• Chinese Interbank Lending Freezes; Government Bond Trading Halted After Massive PBOC Liquidity Drain

  Earlier today, we were surprised to note that having aggressively drained liquidity from the interbank funding market, on the first trading day of 2017, the PBOC not only fixed the Yuan well lower (sy 6.9498 vs 6.9370 on the last day of 2016, even if this was well stronger than the Offshore Yuan), but the People’s Bank of China withdrew even more liquidity. It did that by injecting CNY20 billion via 7-day reverse repos and another CNY20 billion via 14-day reverse repos in its open-market operations Tuesday, according to traders, while continuing to skip 28-day reverse repos.

  The move resulted in a net drain of CNY155 billion for the day, and followed a substantial drain of a net CNY245 billion last week – the first removal of liquidity in three weeks. We promptly followed up with a warning:

  PBOC drains a net CNY155 billion for the day. Keep an eye on overnight SHIBOR/ HIBOR/ Repo

  — zerohedge (@zerohedge) January 3, 2017

  Just over an hour later, it appears our warning was warranted, because according to the latest daily fixing of the Treasury Market Association, as a result of the PBOC’s massive liquidity drain which soaked up a nearly a third of a trillion Yuan in the past two weeks, the interbank market is freezing again as follows:

  • 1-month yuan interbank rate in Hong Kong rises 1.16ppts to 13.01%,
  • 3-month CNH Hibor +89bps to 10.02%;

  

  Most importantly, the overnight CNH Hibor rate soared 4.95% to 17.76%, the highest since September, andconfirming of yet another daily freeze in interbank lending simply so that the PBOC can punish all those who are still short the Yuan. 

  

  The good news: at least the UCDCNH tumbled by as much as 200 pips on the session. The bad news, it is unclear how much more of this daily volatile punishment Chinese and Hong Kong banks can take.

  But wait, because the interbank freeze was not all, and in a repeat of two weeks ago when China’s halted the trading of its government bond future, the Shanghai Stock Exchange announced that Shanghai halted trading of the 3.99% government bond due May 2065 after “abnormal fluctuations.”  It was not exactly clear what that particular phrase meant aside from “aggressive selling” as per the chart below.

  

  According to a statement, trading was set to resume at 11:06 am after being halted at 10:36am, but not before the exchange called on investors to “remain rational and reminded them of trading risks.” In other words, please don’t sell, especially when the central bank just yanked a near record amount of liquidity from the market.

  

  

• Why Donald Trump Is Spot-On About The Russians And The Election

  Submitted by John Reed Stark via LinkedIn.com,

  President-elect Donald Trump has recently questioned: 1) President Obama's finger pointing at the Russians for election-related cyberattacks; and 2) the current media and pundit frenzy alleging a Russian cyber-strike targeting Secretary Hillary Clinton in order to assure a Trump presidency. President-elect Trump plans to press U.S. intelligence agencies to defend their conclusions, stating,

  “I know a lot about hacking. And hacking is a very hard thing to prove. So it could be somebody else. And I also know things that other people don’t know, and so they cannot be sure of the situation.”

  Having worked since 1995 as a first-responder to cyber-attacks, including serving 11 years as Chief of the SEC's Office of Internet Enforcement, I whole-heartedly agree with President-elect Trump. His skepticism is not only appropriate and warranted — it's spot-on.

  Official U.S. Statements About Russian Hacking of U.S. Election

  Despite countless inflammatory headlines about Russian election hacking, there exist only two official U.S. statements specifically addressing the facts of recent election-related hacking incidents. The first is the October 7, 2016 Joint Statement from the Department of Homeland Security and Office of the Director of National Intelligence on Election Security (the "Joint Statement"). The second is the December 29, 2016 Joint Analysis Report of the Department of Homeland Security and the Federal Bureau of Investigation, entitled, "GRIZZLY STEPPE – Russian Malicious Cyber Activity" (the "JAR").

  Both government statements are curt, vague, opaque and miles away from being concrete — and both also beg far more questions than answers.

  The Joint Statement

  The Joint Statement adopts a cautionary approach to any sort of attribution or motive behind who "directed the recent compromises of e-mails from U.S. persons and institutions, including from US political organizations." The Joint Statement states that the hacks:

  “. . . are consistent with the methods and motivations of Russian-directed efforts. These thefts and disclosures are intended to interfere with the US election process. Such activity is not new to Moscow — the Russians have used similar tactics and techniques across Europe and Eurasia, for example, to influence public opinion there. We believe, based on the scope and sensitivity of these efforts, that only Russia’s senior-most officials could have authorized these activities.” 

  Announcing that we think the hacks “are consistent with the methods and motivations of Russian-directed efforts” falls far short of a legitimate prosecutorial conclusion based upon actual evidence of Russian culpability and attribution. The Joint Statement's authors are clearly hedging their bets, which is exactly what any reasonable cyber-investigator would do under the circumstances.

  After all, attributing disparate attack vectors to the same culprit is always speculative. The entire virtual criminal design could all be a ruse, where one country’s cyber gang coopts the techniques of another country’s cyber gang, to confuse or disassemble.

  Moreover, even in its most favorable light, the Joint Statement does not support the conclusion that the Russians were trying to help Trump and hurt Hillary — as opposed to just doing what most hackers do i.e. rummaging voraciously and randomly through whatever data they can access, and leaving it to their patrons to determine what is, and is not, of use. 

  Interfering with the election process is only one of many possible motives behind cyber-attacks. Financial crime, insider trading, intellectual property thievery, trade secret pilfering, extortion, ransomware, governmental disruption, market manipulation (just to name a few) are all potential goals at the outset of a hack.

  Cyber-attackers invade systems and networks, frantically grab every data-file they can and then continue mounting their virtual crime sprees wherever that stolen data may lead them — disrupting organizations, causing damage and wreaking havoc all along the way. Make no mistake — the 21st Century hacker's mantra is to shoot first and ask questions later.

  The JAR

  Though more than half of the JAR is just a list of suggested preventive cybersecurity measures, the JAR is still an important report and a critical resource for any analysis of the Russian election rigging allegations — both for what it does say and for what it doesn't say. Here is a play-by-play of its deconstruction:

  1. Attribution. The JAR is the first official government statement attributing certain politically-related malicious cyber activity to specific countries or threat actors, specifically, "to Russian government and civilian intelligent agencies."
  2. The DNC Cyber-Attacks. The cyber-attacks upon the Democratic National Committee ("DNC") apparently began with a 2015 cyber-attack upon the U.S. government. This is typical of cyber-attacks — where the sole goal/motive is data exfiltration, leaving it until afterwards to determine how to take advantage of, or profit from, that exfiltrated data. Specifically, the JAR notes that in the summer of 2015, what looks like a Russian spear-phishing campaign targeting over 1,000 recipients, including U.S. government employees. Apparently, at least a few of these spear-phishing attacks hit pay dirt and in the course of that campaign, somehow "successfully compromised a "U.S. Political Party." (The JAR does not identify the "Political Party" to be the DNC.)
  3. Multiple Attacks Continue." The JAR describes a second attack upon the same "U.S. Political Party," which occurred in the Spring of 2015 and states that, "Actors likely associated with [Russia] are continuing to engage in spear-phishing campaigns, including one launched as recently as November 2016, just days after the U.S. election."
  4. APT Attacks. The JAR acknowledges the lengthy history of state-sponsored Advanced Persistent Threat or so-called APT attacks against every type of U.S. entity, including a range of foreign governments initiating "spear-phishing campaigns targeting government organizations, critical infrastructure entities, think tanks, universities, political organizations, and corporations." Given certain common indicators of compromise identified by the DHS and FBI, the JAR concludes that the perpetrators of the hacks upon the "U.S. Political Party" employed the same modus operandi used by purported Russian groups that have "historically targeted government organizations, think tanks, universities, and corporations around the world."
  5. The Leaks of Exfiltrated Emails and Other Data. The JAR ambiguously and blithely states that, "The U.S. Government assesses that information was leaked to the press and publicly disclosed." The JAR (whether clumsily or intentionally) employs the passive voice to describe the leak — and does not state who leaked the information; how the information was leaked; or any other inculpatory details.
  6. The Podesta Emails. The JAR does not address or infer that the attacks upon the "U.S. Political Party" were perpetrated by the same attackers who somehow obtained the emails of Clinton campaign head John Podesta. In fact, the JAR makes no specific mention of the Podesta hacks.
  7. Trump Over Clinton. Like the Joint Statement, the JAR provides no evidence and makes no mention of any plot, effort or other scheme to steal the election from Hillary Clinton and favor Donald Trump. Rather, the JAR cites only the usual over-arching objective behind most state-sponsored APT attacks i.e. to disrupt and/or damage U.S. institutions and organizations.

  Cybersecurity Experts Disagree (Often)

  Like medical experts who disagree about a diagnosis or treatment, Cybersecurity experts are notorious for disagreeing about attribution conclusions gleaned from digital forensic remnants, residue, fragments and artifacts.

  For instance, the firm investigating the DNC cyber-attacks, CrowdStrike, a highly reputable and well-respected data breach response firm, believes that "Fancy Bear," a hacking group with purported ties to the Russian government, likely orchestrated the DNC hack — and therefore the DNC hack was orchestrated by the Russians.

  Like most digital forensic experts, CrowdStrike seems to have based its conclusions upon technological correlations and shared modus operandi of hacker techniques, a common investigative method employed by digital forensic investigators to identify online intruders. Along those lines, on December 22, 2017, the Washington Post reported that:

  The firm CrowdStrike linked malware used in the DNC intrusion to malware used to hack and track an Android phone app used by the Ukrainian army in its battle against pro-Russia separatists in eastern Ukraine from late 2014 through 2016.

  CrowdStrike found that a variant of the Fancy Bear malware that was used to penetrate the DNC’s network in April 2016 was also used to hack an Android app developed by the Ukrainian army to help artillery troops more efficiently train their antiquated howitzers on targets.

  The Washington Post reports further details about Fancy Bear:

  While CrowdStrike, which was hired by the DNC to investigate the intrusions and whose findings are described in a new report, had always suspected that one of the two hacker groups that struck the DNC was the GRU, Russia’s military intelligence agency, it had only medium confidence. Now, said CrowdStrike co-founder Dmitri Alperovitch, “we have high confidence” it was a unit of the GRU. CrowdStrike had dubbed that unit “Fancy Bear.”

  However, other cybersecurity experts would disagree with CrowdStrike. Security researcher Jeffrey Carr recently pointed out that a 2014 FireEye report on Fancy Bear, which links Fancy Bear to the Russian government, has significant credibility issues:

  'To my surprise, the report’s authors declared that they deliberately excluded evidence that didn’t support their judgment that the Russian government was responsible for [Fancy Bear’s] activities:

  '[Fancy Bear] has targeted a variety of organizations that fall outside of the three themes we highlighted above. However, we are not profiling all of [Fancy Bear’s] targets with the same detail because they are not particularly indicative of a specific sponsor’s interests.” (emphasis added)

  That is the very definition of confirmation bias. Had FireEye published a detailed picture of Fancy Bear’s activities including all of their known targets, other theories regarding this group could have emerged; for example, that the malware developers and the operators of that malware were not the same or even necessarily affiliated.

  The notion that [Fancy Bear] has a narrow focus on U.S. political targets is also undermined in a SecureWorks research paper, which shows that the [Fancy Bear] hackers have a wide variety of interests: 10 percent of their targets are nongovernment organizations, 22 percent are journalists, 4 percent are aerospace researchers, and 8 percent are within the “government's supply chain.” SecureWorks concludes that only 8 percent of Fancy Bear’s targets are “government personnel” of any nationality.

  According to Carr, “it’s an old assumption going back years to when any attack against a non-financial target was attributed to a state actor.” Without that premise, the only logical conclusion is that some email accounts at the DNC appear to have been broken into by someone, and perhaps they speak Russian. Left ignored is the mammoth difference between Russians and Russia.

  Some experts even go so far as to pit themselves directly against the JAR. Take famed data security pioneer John McAfee, the developer of the first commercial antivirus program. McAfee has been a major player in the cybersecurity industry for the past 50 years and does not believe that the Russians were behind the hacks on the DNC, John Podesta’s emails and the Hillary Clinton presidential campaign.

  McAfee notes that the JAR contains an appendix that lists hundreds of IP addresses that were supposedly “used by Russian civilian and military intelligence services,” but notes that,

  "While some of those IP addresses are from Russia, the majority are from all over the world, which means that the hackers constantly faked their location . . . if it looks like the Russians did it, then I can guarantee you it was not the Russians . . . [The JAR] is a fallacy . . . hackers can fake their location, their language, and any markers that could lead back to them. Any hacker who had the skills to hack into the DNC would also be able to hide their tracks . . ."

  The entire election hacking activities could also be some sort of "false flag" operation by someone else with extremely deep pockets and a political agenda. Along these lines, McAfee derides recent investigative techniques behind conclusions of Russian attribution, stating:

  "If I was the Chinese and I wanted to make it look like the Russians did it, I would use Russian language within the code, I would use Russian techniques of breaking into the organization . . . in the end, there simply is no way to assign a source for any attack.”

  Meanwhile, WikiLeaks' founder Julian Assange has insisted that the Russian government is not the source of the Podesta and DNC e-mails, implying that the source is instead a disgruntled DNC or other Democratic operative. 

  Fancy Bear, What will You Wear

  What does the public know for certain about Fancy Bear, or any of its other dozen names assigned by researchers such as APT 28, Tsar Team, Sofacy, Strontium and Pawn Storm? Not much.

  Despite being one of the most reported-on groups of active hackers, there is very little any researcher can say with absolute certainty about Fancy Bear. No one knows, for instance, how many hackers are working regularly within Fancy Bear, or how they organize their hacking squads. No one even knows if Fancy Bear is based in one city or scattered in various locations across Russia or the world. They don’t even know what they call themselves.

  No confirmed Fancy Bear hacker has ever actually gotten caught. Fancy Bear has evolved into a modern-day bogeyman — powerful and ubiquitous, nowhere and everywhere.

  A Quick Review of Reported Digital Forensic Evidence (in Plain English)

  Some of the cited circumstantial digital evidence relating to the DNC hacks while important and useful, also raises some fairly obvious caveats and questions, including:

  • The attacker or attackers registered a deliberately misspelled domain name used for email phishing attacks against DNC employees, connected to an IP address associated with Fancy Bear. (But aren't misspelled domains a cornerstone of phishing attacks all over the world?);
  • The actual clock times of the phishing schemes correlated with "business hours" in Russia and St. Petersburg time zones. (But couldn't Russian hackers just as easily orchestrate their schemes from a different time zone or digitally forge time-stamps? Also, don't hackers notoriously work at all hours of the day and night from any location they prefer?);
  • Malware found on the DNC computers was programmed to communicate with an IP address associated with Fancy Bear. (But would a sophisticated state sponsor of cyber-attacks be so incompetent as to use an IP address tracing back to their homeland?);
  • The DCLeaks.com domain was registered by a person using the same email service as the person who registered a misspelled domain used to send phishing emails to DNC employees. (But are the poor spelling habits of foreign spies truly evidence of their culpability and motive?);
  • Based on some sort of linguistic analysis, experts believe that Guccifer 2.0, the purported Romanian hacker who loudly and boldly claimed responsibility for the DNC hacks, was actually a Russian agent, posing as a Romanian in order to cover up Russian's own hack and spread disinformation. (But other experts disagree, including M.J. Connolly, a professor of Slavic and Eastern European linguistics at Boston College, who says that many of Guccifer 2.0’s language traits are not Russian and that Guccifer 2.0 was more likely Moldovan. Whatever the origins of Guccifer 2.0, isn't this evidence better suited for a Robert Ludlum spy novel or bad episode of The Americans, rather than a bona-fide government intelligence conclusion?)
  • The code in malware and tools of the DNC hacks appears to have been regularly and professionally updated and maintained while utilizing a sophisticated platform, suggesting a Russian operation funded to provide long-term data espionage and information warfare capabilities. (But isn't it common practice for hacking coders to update their software and tool kits as defenses change i.e. isn't that a prerequisite for all kinds of successful hacking?)
  • Metadata in a file leaked by “Guccifer 2.0″ shows it was modified by a user called, “Felix Edmundovich,” a reference to the founder of a Soviet-era secret police force. Another document contained Cyrillic metadata indicating it had been edited on a document with Russian language settings. (But is this how a sophisticated government spy ring behaves — sloppily leaving behind blatant, inculpatory evidence in plain view?);
  • Spear-phishing, the original hacking method used against the DNC, is the same method Fancy Bear uses to initiate its hacking operations. (But spear-phishing is used in some form by just about every hacking group, because it is proven to be the most effective way to inject malware on to a network in order to obtain command and control capabilities.)
  • Some of the phishing emails were sent using Yandex, a Moscow-based webmail provider, which indicates Russian involvement. (But Yandex is the Russian equivalent of Google — is its use in the DNC hack truly that compelling?); and
  • A bit.ly link believed to have been used by Fancy Bear in the past was also used in the spear-phishing scheme that purportedly tricked John Podesta into giving up his Gmail password. (But does Fancy Bear own some sort of criminal patent on their malware, so other hackers cannot ever use their tools and techniques?)

  Final Thoughts

  It is now widely accepted that despite government claims to the contrary: 1) Saddam Hussein was never building weapons of mass destruction (as initially asserted by the Bush Administration); and 2) the Benghazi embassy attack was not because of a YouTube video (as initially asserted by the Obama administration). Whether based upon sophisticated guesswork, concrete intelligence sources or a little of both, experts in each U.S. administration simply got it wrong.  

  Let's also not be naive. Recalibrating raw intelligence data for political purposes has always been tempting for Republicans and Democrats alike. Even if made entirely in good faith, political and ideological motives undoubtedly lurked in the shadows of the WMD and Benghazi intelligence findings.

  In the end, the Obama administration may be right about the Russians cyber-attack of election-related organizations. Russian-sponsored cyber-terrorism and data thievery is a major global problem — and has been for years. Indeed, legions of soldiers from countries across the globe, including Russian cyber-troops, wake up each morning with the sole objective to break into American computer systems and steal data.

  But for the time being, given the inherent subjectivity of intelligence regarding cyber-attacks and the differing interpretations of malware reverse engineering and other circumstantial digital evidence, a healthy dose of skepticism about Russian attribution still makes sense.

  As to whether the Russians somehow cyber-hijacked the election from Hillary Clinton to prop up Donald Trump — that is a completely different story. There is not a scintilla of official government evidence to support such an outrageous claim. It is a wholly unsubstantiated theory and my take is that mere skepticism is not enough. Flat out rejection may be in order.

  Under any circumstance, President-elect Donald Trump is quite right to engage in his own de novo review of government intelligence analytics regarding Russian hacking. It is what Americans expect every Commander-in-Chief to do before making major foreign policy decisions and escalating military tensions. In fact, President-elect Trump's approach is not only smart, courageous, logical and scientific — it is above all else, highly presidential.

  

  

• 2017 Stock Market Predictions: Trump Slump in January for Stocks

  This article by David Haggith was first published on The Great Recession Blog:

  

  I begin my 2017 stock market predictions with a recap of last year’s predictions. In an article back in 2015 titled “The Epocalypse: What Will D-Day Look Like?” I predicted the Fed would raise rates on December 16th, 2015, and the US stock market would crash immediately. Counterintuitively, I said it would crash by shooting upward for a few days; then it would round off, and then, in a short time, it would plunge off a cliff. (In all not a pattern you’d likely find anyone else predicting.)

  I said the stock market would crash by going up because everyone would look around after the long-dreaded day of the Fed’s first rate hike and see that the sky didn’t fall. That would turn them all smarmy and euphoric over how right they were about the recovery and about the bull market. That would, in turn, give rise to their hopes of a bull market forever and never ceasing. However, parties lead to hangovers. Once you recover from the hangover, reality sets in. That’s when they would begin to panic as they looked around, saw all the bottles and underwear and said, “Oh, my gosh, what did we do last night?”

   

  How my 2015/2016 stock market predictions did

   

  That is EXACTLY what happened (perhaps even including the underwear). January became the worst opening month in stock-market history. Now, to be fair, I also said that globally 2016 would turn into the “Year of the Epocalypse,” and it didn’t. (More on that in my next article of 2017 economic predictions, but you have to admit it was one darn weird year, which I think was only the warm-up act for this year.) However, as part of the economic apocalypse I predicted for 2016, I described the following blowup:

   

  Movement from bond funds to stocks will accelerate the bond implosion, wiping out billions in paper wealth on the high-yield bond side. Unfortunately for the market bulls, such mega-bond crashes almost always lead directly into stock-market crashes.

   

  The bond implosion took a lot longer to begin last year than I thought, but it finally got up to speed after Trump’s election, from which point it wiped out more than $13 billion from US bond funds (over $60 billion lost for the whole year) and surprising $1 trillion from all global bond markets (if CNBC’s numbers are right):

   

  ‘Trump Thump’ whacks bond market for $1 trillion loss

  Donald Trump’s stunning victory for the White House may mark the long-awaited end to the more than 30-year-old bull run in bonds…. A two-day thumping wiped out more than $1 trillion across global bond markets…. “We’ve had a sentiment shift in the bond market. People have already started reallocating out of bonds and into stocks, said Jeffrey Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital, which has more than $106 billion in assets. (CNBC)

   

  As I predicted last year, 2016 would be the year when billions would flow out of US bond funds and into stocks because “the money needs somewhere soft to land.” As I mentioned a week or so ago, the Trump rally has less to do with enthusiasm over the Trump plan and more to do with near-panic in the bond market sending a lot of bond money into stocks.

