-old student from the northern city of Tianjin, uses her smartphone to buy, gift and hoard gold online.

   

  Kong has spent 10,000 yuan ($1,452.88) of her savings on gold derivative products this year on Alibaba Group Holding Ltd-linked platform “Cun Jinbao” – literally “store golden treasure”.

   

  “My family has a history of collecting gold bars, which influenced my choice of investment,” said Kong. “I chose an internet platform because it’s easy to track gold prices, see your profits and make trades.”

   

  Gold analysts said the push by tech firms into the sector, though still at an early stage, had potential longer-term to stir up a sluggish Asian market if it caught on.

   

  “It will become a support for gold demand and the gold price if WeChat gold packets become popular, considering the amount of traditional red envelopes users send,” said Guotai Junan gold analyst Xie Qingpeng.

   

  Beijing has taken note of the trend. The Ministry of Industry and Information Technology (MIIT) issued a guideline last week, calling for tech to play a bigger role in gold trading.

   

  Amid a property price spike, gold offers younger buyers a more affordable and accessible investment.

   

  “It’s nearly impossible for young people to invest in property in first tier cities in China. Alternatively, they put small amounts into gold, as a low risk investment,” said Helen Lao, Singapore-based metals analyst at Argonaut Securities.

  I think those last few lines will be a very important factor for gold demand going forward, as young Chinese with savings to protect struggle with where to put their money.

  Meanwhile, gold’s been pretty boring for a while now. I think that might change soon. As I tweeted earlier today.

  I feel like there's a decent amount of negativity and apathy with gold right now.
  Feels bullish.

  — Michael Krieger (@LibertyBlitz) March 23, 2017

  //platform.twitter.com/widgets.js

  

  

• Thursday Humor: Medicare Part G?

  Given today’s vote fiasco, this seemed highly appropriate…

  If you are an older senior citizen and can no longer take care of yourself and need Long-Term Care, but the government says there is no Nursing Home care available for you, what do you do?

   

  You may opt for Medicare Part G.

   

  • The plan gives anyone 75 or older a gun (Part G) and one bullet.
  • You may then shoot one worthless politician.
  • This means you will be sent to prison for the rest of your life where you will receive three meals a day, a roof over your head, central heating and air conditioning, cable TV, a library, and all the health care you need.
  • Need new teeth? No problem. Need glasses? That’s great. Need a hearing aid, new hip, knees, kidney, lungs, sex change, or heart? They are all covered!
  • As an added bonus, your kids can come and visit you at least as often as they do now!

   

  And, who will be paying for all of this? The same government that just told you they can’t afford for you to go into a nursing home.  And you will get rid of a useless politician while you are at it.

   

  And now, because you are a prisoner, you don’t have to pay any more income taxes!

   

  Is this a great country or what?

   

  
  

   

  Now that you have solved your senior Long-Term Care problem, enjoy the rest of your week!

  Source: Unknown

  

  

• Trump Issues An Ultimatum To House Republicans: Vote On Friday Or Obamacare Stays

  Update: Trump’s bluff may be working already. Following Trump’s ultimatum, Mark Meadows, chairman of the Freedom Caucus said that the healthcare bill has been improved, and that the Freedom Caucus will meet and discuss the revised bill. And while Meadows is maintaining a solid front for now, saying he is a “No” vote right now, with Trump having shone the spotlight fully on the Freedom Caucus, and thus providing republicans with a scapegoat should the vote fail tomorrow, we would not find it at all surprising if the Freedom Caucus were to fold overnight following “intense deliberations.”

  * * *

  Following a day of narrative twists and turns ahead of what was supposed to be a Thursday night vote to repeal Obamacare, a vote which was pulled in the last moment when over 30 conservative and moderate House republicans threatened to vote against the Ryan/Trump plan, Trump has had enough with the Freedom Caucus dissenters and has issued an informal ultimatum: vote to repeal Obamacare on Friday or Obamacare stays.

  Trump is demanding a vote Friday in the House on the Republican plan to repeal and replace Obamacare, White House Budget Director Mick Mulvaney said according to Reuters. If the bill fails, Trump is prepared to move on and leave Obamacare in place the budget director added.

  Trump officials meeting with the House GOP conference said Trump is done negotiating over the legislation, which was set to come up for a vote Thursday but was delayed.

  Mulvaney told the GOP conference that Trump wants a vote on Friday during a dramatic closed-door meeting, according to a GOP source in the room.  If the vote fails, Trump will move on to other priorities and ObamaCare will stay as the law of the land, Mulvaney said.

  There were last-minute changes being considered to the bill. But it was unclear whether the House of Representatives would be able to pass it, said North Carolina Congressman Mark Meadows, the chairman of a group of conservatives known as the Freedom Caucus, which has been critical of the bill. “I’m still optimistic” about reaching an agreement, Meadows told reporters.

  Having met with Paul Ryan on Thursday evening, Trump’s right hand man Steve Bannon told reporters after the House Republican conference that he expects lawmakers to vote Friday on the health-care bill. When asked if he’s confident there’s enough votes for passage: “We’re going to vote and we’ll see.”

  Rep. Chris Collins confirmed the Trump administration’s message after the meeting. Trump is done negotiating, he said.  “We have to have a vote tomorrow. He expects it to pass, but he’s moving on if for some reason it didn’t,” Collins said.

  According to The Hill, the developments set up a likely vote on the measure Friday afternoon.

  It remains unclear just how Trump’s ultimatum will change the minds of dozens of Republicans who have vowed to oppose the bill, putting them into a direct confrontation with their president. With all of the House’s Democrats expected to vote against the bill, the GOP can only afford 22 defections.

  Additionally, even if their replacement plan does eventually get approval from the House, the legislation faces an even tougher fight in the Republican-controlled Senate.

  Meanwhile, in a worst case scenario, in which the House votes tomorrow and fails to generate the needed majority of votes, it is unclear just how Trump can “move forward” under the reconciliation process, as tax reform is part and parcel with deficit-reducing – as scored by the CBO – Republican health bill. Should Trump push on, at best it will mean he has an even smaller tax cut cushion. Furthermore, should Trump further antagonize the Freedom Caucus, a far bigger problem for Trump and the government will be if the conservative wing refuses to budge on the debt ceiling negotiation, because should the US be unable to once again indefinitely extend the debt ceiling limit, the US will suddenly have far greater problems than repealing Obamacare.

  

  

• Chinese President Throws Weight Behind Israel/Palestine Peace, Two-State Solution

  Authored by James Holbrooks via TheAntiMedia.org,

  

  While hosting Israeli Prime Minister Benjamin Netanyahu in Beijing on Tuesday, Chinese President Xi Jinping called for peace between Israel and Palestine and said an independent Palestinian state should be established “as soon as possible.”

  “The conflict between Israel and Palestine has had a long lasting impact on the Middle East,” Xi said. “China appreciates that Israeli side will continue to tackle the Israeli-Palestinian issue on the issue of the ‘two-state solution.’”