  If this flight from bond funds does become an complete bursting of the bond bubble, that is ultimately going to hurt everything, including stocks; so it is not the salvation of the stock market, other than temporarily.

  Many were not certain the Fed would raise rates on December 16, 2015, but I was because the Fed would have lost too much public confidence if it did not. It had been telegraphing its first interest increase all year long plus half of the year before that. To not raise interest at all during 2015 would have been a disaster. By revealing the Fed had no faith in its recovery, it would have deflated the Fed’s whole hope balloon, filled with nothing but hot air anyway.

  It was easy for me to see the stock market would fall at the end of 2015 and into 2016 because the first interest-rate increase in years would change the sick dynamic in the market where bad news was good news because it always resulted in hope of more Fed free (or cheap-and-easy) money. With QE ended and interest rates starting to rise, bad news would finally start to become just bad news … and there was a lot more bad news in the pipeline than good.

  It was also easy to see that pent-up emotions would burst into euphoria once we made it past the long-dreaded day of the first increase, and it was easy to see there was no underlying strength in the economy and no new plan for the economy, so no reason for the stock market to rise, other than that euphoria. Thus, fall it did. No surprise here.

   

  My 2017 stock market predictions: The Trump slump

   

  This year is not as easy. Things are much more complicated now. Trumphoria has run even higher than last year’s “irrational exuberance” (as Greenspan termed it), but it comes with a new plan that is vastly different than all preceding years, which could give some serious temporary economic boost. (It doesn’t resolve ANY of our underlying economic problems, though, and it makes the biggest of those problems (national debt) far worse; but it has also too much mojo to be ignored.) It is an enormous tax plan, and an economic change like that always creates a lot of money movement. So, there will be many shells in this game moving in many directions, making it harder to see where the peanut ends up (if the peanut you’re trying to watch is 2017 stock market predictions).

  Partially due to the Trump plan, the Dow Jones Industrial Average saw one of its fastest rates of rise in history during the weeks that followed Trump’s victory at the polls. The victory was a great surprise to many, but I had been saying on my blog that, if anyone had closet voters that the pollsters couldn’t see, it would certainly be Trump; so, I wouldn’t be surprised by a Trump victory. I was, however, as surprised as anyone by the Trump stock-market rally. I hadn’t predicted the stock market would immediately crash after the election, but I certainly didn’t expect it to soar because I figured Fed support for the market would wane.

  Prior to the Fed’s rate increase this December, which everyone else was as certain of this year as I was, I predicted the opposite effect from last year’s first hike. I said the Federal Reserve’s interest increase would be irrelevant, and it was! The stock market paid little attention this time because bond interest had already been rising, and it didn’t rise any faster after the rate increase. Mortgage rates had already been rising, too. In short, the markets were already pushing interest up faster than anything the Fed is doing anyway.

  If anything, this indicates the Fed is losing its grip on interest rates as market forces overwhelm them. The Fed could, of course, re-establish that grip with another massive stimulus program, but that is something they are loath to do. They have no desire to show their recovery has failed by scrambling to save it. They have no interest in helping Trump who has only badmouthed them (deservedly). If their recover is going to fail, they’d probably rather it fails at the start of Trump’s watch to cast a hex over everything he does. Besides, the interest hikes they have wanted to make but couldn’t are now an easy rise for them, which is why they’ve comfortably slated extra increases this year because they are just pricing into what the market is already doing.

   

  How easily can euphoria give way to a 2017 stock market crash?

   

  In my recent article, “Irrational Exuberance in US Stock Market Grasps at 20K for Dow,” I described how the Trump rally looks like exactly the kind of euphoric rise that is typically seen before a major stock market crash — rapid rate of rise fueled by emotions (joy/relief among Trump supporters), premised only on speculative hopes (a Trump plan that faces numerous obstacles before becoming reality) while having no basis in economic improvements or corporate earnings, stocks already being at a very heady CAPE (Cyclicly Adjusted Price-Earnings) ratio, the economy statistically overdue for a recession, and the fact that the Dow, in particular, was grasping for an extremely high milestone of 20K. Like the irrational rallies just before major crashes in recent history, it also came with a huge increase in trading volume, meaning a lot more people were suddenly jumping in to trade. A record-setting rally in the face of all that has “irrational exuberance” written all over it.

  But the one thing that made the Trump rally fit the irrational exuberance that precedes a major stock market crash more than any other factor was the fact that almost no one was predicting this bull run would end. (At first; a few are now.) Consumer confidence hit an all-time high, too. So, optimism suddenly burst like fireworks everywhere but it’s all in the same old muddy economy. Nothing has actually changed yet. Obama is even still president.

  When the stock market soars with no evidence of fear, that’s when it is most vulnerable to a crash because markets only crash big when almost no one sees the crash coming. (If they saw it coming, they wouldn’t be running up the slope like lemmings in lock step.) The absence of fear creates surprise when the market turns, and surprise can easily become panic. It’s a manic-depressive kind of cycle.

  One other thing I pointed out in that article was that pushing up to or even through a major milestone along any index doesn’t mean anything bullish. Many times in history, the market has fainted as it neared a major milestone and settled back down, not to reach toward that milestone again for many years. When the market has passed a milestone, it has sometimes continued a month or two and then crashed. Sometimes it keeps climbing.

  So, the stock market could well faint away before it hits 20,000, not to return to such heights for years to come (as has happened many times), or it could gather up some more steam and push right past — making everyone think the bull is charging on — only to get dizzy in the new rarified atmosphere and fall dead away. Although there are many reasons laid out here for thinking the stock market will come down in January, I have only one reason for thinking it will. Ironically, that is Trump’s own plan, which caused it to soar in the first place.

  If there is one thing that holds true for rapid rallies, it’s the huge desire to sell the top and realize some profit from the easy-money gains of recent weeks. The market has clearly rounded off from its rise and even slipped downward like a roller coaster cresting the first big hill. So, there is a hint that investors are about to do some profit taking, but a hint in the form of the market catching its breath doesn’t bear a conclusion by itself, especially this time of year. The market always tends to cool from Christmas week through the New Year as people disengage and go spend time with families and on vacations. Tomorrow the investors get back to “work.”

  And tomorrow (Tuesday, January 3, 2017) means everything. One very important thing changes for the market on Tuesday morning: We enter the trading year in which Donald Trump promises a maximum capital-gains tax cut on short-term investments. (Taxes on assets like stocks held less than a year.) That’s the kind of holdings a big speculative trader is going to have. If you were a big speculative trader who benefited hugely from buying stocks during the Trump rally, would you sell some of your stocks in late December to pocket the profit, or would you wait a few days so that you could realize an instant and rather substantial tax savings, too? I don’t think I need to answer that for you.

  So, ironically Trump’s infrastructure spending plan caused the rally before the plan has even been presented to congress, but Trump’s tax plan could be the rally’s undoing before that plan is sent to congress.

   

  Other factors that could let the hot air out of the Trump stock market rally

   

  • Any benefit from infrastructure spending is far down the road because of how long it takes to plan and approve projects.
  • Trump and his cabinet members have already started backing away from the infrastructure stimulus plan, saying it will not happen until the end of his term. It is not their top priority.
  • We already saw Obama’s “shovel-ready” plan fail to gain any enthusiasm among municipalities, counties and states and the federal government, so it failed.
  • It’s time to get real. You can promise anything, but then there is congress. Trump has lined up a solid wall of enemies among the Democrats, but he also faces many Republican defectors who openly stated they would not only vote with the Dems in the election but would vote for one of the worst Democratic candidates ever fielded, rather than vote for Trump. Do you think these Pubs would be so brazen about voting with the Dems for Hillary and then hesitate to side with them on the house or senate floors? Getting a majority may be hard for Trump may be hard, and he doesn’t have a solid mandate because he lost the popular vote by a large amount.
  • In the very least, the reality that gets approved in congress is always a compromise from the promise.
  • The plan is so big, were it to happen, it would drive up the cost of its own financing like a forest fire creates its own wind. That means it will drive up the cost of the entire existing national debt, which has to be regularly refinanced. And that means the real cost in interest for the government will be astronomical because of what the federal government will have to pay on the entire debt, not just on the plan
  • President Obama’s scorched-earth policies seem intent upon creating as much global chaos as he can before Trump takes over.

   

  Will the stock market crash in 2017?

   

  That it will slump in January, I’m fairly sure — not certain but fairly sure. I am not certain that will be an immediate plunge on Tuesday, but I think profit taking and numerous other concerns will take over before the inauguration.

  As I say, Obama is doing so many chaotic things right now that he looks like he’s losing his mind in a temper tantrum. Protests may become riots leading up to and especially during the inauguration as desperate people continue to do everything they can to thwart Trump’s election. The entire world is descending into chaos due to outlandish immigration polices, old wars and new wars and, in the US, due to rage over Trump’s victory. All of these things will make the market uneasy as they grow in intensity, which they appear likely to do.

  Trump, on the other hand, has promised massive tax changes, which will certainly move money all over the place, particularly back into the US. A lot of that may go into stocks, especially repatriated corporate savings and anticipated corporate income-tax savings. (Where there are people selling to take profits there have to be buyers, so selling doesn’t necessarily drive the price of stocks down; if there are enough new buyers jumping in to take up the offerings.)

  All this movement of money will increase the velocity of money in many directions and should heat up the economy as intended, but increasing the velocity of trillions of fiat dollars that have been parked in stocks and bonds for years is a kind of event we’ve never seen. Some say it will create huge inflation as it moves that money into the Main-Street economy. On the other hand, the wipe out of stocks and bonds if the bond market crashes first could evaporate so much fiat money back out of the monetary system that we see hyper deflation.

  So, I think a stock market slump at the start of the year is fairly sure because some profit taking is bound to happen, and many investors are likely to take pause with so much happening to wait and see how Trump’s plans start to shape up in congress before running things up any higher. This market may slouch toward its fall. A 2017 stock market crash (maybe at the start of the year but probably not) seems likely because the stock market enters 2017 looking like a jinga puzzle balancing on one stick at the bottom of the stack; but Trump is also standing over it like a levitating magician with invisible strings of hope descending from his fingers to hold the pieces up; and a lot of other falling things like bonds may choose stocks as their last resort.

  So, I have no idea how so many major countervailing forces will play out in the short term; i.e., which will hit first or hardest. What I am sure of is one very chaotic year that makes 2016 look like an opening act because the forces that oppose Trump are not going to retreat, and similar anti-establishment forces in other countries aren’t going to either. In the US, the forces opposed to Trump are greater in size (raw vote count) than the forces that put him in power, so they are also not going to retreat. When the winning side has the least actual supporters, you can probably expect a pretty fierce and weird battle from the opposition.

  It would take a miracle from a power higher than Donald Trump to keep all of that from breaking up, and God hasn’t told me if he’s going to intervene. What I see is spreading chaos throughout the world with no one who can pull it together. I was certainly right about growing chaos last year, and this year looks as though the global breakup will continue to spread like fracture lines on a frozen pond under the weight of a fighting crowd. The US stock market is only one of those lines while more and more crowds are coming onto the ice to enter the fray. The ice could break up cataclysmically as the weight increases all over the pond and plunge everyone into the ice water, or it may only break here and there, a few at a time. The only certain thing is growing chaos.

  If you have to be out on the ice, stand near the shore, and bring ropes.

   

  Read also: Irrational Exuberance in US Stock Market Grasps at 20K for Dow

  

• Assange To Hannity: "Our Source Is Not The Russian Government"

  It won’t be the first time Julian Assange was interviewed and asked whether the source of the hacked DNC and Podesta emails was Russia; however, it will be the first time everyone pays attention to his answer. Recall that the first such interview of Assange – when the question of who had sourced Wikileaks with the hacked emails came up – took place exactly two months ago, on November 3. Back then, in an interview televized by RT, John Pilger explicitly asked Asange where the emails in question had come from.

  Assange’s response was straightforward: “The Clinton camp has been able to project a neo-McCarthyist hysteria that Russia is responsible for everything. Hillary Clinton has stated multiple times, falsely, that 17 US intelligence agencies had assessed that Russia was the source of our publications. That’s false – we can say that the Russian government is not the source.”

  That particular interview took place when Trump has losing badly in the polls, and as such few people paid attention: after all, what difference did it make who had leaked the Podesta emails: Hillary Clinton was assured to win (with a 90%+ probability according to the NYT and other “non-fake news” outlets).

  Needless to say, the issue of Russian hacking has since come back with a vengeance, and culminated last week with Obama expelling 35 Russian diplomats in the greatest diplomatic escalation between the US and Russia in decades; an action which took place based on a flimsy 13-page DHS/FBI report which demonstrated that anyone could have hacked the DNC emails if only they spent a few dollars to purchase a piece of Ukranian PHP malware.

  Which is why many more will pay attention to Assange’s next interview with Sean Hannity, which will air Tuesday on Fox News. According to a Fox News release, the two will discuss Russian hacking, the 2016 presidential election, and both the Obama and upcoming Trump administrations. It will air at 10 p.m. on Jan. 3, with additional portions of the interview airing throughout the week. As Variety adds, The interview will mark Assange’s first face-to-face cable news appearance. It is not, however, the first time he’s spoken publicly to Hannity. Most recently, in December, Assange called into Hannity’s radio show, in which the host gushed to Assange that “you’ve done us a favor” in exposing gaps in U.S. cybersecurity.

  And while what Assange would say was rather predictable, as he would simply reiterate what he has said previously, courtesy of Real Clear Politics, we have an advance glimpse into the punchline, to wit:

  HANNITY: Can you say to the American people, unequivocally, that you did not get this information about the DNC, John Podesta’s emails, can you tell the American people 1,000 percent that you did not get it from Russia or anybody associated with Russia?

   

  ASSANGE: Yes. We can say, we have said, repeatedly that over the last two months that our source is not the Russian government and it is not a state party… Obama is trying to say that President-elect Trump is not a legitimate President.

  When asked if  WikiLeaks changed the outcome of the election, Assange replied “Who knows, it’s impossible to tell” but, he added, “if it did, the accusation is that the true statements of Hillary Clinton and her campaign manager, John Podesta, and the DNC head Debbie Wasserman Schultz, their true statements is what changed the election.”

  Which is correct, however admitting as much would shift the blame away from the “Russians” and back to the failures of the Clinton campaign and the shortcoming of the Democrats, and the whole point of this scapegoating campaign is precisely the opposite.

  As the Hill adds, Assange said there’s an “obvious” reason the Obama administration has focused on Russia’s alleged role in Democratic hacks leading up to Donald Trump’s electoral win.

  “They’re trying to delegitimize the Trump administration as it goes into the White House.”

  He then added that “our publications had wide uptake by the American people, they’re all true,” Assange continued. “But that’s not the allegation that’s being presented by the Obama White House.”

  However, as we said previously, since at the end of the day it is Assange’s word – unless Wikileaks does actually reveal its source, which would be professional suicide – against the word of Obama and 17 agenices who back him up, despite still having provided no actual evidence in the ongoing, and quite bizarre attempt to force a deterioration of US-Russian relations in the final days of the Obama administration, just so Trump can inherit a complete diplomatic mess and make closer relations with Putin more complicated, this latest interview with Assange will likewise resolve absolutely nothing.

  

  

• Syrian Refugee Arrested After Seeking €180,000 From ISIS To Drive Truck Bombs Into European Crowds

  Two weeks after a Tunisian man, Anis Amri, whose German asylum request had been rejected, rammed a truck into a Berlin Christmas market and was later shot dead by Italian police, the German state prosuector’s office said on Monday that a Syrian migrant who arrived in Germany two years ago was arrested on suspicion of seeking money from the Islamic State, to drive truck bombs into crowds.

  Saarbruecken prosecutor Christoph Rebmann said the 38-year-old Syrian was detained on Saturday in his apartment in Germany’s Saarland State, and an arrest warrant was issued on Sunday on suspicion that he was trying to raise 180,000 euros ($189,000) to fund an attack. Rebmann said the man, whom he did not name, was suspected of seeking the money from Islamic State in Syria to buy trucks and load 400-500 kg (880-1,100 pounds) of explosives into each of them. “He is suspected of … requesting 180,000 euros from a contact person in Syria on his cell phone from Saarbruecken in December, 2016 so that he could acquire vehicles to pack with explosives and drive them into a crowd,” Rebmann said.  It was not clear if the Islamic State in Syria, which has been facing a severe liquidity shortage since its oil operation was virtually eliminated by Putin, had that kind of spare change.

  
  The truck which ploughed into a crowded Christmas market in Berlin, on
  December 19, 2016.

  According to a separate statement by Saarland police, the Syrian suspect asked for the ISIS money to finance an “unspecified terrorist attack” in “Germany, France, Belgium and the Netherlands.” 

  Saarland Deputy Police Commissioner Hugo Muller said that the Syrian man planned to repaint the vehicles as police cars. “In his respective communications with contacts linked to IS, he [the suspect] offered or suggested to repaint cars to make them look similar to police cars, load them with explosives, position them in a crowd of people and then detonate them,” Muller said.

  The Prosecutor’s office announced that the suspicion of plotting a terrorist attack are based on a chat in the online messenger Telegram, which was found in the telephone of the suspect during a search of his house. “So far the investigation has found no evidence that the suspect had already prepared [booby trapped] cars to carry out the attacks,” authorities noted though. The man admitted to making contact with the Islamic State, but has denied he had any plans to stage an attack.

  “He said he wanted the money from ISIS to support his family back in Syria,” Rebmann told Reuters, adding that the Syrian had said he wanted to fool the jihadist group into sending him the money.

  The Syrian came to Germany on Dec. 5, 2014, just before a wave of more than 1.1 million asylum-seekers arrived from the Middle East, Africa and Asia in 2015. He was given permission to stay in Germany on Jan. 12, 2015, and originates from the Syrian is from the city of Raqqa, the Islamic State’s de factor capital. According to Reuters, the prosecutor’s office in Saarbruecken, near the French border, had been alerted to his activities by the BKA federal crime office.

  Suggesting a shift in Germany’s “Open Door”approach to refugees, Interior Minister Thomas de Maiziere said that failed asylum seekers who are regarded as a danger should be detained until they can be deported. He made the suggestion in a guest column in Tuesday’s edition of the Frankfurter Allgemeine newspaper.

  Both he and Merkel have plenty of reasons for concern: political analysts, conservative allies and diplomats have said a major terrorist attack in the coming months could damage Merkel’s hopes of winning a fourth term in September’s election. The far-right Alternative for Germany (AfD) party has blamed her policies for the Dec. 19 Berlin attack as well as previous terrorist attacks on German soil.

  

  

• A Biased 2017 Forecast, Part 2

  Submitted by Jim Quinn via The Burning Platform blog,

  In Part One of this article I discussed the failure of our brains to think rationally due to our biases and the relentless propaganda flogged by our Deep State ruling class. Viewing the future through the looking glass of the Fourth Turning keeps you focused on the three catalysts which will drive all events in 2017 and beyond. I’ve addressed my 2017 Debt forecast in Part One. Now I will make some guesses about what might happen in 2017 related to Civic Decay and Global Disorder.

  Civic Decay Forecast

  “Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.” – Daniel Kahneman, Thinking, Fast and Slow

  

  The presidential election and its aftermath tell you everything you need to know about the level of civic decay overtaking this country. The country is as divided as it was after the election of Abraham Lincoln in 1860. There is virtually no common ground between liberals and conservatives. The pure hatred and contempt between the winners and losers in the recent election does not bode well for the country over the next four to eight years.

  The social fabric of the country has been torn asunder. The Clinton supporters believe anyone not on their side is deplorable, racist, misogynist, and fans of Hitler. Trump supporters believe anyone not on their side is low IQ, Muslim loving, deceitful, math challenged, and fans of a criminal. The gulf between the two sides is unbridgeable.

  Barack Obama, the well-dressed, polished, articulate, empty suit, who has occupied the White House for the last eight years serving as the front man for the Deep State, has done more to destroy race relations and sense of community than any president in history. His divisive rhetoric and actions over the last eight years created the atmosphere for the acrimonious election and the violent protests that followed.

  His failure to quell the Soros funded Black Lives Matter terrorist organization has resulted in the slaughter of police across the country. Meanwhile, his hometown of Chicago has seen 800 homicides and over 4,400 shootings in 2016 – with over 90% blacks killing blacks. His legacy is one of complete and utter failure, but his hubris knows no bounds, and he actually believes his eight year reign of error was a resounding success. Facts be damned.

  

  “A person who has not made peace with his losses is likely to accept gambles that would be unacceptable to him otherwise.” – Daniel Kahneman, Thinking, Fast and Slow

  Obama fears his legacy will go up in flames. When you govern through executive orders, bypassing Congress, and flaunting the Constitution, your actions can be overturned with the stroke of a pen. When your crowning achievement – Obamacare – is derided by virtually everyone in the country as an epic failure and will be repealed and replaced in short order, you realize your entire presidency was a sham and a national disgrace.

  Obama is flailing about in his final weeks desperately trying to keep the attention focused upon him. He is gambling with the lives of his countrymen by doing everything in his power to provoke World War III with Russia and to inflame the Middle East with his UN engineered snub of Israel. Obama doesn’t like to lose and he is acting like a churlish spoiled brat as his time runs out. He has become a laughingstock around the world. He will fan the flames of discontent in this country until he is ushered out of the White House.

  Here are a few suppositions about what will happen next:

  • Obama trying to sow discord between the U.S. and Russia will fail, as Trump and Putin will meet and find common ground in the Middle East, the Ukraine, and Turkey. Republican neo-cons like McCain and Graham will be outraged. Liberal warmongers who once protested Bush’s wars will also be outraged. The mainstream media will continue to try and fan the flames of war.
  • Before leaving office Obama will poke a final stick in the eye of Trump and his supporters by pardoning Hillary Clinton for all possible wrongdoing. This will infuriate the right. Trump will do everything in his power to investigate the Clinton foundation and any issues which could incriminate Bill, Holder, Lynch or Obama. The peaceful transition of power has not been observed by the left, so all bets are off once Trump takes office.
  • Well-funded (by Soros) domestic agitators, including BLM and various femi-nazi groups, will attempt to disrupt the inauguration ceremonies. There will be violence, conflicts with Trump supporters, and police confrontations. This will further widen the divide in this country. The left have proven to be those who promote violence and will continue to do so. If they venture outside of their urban safe zones, they will be met with a white heavily armed populace.
  • The left wing mainstream media will not be deterred in their efforts to bring down the Trump presidency. They will fire away on a daily basis as their ratings drop lower and lower. Their railing against “fake news” has backfired, driving more people to alternative media sites where they will not be inundated with Deep State approved propaganda. The press will do their utmost to agitate the masses, creating and promoting conflict. Trump will continue to bypass and scorn the media outlets by taking his message directly to the people.
  • Building the wall, shutting off the immigration pipeline of Muslim refugees, defunding sanctuary cities, and fully supporting local police across the country will trigger snowflakes, BLM terrorists, illegal immigrants, and various Soros funded radical groups to stage violent protests in the liberal urban enclaves. They are waiting for their next high profile police shooting to pounce. The civil chaos and violent protests will increase as the year progresses.
  • Whoever Trump nominates as his Supreme Court justice will face enormous scrutiny. The left wing media will stop at nothing to destroy the nominee. The hearings in Congress will be nasty, rude, and vitriolic. The animosity between the opposing sides will reach epic proportions. Both sides know the Supreme Court is of vital importance to the future course of the country.
  • With Obama failing to fade into the sunset and his enormous ego and arrogance spurring him to agitate the left wingers, there will be no de-intensifying of the rhetoric between the right and the left. As we’ve seen, the left are the proponents of violence as their chief weapon. An attempt on the life of Trump is a distinct possibility in his first year in office. A successful or unsuccessful attempt would have far reaching consequences that could lead to civil chaos.

  Global Disorder Forecast

  “We focus on our goal, anchor on our plan, and neglect relevant base rates, exposing ourselves to the planning fallacy. We focus on what we want to do and can do, neglecting the plans and skills of others. Both in explaining the past and in predicting the future, we focus on the causal role of skill and neglect the role of luck. We are therefore prone to an illusion of control. We focus on what we know and neglect what we do not know, which makes us overly confident in our beliefs.” – Daniel Kahneman, Thinking, Fast and Slow

  

  The level of global disorder hasn’t been this high since the 1930s. There are dozens of potential flash points capable of producing a cascading crisis which could blow up the world. The highly touted establishment mantra of globalization has produced an interconnected web of trillions in global debt, with one quadrillion dollars of indecipherable derivatives layered on top, all dependent upon the sustenance of insolvent mega-banks and bankrupt nation states. The only thing keeping this global Ponzi scheme alive is the unfounded belief in the brilliance of central bankers and corrupt politicians.

  The detonator for these interwoven financial weapons of mass destruction is rising global interest rates. The global financial system will be blown sky high by a sustained high volume sovereign bond selloff. The bond market is always the canary in the coal mine. Bonds will sell-off before stocks and real estate. Bond markets have begun to sell-off in a relatively orderly manner over the last three months, with long term Treasuries falling 13%. Bill Gross recently described the growing risk:

  “Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day.”

  Will that day happen in 2017? No one knows for sure, but the probability is much higher than biased “experts” believe. The substantial concentration of cognitive biases clouding the judgement of the supposed wise men ruling the world has blinded them to the tragic consequences of what happens when the mother of all bubbles explodes like a supernova.

  The complacency of those in charge and the trusting masses will eventually be dealt a death blow when the high frequency trading computers run amuck and wipe out trillions of faux paper wealth in a matter of minutes. The powers that be will declare no one could have seen it coming, when in actuality anyone with a basic understanding of math could have seen it coming from a mile away. Most have chosen to remain blind to reality, because dealing with it is too painful to consider.

  “We can be blind to the obvious, and we are also blind to our blindness.” – Daniel Kahneman, Thinking, Fast and Slow

  Let’s get to a few prognostications regarding global events in 2017:

  • Obama, in a despicable act of trying to fence Trump in, has introduced further sanctions against Russia and Putin based upon no solid evidence other than the opinions of the same people who were sure there were WMD in Iraq. The MSM and the neo-con faction of his party are all on Obama’s side. I expect Trump to override Obama’s childish display of antagonism, while showing the neo-cons there is a new sheriff in town, by developing a working relationship with Putin and lowering the tensions between the two countries.
  • Trump and Putin will come to an agreement regarding keeping Assad in power in Syria while turning both nations’ attention to obliterating ISIS and the so called “moderate” Al Qaeda terrorists in the Middle East. General Mattis and Trump’s team of rational thinkers will develop a feasible plan to destroy ISIS once and for all. Safe zones will jointly be created in Syria and Iraq by the U.S. and Russia to stem the tide of refugees pouring into the EU and U.S.
  • The U.S. dependency on Saudi oil will continue to decrease, further reducing their influence on U.S. policy in the Middle East. Saudi failure in Syria, Yemen and keeping Iran contained will lead to further discontent in the kingdom. Financial woes, declining oil output and religious tensions will fray the fabric of their insular society and lead to a religious uprising and civil war.
  • Turkey has been pushed into the Russian sphere of influence by U.S. meddling. The country is falling apart. A civil war on par with the Syrian conflict is likely to breakout. Russia would likely support the dictator Erdogan against rebel forces supported by NATO. Religious and sectarian violence will tear the country apart and create further tensions between Russia and the U.S.
  • Israel will pre-emptively take action either covertly or overtly to damage the Iranian nuclear program without informing the U.S. of its actions in advance. This will be supported by the neo-con factions in the U.S. government, but will strain relations between Netanyahu and Trump.
  • The crackpot efforts at demonetization by Modi in India will destroy the Indian economy and cause societal upheaval among his 1.25 billion mostly poor citizens. With the eighth largest economy on the planet imploding, the economic reverberations across Southeast Asia will be enormous, possibly being the trigger for the next step down in this ongoing global recession. India’s weakness could spur their enemy Pakistan to take aggressive border actions which could lead to military conflict.
  • With the fourth largest economy in the world in near permanent recession for the last twenty years, Japan’s debt to GDP ratio of 230% portends financial collapse. In the midst of a demographic implosion, with negative interest rates, and a central bank buying all the newly issued debt and billions in stocks, Japan is a bug seeking a windshield. When this Ponzi economy crashes, the worldwide impact will be significant. If Japan doesn’t trigger the global eruption, it will be a major contributor as the detonation spreads around the world.
  • China continues to steadily devalue the yuan against the USD and has eliminated all the gains since 2010. At the same time they have reduced their foreign reserves by over 20% since mid-2014. China’s third largest economy in the world is slowing rapidly as more bad debt builds up in their system. They have a real estate bubble that makes the U.S. bubble seem like a pimple on the ass of a fly. A trade war initiated by Donald Trump would be the pin bursting the Chinese debt bubble. The situation could intensify into a bond selloff and panic. If derivative positions of over-leveraged or poorly-hedged globally systemic banks begin to unravel, cascading losses could lead to a vicious cycle and a tragic outcome.
  • Potential military conflict between China and Japan/U.S. over the islands in the South China Sea ramps up by the day. No one wants a war, but all it would take is a careless stupid act by a low level military officer to create a crisis. China is already bent out of shape by Trump acknowledging the existence of Taiwan. China is still essentially a dictatorship. The country is racked by corruption. An economic collapse could be met with distracting the public through a military adventure against Taiwan. These scenarios are unlikely in 2017, but not out of the question.
  • The most likely and potentially most dire event which could affect the world in 2017 is the disintegration of the EU. Greece is still a basket case. Italy is on the brink. The EU area economy barely registers positive after years of negative interest rates and debt issuance. Unemployment rates, excluding Germany, range between 10% and 25%. Brexit and Trump’s victory portend a further shift to the right in the EU. The right wing party will win the French presidency. Merkel will be defeated in the upcoming elections. France and Italy are likely to have a referendum on leaving the EU. The departure of either will end the failed experiment. The insolvent Italian, French and German banks, specifically Deutsche Bank, will collapse in an EU disintegration scenario.
  • The influx of Muslims into Europe is destroying their culture and leading to violence, terrorism, bloodshed, and now retribution. The left wingers have made a dreadful mistake in allowing hordes of Muslims to invade their countries. Their already fraying social welfare states are now completely bankrupt and citizens are afraid to go into the streets for fear of being attacked by members of the religion of peace. With the right gaining power in France, Germany and Italy, the blowback against Muslims will be violent and bloody. European cities will be rocked with violence throughout 2017.

  “Confidence is a feeling, which reflects the coherence of the information and the cognitive ease of processing it. It is wise to take admissions of uncertainty seriously, but declarations of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.”  – Daniel Kahneman, Thinking, Fast and Slow

  

  I think it is pretty obvious my pessimism bias may have skewed my predictions for 2017. I’ve been pessimistic for the last eight years and the stock market is up 200%. I try to assess the world from a logical fact based frame of mind, but for the last eight years the world has been kept afloat by a combination of debt, delusions and denial.

  The Deep State propaganda machine has convinced the masses we are living in normal times, despite the fact the Fed printed $3.5 trillion out of thin air and handed it to the criminal Wall Street banks, interest rates have been kept at or near zero for eight years, revelations from Snowden that we truly live in a surveillance state far exceeding Orwell’s dystopian vision, the national debt doubling to $20 trillion, proof that all financial markets are rigged, undeclared wars being waged across the globe, and a reality TV star defeating a criminal to be president of the United States. Sounds pretty normal to me.

  My confidence level in my predictions is quite low. But, if one or two of the low probability events comes to fruition, the financial and/or human devastation will make 2008 look like a walk in the park. I don’t have an agenda in putting forth these predictions. I’m not selling anything or hawking stocks, bonds, or gold. I don’t tout myself as an expert like the over-confident, arrogant pricks on CNBC, CNN, MSNBC, or FOX. I’m just trying to understand what is happening in this crazy universe. We live in an uncertain world. I believe an unbiased appreciation of uncertainty is the cornerstone of rationality and reason. Not acknowledging the role of luck or chance in the course of human events is setting you up for a fall.

  Our countries, central banks, financial complex, military industrial complex, sick care complex, global mega-corporations, and government bureaucracies are ruled by men whose hubris, arrogance, greed and hunger for power has warped our world, producing unfathomable ill-gotten profits for the financial class who can abuse justice with impunity while the average man is bullied, pillaged and abused with disregard.

  These well dressed, highly educated, sophisticated, soulless barbarians hide their evil deeds behind the trappings of culture, but they are revealed by their grotesque schemes, murderous policies, and war profits soaked in blood. When they lose control of this global Ponzi scheme, I hope they pay the ultimate price for their traitorous deeds. Will it happen in 2017? I don’t know. But it will happen before this Fourth Turning climaxes.

  “The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort – in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction, and in mankind’s willingness to use it.” – Strauss & Howe – The Fourth Turning

  

  

• Dramatic Time-Lapse Video Captures Arrival Of Beijing Smog Cloud

  The following dramatic time-lapse video, shows a wall of toxic smog rolling into Beijing over a 20-minute period collapsed into a 10 second video; it gives a glimpse of the pollution problem in China’s capital city. Chas Pope, a British engineering consultant working in Beijing, shot the video.

  An air-quality index released by China’s municipal environmental protection bureau, which measures potentially hazardous particles in the air, hit 482 on Sunday, almost touching the 500 mark where the scale tops out, and far beyond the point deemed hazardous to health, according to the South China Morning Post.

  “Everyone should avoid all physical activity outdoors,” a warning accompanying the reading warns. “People with heart or lung disease, older adults, and children should remain indoors and keep activity levels low.”

  As a result of the heavy smog to hit much of northern China on Sunday, hundreds of flights were canceled and highways shut, disrupting the first day of the New Year holiday. The latest smog incident to hit Beijing, and which forced local authorities to extend an “orange alert” – the second highest level for air pollution until Jan. 4 – followed a similar hazardous smog alert in mid-December, leading authorities to order hundreds of factories to close and to restrict motorists to cut emissions.

  The latest bout of air pollution began on Friday and is expected to persist until Thursday, although it will ease slightly on Monday, the last day of the New Year holiday according to ABC.

  In Beijing, 126 flights were canceled at the city’s main airport and all buses from there to neighboring cities suspended, state news agency Xinhua said.

  Average concentrations of small breathable particles known as PM2.5 were higher than 500 micrograms per cubic meter in Beijing – 50 times higher than World Health Organization recommendations.

  In Tianjin, Beijing’s next door metropolis, the smog was not as serious but visibility much worse, with more than 300 flights canceled at Tianjin airport and conditions not expected to improve in the near term, the city government said. Xinhua said highways into and out of the city were also closed.

  In Shijiazhuang, the capital of Hebei province that surrounds most of Beijing, about two dozen flights were canceled and eight flights diverted to other airports because of the smog, the People’s Daily said on its website.

  A total of 24 Chinese cities have issued red alerts for the current round of pollution, which mandate measures like limiting car usage and closing factories, while 21 have issued orange alerts, including Beijing and Tianjin.

  As Reuters notes, Pollution alerts are common in northern China, especially during winter when energy demand, much of it met by coal, soars. The country’s northern provinces mostly rely on the burning of hundreds of millions of tonnes of coal each year for heating during northern China’s bitterly cold winters.

  China began a “war on pollution” in 2014 amid concerns its heavy industrial past was tarnishing its global reputation and holding back its future development, but it has struggled to effectively tackle the problem.

  Unfortunately for China’s residents, the “war” is lost every time Chinese production goes into overdrive, forcing the government to order manufacturing to halt output, leading to an economic slowdown, and forcing a sharp restart several weeks to months later, usually as a result of more trillions in credit injections, which then send the credit impulse propagating around the globe.

  In other words, the global economy is now held hostage by the level of toxic particullate matter in northern China: any time this goes off the chart, manufacturing in China is halted, leading to significant downstream effects around the entire world.

  

  

• Yuan Dumps, Bitcoin Jumps As China Researchers Suggest "One-Off Devaluation" & Capital Controls

  As we have detailed numerous times recently, the recent move in Bitcoin has been strongly suggesting increasing fears of capital controls and/or expectations of a looming (and quite notable) devaluation of the Yuan against the US Dollar. Tonight saw China's largest nationalist tabloid suggesting that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level. Offshore Yuan is tumbling – to new record lows.

  As we noted earlier, a quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls. 

  

  Based on this chart alone, the recent surge in Bitcoin would imply that a substantial devaluation of the yuan is looming. That, or even more aggressive capital controls.

  And tonight, researchers with State Information Center led by Zhu Baoliang wrote in an article published on Shanghai Securities News, that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level and suggest capital controls and as well as what seems like a reference to "virtual currency"…

  …the effect of monetary policy continues to weaken. After repeatedly cut interest rates, lowering after registration, our short futures money market interest rates have dropped to about 2.2%, in the history of a relatively low level. Money supply growth rate far exceeds the rate of economic growth, social capital is abundant. But because of the lack of investment opportunities, more funds through the state-owned enterprises and financing platform to invest in less efficient infrastructure, or real estate, or idle in the virtual economy. Capital continues to off real to the virtual, will breed all kinds of asset bubbles, a huge impact on financial stability. At the same time, state-owned enterprises, financing platforms, real estate and other sectors and industries a large number of financing, but also pushed up the financing costs of financial markets, private enterprises and small and medium-sized enterprises to reduce the financing cost is not large, thus out of private investment.

   

  …

   

  It is suggested that the total social financing and broad money growth should be about 12%, and maintain a reasonable and reasonable liquidity scale. The second is to further improve the RMB exchange rate market-oriented level, and enhance the flexibility of the RMB exchange rate, or even a one-time devaluation of the renminbi, so as to maintain the stability of the RMB in the equilibrium level.

   

  At the same time, the proper control of foreign exchange outflow, the state-owned enterprises in overseas real estate, antiques, teams and other non-substantive, non-technical M & A activities to be strictly limited. Third, closely tracking study American influence elected president's economic policies on China, the foreign exchange market volatility and prevent cross-border capital outflows triggered massive financial risk domestic bond market, the real estate market.

  And for now the reaction is offshore Yuan selling to record lows…

  

   

  And Bitcoin (in China) surging very close to record highs…

  

   

  7,588 Yuan per Bitcoin in the record high and volume in this most recent surge is dramatically higher. But as we noted earlier, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

  

  

• Edward Snowden Trashed In Absurd WSJ Op-Ed

  Submitted by Mike Shedlock via MishTalk.com,

  Edward Jay Epstein has an op-ed in the Wall Street journal promoting his new book “How America Lost Its Secrets: Edward Snowden, the Man and the Theft”.

  Epstein discusses the Fable of Edward Snowden

  At the forefront of Epstein’s claims is the fact that Snowden lied. “As he seeks a pardon, the NSA thief has told multiple lies about what he stole and his dealings with Russian intelligence,” says Epstein.

  

  Of all the lies that Edward Snowden has told since his massive theft of secrets from the National Security Agency and his journey to Russia via Hong Kong in 2013, none is more provocative than the claim that he never intended to engage in espionage, and was only a “whistleblower” seeking to expose the overreach of NSA’s information gathering. With the clock ticking on Mr. Snowden’s chance of a pardon, now is a good time to review what we have learned about his real mission.

   

  Mr. Snowden’s theft of America’s most closely guarded communication secrets occurred in May 2013, according to the criminal complaint filed against him by federal prosecutors the following month. At the time Mr. Snowden was a 29-year-old technologist working as an analyst-in-training for the consulting firm of Booz Allen Hamilton at the regional base of the National Security Agency (NSA) in Oahu, Hawaii. On May 20, only some six weeks after his job there began, he failed to show up for work, emailing his supervisor that he was at the hospital being tested for epilepsy.

   

  This excuse was untrue. Mr. Snowden was not even in Hawaii. He was in Hong Kong. He had flown there with a cache of secret data that he had stolen from the NSA.

  Well la-de-friggin da. The idiocy of those opening paragraphs is obvious to the world.

  What was Snowden supposed to say? “Hey guys I am not coming into work because I stole documents and I am meeting up with Greenwald?”

  So of course Snowden lied… he had to lie.

  It was not the quantity of Mr. Snowden’s theft but the quality that was most telling. Mr. Snowden’s theft put documents at risk that could reveal the NSA’s Level 3 tool kit—a reference to documents containing the NSA’s most-important sources and methods. Since the agency was created in 1952, Russia and other adversary nations had been trying to penetrate its Level-3 secrets without great success.

   

  Yet it was precisely these secrets that Mr. Snowden changed jobs to steal. In an interview in Hong Kong’s South China Morning Post on June 15, 2013, he said he sought to work on a Booz Allen contract at the CIA, even at a cut in pay, because it gave him access to secret lists of computers that the NSA was tapping into around the world.

  Snowden figured out the NSA was involved in illegal activity and he wanted to investigate the depth of it. He succeeded. Congratulations to Snowden for a job well done.

  In October 2014, he told the editor of the Nation, “I’m in exile. My government revoked my passport intentionally to leave me exiled” and “chose to keep me in Russia.” According to Mr. Snowden, the U.S. government accomplished this entrapment by suspending his passport while he was in midair after he departed Hong Kong on June 23, thus forcing him into the hands of President Vladimir Putin’s regime.

   

  None of this is true. The State Department invalidated Mr. Snowden’s passport while he was still in Hong Kong, not after he left for Moscow on June 23. The “Consul General-Hong Kong confirmed that Hong Kong authorities were notified that Mr. Snowden’s passport was revoked June 22,” according to the State Department’s senior watch officer, as reported by ABC news on June 23, 2013.

  Mercy! His passport was invalidated on June 22, not June 23. Call out the national guard. It’s treason I say.

  To provide a smokescreen for Mr. Snowden’s escape from Hong Kong, WikiLeaks (an organization that the Obama administration asserted to be a tool of Russian intelligence after the hacking of Democratic Party leaders’ email in 2016) booked a dozen or more diversionary flight reservations to other destinations for Mr. Snowden.

  Oh yes, let’s drag Obama’s stupidity into the discussion. The only thing Epstein failed to deliver was nonsense from the Washington Post. Perhaps it’s in the book.

  Nowhere did Epstein make the case Snowden was anything more than a whistle-blower.

  His op-ed is so ridiculous, one can dismiss the book as the work of a misguided fool who fails to understand what the US constitution is all about.

  @ggreenwald @snowden Edward Snowden is a genuine US hero. It's fake-patriot, book-writing fools like Epstein the US really has to fear.