  China’s premier, Li Keqiang, had warmly received the Israeli prime minister on Monday in Beijing’s Great Hall of the People.

  “The Chinese people and the Jewish people are both great peoples of the world,” Li said at the meeting.

  Netanyahu, similarly amenable, praised China as a world leader in technology and said there are many areas where the two nations can collaborate.

  “And I would like to have the opportunity to exchange views with you and to see how we can cooperate together for the advancement of security, peace and stability, and prosperity,” Netanyahu said Monday.

  He stuck to this note while speaking with the Chinese president on Tuesday.

  “We have always believed, as we discussed on my previous visit,” Netanyahu said, “that Israel can be a partner, a junior partner, but a perfect partner for China in the development of a variety of technologies that change the way we live, how long we live, how healthy we live, the water we drink, the food we eat, the milk that we drink — in every area.”

  In fact, in terms of trade, Netanyahu wants China to grant Israel a special status. Back in January, China set restrictions on its citizens’ overseas spending in an effort to boost domestic revenue. Now, the Israeli prime minister is asking China’s president for an economic waiver.

  “I asked for an exemption on the general restrictions,” Netanyahu told reporters after his meeting with Xi on Tuesday. “I said that Israel’s a special case. It’s a technology powerhouse that has no market. It has significance for technology but it doesn’t have any significance in terms of volume on markets or currencies, or anything. Israel is very big in technology but small in market weight.”

  The Israeli leader claims Xi is willing to go along with the idea, though no details of such an arrangement have been made public. Also unknown is whether such a deal would be contingent upon Israel seeking a peaceful two-state solution to its conflict with Palestine, as President Xi indicated Tuesday he supports.

  Netanyahu appeared to have no comment in response to Xi’s remarks about a two-state solution.

  In February, President Trump backed away from the White House’s long-purported goal of reaching that compromise, instead leaving the door open for whatever plan the two sides agree on.

  “If Israel and the Palestinians are happy, I’m happy with the one they like the best,” the U.S. president said.

  

  

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• Will Thursday's Final TLTRO Finally Spark Carry Trades?

  By Nick Kounis of ABN Amro

  Euro Rates Watch – Will the TLTRO spark carry trades?
  

  • The last of the ECB’s TLTRO-II operations is expected to have a big take up, with the market expecting EUR 125bn, and some forecasts as high as EUR 300bn
  • From a rates perspective, what matters is whether these funds will trigger flows into the bond or swap markets as banks set up carry trades
  • Carry trades have certainly looked attractive and currently there is a possible spread of around 80bp between the rate on the TLTRO and similar maturity peripheral bonds
  • However, there is little evidence that banks have used TLTRO-II funds for carry trades over the last few months
  • Eurozone bank government bond holdings have actually fallen sharply since the first TLTRO-II…
  • …while a very small proportion of banks said they would use the funds to buy assets in the ECB’s Bank Lending Survey
  • Finally, there was no discernible impact on government bond curves around the time of the TLTROs…
  • ….and only a temporary impact on swap spreads in one of the three operations
  • Overall, we doubt the last of the TLTRO’s will have a major lasting impact on bond or swap markets

  The impact of TLTRO-II on the eurozone rates market

  On Thursday, the ECB will hold its fourth tender under the TLTRO-II (Targeted Long-Term Refinancing Operations) programme. A large take-up is expected. A poll published by Reuters had a  median forecast of EUR 125bn net borrowing (EUR 141bn gross given banks will repay EUR 16.74bn), with estimates as high as EUR 300bn. From a rates perspective, what matters is whether these funds will trigger flows into the bond or swap markets as banks set up carry trades. Certainly, carry trades can be attractive. At the time of past operations there has been a possible spread of around 40bp between the rate on the TLTRO and similar maturity peripheral bonds. Currently this spread has risen to around 80bp, given the rise in peripheral yields. In this note we assess how likely it is that we will see a major impact on bond and swap markets by looking at the impact of the first three tenders, which saw a cumulative net take up of EUR 138bn. We first take a look at what banks have said about the uses of TLTRO funds in the ECB’s Bank Lending Survey. We go on to look at bank bond holdings. Finally, we analyse price movements in the bond and swap markets around the time of the TLTROs.

  

  Only a very small proportion of banks say they used TLTRO to buy assets

  The ECB’s Euro area Bank Lending Survey of January 2017 (see here) asked 134 banks about their participation in past TLTRO-II operations and the upcoming tender. In addition, the banks were questioned on their planned use of the funds (see charts below). Of the banks, 37% said they participated in the third TLTRO-II operation, which was lower than in the second tender (see graphs below). Meanwhile, 26% said they intended to participate in the upcoming TLTRO-II tender, while 42% was undecided and 32% indicated that they did not plan to participate. It is likely that more banks now intend to participate given it is final tender and market expectations of interest rate hikes have risen (see appendix). For the use of past TLTRO-II liquidity, banks revealed that they would use the cheap liquidity for granting loans (60%), to refinance other funding sources (24%), while only a very modest proportion said they intended to buy assets (9%). For tomorrow’s tender, a slightly higher proportion of the banks said they would engage in carry trades (13%).

  

  Eurozone government bond holdings have fallen

  The banks’ responses in the ECB survey appear to be corroborated in data on eurozone banks’ non-MFI bond holdings (see charts below). Eurozone banks’ bond holdings fell significantly between June of last year and  January of this year. Total bond holdings fell by EUR 153bn (-9.6%), while domestic bond holdings fell by EUR 124bn (-10.6%). The large absolute falls were seen in Spain and Italy, followed by France and Germany. If banks had  initiated carry trades by using TLTRO-II funds to invest in bonds, their bond holdings would have been expected to rise. Rather, a large buyer – the Eurosystem central banks – seems to have crowded them out of the market.

  

  Little discernible impact on bond or swap markets

  Finally, we find no major or sustained impact on bo nd or swap markets in the day surrounding the TLTRO-II operations. In the charts below, T is the TLRO-II settlement day for the various operations, and we show movements in swap and bond markets 5 days before and 5 days after. Carry trades would be expected to induce steepening as they would support the segment around 4-years. The left hand chart shows 5s10s ASW swap spreads. There was only temporary steepening around the time of the first TLTRO-II in June, while there was no visible impact in the September and December editions. In the run-up to this month’s TLTRO-II, we do see some steepening, as there appears to be some front running. But it is too early to say it trend will be sustained, given the experience of the swap market behaviour in the first three tenders. The right hand chart shows the average 4s8s spreads of Italian and Spanish government bonds. There is little evidence of bull steepening around any of the operations.

  

  No major sustained impact expected from last TLTRO-II

  The last of the TLTRO-II operations will probably see a large net take up of EUR 100bn or more. As discussed above, it would seem very attractive to invest TLTRO proceeds into especially peripheral government bonds  or to conduct carry trades by entering receiver swaps of similar maturities to the tender. However, there is little evidence that banks have done so up until now, even though it has always been relatively attractive. One  potential reason for this is that (especially peripheral) bank holdings of government bonds were already very large at the start of the TLTRO-II operations. They may feel uncomfortable adding to those holdings. Another reason is that by investing in assets, banks increase their balance sheets. This could be accompanied by higher regulatory costs which would make carry trades less profitable. Furthermore, there have been initiatives in Europe to risk-weight banks’ domestic government bond holdings. At the same time, investors have recently become more concerned about the fundamentals of certain sovereigns in the periphery,  especially once QE ends. Overall, we  doubt the last of the TLTRO’s will have a major lasting impact on bond or swap markets

  

• Economics Of The Standoff Between Turkey And The Netherlands

  Authored by Altay Atli via The Strategic Culture Foundation blog,

  

  As the diplomatic squabble between Turkey and the Netherlands continues to fester, concerns are raised about whether — and to what extent — the tensions will harm bilateral relations, particularly in economics where the two countries have robust trade and investment connections.

  For Turkey, the Netherlands offers a large and expanding export market. Trade between the two countries has roots in the 17th century when the Ottomans exported wool and cotton (later tobacco as well) to the Netherlands and imported clothes and linen in return. Commerce between the two countries remained strong into modern times; in 2016 the bilateral trade volume was US$6.6 billion.

  The Netherlands is the 10th largest export destination for Turkey, and perhaps more importantly from the Turkish perspective, it is also a fast-growing market. Last year Turkish exports to the Dutch market amounted to $3.6 billion, against $3 billion in imports. And while the annual increase in imports was 3.4%, exports expanded much faster, at 13.8%. For the Turkish economy, which is suffering an acute current-account deficit, the increasing trade surplus with the Dutch is a precious commodity.

  On the other side of the equation, Turkey is and has always been a favored destination for Dutch investment. A process that started in 1930 when the Dutch company Philips set up shop in the newly established Republic of Turkey has reached new levels since then, making the Netherlands by far the largest source of foreign direct investment in Turkey today. According to data by the Turkish Central Bank, Dutch investment stock in Turkey was $22 billion in 2016, compared with $11.2 billion in US investments in second place, and $9.8 billion from Austria in third place.

  Turkey is home to 2,700 companies funded by Dutch capital. This figure includes those transnational companies registered in the Netherlands for legal and tax-related purposes. This sizeable Dutch involvement in the Turkish economy benefits both sides. For Dutch multinationals such as Unilever, ING Bank, Philips, Perfetti, Royal Dutch Shell and Philip Morris, Turkey is not only a favorable production base but also a lucrative market and a trading and logistics hub for access to the Middle East and North Africa, Balkans, Caucasus and Central Asia. More Dutch investment is set to come to Turkey, such as the recent purchase by Vitol Group of the Turkey-based fuel products distribution company Petrolofisi for $1.47 billion. Investment needs a stable political climate, and the diplomatic spat between Turkey and the Netherlands doesn’t help.

  It is also worth nothing that while the amount of Turkish investment in the Netherlands is considerably smaller, there are several large Turkish firms that have set up subsidiaries enabling access to the larger EU market.

  For the past week, Dutch pundits have been commenting that Turkey is more dependent on the Netherlands, so possible sanctions imposed by Ankara would only mean “shooting themselves in the foot.” Turkish authorities have imposed political sanctions over the Dutch government’s refusal to allow Turkish ministers to meet with members of the Turkish diaspora there, including halting high-level political discussions between the two countries and the closing of Turkish airspace to Dutch diplomats. But Ankara has carefully ruled out economic sanctions. Turkey’s economics minister, Nihat Zeybekçi said: “If we take these steps, both sides would be hurt.” Ömer Çelik, minister of EU affairs said the Dutch business community, which is “investing in Turkey, doing commerce and generating employment” is “certainly not a part of this crisis,” and “Dutch investment in Turkey is by no means under risk”.

  Economic sanctions between Turkey and the Netherlands don’t seem likely at the moment, but longer-term threats remain.

  First, even if no sanctions are imposed, the significant loss of confidence caused by recent events will take a toll on bilateral economic relations for some time.

   

  Second, the sizeable Turkish diaspora in the Netherlands, as well as the relatively smaller Dutch community living in Turkey, will face uncertainty, and this will have an economic impact too. An estimated 400,000 Turks live in the Netherlands, according to a diaspora association, and there are 25,000 businesses with Turkish owners, most of them smaller enterprises. Many of these companies are doing business with Turkey, and they are negatively affected by the current dispute between the two governments. So is the much smaller Dutch community in Turkey. But it is equally active in the economy, especially in the tourism sector. Declining tourist numbers will hurt Turkish and Dutch operators alike, and it might take some time to recover to pre-crisis levels of business.

   

  Third, the diplomatic spat is likely to have a negative effect on efforts to revise the Turkish-EU Customs Union. The union, which took effect in 1996, is outdated, failing to catch up with the requirements of today’s global trade. Ankara and Brussels had begun talks to improve the deal, but the current circumstance is likely to overshadow attempts based on economic rationality.

  This week Turkish football team Be?ikta? played the Greek side Olympiakos in the European cup. The Turks won 4-1 helped by two goals from Ryan Babel, the Amsterdam-born Dutch striker. Turkey and the Netherlands have links that are closer than many realize, and it will benefit both to keep them intact.

  

  

• Hysteria on the Left Over Russia Has Reached a Fevered Pitch

  We first need to remember where this all started — nearly a hundred years ago Trotsky was exiled from Russia; he packed his bags and headed for Mexico to start what is known today as the neocon movement. Their stated goal was to spread a brand of government via military means — remaining in a state of revolution at all times. They are, essentially, communists masquerading as capitalists and they co-opted the republican party. Today, the children of the original neocons, like Bill Kristol, have hard-ons for Russia — because it’s in their blood. They can’t help themselves.

  Now the left were always fans of the Soviet Union — because communism appealed to them. If you recall, Ted Kennedy actually reached out to the Russians in the 80’s to broker a deal with them in exchange for their help in undermining Reagan. It failed and Reagan ended up being the best leader since JFK.

  But ever since communism ended in Russia, the left have been very sore with them and have merged ideologies with the neocons to foment strife with them. Events transpiring in the Ukraine was the first excuse for these sleeper cells in our government to activate — trying to lure Putin into an escalation. When Putin went into Syria, to defend his only deep water port in the Mediterranean and take out ISIS, who we armed and permitted to run wild about the region, we had Turkey shoot down their fighter jet followed by Secretary Kerry requesting that we send troops into Syria to support the ‘rebels’ — who were/are terrorists.

  When John Podesta’s emails were released, it was a massive embarrassment to the DNC and Hillary Clinton. Rumors of a child-pedo ring were running rampant and weird things started to happen — such as the death of Seth Rich. Following Trump’s victory, this narrative that Russia somehow hacked Podesta’s emails and then delivered them to Wikileaks was energized to the tenth degree by the mercenary media, neocons, and the left. They’ve been using this feeble and easy to disprove narrative to undermine President Trump — because he represents everything the establishment hates. They’re impugning the honor and integrity of a military giant, one with advanced nuclear weaponry — because their childish behavior demands it.