  — Mike Mish Shedlock (@MishGEA) January 2, 2017

  

  

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• How A United Iran, Russia, & China Are Changing The World

  Submitted by Federico Pieraccini via Strategic-Culture.org,

  The two previous articles have focused on the various geopolitical theories, their translations into modern concepts, and practical actions that the United States has taken in recent decades to aspire to global dominance. This segment will describe how Iran, China and Russia have over the years adopted a variety of economic and military actions to repel the continual assault on their sovereignty by the West; in particular, how the American drive for global hegemony has actually accelerated the end of the 'unipolar moment' thanks to the emergence of a multipolar world.

  From the moment the Berlin Wall fell, the United States saw a unique opportunity to pursue the goal of being the sole global hegemon. With the end of the Soviet Union, Washington could undoubtedly aspire to planetary domination paying little heed to the threat of competition and especially of any consequences. America found herself the one and only global superpower, faced with the prospect of extending cultural and economic model around the planet, where necessary by military means.

  Over the past 25 years there have been numerous examples demonstrating how Washington has had little hesitation in bombing nations reluctant to kowtow to Western wishes. In other examples, an economic battering ram, based on predatory capitalism and financial speculation, has literally destroyed sovereign nations, further enriching the US and European financial elite in the process.

  Alliances to Resist

  In the course of the last two decades, the relationship between the three major powers of the Heartland, the heart of the Earth, changed radically.

  Iran, Russia and China have fully understood that union and cooperation are the only means for mutual reinforcement. The need to fight a common problem, represented by a growing American influence in domestic affairs, has forced Tehran, Beijing and Moscow to resolve their differences and embrace a unified strategy in the common interest of defending their sovereignty.

  Events such as the war in Syria, the bombing of Libya, the overthrowing of the democratic order in Ukraine, sanctions against Iran, and the direct pressure applied to Beijing in the South China Sea, have accelerated integration among nations that in the early 1990s had very little in common.

  Economic Integration

  Analyzing US economic power it is clear that supranational organizations like the World Trade Organization, International Monetary Fund and the World Bank guarantee Washington’s role as the economic leader. The pillars that support the centrality of the United States in the world economy can be attributed to the monetary policy of the Fed and the function of the dollar as a global reserve currency.

  The Fed has unlimited ability to print money to finance further economic power of the private and public sector as well as to pay the bill due for very costly wars. The US dollar plays a central role as the global reserve currency as well as being used as currency for trade. This virtually obliges each central bank to own reserves in US currency, continuing to perpetuate the importance of Washington in the global economic system.

  The introduction of the yuan into the international basket of the IMF, global agreements for the Asian Infrastructure Investment Bank (AIIB), and Beijing’s protests against its treatment by the World Trade Organization (WTO) are all alarm bells for American strategists who see the role of the American currency eroding. In Russia, the central bank decided not to accumulate dollar reserves, favoring instead foreign currency like the Indian rupee and the Chinese yuan. The rating agencies – western financial-oligarchy tools -have diminishing credibility, having become means to manipulate markets to favor specific US interests. Chinese and Russian independent rating agencies are further confirmation of Beijing and Moscow’s strategy to undermine America’s role in western economics.

  De-dollarization is occurring and proceeding rapidly, especially in areas of mutual business interest. In what is becoming increasingly routine, nations are dealing in commodities by negotiating in currencies other than the dollar. The benefit is twofold: a reduction in the role of the dollar in their sovereign affairs, and an increase in synergies between allied nations. Iran and India exchanged oil in rupees, and China and Russia trade in yuan.

  Another advantage enjoyed by the United States, intrinsically linked to the banking private sector, is the political pressure that Americans can apply through financial and banking institutions. The most striking example is seen in the exclusion of Iran from the SWIFT international system of payments, as well as the extension of sanctions, including the freezing of Tehran's assets (about 150 billion US dollars) in foreign bank deposits. While the US is trying to crack down on independent economic initiatives, nations like Iran, Russia and China are increasing their synergies. During the period of sanctions against Iran, the Russian Federation has traded with the Islamic Republic in primary commodities. China has supported Iran with the export of oil purchased in yuan. More generally, Moscow has proposed the creation of an alternative banking system to the SWIFT system.

  Private Banks, central banks, ratings agencies and supranational organizations depend in large part on the role played by the dollar and the Fed. The first goal of Iran, Russia and China is of course to make these international bodies less influential. Economic multipolarity is the first as well as the most incisive way to expand the free choice before each nation to pursue its own interests, thereby retaining its national sovereignty.

  This fictitious and corrupt financial system led to the financial crisis of 2008. Tools to accumulate wealth by the elite, artificially maintaining a zombie system (turbo capitalism) have served to cause havoc in the private and public sectors, such as with the collapse of Lehman Brothers or the crisis in the Asian markets in the late 1990s.

  The need for Russia, China and Iran to find an alternative economic system is also necessary to secure vital aspects of the domestic economy. The stock-market crash in China, the depreciation of the ruble in Russia, and the illegal sanctions imposed on Iran have played a profound role in concentrating the minds of Moscow, Tehran and Beijing. Ignoring the problem borne of the centrality of the dollar would have only increased the influence and role of Washington. Finding points of convergence instead of being divided was an absolute must and not an option.

  A perfect example, explaining the failed American economic approach, can be seen in recent years with the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), two commercial agreements that were supposed to seal the economic trade supremacy of the US. The growing economic alternatives proposed by the union of intent between Russia, China and Iran has enabled smaller nations to reject the US proposals to seek better trade deals elsewhere. In this sense, the Free Trade Area of ??the Asia Pacific (FTAAP) proposed by Beijing is increasingly appreciated in Asia as an alternative to the TPP.

  In the same way, the Eurasian Union (EAEU) and the Commonwealth of Independent States (CIS) have always been key components for Moscow. The function these institutions play was noticeably accelerated following the coup in Ukraine and the resulting need for Russia to turn east in search of new business partners. Finally, Iran, chosen by Beijing as the crossroad of land and sea transit, is a prime example of integration between powers geographically distant but with great intentions to integrate vital structures of commerce.

  The Chinese model of development, called Silk Road 2.0, poses a serious threat to American global hegemonic processes. The goal for Beijing is to reach full integration between the countries of the Heartland and Rimland, utilizing the concept of sea power and land power. With an investment of 1,000 billion US dollars over ten years, China itself becomes a link between the west, represented by Europe; the east, represented by China itself; the north, with the Eurasian economic space; the south, with India; Southeast Asia; the Persian Gulf and Middle East. The hope is that economic cooperation will lead to the resolution of discrepancies and strategic differences between countries thanks to trade agreements that are beneficiary to all sides.

  The role of Washington continues to be that of destruction rather than construction. Instead of playing the role of a global superpower that is interested in business and trade with other nations, the United States continues to consider any foreign decision in matters of integration, finance, economy and development to lie within its exclusive domain. The primary purpose of the United States is simply to exploit every economic and cultural instrument available to prevent cohesion and coexistence between nations. The military component is usually the trump card, historically used to impose this vision on the rest of the world. In recent years, thanks to de-dollarization and military integration, nations like Iran, Russia and China are less subject to Washington's unilateral decisions.

  Military deterrence

  Accompanying the important economic integration is strong military-strategic cooperation, which is much less publicized. Events such as the Middle East wars, the coup in Ukraine, and the pressure exerted in the South China Sea have forced Tehran, Moscow and Beijing to conclude that the United States represents an existential threat.

  In each of the above scenarios, China, Russia and Iran have had to make decisions by weighing the pros and cons of an opposition to the American model. The Ukraine coup d’état brought NATO to the borders of the Russian Federation, representing an existential threat to the Russia, threatening as it does its nuclear deterrent. In the Middle East, the destruction of Iraq, Libya and Syria has obliged Tehran to react against the alliance formed between Saudi Arabia, Turkey and the United States. In China, the constant pressure on South China Sea poses a serious problem in case of a trade blockade during a conflict. In all these scenarios, American imperialism has created existential threats. It is for this reason natural that cooperation and technological development, even in the military area, have received a major boost in recent years.

  In the event of an American attack on Russia, China and Iran, it is important to focus on what weapon systems would be used and how the attacked nations could respond.

  Maritime Strategy and Deterrence

  Certainly, US naval force place a serious question mark over the defense capabilities of nations like Russia, China and Iran, which strongly depend on transit via sea routes. Let us take, for example, Russia and the Arctic transit route, of great interest not only for defense purposes but also being a quick passage for transit goods. The Black Sea for these reasons has received special attention from the United States due to its strategic location. In any case, the responses have been proportional to the threat.

  Iran has significantly developed maritime capabilities in the Persian Gulf, often closely marking ships of the US Navy located in the area for the purposes of ??deterrence. China's strategy has been even more refined, with the use of dozens, if not hundreds, of fishing boats and ships of the Coast Guard to ensure safety and strengthen the naval presence in the South and East China Sea. This is all without forgetting the maritime strategy outlined by the PLA Navy to become a regional naval power over the next few years. Similar strategic decisions have been taken by the navy of the Russian Federation. In addition to having taken over ship production as in Soviet times, it has opted for the development of ships that cost less but nevertheless boast equivalent weapons systems to the Americans carrier groups.

  Iran, China and Russia make efficiency and cost containment a tactic to balance the growing aggressiveness of the Americans and the attendant cost of such a military strategy.

  The fundamental difference between the naval approach of these countries in contrast to that of the US is paramount. Washington needs to use its naval power for offensive purposes, whereas Tehran, Moscow and Beijing need naval power exclusively for defensive purposes.

  In this sense, among the greatest weapons these three recalcitrant countries possess are anti-ship, anti-aircraft and anti-ballistic systems. To put things simply, it is enough to note that Russian weapons systems such as the S-300 and S-400 air-defense systems (the S-500 will be operational in 2017) are now being adopted by China and Iran with variations developed locally. Increasingly we are witnessing an open transfer of technology to continue the work of denying (A2/AD) physical and cyberspace freedom to the United States. Stealth aircraft, carrier strike groups, ICBMs and cruise missiles are experiencing a difficult time in such an environment, finding themselves opposed by the formidable defense systems the Russians, Iranians and Chinese are presenting. The cost of an anti-ship missile fired from the Chinese coast is considerably lower than the tens of billions of dollars needed to build an aircraft carrier. This paradigm of cost and efficiency is what has shaped the military spending of China, Russia and Iran. Going toe to toe with the United States without being forced to close a huge military gap is the only viable way to achieve immediate tangible benefits of deterrence and thereby block American expansionist ambitions.

  A clear example of where the Americans have encountered military opposition at an advanced level has been in Syria. The systems deployed by Iran and Russia to protect the Syrian government presented the Americans with the prospect of facing heavy losses in the event of an attack on Damascus. The same also holds for the anti-Iranian rhetoric of certain American politicians and Israeli leaders. The only reason why Syria and Iran remain sovereign nations is because of the military cost that an invasion or bombing would have brought to their invaders. This is the essence of deterrence. Of course, this argument only takes into partial account the nuclear aspect that this author has extensively discussed in a previous article.

  The Union of the nations of the Heartland and Rimland will make the United States irrelevant

  The future for the most important area of ??the planet is already sealed. The overall integration of Beijing, Moscow and Tehran provides the necessary antibodies to foreign aggression in military and economic form. De-dollarization, coupled with an infrastructure roadmap such as the Chinese Silk Road 2.0 and the maritime trade route, offer important opportunities for developing nations that occupy the geographical space between Portugal and China. Dozens of nations have all it takes to integrate for mutually beneficial gains without having to worry too much about American threats. The economic alternative offered from Beijing provides a fairly wide safety net for resisting American assaults in the same way that the military umbrella offered by these three military powers, such as with the the SCO for example, serves to guarantee the necessary independence and strategic autonomy. More and more nations are clearly rejecting American interference, favoring instead a dialogue with Beijing, Moscow and Tehran. Duterte in the Philippines is just the latest example of this trend.

  The multipolar future has gradually reduced the role of the United States in the world, primarily in reaction to her aggression seeking to achieve global domination. The constant quest for planetary hegemony has pushed nations who were initially western partners to reassess their role in the international order, passing slowly but progressively into the opposite camp to that of Washington.

  The consequences of this process have sealed the destiny of the United States, not only as a response to her quest for supremacy but also because of her efforts to maintain her role as the sole global superpower. As noted in previous articles, during the Cold War the aim for Washington was to prevent the formation of a union between the nations of the Heartland, who could then exclude the US from the most important area of ??the globe. With the fall of the Iron Curtain, sights were set on an improbable quest to conquer the Heartland nations with the intent of dominating the whole world. The consequences of this miscalculation have led the United States to being relegated to the role of mere observer, watching the unions and integrations occurring that will revolutionize the Eurasian zone and the planet over the next 50 years. The desperate search to extend Washington's unipolar moment has paradoxically accelerated the rise of a multipolar world.

  In the next and final article, I will throw a light on what is likely to be a change in the American approach to foreign policy. Keeping in mind the first two articles that examined the approach by land theorized by MacKinder as opposed to the Maritime Mahan, we will try and outline how Trump intends to adopt a containment approach to the Rimland, limiting the damage to the US caused by a complete integration between nations such as Russia, China, Iran and India.

  

  

• U.S. Healthcare Is A Global Outlier (And Not In A Good Way)

  Historically, the United States has spent more money than any other country on healthcare.

  In the late 1990s, for example, the U.S. spent roughly 13% of GDP on healthcare, compared to about a 9.5% average for all high income countries.

  However, as Visual Capitalist's Jeff Desjardins notes, in recent years, the difference has become more stark. Last year, as Obamacare continued to roll out, costs in the U.S. reached an all-time high of 17.5% of GDP. That’s over $3 trillion spent on healthcare annually, and the rate of spending is expected accelerate over the next decade.

  HIGH COSTS, HIGH BENEFIT?

  With all that money being poured into healthcare, surely the U.S. must be getting better care in contrast to other high income countries.

  At least, that’s what one would think.

  Today’s chart comes to us from economist Max Roser (h/t @NinjaEconomics) and it shows the extreme divergence of the U.S. healthcare system using two simple stats: life expectancy vs. health expenditures per capita.

  

  Courtesy of: Visual Capitalist

   

  THE DIVERGENCE OF U.S. HEALTHCARE

  As you can see, Americans are spending more money – but they are not receiving results using the most basic metric of life expectancy. The divergence starts just before 1980, and it widens all the way to 2014.

  It’s worth noting that the 2015 statistics are not plotted on this chart. However, given that healthcare spend was 17.5% of GDP in 2015, the divergence is likely to continue to widen. U.S. spending is now closing in on $10,000 per person.

  Perhaps the most concerning revelation from this data?

  Not only is U.S. healthcare spending wildly inefficient, but it’s also relatively ineffective. It would be one thing to spend more money and get the same results, but according to the above data that is not true. In fact, Americans on average will have shorter lives people in other high income countries.

  Life expectancy in the U.S. has nearly flatlined, and it hasn’t yet crossed the 80 year threshold. Meanwhile, Chileans, Greeks, and Israelis are all outliving their American counterparts for a fraction of the associated costs.

  

  

• How George Soros Destroyed The Democratic Party

  Submitted by Daniel Greenfield via FrontPageMag.com,

  It was the end of the big year with three zeroes. The first X-Men movie had broken box office records. You couldn’t set foot in a supermarket without listening to Brittney Spears caterwauling, “Oops, I Did It Again.” And Republicans and Democrats had total control of both chambers of legislatures in the same amount of states. That was the way it was back in the distant days of the year 2000.

  In 2016, Republicans control both legislative chambers in 32 states. That’s up from 16 in 2000.

  What happened to the big donkey? Among other things, the Democrats decided to sell their base and their soul to a very bad billionaire and they got a very bad deal for both.

  It was 2004. The poncho was the hottest fashion trend, there were 5 million new cases of AIDS and a former Nazi collaborator had bought the Democrat Party using the spare change in his sofa cushions.

  

  And gone to war against the will of the people. This was what he modestly called his own “Soros Doctrine”.

  “It is the central focus of my life,” George Soros declared. It was “a matter of life and death.” He vowed that he would become poor if it meant defeating the President of the United States.

  Instead of going to the poorhouse, he threw in at least $15 million, all the spare change in the billionaire’s sofa cushions, dedicated to beating President Bush.

  In his best lisping James Bond villain accent, Soros strode into the National Press Club and declared that he had “an important message to deliver to the American Public before the election” that was contained in a pamphlet and a book that he waved in front of the camera. Despite his “I expect you to die, Mr. Bond” voice, the international villain’s delivery was underwhelming. He couldn’t have sold brownies to potheads at four in the morning. He couldn’t even sell Bush-bashing to a roomful of left-wing reporters.

  But he could certainly fund those who would. And that’s exactly what he did.

  Money poured into the fringe organizations of the left like MoveOn, which had moved on from a petition site to a PAC. In 2004, Soros was its biggest donor. He didn’t manage to bring down Bush, but he helped buy the Democratic Party as a toy for his yowling dorm room of left-wing activists to play with.

  Soros hasn’t had a great track record at buying presidential elections. The official $25 million he poured into this one bought him his worst defeat since 2004. But his money did transform the Democrat Party.

  And killed it.

  Next year the Democracy Alliance was born. A muddy river of cash from Soros and his pals flowed into the organizations of the left. Soros had helped turn Howard Dean, a Vermont politician once as obscure as this cycle’s radical Vermont Socialist, into a contender and a national figure. Dean didn’t get the nomination, but he did get to remake the DNC. Podesta’s Center for American Progress swung the Democrats even further to the left. And it would be Podesta who helped bring Hillary down.

  The Democrats became a radical left-wing organization and unviable as a national political party. The Party of Jefferson had become the Party of Soros. And only one of those was up on Mount Rushmore.

  Obama’s wins concealed the scale and scope of the disaster. Then the party woke up after Obama to realize that it had lost its old bases in the South and the Rust Belt. The left had hollowed it out and transformed it into a party of coastal urban elites, angry college crybullies and minority coalitions.

  Republicans control twice as many state legislative chambers as the Democrats. They boast 25 trifectas , controlling both legislative chambers and the governor’s mansion. Trifectas had gone from being something that wasn’t seen much outside of a few hard red states like Texas to covering much of the South, the Midwest and the West.

  The Democrats have a solid lock on the West Coast and a narrow corridor of the Northeast, and little else. The vast majority of the country’s legislatures are in Republican hands. The Democrat Governor’s Association has a membership in the teens. In former strongholds like Arkansas, Dems are going extinct. The party has gone from holding national legislative majorities to becoming a marginal movement.

  And the Democrats don’t intend to change course. The way is being cleared for Keith Ellison, the co-chair of the Congressional Progressive Caucus with an ugly racist past, to head the DNC. Pelosi will oversee the disaster in the House. And Obama will remain the party’s highest profile national figure.

  There could hardly be a clearer signal that the left intends to retain its donkey herding rights. Soros and his ilk have paid for the reins. That is why Pelosi, with her access to donors, will retain her position.

  The left had recreated the Democrat Party and marginalized it. Much of this disaster had been funded with Soros money. Like many a theatrical villain, the old monster had been undone by his own hubris. Had Soros aided the Democrats without trying to control them, he would have gained a seat at the table in a national party. Instead he spent a fortune destroying the very thing he was trying to control.

  George Soros saw America in terms of its centers of economic and political power. He didn’t care about the vast stretches of small towns and villages, of the more modest cities that he might fly over in his jet but never visit, and the people who lived in them. Like so many globalists who believe that borders shouldn’t exist because the luxury hotels and airports they pass through are interchangeable, the parts of America that mattered to him were in the glittering left-wing bubble inhabited by his fellow elitists.

  Trump’s victory, like Brexit, came because the left had left the white working class behind. Its vision of the future as glamorous multicultural city states was overturned in a single night. The idea that Soros had committed so much power and wealth to was of a struggle between populist nationalists and responsible internationalists. But, in a great irony, Bush was hardly the nationalist that Soros believed. Instead Soros spent a great deal of time and wealth to unintentionally elect a populist nationalist.

  Leftists used Soros money to focus on their own identity politics obsessions leaving the Dems with little ability to interact with white working class voters. The Ivy and urban leftists who made up the core of the left had come to exist in a narrow world with little room for anything and anyone else. 

  Soros turned over the Democrats to political fanatics least likely to be able to recognize their own errors. His protégés repeated the great self-destruction of the Soviet Union on a more limited scale

  Soros fed a political polarization while assuming, wrongly, that the centers of power mattered, and their outskirts did not. He was proven wrong in both the United States of America and in the United Kingdom. He had made many gambles that paid off. But his biggest gamble took everything with it.

  "I don’t believe in standing in the way of an avalanche," Soros complained of the Republican wave in 2010.

  But he has been trying to do just that. And failing.

  "There should be consequences for the outrageous statements and proposals that we've regularly heard from candidates Trump and Cruz," Soros threatened this time around. He predicted a Hillary landslide.

  He was wrong.

  As Soros plowed more money into the left, its escalating radicalism alienated more of the country. Each “avalanche” was a reaction to the abuses of his radicals.  It wasn't Trump or Cruz who suffered the consequences. It wasn't even his own leftists. Rather it was the conservative and eventually the moderate wings of the Democrat party who were swept away by his left-wing avalanches.

  The left did not mourn the mass destruction of the moderates. Instead it celebrated the growing purity of the Democrats as a movement of the hard left. It did not notice or care that it was no longer a political force outside a limited number of cities. It anticipated that voters would have no choice but to choose it over the "extremist" Republicans.

  It proved to be very, very wrong.

  George Soros spent a fortune to turn a national party favorable to the left into an organization that has difficulty appealing to anyone not on the left. He wanted to control a country he did not understand. And, as the left so often does, he achieved his goals and in doing so destroyed them.