  Would you want your son drafted into a war to fight and die in Moscow because John “I don’t need pizza now” Podesta’s email box was hacked? Get the fuck out of here with these lunatics.

  I clipped this from the Russian ‘echo-chamber’ Infowars — who did a good job documenting some of the more outlandish statements made by the left — regarding Russia. These are not the actions and words of stable people.

  Content originally generated at iBankCoin.com

  

• Davos For Democrats: DNC Mega Donors Meet At Mandarin Oriental Hotel To Plot "The Resistance"

  Authored by Mike Krieger via Liberty Blitzkrieg blog,

  

  The Daily Beast just published an article previewing what should be referred to from this day forth as Davos for Democrats; a big-money infused orgy of wealthy donors telling their political puppets what to do as they mingle at one of the most luxurious hotel chains in the world.

  Clearly learning absolutely zero lessons from their recent election pummeling, the Democratic Party is simply doubling down on its hopelessly failed strategy. Namely, a focus on more cash, even more donor influence and an absence of any new or interesting ideas that could actually get frustrated and struggling American voters excited. The post referenced below reads like something out of The Onion and would be downright hilarious if it wasn’t so pathetic and deranged.

  From the article, Democratic Donors Gather in D.C. to Plot the Resistance:

  The Democratic Party’s top officials will meet with some of their wealthiest donors in Washington, D.C., this week to plot the Trump resistance, according to documents obtained by The Daily Beast.

   

  The chairs of the Democratic National Committee and the party’s House and Senate campaign arms will huddle with activists, operatives, and deep-pocketed Democratic financiers at a biannual conference hosted by the Democracy Alliance, a leading left-wing donor collaborative at Washington’s ritzy Mandarin Oriental hotel.

   

  They will discuss strategy for immediate opposition to President Donald Trump’s policies, begin laying the groundwork for Democratic campaigns in next year’s midterm elections, strategize future efforts for congressional redistricting, and promote an agenda focused on the state level, where Democrats still retain some power and hope to build a model for national progressive victories. And perhaps most importantly, map out how to fully fund their opposition to all things Trump.

   

  The Alliance brings together high-dollar liberal donors—individuals, labor unions, and charitable foundations—that pledge to give at least $200,000 annually to a suite of left-wing organizations. Through its “partners,” as the donors are known internally, the Alliance in 2015 raised $75 million for its supported organizations, an annual record for the group.

  A lot of good that $75 mill did. Encouraging to see the solution is just throw more donor money at the problem.

  Those include the Center for American Progress, a liberal policy shop that has turned its 501(c)(4) arm into an anti-Trump “war room,” and Media Matters for America, a media-focused rapid response group that has recently retooled its efforts toward “fake news” and pro-Trump disinformation.

  Dumb and Dumber.

  And on Friday, the Alliance will host what it describes as “the first in a regular series of off-the-record dialogues between progressive political donors and Democratic Party officials about the future.”

  A regular series of off-the-record meetings between donors and Democratic officials. You can’t make this stuff up.

  Donors in attendance will include Michael Vachon, a top aide to billionaire hedge fund manager George Soros; health care technology mogul Paul Egerman; Dallas philanthropist Naomi Aberly; Susan Sandler, the daughter of subprime mortgage pioneer Herb Sandler; and Ian Simmons, the husband of Hyatt hotel fortune heiress Liesel Pritzker Simmons.

   

  The Alliance’s donors have recently had to step up their financial commitments as the group retools its mission from policymaking by way of an allied White House to opposition to Republican dominance at all levels of government.

   

  In addition to their annual contribution thresholds, Alliance partners must chip in to support the donor collaborative’s operations. Partner dues increased by between $5,000 and $10,000 this year to support the Alliance’s revamped mission, BuzzFeed News reported in January.

  Long on money, short on ideas. That’s the Demcoratic Party for you.

  That dovetails with recent Alliance strategy, which has focused on reversing dramatic Democratic losses at the state level ahead of the 2020 census and redistricting process. The Alliance considers a Democrat-friendly round of redistricting essential to future progressive policy gains.

  A focus on redistricting. Again, no ideas.

  Another event, featuring Planned Parenthood president Cecile Richards, will examine the “opportunity, spurred by the enormous energy of ordinary people taking grassroots action, to oppose the Trump agenda and how to channel this energy for a change in the nation’s political direction, starting with building back power and winning critical state elections in 2017 and 2018.”

  This article is just so telling about the priorities of the donor-controlled Democratic Party. They remain focused on money, redistricting and “channeling energy” (i.e. manipulating voters), as opposed to ideas. The party has nothing to offer Americans other than Trump opposition and Russia conspiracy theories.

  The first of those break-out sessions will plot “strategy and plans to protect the safety net for low-income families and individuals.” Among its attendees will be the director of US Programs for Soros’s Open Society Foundations.

  Perhaps getting the opinions of actual poor people might be useful, as opposed to listening to the operatives of billionaires.

  That discussion will be held at Washington’s elite Cosmos Club, whose members—which have included three U.S. presidents, two vice presidents, and 12 Supreme Court justices—pay annual dues of about $2,000.

  How grassroots of them.

  Meanwhile, did you watch the clip of Nancy Pelosi being asked by Anderson Cooper who the leader of the party is?

  Obama and Hillary Clinton.

  This party is an absolute joke, and the quicker we admit this and create something else, the better. It hasn’t changed, and it’s not going to.

  

  

• China 'Shadow Banks' Crushed As Liquidity Costs Hit Record High

  During the so-called Chinese Banking Liquidity Crisis of 2013, the relative cost of funds for non-bank institutions spiked to 100bps. So, the fact that the 'shadow banking' liquidity premium has exploded to almost 250 points – by far a record – in the last few days should indicate just how stressed Chinese money markets are.

  While interbank borrowing rates have climbed across the board, the surge has been unusually steep for non-bank institutions, including securities companies and investment firms. They’re now paying what amounts to a record premium for short-term funds relative to large Chinese banks, according to data compiled by Bloomberg.

  

  The premium is reflected in the gap between China’s seven-day repurchase rate fixing and the weighted average rate, which, by Bloomberg notes, widened to as much as 2.47 percentage points on Wednesday after some small lenders were said to miss payments in the interbank market. Non-bank borrowers tend to have a greater influence on the fixing, while large banks have more sway over the weighted average.

  "It’s more expensive and difficult for non-bank financial institutions to get funding in the market," said Becky Liu, Hong Kong-based head of China macro strategy at Standard Chartered Plc. “Bigger lenders who have access to regulatory funding are not lending much of the money out.”

  Without access to deposits or central bank liquidity facilities, many of China’s non-bank institutions must rely on volatile money markets. As Bloomberg points out, The People’s Bank of China has been guiding those rates higher in recent months to encourage a reduction of leverage, while also stepping in at times to prevent a liquidity crunch.

  

  The PBOC responded to this week’s jump in borrowing costs by making an unscheduled injection of hundreds of billions of yuan on Tuesday, and it followed that with another addition of cash through daily open-market operations on Wednesday.

  "The PBOC is allowing smaller lenders to miss payments in order to force financial institutions to de-leverage," said Harrison Hu, chief greater China economist at Royal Bank of Scotland Group Plc in Singapore.

   

  "But it will keep a fine balance. It doesn’t want the pressures to become out of control. There’s a possibility that the PBOC will directly inject funds in smaller banks, if the cash shortage continues.”

  As Goldman noted, the rate surge reflects a combination of:

  • A tightening bias by the PBOC. The central bank has shifted policy stance since autumn last year, but the clearer interbank rate rise in recent days suggests that the hawkish bias has stepped up further.
  • Diminished clarity of the role of interbank rates in the PBOC’s policy framework. Since mid-2015, interbank rates had been kept largely steady, partly reflecting the PBOC’s efforts to build up a policy rate framework centering on interbank rates. The PBOC has also introduced SLF (standing lending facility), which is understood as a tool to keep volatility in interbank funding conditions low. However, in a signal that deviates from these previous efforts, the PBOC last Thursday tried to dissociate interbank rates from “policy rates”, which the PBOC said should mean benchmark bank lending and deposits rates. The comment appeared to open up a bigger scope for the PBOC to allow interbank rates to move higher (with the possible intention to avoid conflict with its official “stable and neutral” policy stance or potential pushback from other policy authorities).
  • The SLF mechanism appears to have not functioned effectively in recent days. There have been occasional breaches of the general 7-day repo rate above the SLF rate (3.35% per PBOC’s official communication, although it was reportedly raised to 3.45% last week). This suggests that SLF has not effectively fulfilled its supposed function of imposing a ceiling to interbank rates. One possible reason is that SLF is accessible only by banks, and much of the spikes of the general 7-day repo rate have been a result of liquidity scramble by NBFIs (which have no SLF access), while banks' interbank funding cost (as measured by DR007; Exhibit 1) has remained more moderate and still below the SLF rate (note that the 7-day repo fixing rate is partly based on funding cost of NBFIs as well). Nevertheless, the apparent lack of effectiveness of SLF in suppressing interbank rate volatility might have weakened the anchoring of the market’s rate expectations in the near term, and such uncertainty could have compounded the liquidity squeeze.
  • Continued high interbank repo borrowing by funds. The wide gap of R007-DR007 reflects continued stress imposed by NBFIs, likely particularly funds, on the funding market. Indeed, as of end-Feb, interbank repo borrowing by funds remained high at over 30% of the interbank repo borrowing (Exhibit 2) despite the increased pressure on the commercial viability of repo trades (borrowing via interbank repo to finance long-dated bond holdings).
  • Regulatory impact. The PBOC has tightened the prudential requirements (particularly on the growth of banks' balance sheet) under its MPA examination, which is to be conducted at quarter-end. This has likely further contributed to, and amplified the impact of, a tightening in the interbank market.

  In total, the interbank rate volatility may remain quite high in the coming days, especially in light of the near-term consideration of MPA examination at quarter-end and the PBOC's apparent deviation from the previous monetary policy framework. Alternatively, today's plunge in the dollar may have had a secondary purpose of easing Chinese financial conditions, where the ongoing dollar rally has pushed the local financial sector to the brink of illiquid collapse.

  

  

• Is This The Sound Of The Bottom Falling Out Of The Auto Industry?

  Authored by Wolf Richter via WolfStreet.com,

  Not quite, not yet, but it’s not good either.

  Let’s hope that the problems piling up in the used vehicle market – and their impact on new vehicle sales, automakers, $1.1 trillion in auto loans, and auto lenders – is just a blip, something caused by what has been getting blamed by just about everyone now: the delayed tax refunds.

  In its March report, the National Association of Auto Dealers (NADA) reported an anomaly: dropping used vehicle prices in February, which occurred only for the second time in the past 20 years. It was a big one: Its Used Car Guide’s seasonally adjusted used vehicle price index plunged 3.8% from January, “by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble.”

  The index has now dropped eight months in a row and hit the lowest level since September 2010. The index is down 8% year over year, and down 13% from its peak in 2014.

  The price decline spanned all segments, but it hit the two ends of the spectrum — subcompact cars and the luxury end — particularly hard. The list shows the change in wholesale prices from January to February in vehicles up to eight years old:

  

  NADA blamed three factors:

  1. The surge in new vehicle incentive spending. Automakers, drowning in unsold inventories on dealer lots and desperate to move the iron and keep their plants running, increased incentive spending by 18% to the highest level in over a decade. This made new vehicle more competitive with late-model used vehicles. So this would be on the demand side.
  2. The growing flood of used vehicles going through auction. Over the first two months this year, volume of vehicles up to eight years old rose by about 5% year-over-year. Volume of late-model vehicles – the supply from rental car companies and lease turn-ins – jumped 10%. So that’s on the supply side.
  3. The IRS tax refund fiasco. Restaurants, retailers, and others are already blaming various February debacles on these delayed tax refunds. After the IRS was hit with millions of fake e-filed tax returns last year that claimed the Earned Income Tax Credit and the Additional Child Tax Credit, Congress required the agency to delay sending out refunds this year.

  It’s big money. According to the IRS, refunds issued through February 10 plunged 69% from the same period a year ago. That’s $65 billion that didn’t make it into consumers’ bank accounts. But then the money was unleashed. In the week ending February 17, the IRS sent out a record $74 billion in refunds. By the week ending February 24, refunds were down only 10%, or $15 billion, year-over-year. So most of the problem was resolved by the end of February.

  That might explain part of the problem on the demand side, at least at the lower end of the scale. But it’s hard to explain the plunge in prices at the luxury end. Also, these are wholesale prices. They don’t react instantly to a brief consumer cash crunch caused by tax-refund delays, now resolved. Something else appears to be going on.

  The report, in attempting a forecast, cautioned:

  February’s unusually soft showing makes pinpointing where used prices will go over the next few months a bit more challenging. However, given the slower than usual rollout of federal tax refunds, it’s assumed prices will be somewhat stronger in March and April than originally anticipated.

  The Used Vehicle Index by Manheim, the world’s largest wholesale auto auction, didn’t pick up a massive drop in used vehicle prices over the past few months, though it too is showing some weakness. The index edged down 0.2% in February. The report pointed out that, “given a sharp decline in pricing in February of last year, the Manheim Index now shows a year-over-year gain of 1.1%.”

  The index has dropped in six of the past seven months (chart), but in small increments, and as it says, “stability remains the watchword.” It too acknowledge headwinds for the market, including the “heavy new vehicle inventory and incentives,” and “a crazy tax refund season.”

  Why are used vehicle wholesale prices important?

  For one, they matter to lenders. Used vehicle wholesale prices determine the value of the collateral for $1.11 trillion in auto loans that have boomed on higher prices, higher unit sales, longer maturities (the average hit a new record of 66.5 months in Q4), and higher loan-to-value ratios (negative equity):

  

  Dropping wholesale prices increase loan losses for lenders as recovery is lower. Declining wholesale values of lease turn-ins, if the trend persists, impacts how finance companies structure the lease terms, thus raising the costs for the customers and putting a damper on leasing activity.