  

  

• Is 2017 The Year Silicon Valley Experiences The Dark Side Of "It's Different This Time"?

  Authored by Mark St.Cyr,

  With 2016 now in the rearview mirror. The one thing that was supposed to be included in that vision was the successful resurgence of IPO’s across “The Valley”. 2016 was supposed to be “the year” of the comeback for unicorn cash-out dreams after what can only be described as a “not as advertised” 2015. For if one needs remembering: 2015 was the worst year for tech IPO’s since 2009.

  Here’s another problem nobody seems willing to discuss: 2015 may have been the high-water mark going forward when compared to 2016. Yet, not too worry we’re told! For has been reported via many a media source 2017 is shaping up be? Hint: The year it comes back.

  Here is a chart from an article just this past August titled “Tech IPO Clog Poised To Burst” To wit:

  

  The prevailing premise, once again, throughout “The Valley” is that “next year” should be the return of those unicorn dreams. After all, how could 2016 be any worse than 2015 was the premise at the beginning of year. The issue? Look at the above chart for clues. Or, as we like to say here in reality, “A whole lot worse!” For 2016 now makes not only 2008 look good. It makes 2009 look terrific in comparison.

  Yet, this hasn’t slowed down one next-in-rotation fund manager to proclaim how “social” or “tech” is just “crushing it”. The real issue is that many who have “invested” based on a lot of this trite have found their portfolios have been the ones getting crushed. Case in point: Twilio™. To wit:

  

  (Source)

  Now I’m not intentionally pointing out this company for any other reason than its IPO was proclaimed across the media and “The Valley” as to be “the” one as to show just how resilient not only the demand for IPO’s would be, but also how “worth it” their heralded valuations were. Once again, the problem? It did just that.

  I have read articles emanating from “The Valley” as late as only weeks ago where it’s touted Twillio’s share price is up over 111% since it’s IPO. Sounds great, but it’s not only disingenuous, it’s damn right shameful to use that as the sole metric for validity to the premise that IPO’s or “tech’s” resurgence when looking at the above chart. For if you are one of the unfortunate that bought shares on the open market only a few weeks after the IPO? There’s no “crushing it” gains for you – you got crushed, with probably more pain to come.

  There was also another “It’s different this time” proclamation which was supposed to prove 2016 to all the “nay-sayers” just how much people like myself “don’t get” social/tech/The Valley/etc. For it was we who needed to see the brilliance of their decision-making processes. And none was so heralded as to what 2016 was supposed to be than the resurgence of Twitter™, with its now multi-tasking CEO.

  How did all that work out? Well, as they say in “The Valley”, let’s look at another “picture” shall we?

  

  (Source)

  Again, all I’ll say to the above is this: If this is what the term “crushing it” now means in “The Valley”? I envision 2017 is going to take crushing up to 11!

  So with all the above for some context. No opinion for comparison would be complete without also including the “holy grail” of everything tech/The Valley/IPO’s, and more. Let alone all that it is said to encompass: Facebook™ (FB).

  

  (Source)

  Now one couldn’t be held for lying to state FB stock is indeed up since the end of 2015. However, would that be telling you the “truth” if one was to only state that one metric? Especially if you were trying to get a correct handle of the “health” or “potential profits” still promised in the “everything social” land of riches arguments?

  As I highlighted on the chart above: If you purchased shares on Feb 1st of 2016 after what was heralded as an earnings report that “crushed it”, and was touted as (here’s that term again) “the” earnings report to shut all the “doom-and-gloomers” up once and for all. Guess what? Hint: You’re right back where you started.

  And for those who decided 2016 was indeed the year where “tech” resurged and was caught up in the whole IPO of the afore-mentioned Twillio in July? It’s more than likely FB in 2016 is now a wash at best, a painful loss at worse. For it fell over 15% lower a mere 45-ish trading days later after those “lifetime highs” to end the year.

  However even that doesn’t really encapsulate the whole. For if one can remember (after all it was just these last few weeks) the “markets” have been on an absolute tear to make (once again) never before seen in the history of mankind highs. And what was FB’s valuation doing during all this? Hint: Look at the chart above. e.g., The exact opposite.

  Another meme that keeps getting perpetuated is the argument “There’s still so much V.C. capital just looking for investment it must surely mean these companies (i.e., The Unicorns) have legitimate ‘so worth it’ valuations for further cash-out riches. This alone proves the nay-sayers don’t know what they’re talking about.” To which I say: Really? Then let’s argue a few points shall we?

  Let me start with this one point: If I said to you, “Hey, want me to show you how to make $1.00 into millions”? You’d probably wouldn’t even dignify the response with a no, you’d just walk away for you knew (at least I hope you would) if it seems to good to be true, it probably is. Now, with that said answer this:

  How is “investing” some trifle sum (e.g., a few $Million) which instantaneously gives one the ability to claim they’re worth $Billions any different? Couple that with – the metrics for those claims are all based on “because they say so”.

  Yes, the accounting for said valuations are based on 1+1= whatever we say it is. Not anything which is based in reality as you or I may understand. Or said differently: It makes Non-GAAP accounting look down right conservative in comparison.

  This is the dirty-liitle-secret in the underbelly of all that is “unicorn” in my view. And sooner, rather than later, I believe this spurious type of accounting will someday find its way into the courts and be abolished. However, that’s for another day.

  If you want an example? Try to square-the-circle that Theranos™ (remember them?) along with its founder Elizabeth Holmes was not only said to be worth, but was proclaimed throughout the business media that she personally was worth a fortune of $4.5 BILLION dollars. While the company itself was worth some $9 BILLION based on what I found to be one of the best lines (as in the form of a question) I can remember that came back in July from a Fortune™ article. The line?

  “How on earth did it [Theranos] manage to raise $400 million in funding at a $9 billion valuation?”

  Yes indeed, it was a good question. Problem was people like myself have been asking that of unicorns since 2008. Not after one of its most proclaimed archetype’s crashes and burns where even the likes of Icarus himself might marvel.

  And speaking of “unicorns”. As 2016 has now come and gone what are we supposed to infer by the ever-increasing troubles emanating from the prized “decacorn” holding stable? (e.g., The Uber™, AirBnB™ types et al)

  It would seem with every passing day (which has now morphed into years) waiting for that “perfect” cash-out point as to IPO seems to only be met with one reglatory hurdle after another. Which could, if found the ruling/rulings go against them, eviscerate their valuation-gone-wild models/metrics that would make even a glue factory blush for efficiency.

  Uber is being sued (again) based on workers wages, classification, and more. China is now an after thought which in 2016 was supposed to be its primary goal if I’m not mistaken. And AirBnB still has its regulatory hurdles to be weeded out through the courts. If many of these go against them, then they face an all too, and very real valuation problem do they not?

  Oh, yeah, and don’t forget “decacorn” stands for a unicorn worth $10’s of BILLIONS in valuation terms. You know where “The Valley” states reality for making the argument that a so-called “glorified taxi-app” is said to be worth more than the likes of GM™, Ford™, Nissan™, Hyundai™, and others, because “Its disruptive”, so of course “It’s totally worth it” and it must be worth more.

  That’s not hyperbole on my part. You can find those exact words and arguments across the media and especially anywhere that’s Silicon Valley centric. Again, truly ponder that last statement. And if in the end you can’t shake an image of a sock-puppet  from entering your mind? Don’t worry, I believe that proves you can still think clearly and understand true reality.

  So now why has all the above happened? And why do I believe there’s far more of a “dark side” to all this “it’s different this time” fantasy world that Silicon Valley or “The Valley” as I like to say hasn’t a clue is on the horizon?

  Here’s the equation I believe will not only send shock waves, but will bring down many a valuation edifice within “The Valley” in 2017. And here it is:

  First: The Fed. And Second: Rate hikes.

  Two very short sentences containing nothing more than two words each but their implications could have exponentially explosive results. For what they portend is that “It’s different this time” may indeed be exactly that.

  What I hoped you may have noticed during this discussion is the one thing myself and very few others pointed out would happen if the hypothesis we’ve been articulating over the last few years was correct. That hypothesis has always been “Without the Fed. pumping in unlimited funds via the QE programs, and a “death-grip” to the zero bound (aka ZIRP) the first ones to show how much of a facade these “markets” where would be seen directly in the “tech” space.

  Notice anything similar in any of the above? Hint: Without QE, everything came to a screeching halt at best, and a complete reversal of fortunes for many at worst. And I believe it’s only just begun. Why?

  This past December, much like the one in 2015, the Fed. once again raised rates. However, this one in-particular is the one that may catch a lot of onlookers (especially most of the financial press) by surprise, and it’s for this reason:

  If you watched the presser (and I suggest one do just that) following the rate hike given by Ms. Yellen, one thing is very front and center: She vociferously argued, or defended the idea of not only raising, but raising more than many presumed (now the working number of hikes is up to 3 from 2) coupled with her again animated defense of possibly even raising more, and more quickly should the Fed’s assessment to anything “fiscal” coming out of congress warrants it. When only weeks before she was arguing a possible need to run a “high-pressure” economy. That in-and-of-itself is a 180 from her (e.g., The Fed’s) implied stance.

  (Just to clarify: “vociferously” and “animated” for Ms. Yellen is my assessment as I compare to her characteristic usually monotone readings or discussions at other events. Your interpretations may differ.)

  So now with the 800lb. “It’s different this time” gorilla in the room I’d like to make a hypothesis for you to consider. I’m not saying “prediction” because that’s for fools. Nobody, and mean just that no-body knows what the future holds. All we can do is “look at the charts” (i.e., teas leaves) coupled with our best assumptions of what is correlation and/or causation, filtered through any acumen we might have gained over the years, then hopefully put ourselves in the best position for either possible gain, or to sidestep harm. Nothing more.

  If we look only at the above charts to my eye one thing can be rationally inferred: Without the Fed. the “everything social” argument is D.O.A. Period.

  What can also be logically asked is this: Why did FB’s valuation begin dropping and has never recovered during which supposedly as we were all being screamed at that “They were crushing it!” in every metric or mobile assumption. Again, it was touted as “You nay-sayers just don’t get it!” And yet, their valuation kept falling? And continued in the face of a rally into year-end that’s now gone into the record books under the classification of “historic”?

  Was this in part due to a reasonable assumption that the one buyer who was buying so much stock in FB during 2016 promptly decided if the Fed. was indeed going to raise it couldn’t buy any more out of concerns of future funding costs?

  Oh, and just to clarify – that buyer was the Swiss National Bank. Second to none in its FB shareholdings. Yes, even to Mark himself.

  And if one can answer “yes” to that question in even a remote possibility, then what does that do to a whole lot of other companies within the “markets”? Hint: Here’s just one article for you to ponder coupled with the above implications. To wit:

  “Mystery” Buyer Revealed: Swiss National Bank’s US Stock Holdings Rose 50% In First Half, To Record $62BN”

  Once again I can’t make this argument more forcefully than what the “tea leaves” or “charts” imply surrounded with the rationalization that the Fed. may indeed be far more aggressive in hiking with this new administration in power than the previous. And if that has even the remotest possibilities of being true? Based on what one could reasonably infer that took place over 2016 in total?

  “It’s different this time” may take on a meaning never dreamed of within Silicon Valley, “The Valley”, and in particular, the “markets” as a whole.

  And if I’m wrong, I’ll just leave you with one last point to consider…

  If there’s so much more room to go in the “everything social” model as is professed via the media and every next-in-rotation fund manager that can elbow their way onto a television set. As one of my favorite Batman® characters was fond of saying, “Riddle me this!”

  If FB, and or the “everything social” model is still in its nascent beginnings with so much more room to grow? Then why was Mark Zuckerberg ready, and seemingly willing in 2016 to sell his shares, and leave FB with the very real possibly of having to give up control to go into politics for two years? You know – if FB is the end all, be all of the “everything social” argument?

  All I’ll say is this: “The Valley” had better be hoping – it is a whole lot different this time – than what it may end up being.

  We shall see soon enough.

  

  

• California Democrats Legalize Child Prostitution

  A couple of days ago we highlighted some of the ridiculous new state laws that will go into effect across the country starting today (see “Here Are Some Of The Ridiculous New State Laws That Will Take Effect January 1st – Happy New Year!“).  And while there was plenty of lunacy noted within the post, apparently we overlooked one of California’s finest achievements of 2016, namely the legalization of child prostitution. 

  Now, we know what you’re thinking…California’s liberal lawmakers in Sacramento are certainly well left of center and maybe a bit kooky but they would never do something quite that ridiculous.  Well, we had the same thought so we decided to track down the actual text of the legislation, Senate Bill No. 1322, and, unfortunately, they did do something that ridiculous.

  Below is the first page of SB1322 which notes that while “existing law makes it a crime to solicit or engage in any act of prostitution” SB1322 “would make the above provisions inapplicable to a child under 18 years of age.”

  

   

  Of course, as the LA Times pointed out, the bill, which was authored by Los Angeles Democrat Holly Mitchell, is founded on the premise that keeping young children out of the juvenile justice system and instead placing them in the hands of Social Services would be better for their ultimate rehabilitation. 

  Gov. Jerry Brown in 2014 signed legislation placing sex trafficking victims without legal guardians under the authority of the dependency system, which centers on caring for abused and neglected children.

   

  SB 1322 drew the support of a large coalition of advocates who said the bill was a step further in that direction, taking young victims entirely out of the juvenile justice system. But law enforcement officials oppose the move, saying the state’s child welfare system is woefully low on resources.

  And while Mitchell’s efforts may be well intentioned, it simply proves once again how completely ignorant our elected officials are to the unintended consequences resulting from the practical application of their ridiculous laws.  Certainly anyone with just a modest IQ and a touch of business sense, should be able to quickly deduce that SB 1322 provides a huge incentive for pimps and human traffickers to target underage girls rather than adults.  As Travis Allen, a rare California Republican serving in Sacramento, noted in an op-ed published by the Washington Examiner, “immunity from arrest means law enforcement can’t interfere with minors engaging in prostitution — which translates into bigger and better cash flow for the pimps.”

  Unfortunately, the reality is that the legalization of underage prostitution suffers from the fatal defect endemic to progressive-left policymaking: it ignores experience, common sense and most of all human nature — especially its darker side.

   

  The unintended but predictable consequence of how the real villains — pimps and other traffickers in human misery — will respond to this new law isn’t difficult to foresee. Pimping and pandering will still be against the law whether it involves running adult women or young girls. But legalizing child prostitution will only incentivize the increased exploitation of underage girls. Immunity from arrest means law enforcement can’t interfere with minors engaging in prostitution — which translates into bigger and better cash flow for the pimps. Simply put, more time on the street and less time in jail means more money for pimps, and more victims for them to exploit.

   

  As Alameda County District Attorney Nancy O’Malley, a national leader on human trafficking issues, told the media, “It just opens up the door for traffickers to use these kids to commit crimes and exploit them even worse.” Another prosecutor insightfully observed that if traffickers wrote legislation to protect themselves, it would read like SB 1322.

  So, congratulations on the new legislation, Ms. Mitchell.  Just like your $15 minimum wage will simply result in a whole bunch of low-income folks getting fired over the coming years, we suspect you just doomed a lot more vulnerable teenage girls to the sex trade.

  

   

  Senate Bill 1322 can be read in its entirety below:

  

  

• The Same Idiots Who Pushed the Iraq War Are Now Stirring Up Hysteria About Russia

  The propaganda about Iraq having weapons of mass destruction was one of the most blatant examples of “fake news” in American history.

  Now, many of the same idiots who pushed the Iraq war lies are stirring up hysteria about Russia.

  For example, the Washington Post’s editorial page editor Fred Hiatt cheerleaded for the Iraq war.  Now, the Washington Post under Hiatt’s leadership has been the main source of the most breathless anti-Russian hysteria.

  ABC News political analyst Matthew Dowd – chief strategist for the Bush-Cheney ’04 presidential campaign – was a big booster for the Iraq war. Now, Dowd Tweets that you’re only a patriot if you blindly accept what President Obama and the intelligence services claim without any proof.

  George W. Bush’s speechwriter David Frum – who pushed many of the biggest lies about the Iraq war – is now trying to ridicule anyone who doesn’t accept the evidence-less claims that Russia hacked the Democratic party as a Kremlin stooge.

  Similarly, Jonathan Chait championed the Iraq war. And now he’s ridiculing those asking for evidence before jumping headlong into anti-Russia hysteria.

  These guys all have a track record of pushing false stories which get us into disastrous wars … why should we listen to them now?

  Other Recent Stories: 

  • The Ultimate Market Forecaster: Martin Armstrong

  • The Same Hackers Blamed for the DNC Email Hack Were Blamed for Hacking the German Parliament … But that Ended Up Being a Leak By German Insiders, Not a Hack At All

  • Pedophilia Is Disgustingly Widespread Among Those In Positions of Power

  • When Did Democrats Turn Into McCarthyites?

  

• If There Really Was Evidence Of Russian Hacking, The NSA Would Have It

  Submitted by David Spring via TurningPointNews.org,

  On December 29, 2016, the Hill posted an article discussing a 13 page report by the FBI and DHS claiming that their 13 page report was “evidence” of Russian hacking in US elections.
  http://thehill.com/policy/national-security/312132-fbi-dhs-release-report-on-russia-hacking

  Wikileaks has repeatedly stated that the source of its leaks was a disgruntled Democratic Party insider.
  http://www.dailymail.co.uk/news/article-4034038/Ex-British-ambassador-WikiLeaks-operative-claims-Russia-did-NOT-provide-Clinton-emails-handed-D-C-park-intermediary-disgusted-Democratic-insiders.html

  However, President Obama issued a press release on December 29 2016 using the DHS-FBI report to justify increasing sanctions against Russia.
  https://www.whitehouse.gov/the-press-office/2016/12/29/statement-president-actions-response-russian-malicious-cyber-activity

  I therefore decided to see what the evidence was of Russian involvement in US Elections. The Hill article linked to this 13 page government press release as its proof of Russian hacking.
  https://www.us-cert.gov/sites/default/files/publications/JAR_16-20296.pdf

  The government press release written by DHS-FBI did not mention Wikileaks in its report. Nor did the report provide any evidence of Russian hacking in the US elections. Instead, the press release stated that “technical indicators” of Russian hacking were in the “CSV file and XML file attached with the PDF.” However, there was no CSV or XML file or link attached with the PDF. I was eventually able to find these two files at this link.
  https://www.us-cert.gov/security-publications/GRIZZLY-STEPPE-Russian-Malicious-Cyber-Activity

  To see the evidence of Russian hacking first hand, I downloaded the CSV file and converted it into a spreadsheet. The CSV file and the XML file both contained the same data. Here is the XML link to this data which can be viewed online in a web browser.
  https://www.us-cert.gov/sites/default/files/publications/JAR-16-20296.xml

  Both files provide a list of 895 “indicators” of Russian Hacking. Unfortunately, nearly all of these indicators are simply IP addresses. In other words, it is a list of 895 servers from from more than 40 countries around the world. But the list also includes a few website domain names. (Domain names are simply the name of the website such as Youtube.com). I looked up these website domain names with the the following tool which tells us who owns the domain names and where they are located:
  https://www.whois.net/

  My review of these domain names confirmed that none of these domain names have any relationship to Russian government hackers. Here are the results for four of the domain names provided by the DHS and the FBI as evidence of Russian hacking:

  ritsoperrol.ru is not in use. It is registered to a private person. The named server hosting the domain is nserver: ns0.xtremeweb.de. This is a German web hosting and consulting company whose address and phone number are publicly listed on their website. It is highly unlikely that Russian hackers would use a public German web host to register and host their domain names.

   

  littlejohnwilhap.ru is not in use and is available to be purchased. It is unlikely that Russian hackers would use a domain name like this to launch a cyber attack on the US.

   

  wilcarobbe.com is taken and is not in use. It is registered to Arsen Ramanov in Groznenskaya Russia. His address, phone number and email address are all publicly listed. It is highly unlikely that Russian hackers would use a domain name that was publicly listed. Hackers are not idiots.

   

  one2shoppee.com is taken and is registered with GoDaddy.com. It is not currently in use. But it is highly unlikely that Russian Hackers would register their domain names with GoDaddy – which is a US server. In fact, it is very unlikely that Russian hackers would ever use any US servers. They would only use their own servers.

  How did these four domain names get on a list of Russian hackers? It is possible that some unknown agents took over these domain names and may have used them for some kind of hacking activity. However, the agents could have just as easily been from the US as from Russia. In fact, it is not likely that these domain names were taken over by Russian hackers for the simple reason that Russian hackers are way to smart to be using these silly tactics.

  None of the 885 IP addresses have any confirmed relationship to Russian Government Hackers

  An IP address is simply a numerical designation for a server. The 885 IP addresses listed in the DHS – FBI CSV file were even more interesting. The IP addresses were located on servers from the US and more than 40 nations around the world including more than 30 IP addresses supposedly located in China. Here are a few of the IP addresses

  • 167.114.35.70
  • 185.12.46.178
  • 46.102.152.132
  • 178.20.55.16

  I looked up several of these IP addresses using the following tool:
  http://whatismyipaddress.com/ip-lookup

  Here are a four examples of IP addresses in the DHS-FBI report:

  167.114.35.70 is a Canadian Corporate server specializing in the promotion of Bitcoin. They are within a few miles of the US border.