  All this puts pressure on new vehicle sales, further pushing automakers to pile on even larger incentives in order to move the units, grapple with inventories, and keep plants open. This works for a while – there’s nothing like big-fat incentives to bring out reluctant buyers. But incentives, when everyone is doing them, are front-loading sales. This is ultimately self-defeating and gets very costly even as sales begin to decline. It was a contributor in the collapse of the industry during the Financial Crisis.

  And there are well-established patterns of customers switching between new vehicles and late-model used vehicles. Large incentives by automakers put pressure on late-model used vehicles. In turn, falling prices on the used vehicle side cannibalize sales from the new vehicle side. In other words, they compete with each other, often on the same dealer lot. Especially if demand is lackluster despite the incentives, these patterns can trigger a downward spiral that is difficult to get out of.

  First oil & gas, then construction, then new vehicle sales. Read…  How Auto Sales Are Getting Crushed in Houston

  

  

• BOMBSHELL: CIA Whistleblower Leaked Proof Trump Under "Systematic Illegal" Surveillance Over Two Years Ago: FBI Sat On It

  The same day House Intelligence Committee chairman Devin Nunes gave a press conference disclosing that President Trump had been under “incidental surveillance,” Attorney and FreedomWatch Chairman, Larry Klayman, sent a letter to the House Committee on Intelligence imploring them to pursue the claims and evidence presented under oath at a Washington DC FBI Field Office by his client – CIA / NSA Whistleblower Dennis Montgomery – who Klayman claims “holds the keys to disproving the false claims…   …that there is no evidence that the president and his men were wiretapped”

  When Montgomery attempted to deliver this information through the appropriate channels two years ago, the former CIA and NSA contractor wasn’t given the time of day:

  [W]hen Montgomery came forward as a whistleblower to congressional intelligence committees and various other congressmen and senators, including Senator Charles Grassley, Chairman of the Senate Judiciary Committee, who, like Comey, once had a reputation for integrity, he was “blown off;” no one wanted to even hear what he had to say.

  As a result, Montgomery went to attorney and FreedomWatch founder Larry Klayman – who then approached the FBI: 

  Under grants of immunity, which I obtained through Assistant U.S. Attorney Deborah Curtis, Montgomery produced the hard drives and later was interviewed under oath in a secure room at the FBI Field Office in the District of Columbia. There he laid out how persons like then-businessman Donald Trump were illegally spied upon by Clapper, Brennan, and the spy agencies of the Obama administration.

  Montgomery left the NSA and CIA with 47 hard drives and over 600 million pages of information, much of which is classified, and sought to come forward legally as a whistleblower to appropriate government entities, including congressional intelligence committees, to expose that the spy agencies were engaged for years in systematic illegal surveillance on prominent Americans, including the chief justice of the Supreme Court, other justices, 156 judges, prominent businessmen such as Donald Trump, and even yours truly. Working side by side with Obama’s former Director of National Intelligence (DIA), James Clapper, and Obama’s former Director of the CIA, John Brennan, Montgomery witnessed “up close and personal” this “Orwellian Big Brother” intrusion on privacy, likely for potential coercion, blackmail or other nefarious purposes. 

   

  He even claimed that these spy agencies had manipulated voting in Florida during the 2008 presidential election, which illegal tampering resulted in helping Obama to win the White House.

  Given the fact that the FBI had Montgomery’s testimony and evidence for over two years, Klayman traveled to Washington DC last Thursday to meet with Committee Chairman Devin Nunes in the hopes that he would ask FBI Director Comey why the FBI hadn’t pursued Montgomery’s evidence. When Klayman arrived to speak with Nunes, he was “blown off” and instead shared his information with committee attorney Allen R. Souza – who Klayman requested in turn brief Nunes on the situation.

  During my meeting with House Intelligence Committee counsel Allen R. Sousa I politely warned him that if Chairman Nunes, who himself had that same day undercut President Trump by also claiming that there is no evidence of surveillance by the Obama administration, I would go public with what would appear to be the House Intelligence Committee’s complicity in keeping the truth from the American people and allowing the FBI to continue its apparent cover-up of the Montgomery “investigation.”

   

  And, that is where it stands today. The big question: will House Intelligence Committee Chairman Nunes do his job and hold FBI Director Comey’s feet to the fire about the Montgomery investigation?

  Klayman has detailed all of this in a NewsMax article, followed up with an official letter to Chairman Nunes today, requesting that he question Comey on Montgomery’s evidence. Perhaps this explains Nunes’ impromptu press conference today admitting that Trump’s team was under “Incidental Surveillance” before making his way to the White House to discuss with the President.

  So – we know that evidence exists from a CIA / NSA contractor turned whistleblower, detailing a massive spy operation on 156 judges, the Supreme Court, and high profile Americans including Donald Trump. See the letter below:

  Judicial Watch bombshell letter to Rep. Devin Nunes1/4 https://t.co/CZ4haCVauK pic.twitter.com/h73gN2iqAS

  — ZeroPointNow(@ZeroPointNow) March 23, 2017

  Judicial Watch bombshell letter to Rep. Devin Nunes 2/4 https://t.co/CZ4haCVauK pic.twitter.com/qjxoHcWcOj

  — ZeroPointNow (@ZeroPointNow) March 23, 2017

  //platform.twitter.com/widgets.js

  Judicial Watch bombshell letter to Rep. Devin Nunes3/4 https://t.co/CZ4haCVauK pic.twitter.com/ehw04e1ROw

  — ZeroPointNow(@ZeroPointNow) March 23, 2017

  Judicial Watch bombshell letter to Rep. Devin Nunes 4/4 https://t.co/CZ4haCVauK pic.twitter.com/ccrMz7zU19

  — ZeroPointNow (@ZeroPointNow) March 23, 2017

  //platform.twitter.com/widgets.js

   

  Content originally generated at iBankCoin.com * Follow on Twitter @ZeroPointNow

  

• Mexico's Finance Minister Warns Mexican Companies "Not To Participate In Construction Of The Wall"

  As Trump seeks proposals for an impenetrable, yet “aesthetically pleasing”, 30-foot border wall, Mexico’s government on Tuesday warned Mexican companies that it would not be in their best “interests” to participate in the project even though there will be no explicit legal restrictions or sanctions to stop them if they tried.  Per Reuters:

  “We’re not going to have laws to restrict (companies), but I believe considering your reputation it would undoubtedly be in your interest to not participate in the construction of the wall,” said Mexican Economy Minister Ildefonso Guajardo.

   

  “There won’t be a law with sanctions, but Mexicans and Mexican consumers will know how to value those companies that are loyal to our national identity and those that are not,” Guajardo added.

   

  His comments echo those of Mexico’s foreign minister Luis Videgaray, who said on Friday that Mexican companies that see a business opportunity in the wall should “check their conscience” first.

  Despite the warnings, Cemex, one of the world’s largest cement producers, has said it is open to providing quotes to supply the raw materials for the border wall and competitor Grupo Cementos de Chihuahua has also signaled a readiness to work on the project.

  Meanwhile, the only Mexican company, out of some 720 in total, to put its name down on the U.S. government’s website for business opportunities as an interested vendor for the wall construction, is a small, four-member concern from the central city of Puebla that wants to provide LED lights that it imports mostly from China.

  

  Ildefonso Guajardo Villarreal, Mexico’s Economy Minister

   

  Of course, while the Mexican government offers up warnings without any real teeth, in the Communist country of California, politicians have actually introduced legislation to ban its pension funds from investing in companies that provide their services to build the wall…because who care about fiduciary duties?  From our post yesterday:

  A new piece of legislation recently introduced in California, Assembly Bill (AB) 946 or the “Resist the Wall Act,” would require the California Public Employee Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) – the nation’s first and second largest pension funds – to liquidate within 12 months any investments in companies involved in the construction of President Trump’s “Wall of Shame”.  The bill also requires the two pension funds to report to the Legislature and the Governor by January 1, 2019 with a list of companies from which they have liquidated investments or plan to do so.

   

  Not surprisingly, the legislation was penned by a trio of Cali democrats including Assemblymembers Phil Ting (D-San Francisco), Lorena Gonzalez Fletcher (D-San Diego), and Eduardo Garcia (D-Coachella).

  Californians build bridges not walls. AB 946 asks PERS and STRS to #resist the wall and divest from its builders. https://t.co/373fnOfaue pic.twitter.com/JHWDnRip8p

  — Phil Ting (@PhilTing) March 20, 2017

  //platform.twitter.com/widgets.js

   

  In a press release posted to his website, Ting said that “Californians build bridges not walls” and declared for all of California that they want no part of Trump’s “Wall of Shame.”

  “Californians build bridges not walls.  This is a wall of shame and we don’t want any part of it.  Immigrant stories are the history of America and this is a nightmare,” said Ting.  “Asian Americans know the pains of being blocked from immigrating to the United States.  We endured that indignity under an act of Congress for decades.  We must stand together and fight this wall because it symbolizes weakness and hate to the world.”

   

  “The state’s contracting and investment practices should reflect the values of our state,” said Gonzalez Fletcher.  “It’s clear the people of California don’t want to invest in the hateful values that the Trump wall represents.”

   

  “It is counterproductive to invest in projects that will not serve the best interest of all Californians.  It is the responsibility of the legislature to safeguard our values and create opportunities for economic growth, rather than to bar them,” stated Garcia.  “We cannot build up our dreams if our resources are being used to build a wall.”

  Shockingly, Villarreal did not provide an update on how/where Mexico will source the $15-$20 billion in funds required to pay for the wall during his comments.

  

  

• Doug Casey Has "Never Seen Anything Like This"

  Via InternationalMan.com,

  Nick Giambruno: Doug, what do you think is the root problem of the US economy and financial system?

  Doug Casey: There are several, including incompetence, corruption and, of course, just plain stupidity. But there's not much you can do about those things; they're intrinsic to government. But perhaps something can be done about ignorance, which starts in school: What, for instance, do most people learn about economics and finance? Very little. As Mark Twain said, "It's not what people know that's the problem, it's what they think they know that just ain't so."

  All of the economics that's taught in the schools—what little that is taught—is completely backward. Plus, almost everything you hear on television is conventional, unsound, and wrong.

  I'd like to believe anybody that's reading this right now that has at least heard of the "Austrian school of economics," understands the value of gold, and knows a bit of basic economic theory and history. Without at least some fundamentals, people stand to suffer a huge drop in their standard of living if the economy goes sideways.

  When the current financial crisis started, in 2007, it was the leading edge of the huge financial hurricane that hit in earnest in 2008 and 2009. Now we're in the eye of this hurricane, but we're going into the trailing edge of the storm, and it's going to be much worse and much different than what happened in '08 and '09. Or, for that matter, in the 1930s. So hold onto your hat.

  Nick Giambruno: Can President Trump fix this mess?

  Doug Casey: Everybody is talking about Donald Trump. He's a complex individual. I actually made money bets that he would win the election. But that’s not the only reason I’m glad he won.

  Is Trump a good thing or a bad thing? They say, "Oh he's a racist." "Oh he's a sexist." "Oh he's a homophobe." "Oh he hates Muslims." Frankly we should analyze those things, but I think they're basically all lies. In fact, he's just a businessman, flying by the seat of his pants. He doesn't have a core philosophy.

  What's going on in the US now is a culture clash. The people that live in the so-called "red counties" that voted for Trump—which is the vast majority of the geographical area of the US, flyover country—are aligned against the people that live in the blue counties, the coasts and big cities.

  They don't just dislike each other and disagree on politics; they can no longer even have a conversation. They hate each other on a visceral gut level. They have totally different world views. It's a culture clash.

  I've never seen anything like this in my lifetime. There hasn't been anything like this since the War Between the States, which shouldn't be called "The Civil War," because it wasn't a civil war. A civil war is where two groups try to take over the same government. It was a war of secession, where one group simply tries to leave.

  We might have something like that again, hopefully nonviolent this time. I don't think the US should any longer remain as one political entity. It should break up so that people with one cultural view can join that group and the others join other groups. National unity is an anachronism.

  Nick Giambruno: What would that look like?

  Doug Casey: Well look, my ideal situation politically is this… right now the world is divided into about 220 different nation states, different countries. That's a very bad idea, because almost all of these nation states are trying to weld together people of different views, philosophies, languages, religions, ethnicities, and races, and it doesn’t work.

  This is a major reason why Africa—which I'm pretty familiar with—just hasn't gone anywhere. Every one of those countries, as well as every one of the countries in the Mid-East, Central Asia, and I'll include India, they're not real countries. They were put together arbitrarily in the boardrooms of Europe in the 19th century, and they have no internal consistency. So different groups in those countries try to take over the government so they can use it to steal.

  Instead of 220 nation states we should ideally have about seven billion. Everybody should be a sovereign individual.

  Nick Giambruno: What does Trump mean for the stock market?

  Doug Casey: Trump is associated with the free market, even though he understands nothing about economics. He's not really a free market guy, he's an authoritarian, not a libertarian. And he has some disastrous economic ideas—like putting up import barriers and replacing Obamacare. He's trying to run the country as if it were his privately owned company.

  He also has some good economic ideas. Cutting regulations, wonderful, and he's doing it. Cutting taxes, fantastic. This is very good.

  But he appears to want a weak dollar: What he's really doing is destroying American savings and making imported goods more expensive. This is horrible. I mean this could actually be the straw that breaks the camel's back. A Smoot-Hawley tariff lookalike.

  I applaud the fact he also despises Progressives, Cultural Marxists, Social Justice Warriors, the media, academics, and the like. But, again, he's no libertarian.

  Nick Giambruno: Where do you think the stock market is headed?