   

  185.12.46.178 is a Swiss corporate server associated with the domain name leavesorus.com. The domain name leavesorus.com is currently available to be purchased. This indicates that this is a fake domain name and likely a fake corporation.

   

  46.102.152.132 is another Swiss corporate server this one specializing in emails and associated with the domain name maxsultan.xyz which is a fake domain name. This also indicates that this is another fake corporation.

   

  178.20.55.16 is a proxy server with no known location but has been used as a TOR router exit node. A proxy server is another name for a mirror or server used to bounce information from one server to another in order to hide the true location of the original server. This proxy server is associated with the domain name nos-oignons.net. This domain name was registered on December 31 2012 and is valid until December 31 2017. In other words, whoever got this domain name paid for its use for 5 years. But they did registered the domain name anonymously. The website associated with this server appears to be a group in France promoting the TOR router. They became an association in May 2013 – 5 months after getting the domain name. The group currently has 5 members and it costs one Euro to join this group. Their website was reported 9 days ago as having been infected with the Zues virus. This infection does not leave tracks on server logs. So it is difficult to tell where it came from. Removal of this virus requires a complete rebuild of the server. In short, some agency decided to take out this server and then use it to make a cyber attack on some US government agency and thus have the IP address listed on the DHS-FBI list as one of 895 indicators of Russian hacking.

  Many of the IP addresses yielded the same dead end or otherwise highly suspicious result – meaning that some very large agency is using hundreds of servers in various countries around the world as a front for hacking attacks. I recently researched a series of attacks on my personal websites from hundreds of IP addresses using hundreds of servers that were supposedly located in the Ukraine. I was able to confirm the exact location in the Ukraine that was supposedly being used to launch literally thousands of attacks on my websites. However, it is not credible that anyone in the Ukraine has the millions of dollars needed to be running hundreds of servers in a remote Ukrainian location. Nor is it likely that anyone in rural Ukraine would even have the knowledge to take care of hundreds of servers even if they did have the millions of dollars needed to plow into buying these servers. Nor are they likely to have the knowledge needed to be running very complex cyber attacks. Ukraine is just not a good location for servers. This experience convinced me that attacks were being launched from other locations and were merely being routed through Ukraine in order to mislead people about where the attacks were really coming from.

  Next, the CSV file provided by DHS-FBI listed the physical location of all 885 IP addresses. What is most ironic is that, only two of the 885 IP addresses were from servers in Russia. The most common location of the hacking servers was the United States. Over 30 of the servers were supposedly located in China. But it is known that the NSA has the ability to use satellite mirrors to hide the locations of their servers – making folks believe that the attacks are coming from China (or Ukraine or Mongolia) when in fact they are coming from servers located in the US.

  

  Here are 50 more servers. Again, no Russians:

  

  Here are 50 more servers. How can servers in the US be used as evidence of Russian hacking?

  

  Here is another batch of 50 servers. Again, no Russians.

  

  Wait a Minute… Is this the Smoking Gun???
  Actually, there were two Russian servers located on lines 259 and 261. Here are the IP addresses.

  • 93.171.203.244
  • 95.105.72.78

  Here is more information about each of these:

  93.171.203.244 This is a clean broadband server located near Ufa which is a city in Russia with one million people. It is associated with an organization called Miragroup Ltd. The website is rxbrothers.ru. Naturally, this is a fake domain name which is available to be purchased. Miragroup is actually a corporation located in Great Britain.

   

  95.105.72.78 is another clean broadband server located near Ufa. The organization is JSC Ufanet and the website is ufanet.ru which is a public broadband service started in 1997. Someone apparently is using this broadband service to hack the US government. Could this be the smoking gun that the Russian government is attacking the US? Think about it. If you were a Russian hacker, would you really use a public server located in some Russian town? I don’t think so. This is more like evidence that some hacker was using the local public library.

  Imagine someone launching a cyber attack from the Seattle Public library – and then our government declaring that they have evident that the mayor of the City of Seattle was responsible for the attack because “nothing happens in Seattle without the approval of the Mayor!”. This is worse than a silly accusation. It is ridiculous. It is irresponsible.

  Real Russian Hackers do not use Windows Servers

  Only three of the servers provided in the DHS/FBI report included detailed information (despite the fact that the IP addresses provided information on all 895 servers and that DHS/FBI certainly have detailed information on all of the servers). All three servers listed in the report were Windows servers. It is highly unlikely that Russian hackers or Chinese hackers would be using Windows servers. Instead, all real hackers use Linux servers because Linux servers are much more secure than Windows servers.
  https://techlog360.com/top-15-favourite-operating-systems-of-hackers/

  If there really was evidence of Russian hacking, the NSA would have it

  Former NSA leader turned whistleblower William Binney recently stated that if the Russians really did hack the Democratic Party servers, the NSA would certainly have real evidence (not the nonsense put out in the DHS-FBI CSV file). Here is his quote from a December 29 2016 article by Glenn Greenwald: “The bottom line is that the NSA would know where and how any “hacked” emails from the DNC, HRC or any other servers were routed through the network. This process can sometimes require a closer look into the routing to sort out intermediate clients, but in the end sender and recipient can be traced across the network.”
  https://theintercept.com/2016/12/29/top-secret-snowden-document-reveals-what-the-nsa-knew-about-previous-russian-hacking/

  Edward Snowden has not only confirmed that the NSA has this ability – but that he himself used an NSA program called XKEYSCORE to monitor such attacks.
  https://theintercept.com/2016/07/26/russian-intelligence-hack-dnc-nsa-know-snowden-says/

  Anyone with any kind of technical background in defending against hacker attacks would understand that what Binney, Snowden and Greenwald are saying is true. The evidence of their truth – most of which was supplied by Snowden from NSA documents – is overwhelming.

  

  Conclusion

  An important research principle is to follow the money. People around the world need to ask themselves who has the money and technical ability to be running hundreds and perhaps thousands of real servers and real IP addresses from fake corporations using fake websites in fake locations in more than 40 nations around the world? What agency has already been proven to be running mass surveillance on billions of people in more than 40 nations all around the world? Whose military cyber budget is more than 10 times larger than the cyber warfare budget of the rest of the world combined? There is certainly an elephant in the room – but it is not a Russian elephant.

  At a televised press conference on April 2016, former NSA agent, Edward Snowden asked the Russian leader Vladimir Putin if the Russian government engaged in mass surveillance of millions of people in a manner similar to the NSA. Putin replied that Russian law prohibited the Russian government from engaging in mass surveillance. Putin then pointed out that the Russian military budget was less than 10% of the US military budget. So even if they wanted to engage in mass surveillance, they simply did not have the money.
  https://www.theguardian.com/world/video/2014/apr/17/snowden-putin-russia-surveillance-phone-in-video

  People also need to ask themselves why the FBI DHS chose to place their evidence in a CSV file and XML file rather than a normal document or spreadsheet. If this were real evidence, it would have been placed directly in the PDF report for everyone to read – not hidden away in a file the general public has little ability to read.

  Finally, for the FBI or the DHS to claim that the XML-CSV file contains evidence or even indicators of Russian hacking is simply a false statement. It is a perfect example of fake news. Any news agency promoting this claim without doing even the most basic of research that would easily confirm it is false, should be listed as a fake news agency.

  The real question that we should all be asking is why the DHS and FBI would destroy their reputation by posting such a fake report?

  Several years ago, our CIA claimed that Iraq had weapons of mass destruction. We now know that Iraq had no weapons of mass destruction – meaning that we went to war and spent over a trillion dollars on a fake report. Is this new fake report a pretext for launching a cyber war against Russia? Is it intended to justify increasing US military spending?

  It is hard to say what the real purpose of this fake DHS-FBI report is. But the fact that this silly list of IP addresses was the best evidence they could provide should be a strong indication that there really is no evidence of Russian hacking. Instead, it is more likely that Wikileaks is telling the truth in stating that they got the emails from a disgruntled Democratic Party insider.

  

  

• Drug Cartels Get Involved As Mexicans Rage, Protest Surging Gas Prices

  Even as Mexico has reasons to be concerned about the upcoming presidential inauguration of Donald Trump, who has vowed to make life, and especially trade relations, for Mexicans far more “complicated” under his administration, the population of Mexico has far more pressing problems at this moment, because just days after the finance ministry announced on December 27 that it would raise the price of gasoline by as much as 20.1% to 88 cents per liter while hiking diesel prices by 16.5% to 83 cents, the hikes went into effect on January 1, welcoming in the new year with a surge in the price of one of Mexico’s most important staples and leading to widespread anger, protests and in some cases violence.

  

  As Telesur reports, the people of Mexico “are entering the New Year in a state of rage and anxiety” with protests planned for Sunday to strongly denounce the government’s huge hike in gasoline prices. The sharp rise in gasoline prices has been called the “gasolinazo” in Spanish, which roughly translates to “gasoline-punch.”

  Asalto pic.twitter.com/lv7beYCQCG

  — Gustavo Vela (@GustavoVela71) December 30, 2016

  The price increase comes as part of a planned liberalization of Mexico’s energy market, which involves the move from subsidies that kept gas prices low to a market-based pricing scheme that will adjust prices at the pump based on supply and demand. And while Mexico’s unpopular president Enrique Pena Nieto had promised that fuel prices will fall thanks to his 2014 energy reforms, which dismantled the seven-decade-old national ownership of petroleum resources by state-owned firm Pemex, the initial move in prices has been higher, and decidedly so, by roughly 20% for gasoline and slightly less for diesel.

  The price ceiling will then be adjusted daily starting Feb. 18, before letting supply and demand determine them in March, although it is the immediate shock that is of concern to the peace and stability in Mexico.

  Case in point, around 100 protestors blocked a service station in Acapulco on Friday, while on Saturday an assembly of popular organizations in Chihuahua state’s capital pledged to block all commercial transportation from entering or exiting the city as a means toward paralyzing the economy and pressuring the federal government to reverse the hikes. The assembly of people’s organizations also announced their intention to block major highways and railways in response to what they see as a neoliberal looting of Mexico and handover of its resources to private capital, according to a statement.

  On Sunday, the day the price hikes went into effect, Excelsior reported that angry citizens protested in several spots of the capital, Mexico City, blocking roads, demanding a return to lower gas prices.

  

  

  But before readers blow this off as just another protest by an angry population which fails to grasp the “global deflationary collapse” while focusing on “fringe, outlier events”  – at least in the words of central bankers –  things suddenly got serious when none other than the country’s powerful Jalisco New Generation cartel has entered the fray, threatening to burn gas stations in response to the price hikes, according to Jalisco authorities cited by TeleSur.

  
  Gunmen torched vehicles and blockaded roads during a military operation to
  arrest two leaders of the Jalisco New Generation cartel.

  “They are speculating in order to obtain million dollar profits from the majority of the people who don’t make even a minimum wage, we have already realized that the (shortage) of fuel is because dealers don’t want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission,” the Mexican drug cartel stated in a WhatsApp message circulating in Jalisco.

  “The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m.” — before the price increases go into effect — “have not normalized the sale of fuel at the fair price,” the message said, according to the Mexican news outlet Aristegui Noticias.

  Making matters worse is that Mexico was already facing fuel shortages prior to the price hike, angering Mexicans in several states. Ahead of the price hike many people have said they’d hoard gasoline, buying it from stations that in many states are already dealing with supply shortages. Illegal gas sales have popped up, and protests have already taken place in some parts of the country, with more planned in the days of the new year.

  “The fuel price increase causes outrage. People are right: it’s not fair. I support each family, I share their outrage and anger,” Aristoteles Sandoval, the governor of western Jalisco state, wrote on Twitter. Sandoval’s criticism drew particular attention because he is a member of Pena Nieto’s ruling Institutional Revolutionary Party or PRI. Furious opposition governors plan to meet with federal government officials next week to discuss the price hike.

  Meanwhile, the unpopular price hike is also becoming a key political talking point: “We just had a security meeting (between governors and Pena Nieto) days ago and there was not one comment about this situation,” said Mexico City’s Mayor Miguel Angel Mancera, a member of the opposition Party of the Democratic Revolution or PRD.

  The protests are the latest expression of widespread antipathy toward Pena Nieto, whose popularity according to Telesur has plummeted below 25% this year due to his government’s widespread perception of collusion with cartels and failure to address drug-related violence, disappointing economic growth, violent repression of social movements and his unpopular decision to host Donald Trump before the anti-immigrant Republican won the U.S. presidential election.

  Not helping matters, Finance Minister Jose Antonio Meade defended the fuel price increase, saying it would not trigger more inflation and that eventually the “final price for consumers will be among the most competitive in the world.” For now, however, the response has been a negative one, with social media criticism leveled at Meade, who has been portrated as “chupasangre”, or “bloodsucker.”

  José Antonio Meade un chupasangre que quiere ser presidente. Él autorizó el gasolinazo. Monero Rocha pic.twitter.com/goJnHPp056

  — Gustavo Vela (@GustavoVela71) December 29, 2016

     
  In Mexico City, service station worker Maria de la Luz Lopez, quoted by Telesure, was worried that the price increases could hurt her. “I’m afraid that to compensate for the increase, (customers) will no longer give us tips,” said Lopez who, like many in her field, does not earn a wage and depends on the generosity of drivers.

  But ultimately, the price shock will hit those who are hurting the most. The increases would mean Mexicans, of whom 52% live in poverty, would spend more of their annual income on fuel than the residents of 59 other countries, according to data compiled by Bloomberg.

  “We see the gasolinazo as an attack against the population, as a robbery, taking into account the levels of income of the population,” Jose Narro, director of the workers’ group Coordinadora Nacional Plan de Ayala, told Reforma.

  Making matters worse, and refuting the promises of the finance minister, the Mexican central bank has warned that gas price increases would boost inflation at a time when the peso has already plunged against the US dollar due to the Trump victory.

  With or without the involvement of the cartels, Mexico’s economy is likely to undergo a turbulent period of decline, which will be music in the ears for Mexico’s opposition politicians, such as leftist opposition leader Andres Manuel Lopez Obrador who is likely to benefit from Pena Nieto’s error, and who has put blame for the gasolinazo on the shoulders of Pena Nieto’s center-right Institutional Revolutionary Party and the conservative National Action Party, calling the former “corrupt and cynical” and the latter hypocrites.

  The policy and its rollout have further diminished the perception of the Mexican president and his party, which has been a trend for some time.

  “Mexicans were promised lower electricity prices, they got higher electricity prices. Mexicans were told austerity was needed, they got a congress that showers itself with bonuses,” Dutch journalist Jan-Albert Hootsen, wrote on Facebook. “Mexicans were promised more security and a fairer justice state, they got homicide rates back at the level of 2012, the Ayotzinapa massacre and its botched investigation, etc.”

  “If you say one thing and are then time and time again perceived to do the exact opposite, what starts off as irritation among the public at some point will simply boil over,” Hootsen concluded.

  For those on the lookout for new gray, or even black swans, in the new year, keep an eye on the public mood in Mexico as a result of the now effected surge in gas prices.

  

  

• A Biased 2017 Forecast, Part 1

  Submitted by Jim Quinn via The Burning Platform blog,

  “The idea that the future is unpredictable is undermined every day by the ease with which the past is explained.” – Daniel Kahneman, Thinking, Fast and Slow

   

  A couple weeks ago I was lucky enough to see a live one hour interview with Michael Lewis at the Annenberg Center about his new book The Undoing Project. Everyone attending the lecture received a complimentary copy of the book. Being a huge fan of Lewis after reading Liar’s Poker, Boomerang, The Big Short, Flash Boys, and Moneyball, I was interested to hear about his new project. This was a completely new direction from his financial crisis books. I wasn’t sure whether it would keep my interest, but the story of Daniel Kahneman and Amos Tversky and their research into the psychology of judgement and decision making, creating a cognitive basis for common human errors that arise from heuristics and biases, was an eye opener.

  In psychology, heuristics are simple, efficient rules which people often use to form judgments and make decisions. They are mental shortcuts that usually involve focusing on one aspect of a complex problem and ignoring others. These rules work well under most circumstances, but they can lead to systematic deviations from logic, probability or rational choice theory. The resulting errors are called “cognitive biases” and many different types have been documented.

  Heuristics usually govern automatic, intuitive judgments but can also be used as deliberate mental strategies when working from limited information. Kahneman and Tversky created the heuristics and biases research program, which studies how people make real-world judgments and the conditions under which those judgments are unreliable. Their research challenged the idea that human beings are rational actors, but provided a theory of information processing to explain how people make estimates or choices. Kahneman won a Nobel Prize in economics for his work in behavioral economics.

  To put their research into terms the common person can understand, human decision making is extremely flawed due to our biases, feelings, irrational thought processes and beliefs in falsehoods. It’s over-confidence in our decision making ability that causes us the most problems. For the average person this can result in financial hardship, frustration or a premature death.

  When high level government officials, bankers or corporate executives make flawed decisions due to their biases, it can mean war, financial disasters, depressions, or disastrous legislation like Obamacare. Hubris, egotism and faulty reasoning, as noted by Mark Twain one hundred and fifty years ago, can kill you and in some cases lead to war and unthinkable levels of death and destruction.

  “It’s not what you don’t know that kills you, it’s what you know for sure that ain’t true.”  – Mark Twain

  In the seven weeks since the election of Donald Trump as our next president, I’ve witnessed the largest case of hindsight bias in world history. Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

  On November 7 the “expert” pollsters like Nate Silver; every corporate mainstream media network, newspaper, and website; along with elitist economists, professors, Hollywood movie stars, Wall Street bankers, and billionaire oligarchs; were 100% sure Hillary Clinton was going to be elected president. Only the deplorables thought otherwise – and they spoke loudly. Putin had nothing to do with the result.

  These very same “experts” and “deep thinkers” now act as if Trump’s election was foreseeable, predictable and the likely outcome. They bloviate about how and why he won as if they knew it was going to happen. When 99% of all establishment “experts” were sure Trump was going to be crushed in a Clinton landslide, why should anyone listen to a word they say?

  The same people who didn’t see even the faintest possibility of a Trump victory now expect the ignorant masses to believe their analysis of what will happen next. I would like to attribute their obtuseness to cognitive biases, but I believe it is more insidious. The Deep State propaganda machine is hard at work spreading falsehoods.

  “A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.” – Daniel Kahneman, Thinking, Fast and Slow

  The onslaught of 2017 predictions from a myriad of Wall Street “experts” talking their book, highly educated economists demonstrating their lack of prescience, mainstream media pundits peddling propaganda and cheerleaders cheering for their home teams, has already begun. I haven’t written an annual forecast article in a few years because I was tired of being wrong. Since I have no newsletters or books to sell, no investments to peddle, and no agenda to push, an annual forecast will just be my best guess at what will happen in 2017.

  The two biases most likely to color my analysis are confirmation bias (The tendency to focus on information in a way that confirms my preconceptions) and pessimism bias (The tendency to overestimate the likelihood of negative things happening). My family and friends think I’m a pessimist. I think I’m a realist. I try to use data to back-up my conclusions, but as George Dvorsky points out, our brains often lead us astray.

  “The human brain is capable of 10¹⁶ processes per second, which makes it far more powerful than any computer currently in existence. But that doesn’t mean our brains don’t have major limitations. The lowly calculator can do math thousands of times better than we can, and our memories are often less than useless — plus, we’re subject to cognitive biases, those annoying glitches in our thinking that cause us to make questionable decisions and reach erroneous conclusions.” – George Dvorsky

  My predictions will be framed by my belief we are midway through a Fourth Turning era of crisis. The three catalysts framing this Fourth Turning are debt, civic decay, and global disorder. No amount of normalcy bias, optimism bias, over-confidence, or desire for the status quo, will take precedence over the uncontrollable mechanisms propelling this Fourth Turning.

  We are in the midst of a once in a lifetime crisis and there is only one thing more frightening than not knowing what is coming next, and that is living in a world run by “experts” who think they know exactly what is going to happen next. These are the same “experts” who didn’t see the 2005 housing bubble, the 2008 financial collapse, the EU implosion, Brexit, or the Trump presidency.

  “It’s frightening to think that you might not know something, but more frightening to think that, by and large, the world is run by people who have faith that they know exactly what is going on.” –  Amos Tversky

  I try to understand the world around me every day, but the hyper-complexity, noise, Deep State propaganda, and volume of data points is overwhelming to our easily distracted brains. I have constructed a story in my mind of how things will develop over the next five to ten years based upon the generational theory put forth by Strauss & Howe in their book The Fourth Turning. It is not a story with a happy ending.

  I don’t have high confidence that I understand how it will play out and what specific events will propel history in the making. I can admit my deficiencies, while people in power with the ability to blow up the world overestimate their understanding of the world and ignore the role of chance in events.

  “We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events.” – Daniel Kahneman, Thinking, Fast and Slow

  Knowing what I don’t know about the unknowns, I’ll try and use what I do know to make some prognostications about 2017:

  Debt Forecast

  It is fascinating to me no one seems all that worried about the systematically dangerous levels of global debt supporting essentially bankrupt governments, banks and consumers. Global debt stood at $142 trillion at the end of 2007, just prior to a worldwide financial meltdown, caused by too much bad debt in the financial system.

  To “fix” this problem, central bankers around the globe ramped up their electronic printing presses to hyper-drive and created another $57 trillion of debt by mid-2014. They haven’t taken their foot off the gas since. Today, global debt most certainly exceeds $225 trillion and has surpassed 300% of global GDP. Rogoff and Reinhart made a pretty strong case that when debt to GDP exceeds 90%, disaster will follow.

  

  Global debt issuance reached a record $6.6 trillion in 2016, with corporations accounting for $3.6 trillion – most of which was used to buy back their stock at all-time highs. What could possibly go wrong? The level of normalcy bias amongst financial “experts”, the intelligentsia, and the common man is breathtaking to behold. We are in the midst of the mother of all bubbles, never witnessed in the history of mankind, and we pretend everything is normal, with no consequences for our reckless disregard for honesty, rational thinking, or simple math.

  

  The 2000 dot.com bubble and the 2008 housing bubble were one dimensional. This mother of all bubbles required the global coordination and unprecedented irresponsible intervention of the US Federal Reserve, the European Central Bank (ECB), the Bank of Japan (BOJ), the Bank of England (BOE) and the Swiss National Bank (SNB) to lead the world to the brink of monetary disaster. The highly educated theorists running these central banks have created tens of trillions in unpayable debt while suppressing interest rates to zero or below at the behest of their Deep State masters.

  The result is simultaneous bubbles in stocks, bonds and real estate. The pin destined to pop all the bubbles is slightly higher interest rates. The 1% increase in the 10 Year Treasury is already causing havoc in the housing market, the bond market and is hammering pension funds. With the hundreds of trillions in globally interconnected derivatives primed to detonate, 2017 could be an explosive year.

  

  Here are a few things I think could happen in 2017 on the economic front:

   

  • The national debt stands at $19.9 trillion and will reach $20 trillion before Obama departs. With spending on automatic pilot and tax revenue in decline, the national debt will reach $21 trillion in 2017. With most of the debt financed short-term, the increase in rates will ratchet the interest on the debt from $433 billion to over $550 billion.
  • With the CPI increasing by over 3% in the first few months of the year, the Fed will continue to raise rates, and the 10 Year Treasury will breach the 3% level.
  • Home prices have surpassed the 2006 peak, even though existing home sales are still 20% below 2006 levels and housing starts are 50% below 2006 levels. The entire “recovery” has been engineered by the Fed and Wall Street at the high end of the market. With mortgage rates up 1% already, the further increase will result in existing home sales and housing starts falling by 20% in 2017 and home prices falling by 5% to 10%.

  

  • The short-term OPEC agreement will allow oil prices to move back to $60 per barrel, further eating into consumer discretionary spending. Desperate fracking companies needing cash flow to service their debt will ramp up. Bankrupt or near bankrupt countries like Venezuela, Mexico, and Iran will also increase production. With a slowing global economy and surging supply, prices will collapse again into the $40s in the second half of the year.
  • Holiday sales for the bricks and mortar retailers will be reported in January as lukewarm at best. By February, the store closing announcements will reach into the hundreds. Sears will finally declare bankruptcy and shutter at least 50% of their stores. Mall developers will begin to declare bankruptcy as vacancies and rising interest rates create a perfect storm.
  • Consumer debt will reach the previous high of $1 trillion, as subprime student loan and auto debt continues to accumulate at an astounding pace. The spigot for student loans is likely to be tightened under Trump, with over 25% of the loans effectively in default. Auto sales (if you can call six year financing and 40% leases, sales) peaked in 2016. Millions of auto buyers are underwater on their loans, subprime auto loans are going into default quicker than you can say Cadillac Escalade, and higher interest rates will price out more potential suckers.
  • The faux jobs recovery is running out of steam. With non-existent wage growth, surging costs for rent, health care, energy, and credit cards tapped out, American families will hunker down and reduce spending further. With consumer spending accounting for 68% of GDP, this will lead to an official recession by the middle of 2017.
  • All the recent surveys showing consumer confidence soaring and optimism for 2017 are based on nothing but hope. The promises of a Trump administration will not come to fruition until 2018 at the earliest. He will meet resistance from Democrats across the board and resistance amongst his own party. His grand plans for massive tax cuts and spending increases will run into the reality of $1 trillion annual deficits. As reality sets in, and recession arrives, the unwarranted optimism will fade rapidly. Tax cuts will be tempered by reduced spending plans.
  • The USD hitting fourteen year highs against the basket of worldwide currencies does not bode well for bringing manufacturing jobs back to make America great again. The reason for the strong dollar is because we are the best looking horse in the glue factory. With Europe and Japan promoting negative interest rates and the Fed slowly raising rates, the dollar will continue to rise. This will hurt our manufacturing businesses, increase our $500 billion annual trade deficit further, and depress the profits of our global corporations.
  • With rising inflation, rising interest rates, stagnant wages, falling corporate profits, stock valuations at all-time highs, and corporations no longer able to finance stock buy backs at no cost, the stock market will finally hit the wall after a seven year bull market. This last surge of euphoria, based on nothing but Trumpmania sweeping Wall Street, will constitute the final blow-off. The market is currently valued to provide nominal returns of less than 1% over the next twelve years and is likely to experience an abrupt sell-off of 50% in the near future. I believe the near future will be 2017. I think the powers that be will be testing Trump’s mettle in his first year to see if he’ll play ball and do their bidding.

  

  “The illusion that we understand the past fosters overconfidence in our ability to predict the future.”  – Daniel Kahneman, Thinking, Fast and Slow

  In Part Two of this article I will ponder how much further our civic decay and global disorder will advance in 2017. Over-confidence, hubris and arrogance of our leaders will be the driving factors.

  

  

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• Former Lifelong Democrat Admits "Obama Is A Failed President"

  Authored by Eric Zuesse via Strategic-Culture.org,

  I’m a former lifelong Democrat, stating here a clear and incontestable fact: Barack Obama is a failed President.

  It’s true not just because of the sad realities such as that «Top Ex-White House Economist Admits 94 % Of All New Jobs Under Obama Were Part-Time» — or, as the economists Alan Krueger and Lawrence Katz wrote in the original of that study: «94 percent of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements». («Alternative work arrangements» referred there to Americans who were involuntarily working only part-time jobs — they simply couldn’t find full-time, though that’s what they wanted.) In other words: Obama’s failure isn’t just because of America’s increasingly sales-clerk, and burger-flipping, workforce.

  And Obama’s failure is also not just because «Poverty Rose In 96 % Of U.S. House Districts, During Obama’s Presidency». (However, that reality turned out to be decisive in Hillary Clinton’s loss to Donald Trump on November 8^th, as Nate Cohn pointed out in The New York Times on December 23rd, headlining, «How the Obama Coalition Crumbled, Leaving an Opening for Trump». Hillary was running on Obama’s poor record.)

  Obama’s failure is also because of other important reasons. Among them is the uncounted thousands of people who were killed in, and the uncounted millions of people who became refugees from, the places where Obama (or else his installed regimes) bombed and caused the residents to either die or flee. George W. Bush’s destructions of Iraq and even Afghanistan were now being followed by the destructions of Libya by Obama and Sarkozy, and of Syria by Obama and Saud and Thani and Erdogan, who armed the tens of thousands of jihadists and sent them into Syria to overthrow and replace Assad — and Bush’s destructions were followed also by Obama’s keeping in power the barbaric junta-regime that replaced the democratically elected Honduran Presiden Manuel Zelaya on 28 June 2009 shortly after Obama entered the White House (and this junta-regime, in turn, caused Honduras’s murder-rate to soar 50% to become the world’s highest, which then caused hundreds of thousands of Hondurans to flee and become undocumented U.S. immigrants, against which Donald Trump campaigned).

  The Obama regime has thus created far more misery outside America, than inside it. Failures such as those didn’t cost Hillary Clinton many (if any) votes (because most voters didn’t even know about these foreign-affairs matters), but those failures were actually even bigger than Obama’s failures in purely domestic U.S. policy matters (which voters do know about). Trump campaigned against ‘illegal immigrants’, but he never even called attention to those people’s fleeing the hells that the U.S. regime had created in not only Honduras but earlier in Guatemala and El Salvador — coups and U.S.-trained death squads.

  In noting Obama’s failures, I’m not a Republican; I’m no one who is condemning Obama for his allegedly being a ‘Marxist' ‘Muslim’, or some other imaginary distraction from the reality (a reality which is too Republican for Republicans to be able to criticize — so, they’ve insteadignored that reality, and cited fake ‘reasons’ against him, including ‘death panels’ and other fabrications, which Republicans then forgot about after their fraudulent allegations against him became clear, to all but insane people, as being just Republican lies). 

  Obama is a failure not because he wasn’t sufficiently conservative or ‘Christian' (as Republicans had constantly accused him of having been), but instead because he wasn’t sufficiently progressive (nowhere close to being a progressive) — and, in many ways, he was actually far more conservative than any of his duplicitous campaign-rhetoric had pretended him to be. He’s an extraordinarily gifted liar — he was phenomenally successful at that.

  And I am not blaming Obama for congressional Republicans’ having been more obsessed with making him be a failed President, than they were interested in making America be a successful nation. Republicans lie at least as much as he does, just not nearly as skillfully. (They especially can’t feign compassion as skillfully as he.) This article thus does not blame him for what the overt Republicans were doing to cripple the little good he had actually tried to achieve — such as closing Guantanamo. It’s only about Obama’s failure.

  Obama’s failure was all his own — it’s not because of the good things that Republicans had blocked him from doing; it is instead because of the horrible things (such as his failed TPP, TTIP and TISA trade-treaties, and his successful 2011 killing of Gaddafi, and 2014 coup in Ukraine) that were central to his actual agenda — a conservative, even reactionary, agenda, which favored the interests of the hundreds of billionaires who control U.S.-based international corporations, above the interests of the 300+ million American people, whom the U.S. President is supposed to be serving.

  I voted for Barack Obama both times, because both of his opponents («Bomb bomb bomb Iran» McCain in 2008, and «#1 geopolitical foe» Romney in 2012) were clearly determined to focus America’s enormous military expenditures away from exterminating the jihadists and their Saudi funders, toward instead conquering Iran (McCain) and Russia (Romney), and also because Republicans — throughout at least the period extending from 1910 to 2010 — consistently had, in fact, produced a record of far less success with the U.S. economy, than did Democrats, and especially because neither McCain nor Romney had repudiated the very worst President in U.S. history (at least prior to Obama) and his atrocious record of lies and needless bloodshed and invasions: George W. Bush — Bush’s Party instead reaffirmed that monstrous President.

  And, consequently, I never expected Barack Obama to turn out to have been, quite possibly, even a worse President than Bush. Nobody expected that — except Republicans, for whom Bush wasn’t bad enough to satisfy them (and certainly not bad enough for them to apologize for — so, they did not apologize for him).

  Here, then, is Obama’s astounding record of failure:

  «From a Democracy to a Plutocracy»

  «Understanding President Obama’s Strategy to Force Cutting Social Security, Medicare, and Medicaid»

  «Obama Finally Lays His Cards on the Table»

  «Barack Obama Is Now Completing His Long-Held Plan to Subvert the Democratic Party»

  «Obama: ‘I Don’t Care About the Public’s Welfare’».

  As that last one documented, the Obama ‘Justice’ Department scored an all-time low number both of financial institution fraud prosecutions, and of white-collar-crime prosecutions. Obama came into power immediately after an economic crash that was loaded especially with financial-institution frauds. He protected the banksters. So, financial-executive-fraud prosecutions didn’t soar, like they should have; instead they plunged. Like Obama told the Wall Street bigs, near the start of his regime, on 27 March 2009, in private, inside the White House: «My administration is the only thing between you and the pitchforks. … I’m not out there to go after you. I’m protecting you… I’m going to shield you». And that’s what he did. And, on 20 September 2016, Dave Johnson of the Campaign for America’s Future, headlined «Banks Used Low Wages, Job Insecurity To Force Employees To Commit Fraud», so there was no way that the employees could keep their jobs except to do the crimes that they were being virtually forced by their bosses to do.

  The criminality was actually at the very top — where Obama had promised «I’m protecting you». So, the TARP’s Inspector General urged, on 26 October 2016 (since the President was refusing to prosecute those people), «that Congress remove the insulation around Wall Street CEOs and other high-level officials by requiring the CEO, CFO and certain other senior executives to sign an annual certification that they have conducted due diligence within their organization and can certify that that there is no criminal conduct or civil fraud in their organization». The Special Inspector General of TARP, Christy Goldsmith Romero, was proposing this, as being the way to make prosecutions, of these top-level fraud-executives, so easy that the Obama Administration’s claims — that there was no top-level fraud that could be prosecuted — would be an even more blatant, absurdly false, lie, than it had been.

  If this country were Ukraine, or even Russia, then Americans (trained by decades of a CIA-controlled ‘free press’) would say «Oh, of course those countries are corrupt, but America isn’t like that». But, at least under Barack Obama, ‘we’ were that. This was America — and ‘our’ President was protecting the elite fraudsters, instead of prosecuting them.

  Nonetheless, anyone who would say that the American people are not better off now than they were at the end of Bush’s disastrous Presidency would be either misinformed or lying, because there’s lots of data showing that, finally, eight years after Bush, Americans are better off than they were at the end of Bush’s miserable eight years (even though not yet better off than Americans were prior to Bush’s 2007-2008 crash). And the Administration published on December 15^th its record of ‘successes’ «The 2017 Economic Report of the President» which was real but not adjusted for the fact that Obama came into office at the pit of the economic crash, which means that such ‘successes’ are almost inevitable, hardly a credit to Obama. But yet, the reality stands, that the Obama economic recovery was the weakest in the entire post-World-War-II period. Plus, the federal debt doubled on his watch, even while, as that Economic Report mentioned only in passing: «The United States has seen a faster increase in inequality in recent decades than any of the major advanced economies, and despite the historic progress made over the last eight years, the level of U.S. inequality remains high». Normally, after an economic crash, economic inequality reduces; but under Obama it remained at or near its pre-crash high. 

  It was an economic record (and an invasion and coup record) of which any Republican President could justifiably have been proud (since conservatives favor inequality, a caste system) — but no Democrat could (except fake ones — such as Obama and the Clintons).

  

  

• Criminal Witch Hunt In Dallas Pension Fiasco

  Submitted by Michael Shedlock via MishTalk.com,

  In the wake of the near collapse of the Dallas police and fire pension fund, a Dallas News editorial says Former Police, Fire Pension Managers Should Face Criminal Investigation.

  

  Mayor Mike Rawlings is right to ask for a state criminal investigation into shady practices by the Dallas Police and Fire Pension System’s prior management.

   

  The fund is on the verge of a potentially catastrophic collapse that could leave public safety workers, taxpayers and the City of Dallas on the hook for billions of dollars. And the reason stems from abuses under the former administrator Richard Tettamant, who was ousted in 2014.

   

  The fund’s former managers bet heavily on risky investments such as luxury homes in Hawaii, a resort and vineyard in California and Dallas’ Museum Tower itself, and promised its hardworking police and fire employees unrealistic returns while enjoying lavish perks.

   

  Those returns didn’t materialize, saddling the retirement fund’s new managers with $2 billion to $5 billion in unfunded liabilities. Frightened police officers and firefighters began a run on the fund, pulling more than $500 million out of it in recent weeks at a pace that would have drained the fund’s cash to dangerous levels.

   

  The city of Dallas contends it is not legally responsible for the actions of the pension fund’s former managers, in part, because the city doesn’t control the fund, which was set up decades ago by the Texas Legislature. But the city is on the hook nonetheless; a failure of the fund would betray promises made to current and retired public safety workers and would make it much more difficult for the city to recruit new police officers and firefighters.

   

  Too many people are at risk and those who put them there need to be called to account for their actions.

  Criminal Witch Hunt

  I am not here to defend the investment schemes of the fund managers. And I certainly take exception to alleged lavish perks. But this case is going nowhere.

  If one wants to place blame, then blame rests squarely on the shoulders of the legislature that authorized the plan and established the absurd pension assumptions.

  Perks did not cause the pension plan to be ridiculously underfunded. Rather, ridiculous plan assumptions steered the managers into risky assets.

  In hindsight, it’s easy to say the fund should have thrown it all at Google, Apple, etc. Care to make the same case going forward?

  Taxpayers on the Hook?

  Taxpayers should not be on the hook for this mess. The promises were bound to fail from the get go.

  The fault for this mess is squarely in the hands of politicians, not those running the fund.

  Nearly every public pension plan in the nation is severely underfunded. There is nothing special about Dallas.

  However, politicians will never point the finger at themselves. So the witch hunt is on.

  Related Articles

  1. Dallas Police Retiring in Droves, Taking Lump Sum Pensions, Fearing the Money Isn’t There (And It Isn’t)
  2. Dallas Pension Showdown: Mayor Seeks to “Target Those Who Got Rich From System”
  3. Not Just Dallas: Fort Worth Employees’ Pension Plan in Deep Trouble

  The only realistic solution to this mess is massive haircuts on pension assumptions, one of two ways: Voluntary or in bankruptcy court.

  

  

• Washington Post Caught Spreading More Fake News About "Russian Hackers"

  Readers of the Washington Post received some alarming news yesterday when the paper published a story alleging that those pesky “Russian hackers” were up to their no good tricks again and had managed to “penetrate the U.S. electricity grid through a utility in Vermont.”  The full headline read as follows:

  

  The opening paragraph of WaPo’s story directly linked the “hack” of the Vermont utility to the same “Russian hacking operation dubbed Grizzly Steppe” that the Obama administration has blamed for the DNC and John Podesta email hacks.  Vermont’s Governor, Peter Shumlin, told WaPo that “Americans should be both alarmed and outraged” by these actions perpetrated by “one of the world’s leading thugs, Vladimir Putin,” before seemingly calling for further retaliatory actions from the Obama administration.

  Vermonters and all Americans should be both alarmed and outraged that one of the world’s leading thugs, Vladimir Putin, has been attempting to hack our electric grid, which we rely upon to support our quality-of-life, economy, health, and safety. This episode should highlight the urgent need for our federal government to vigorously pursue and put an end to this sort of Russian meddling.

  Moreover, Vermont Senator Patrick Leahy took the rhetoric to a whole new level by asserting a diabolical Russian plot to shut down the U.S. electrical grid in the middle of winter…a move that would most certainly kill off half the state’s population in an instant.

  

  Of course, it didn’t take long for the New York Times and ABC to latch on to the story since it fits their “2016 election hacking” narrative so perfectly.

  Our Russian “friend” Putin attacked the U.S. power grid. https://t.co/iAneRgbuhF

  — Brent Staples (@BrentNYT) December 31, 2016

  NEW: “One of the world’s leading thugs, [Putin] has been attempting to hack our electric grid,” says VT Gov. Shumlin https://t.co/YgdtT4JrlX pic.twitter.com/AU0ZQjT3aO

  — ABC News (@ABC) December 31, 2016

   

  Alas, there was just one minor problem, namely that the entire article was completely fabricated.  Apparently the esteemed “journalists” of the Washington Post didn’t even bother to contact the Burlington Electric Department to confirm their bogus story…and why should they…it fit the “Russian hacking” narrative so perfectly therefore it must be true, right?

  Well, apparently not.  The quick spread of WaPo’s “fake news” story forced the Burlington Electric Department to issue a clarifying statement assuring worried residents that, indeed, their electricity grid had not been hacked, but rather a single “laptop not connected” to the grid had been found to have a malware virus.

  

  Which forced the embarrassed Washington Post to quickly tone down their provocative headline…

  

  …and supplement their original article with the following “Editor’s Note” admitting the entire premise of their original story was nothing more than “fake news.”

  Editor’s Note: An earlier version of this story incorrectly said that Russian hackers had penetrated the U.S. electric grid. Authorities say there is no indication of that so far. The computer at Burlington Electric that was hacked was not attached to the grid.

  Which drew quick reactions from twitter…
  

  1) Not an infiltration of the power grid.
  2) “Russian” malware can be purchased online by anyone.
  3) See 1 & 2. https://t.co/bVIG8zQBsk

  — Dell Cameron (@dellcam) December 31, 2016

  Pretty amazing how badly the Post appears to have mangled this one. You didn’t call the Vermont utility regulator before publishing?

  — Eric Geller (@ericgeller) December 31, 2016

   

  …and Glenn Greenwald of The Intercept, who blasted WaPo for their “irresponsible and sensationalist tabloid behavior.”

  THIS MATTERS not only because one of the nation’s major newspaper once again published a wildly misleading, fear-mongering story about Russia. It matters even more because it reflects the deeply irrational and ever-spiraling fever that is being cultivated in U.S. political discourse and culture about the threat posed by Moscow.

   

  The Post has many excellent reporters and smart editors. They have produced many great stories this year. But this kind of blatantly irresponsible and sensationalist tabloid behavior – which tracks what they did when promoting that grotesque PropOrNot blacklist of U.S. news outlets accused of being Kremlin tools – is a by-product of the Anything Goes mentality that now shapes mainstream discussion of Russia, Putin and the Grave Threat to All Things Decent in America that they pose.

  Ironically, a few weeks ago we noted that The Washington Post was all too happy to promote an anonymous website that described Zerohedge as “‘dark gray’ propaganda, systematically deceiving its civilian audiences for foreign political gain” (see “Washington Post Names Drudge, Zero Hedge, & Ron Paul As Anti-Clinton ‘Sophisticated Russian Propaganda Tools’“), all while presenting exactly zero evidence to support their preposterous claim.  Perhaps it’s time for WaPo to dedicate a bit more of its time to self-reflection.

  

  

• At Least 35 People Killed After Shooters Dressed As Santas Open Fire In Istanbul Nightclub – Live Feed

  Live Feed from Istanbul courtesy of RT:

  * * *

  Turkey greeted the New Year with another tragedy after at least 35 people were killed and 40 wounded around 1:15 am local time, when gunmen dressed as Santas opened fire on New Year’s revelers at a nightclub in Istanbul on Sunday morning, Istanbul Governor Vasip Sahin told reporters.