  Doug Casey: Well, anything is possible. I really believe that. So will the Dow go to 40,000? Yeah, it's possible, but it's highly unlikely.

  I wrote Strategic Investing back in 1982. At the bottom of the bond market, when rates were 15%. When the Dow was under 1,000. I wrote, "The Dow's going to 3,000," and everybody said, "You're completely insane, that's a triple of the Dow." Well it went to 3,000, and then it went to over 20,000 over the next generation.

  All I can say about the stock market is, by any traditional parameters of value—price-earnings ratio, price-to-book ratio, dividend yields—it's now very overpriced. And bonds aren't just in a bubble. They're in a hyperbubble.

  The economy itself is head-over-heels in debt. What does "debt" mean? It means that some people borrowed money and owe it to other people who are going to want it back. When you borrow money two things usually happen. First, you're taking capital that others saved in the past, and are probably using for consumption, not to create more wealth. And second, you're mortgaging your future, which makes you a serf when you have to pay it back. All that debt is a ticking bomb.

  So my feeling is the economy can collapse, and with it earnings on the stock market, and with it prices of stocks. So I want no part of the stock market right now.

  Nick Giambruno: What do you want to buy right now?

  Doug Casey: You want to buy when things are cheap; very little is cheap. People don't have a sense of history—they don't realize how cheap things can get. I mean, the Dow Jones in the past, at times its yield has been 6%, 8%, 10%. At the bottom of the last depression, after dividends were cut significantly, it yielded 13%.

  I watch a lot of international stock markets. I remember in the mid-1980s, three stock markets—Hong Kong, Belgium, and Spain—the indices were all yielding 12% to 15% in current dividends. They were selling for two times earnings and half of book value. Now that's when you buy stocks. You don't buy them at the nosebleed levels where they are right now.

  Nick Giambruno: Switching gears to the War on Cash. Why are governments working to phase out cash?

  Doug Casey: It's all the governments of the world. This is not just happening in India, which is basically a primitive country where half the people still live on a dollar or two a day—as unbelievable as that sounds. But in advanced countries, in Europe, especially Sweden and Finland, even in backward Uruguay they're trying to get rid of cash.

  They say, "Well, drug dealers use cash. Criminals use cash." Yes, of course, and free men use cash, because money equals freedom. Money equals all the things you want to have for yourself and provide for other people. You don’t want the State in control of your money.

  They say, "Well, that's okay, you just have to cycle money through your bank account." But when money has to go through your bank account, then that's the only way that you can buy or sell anything. The government controls your bank account. If you become politically unpopular, for whatever reason, they can shut off your bank account. And they know exactly what you’re doing, what you have, and what you like.

  The thing is, without cash you're completely under the control of your rulers, and that is not acceptable to a free man. These people aren’t angels. In fact, you don’t get the best people in government—you get some of the worst people.

  Look, we shouldn't be using the dollar to start with. It used to be the dollar was just a name for a certain amount of gold, 1/20th of an ounce. Then people forgot that the dollar represented something. Now the dollar is just a floating abstraction.

  It's an insane idea. It's a criminal idea. It's anti-human.

  But the average person who's got a smartphone thinks, "Oh that would be convenient. I won't have to worry so much about somebody sticking me up for the dollars in my wallet." But even that's wrong; phones are stolen, and accounts are hacked. There are zero advantages to a cashless society—except to the State.

  Nick Giambruno: What are your thoughts on bitcoin?

  Doug Casey: I'm of two minds about bitcoin. Aristotle in the Fourth Century B.C. gave the five characteristics of anything that can be used as good, reliable money.

  It has to be durable, which is why we don't use wheat as money.

  It has to be divisible, which is why we don’t use artwork as money. You can't divide the Mona Lisa into pieces.

  It has to be convenient, which is why we don't use lead as money. It takes too much to be of value.

  It has to be consistent, which is why we don’t use real estate as money. Every piece is different from every other.

  Last, it has to have value in and of itself, which is why we shouldn't use paper as money.

  So the problem with bitcoin is that its only value, as far as I can determine, is as a transfer mechanism. If you want to send money to somebody on the other side of the world right now you've got to go through the SWIFT system in your banks. It's expensive. It's inconvenient. It's not private.

  But with bitcoin—assuming that the person on the other side of the world can find somebody that wants to accept bitcoin—you can do it instantly and for no cost. That's the value of bitcoin. It's a great transfer mechanism.

  If the dollar starts losing value at 15%, 20%, 25% per year—which is entirely possible over the next few years—people might go to these cryptocurrencies just to get out of dollars. The government can't easily control them, they're limited in amount, and there will be more confidence in them.

  Right now they're interesting speculative vehicles for capital gains, not just bitcoins, but some of these new ones that have different characteristics, as well. They're like buying penny stocks, interesting. A speculative bubble could easily develop in them.

  Nick Giambruno: Why do economists spend so much time trying to decipher what the Fed will do next?

  Doug Casey: Well there's a whole class of talking heads that make a living out of predicting what the Fed is going to do. It's absurd.

  Let me say something radical: The Fed has no right to exist. It serves no useful purpose. It should be abolished. It's worse than unnecessary. The Federal Reserve is destructive.

  So I don't try to second-guess what these idiots are going to do. But the last thing that they should be doing—nothing they do is good—is controlling interest rates. That's for the market to control. Setting the price of money is as stupid as the government trying to set the price of candy bars in a store. It's equally ridiculous, but much more destructive.

  Nick Giambruno: What do you think is going to happen to the US dollar?

  Doug Casey: This is very important. When you work and produce you're paid in dollars, and if you want to get ahead in life you save those dollars. The problem is, after you've saved dollars—what happens if those dollars lose value overnight? Everything you've worked and planned for vanishes with the dollars. This has happened numerous times in other countries with other currencies.

  The problem with the dollar is it's the unsecured liability of the US government, which is bankrupt. In the years to come that's going to become very obvious, with catastrophic consequences for the average American.

  How can you get ahead in the world when you have to save a depreciating asset? That's why in these third world countries the average guy keeps falling further and further behind, because all he can save is the local currency, and the currency consistently turns into toilet paper, so he's always behind the eight ball.

  The same is going to happen in the US on a much grander scale. It's going to be much more serious, because even in all these countries smarter people try to save dollars, they don't save pesos or kwacha or ringgit, they don't save these horrible currencies. They try to get hold of US dollars. When the dollar is devastated, they're going to blame Americans for their currency losing value. This has all kinds of bad consequences.

  The dollar is going to cease being the world's reserve currency sometime in the next decade; I'm confident of that. The Chinese are making a lot of progress with the yuan. The euro, however, is going to cease to exist. The European Union is going to break up. Europe has all kinds of problems.

  Now that's the bad news, but the good news is that during a time of financial chaos most of the real wealth in the world will still exist. It's just going to change ownership. You want to be one of the people on the winning side of that equation.

  *  *  *

  Widespread economic chaos is coming. But you don't need to fear it. Doug Casey and his team recently released this time-sensitive video with all the details. Click here to watch it now.

  

  

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