   

  Gunman in #Reina Istanbul nightclub attack was reportedly wearing a Santa Claus costume, according to local mediahttps://t.co/eaAGD1ixya pic.twitter.com/BkjZI83oNR

  — BBC Breaking News (@BBCBreaking) January 1, 2017

  

  Ambulances line up in front of the Reina nightclub in Istanbul, where a gun
  attack took place during a New Year party.

  The assailant shot a police officer and a civilian as he entered the Reina nightclub before opening fire at random inside according to Reuters. The club lies on the shore of the Bosphorus Strait in the Ortakoy district of Turkey’s most populous city.

   “A terrorist with a long-range weapon … brutally and savagely carried out this incident by firing bullets on innocent people who were there solely to celebrate the New Year and have fun,” Sahin told reporters at the scene.

  

  Dozens of ambulances and police vehicles were dispatched to the club in Ortakoy, a cosmopolitan neighborhood nestled under one of three bridges crossing the Bosphorus, and home to clubs, restaurants and art galleries. Reina is one of Istanbul’s best-known nightclubs, popular with locals and tourists alike.

  #BREAKING Istanbul Governor says at least 35 people killed, 40 wounded in attack at Reina night club #Turkey pic.twitter.com/irZD4Djtj1

  — CNN Türk ENG (@CNNTURK_ENG) January 1, 2017

  Attackers w kaleshnikovs reportedly still inside famous #Reina club.
  Seen several dead & injured people footage & photos. #IstanbulAttacked. pic.twitter.com/3lNYNNeixS

  — ilhan tanir (@WashingtonPoint) December 31, 2016

  Sahin told local media that the assailants first killed the police officer, who was standing at the door of the club, and then went on a rampage inside, killing innocent civilians. A policeman and a civilian are reported to be among the two known casualties at the nightclub. There were two attackers involved, according to NTV, but conflicting reports also described a lone gunman.

  ??te ilk götüntüler. 40 civar? yaral? oldu?u belirtiliyor. pic.twitter.com/FExbV7e7Qy

  — Murat ?ahin (@SunucuSpiker) December 31, 2016

  The gunmen were dressed in Santa Claus outfits, wielding assault rifles, Turkish media said.

  breaking An armed attack on a local club, Reina, in #Istanbul. Many casualties reported. At least 2 dead and over 50 ambulances on scene pic.twitter.com/GF1vhcCoW7

  — Jewish Breaking News (@JBN) December 31, 2016

  According to RT, one of the gunmen has reportedly hidden inside the club, while the whereabouts of the second one were not immediately clear. The number of casualties may rise, as local press estimates that between 500 and 600 people could have been in the club at the time of the attack, Mynet Haber reports.

  Emergency crews have been evacuating injured people from the building as the police search for suspects. Some people jumped into the waters of the Bosphorus to save themselves and were being rescued by police.

  A search and rescue operation for those who jumped in the water is being carried out by maritime police.

  

  

• "Something For Nothing" All-Weather Funds Disappoint In Post-Election Era

  Variously marketed as "all-weather", "all-season", or "bulletproof", the so-called "risk-parity" strategies of some of the world's largest hedge funds have been anything but 'stable' since the election as the combination of leverage and bond losses have crushed the gains from an exuberant equity market.

  Promise people something for nothing and you are going to attract a lot of attention. Stumble in the process and the critics will be quick to pounce.

  As The Wall Street Journal reports, the weeks since the election have been rough for one of the most polarizing investment strategies out there: risk parity.

  The strategy – which simply put, involves using diversification – and sometimes borrowed money (leverage) – to find an (historically-optimized) balance between risk and return.

  Bridgewater’s variant of this strategy, for example, has historically used borrowed money to invest about $1.50 for each dollar in assets, often putting the leverage in historically less-volatile bonds. The goal is stocklike returns with less volatility.

  Problems occur when histroical relationships between asset-classes break down… just as they did during this year (when the historical norm of inversely correlated bond and stock prices reversed completely)…

  

  The post-election rally in stocks and selloff in bonds hit these portfolios, embolding critics of the approach…

  

  Bonds have been in a bull market for 35 years, so adding leverage would have produced strong returns for a modest increase in volatility, says Ben Inker of fund management firm GMO. He also argues that “volatility and risk are not the same.”

  

  As WSJ concludes, the strategy has sharply underperformed both stocks and a traditional 60% stock 40% bond index fund offered by Vanguard since 1993.

  Without the benefit of leverage, lower volatility equals lower returns. Even with it, though, there are occasional bumps in the road. For investors whose moods are as fickle as the weather, risk parity may involve more risk than reward.

  

  

• Global Recession And Other Visions For 2017

  Submitted by Economic Prism's MN Gordon via Acting-Man.com,

  Conjuring Up Visions

  Today’s a day for considering new hopes, new dreams, and new hallucinations.  The New Year is here, after all.  Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad.  But what else will happen?

   

  

  Image of a recently discarded vision…

   

   

  Here we begin by closing our eyes and slowing our breath.  We let our mind role back into the gray matter of our brain.  We wait patiently for new neurological connections to open up.  Then, ever so subtly, visions of the year ahead come into focus.

  Will stocks go up or down?  What about gold and Treasury bonds?  Will the economy expand or contract?  Are we fated for World War III?  Who will win the Super Bowl? These are the questions – and more – we intend to answer.

  Obviously, conjuring up visions is more art than science.  But so is Fed monetary policy. Nonetheless, before we get to it we must first lean upon ancient Chinese Philosopher Lao Tzu for a full disclaimer:

  “Those who have knowledge, don’t predict.  Those who predict, don’t have knowledge.”

  Hence, what follows comes from a place of zero knowledge.  We know nothing.  Still we sharpen our pencils and face our limitations.  What follows, for fun and for free, are several simple conjectures for the year ahead…

   

  Global Recession

  To start, the animal spirits and optimism that greeted Donald Trump’s election victory will flame out not long after inauguration day.  Without a major economic crisis, it will be near impossible to get substantial – $2 trillion deficit – spending approved by Congress.  Moreover, even if massive fiscal stimulus is approved it won’t make much of a lick to the economy for four quarters or more – if ever.

  One lesson of the 2009 American Recovery and Reinvestment Act is that throwing money at infrastructure projects is more complex than commonly appreciated.  Shovel ready projects don’t exist.  In particular, shovel ready infrastructure projects that could generate significant growth in high paying jobs are hard to come by with just the inking of a stimulus bill.

   

  

  The surplus shovels from the last batch of shovel-ready infrastructure projects are still in the process of being dumped…

   

  No doubt, this lesson was quickly forgotten when the sky stopped falling just after the darkest days of the Great Recession.  So, too, it’ll be quickly remembered.  Soon enough, the realization that stimulus spending won’t provide an immediate lift to the economy will spread across Wall Street and the post-election stock market rally will reverse.

  Similarly, the Fed’s efforts to ‘normalize’ interest rates will be tabled.  The economy simply can’t afford higher rates.  This isn’t Trump’s fault, of course.  He’s been handed a badly damaged economy.

  Quite frankly, there’s really no way to fix it.  Decades of economic degradation are irreversible.  Adding new debt based stimulus will only further the overall divergence between debt and GDP.

  Specifically, the debt will grow larger while GDP slouches forward.  On top of that, larger deficits will eventually ignite a level of consumer price inflation that hasn’t dramatically flared up since the early 1980s.  A scenario of slow growth and rising consumer price inflation will emerge at some point.

  But first something else must come to pass.  By mid-year it will become all too apparent that the global economy, including the United States, Europe, China, and Japan, are in a full blown recession.

  The Fed will quickly return to zero interest rate policy.  Ten Year Treasury yields will again slip below 2 percent as investors blindly plow their capital back into the ‘safest investment in the world’ at precisely the most dangerous time.

  The S&P 500, presently near its all-time high, will rapidly descend to 1,200.  And, only then, when fear has reached its extreme, will Congress be ready to go along with Trump’s massive fiscal spending program.

   

  

  The interesting Wile E. Coyote moment of blissful weightlessness shortly after passing the all time high…

   

  Other Visions for 2017

  That’s when things will go really haywire.  By then the effects of infrastructure stimulus will be considered too slow to save the economy from itself.  Calls for a direct economic jolt will be made by Larry Summers as he lobbies to replace Janet Yellen as Fed Head.

  Direct monetization of the debt in the form of ‘tax rebate checks’ will be mailed out to every working age citizen whether they have a taxable income or not.  Alas, any temporary boost to the economy these efforts encourage will be overwhelmed by rising price inflation… and higher interest rates.

  The strong dollar trend will also reverse in earnest by the second quarter.  About this time gold will once again glitter.  Consequently, the first three months of the year will be a fantastic time to accumulate and add to your physical gold hoard.  By mid-April gold will be back above $1,350 per ounce.

  Indeed, the coming year will be one of great distress.  As the global economy slips and slides into recession, world politicians will look to distract blame from their own bungles.  They’ll seize any diversion afforded to them to channel the discontents of their masses.  They’ll blunder outward in search of a new mission and greater purpose for their young and idle.

  Global factions are on a collision course for war.  We wish this weren’t so.  But, unfortunately, ongoing territorial disputes between China, Malaysia, Philippines, Taiwan, and Vietnam over the Spratly Islands in the South China Sea will continue to escalate.

  Likewise, ancient territorial disagreements between Japan and China over the Senkaku-Diaoyu Islands in the East China Sea will deepen.  These disputes, and a burgeoning arms race, could provide the perfect diversion for China and Japan as their debt fueled economies unravel.

  On a high note, we start the New Year hopeful that a lasting ceasefire has been reached in the proxy Syria war – in spite of the failings of the United Nations and the Obama administration.  In addition, there are numerous other reasons for optimism as we enter 2017.

  For example, right now, in cities across the globe, brilliant minds at the fringe of scientific propriety are but one experiment away from the big energy breakthrough humanity’s been waiting more than 45-years for.  Unfettered by academic zealotry, this new scientific discovery will not come from a leading research or government institution.

  Like all great discoveries in our time, it will come from a small team of eccentrics operating out of a garage on a shoestring budget. What we mean is, in the words of the late Gordon MacKenzie:

  “Orville Wright did not have a pilot’s license.”

   

  

  What is this? Flying without a license?  Obviously, the pre-world war age must have been pure chaos… not enough regulations, as Ben Bernanke would say!

   

  Lastly, the Dallas Cowboys will win the Super Bowl.

   

  

  The best part of the Dallas Cowboys. In late 2015 the team became the most valuable sports team in the world, surpassing Real Madrid – with its estimated net worth reaching $4 bn.

  Happy New Year!

  

  

• Narrative Smashed By Stats – "Most Americans" Did Not Vote For Hillary Clinton

  Submitted by Salil Mehta via Statistical Ideas blog,

  Happy New Year!  As we wrap up another successful year of the statistics blog (now with >50k followers), we would be remiss not to recognize some nice friends who are still feeling disappointed over the outcome of the recent U.S. election.  It is worth exploring a little more about the election results, based on the most updated voting records.  Particularly as the Democrats have pivoted the tête-à-tête from recount and FBI director Comey, to popular vote and Russian president Putin. 

  What does it mean to now imply that "most Americans" voted for Democratic ideals, given the results (looked at through the prism of a popular vote tabulation) showed Hillary Clinton won by only a couple percent? 

  It turns out that this sort of conclusion is false, and instead it leads to one party presuming to hold a mighty moral high-ground from their ¼ voting share? 

  From a peak in 2008, now through 2016, those not caring to vote (in white below) continuously rose to 45% (from 43%).  This is a higher voter apathy than in virtually all other advanced countries.  And frankly, it is the largest American segment of 114m (up from 99m).  Last-minute undecideds (including me) rose.

  Additionally, the voting share for the popular vote "winner" (in blue below) fell to 48% (from 53%), or as a portion of the entire eligible population (as opposed to as a portion of voters) it fell to 26% (from 30%).  So on net, even as the population grew, a small fraction voted (and within that an even smaller fraction voted for the popular vote "winner").  This results in Hillary Clinton not epitomizing the views of "most Americans" even if she "won the popular vote", but rather supported by only 66 million Americans (down from 70 million who voted for Barack Obama in 2008).

  I'm with her?  Observe their share of the pie, below!  Democrats have simply seen a continuously dwindling moral-standing to speak for all Americans, even as the population has grown in the past 8 years.

  

  So now back to my friends who are still feeling sour over the Presidential election and looking for relief.  I feel a particular sense of responsibility since my polling probability research was read by millions and continuously solicited/shared by one party, and always properly showed Donald Trump had much stronger odds (~3x) versus what MSM polls or Nate Silver were "scientifically" suggesting.  It is worth noting something here at year-end: it's an acutely individual loss, to not see that there are so many tremendous and long-term opportunities we get to enjoy, just living in a great nation such as the United States.  We get most things right, most of the time.  We get to argue about politics and not worry about a knock on our door in the middle of the night.

  The rest of the world has already moved on, as they should.  They really never cared as much about you, or your candidate (just as ½ of our own country doesn't, per above).  That was mainstream media noise that fooled you.  And having worked for many years, in and out of Washington, we can assure you that well over 90% of people have issues so much larger than who was or will be in the White House.  Yet it's captivating, nonetheless, the amount of attention spent in social circles defying this actuality, and presuming moral high-ground by  falsely twisting statistics to suit private needs.  By setting some simple statistics straight, we honestly hope 2017 ushers in a new era of knowledge, contentment and worldly views, as we leave the disparaging partisan choke-hold of the 2016 elections behind.

  

  

• Tesla Sued Over Model X "Spontaneous Acceleration"

  Is Tesla having the worst year ever?  Over the course of 2016, we’ve written frequently about Tesla’s many setbacks including several auto-pilot related crashes, hackers taking control of moving vehicles, egregious levels of cash burn and a very controversial merger with SolarCity.

  Now, as 2016 draws to a close, Tesla once again finds itself in the spotlight as a Model X owner has filed a lawsuit alleging that his electric SUV suddenly accelerated while being parked, causing it to crash through the garage of his home and into his living room, injuring the driver and a passenger.

  In the lawsuit filed Friday in California, Ji Chang Son said that one night in September, he was slowly pulling into his driveway as his garage door opened when the car suddenly sped forward.  Unfortunately for Tesla, the lawsuit seeks class action status noting at least seven other complaints from owners of similar incidents.  Per CBC News:

  “The vehicle spontaneously began to accelerate at full power, jerking forward and crashing through the interior wall of the garage, destroying several wooden support beams in the wall and a steel sewer pipe, among other things, and coming to rest in plaintiffs’ living room,” the lawsuit said.

   

  The lawsuit, filed in U.S. District Court in the Central District of California, seeks class-action status. It cites seven other complaints registered in a database compiled by the National Highway Traffic Safety Administration (NHTSA) dealing with sudden acceleration.

  

   

  Not surprisingly, after conducting a “thorough investigation,” Tesla concluded that their cars are still extremely awesome and therefore any malfunction in operation was certainly due to user error.

  Tesla said in a statement that it had “conducted a thorough investigation” of the claims made by Son.

   

  “The evidence, including data from the car, conclusively shows that the crash was the result of Mr. Son pressing the accelerator pedal all the way to 100 per cent,” a Tesla spokesperson said in an emailed statement.

   

  Tesla said it has various ways to protect against pedal misapplication, including using its autopilot sensors to distinguish between erroneous pedal application and normal cases.

  Of course, the only question now is how many “plumes of smoke” have to be discovered before Tesla investors start to worry that there might actually be a fire?

  

  

  

• Euronomics Decomposing, Raise a Glass of Cheer!

  This article by David Haggith was first published on The Great Recession Blog: 

  

  Europeans must have been delighted to discover that one thing is working as well as it has since the start of the Great Recession. Behemoth banks that are failing are still able to pay their Christmas bonuses to their top executives and give nice dividends to their shareholders thanks to Super Mario Draghi. 

  Keeping up the tradition of central bankers looking out for other bankers, Mario Draghi, chief of the European Central Bank “agreed to lower the minimum capital requirements for Deutsche Bank on Tuesday, ‘giving the lender more leeway to structure bonus payments and dividends.’” (Zero Hedge).

  Thank God for that, huh? The needs of the stockholders and top execs have been taken care of before one of the world’s oldest megabanks falls on everyone else. While Deutsche Bank’s stocks sit at all-time lows after it has been required to pay $8 billion in fines, at least the golden parachutes are in top condition.

   

  Italy surrenders to Germany

   

  Meanwhile, the world’s oldest bank in Italy got nationalized for Christmas so that the losses of capitalists — many of whom exist outside of Italy — could all be socialized to the people of Italy. However, when the People’s Republic of Italy became the new owner of the bank, they found out the hole in the bank’s core was bigger than they thought. (Surprise.)

  The ECB now estimates the hole to be 8.8 billion euros, rather than the 5 billion of additional capital they formerly believed it needed. That’s a 75% increase in the bank’s capital shortfall that took place from November through December. What a sleigh ride!

  Turns out that all the talk of nationalizing the bank caused depositors to rapidly withdraw funds (who woulda thought?), creating something of a black hole in the bank’s core. Lingering depositors don’t need to worry, though, because the Italian parliament has assured them that all Italians are equally on the hook for the bank’s losses by guaranteeing a 20-billion euro fund to stabilize any Italian banks that are too big to fail.

  In Monte’s case, the Italian government will invest 6.3 billion euros of this fund into filling the growing hole, and the rest will be squeezed out of bond-holders. (Of course, that news is bound to send even the lingerers running if they know what’s good for them, but obviously they don’t, or they wouldn’t still have been there when all this went down, as warnings have been evident for a couple of years.)

  Gee, whatever happened to bail-ins putting the bank’s salvation primarily in the hands of share-holders, bond-holders and major depositors? Look’s like the government still believes general taxpayers should front the biggest wad. So, you’ll be glad to know that, even in Italy, the principles of saving too-big-to-fail banks at the start of the Great Recession are still largely in play. The costs of failing capitalists shall be largely socialized upon the poorer parts of the population because their citizens have happily allowed banks to remain too big to fail.

  Maybe the depositors were all withdrawing their money to buy Christmas presents, so Italy will be saved by a Santa Clause rally. (It is no more wishful than thinking these banks will not ultimately pull down their governments. This was, after all, the bank’s third bailout. Keep bailing.)

  Italy is the eighth-largest economy in the world, third-largest in Europe, and its GDP per capita hasn’t grown since the Great Recession. It has issued the third-largest amount of sovereign bonds in the world to survive its relentlessly unfolding debt catastrophe, with many of its debts being held by banks and central banks outside of Italy.

  On top of that, eighteen percent of all bank loans in Italy are bad debt that has been carried on the books since the Great Recession. Italian banks don’t write off this long-term bad debt because they have less than 50% of the capital they need in order to cover it. So, they pretend their customers will all win the Italian Liralicious Lotto and pay up. Since GDP per capita is actually sinking, the ability of each customer to ever pay one of these debts off is ever diminishing. The Super Mario jackpot better pay off real soon.

  No wonder Italians took a big step toward their own euro exit on December 4th. Back when they had their own currency, they could, at least, try to inflate their way out of trouble. They could lower the lira’s value in order to draw trade away from Germany and toward Italian products. Now they socialize debts away from German (and other non-Italian) bond owners and bank holders toward the Italian populace.

   

  Owed to Grecians earning less

   

  Meanwhile in Greece, people have started rejecting their own inheritances in order to save themselves. At this point in the Greek crisis, so much real estate is underwater that it is worth less than it is worth. You don’t even want to inherit it for free because you cannot sell it for enough to pay off its debt if you accept it.

  With incomes falling (unemployment is at 23%) and taxes rising (particularly property tax) to meet Eurozone austerity requirements, old people have heaped mortgages onto their properties to make it through their declining years. To receive an inheritance from your parents is to receive their bundled debts.

  Thirty-two percent of all property loans in Greece are now delinquent. So much for the ultimate safe haven. So many properties in foreclosure sales drives down the price, making the next round worse. So, beware of dead Greeks bearing gifts if they are willing them to you. Gift recipients are lining up in government cues to decline their inheritance. Wealth destruction via real estate.

  But Europe has this solved. If everything goes well with Greece, the Greek’s condition is expected to resolve back to a normal economy in just fifty years! The Greek debt burden is about 177% of its entire Gross Domestic Product; compare that to the US now at a paltry 100%. Europe calculates the Greek’s situation will improve by 20% come the year 2060. Do you think maybe these people are debt slaves for life? I think they were better off under Rome in AD Zero than under Germany.

  Germany is helping out, after requiring some rather Spartan austerity, by proposing that all of Europe send its refugees goose-stepping toward Greece in order to save the northern states of Europe from those social and financial burdens. That ought to stomp out the tiny nation, which can’t even look out for its own welfare. Greece already has bottled up huge amounts of resentment against both Europe and its own government. Germany seems blindly determined to use its immigration policies to destroy its own European union. “Here, feed our poor and wandering masses while you Greeks lick the bottoms of our boots for nourishment.”

  Not sure who’s doing the math over there, but it doesn’t add up to success.

   

  And now for a Bilderberg Bonanza:

   

  (In case you are stunningly new to the world of conspiracy theories, the uber-elite one-percenters meet at the Hotel Bilderberg once a year to control the world through sub committees like the Illuminati … or something like that. Anyway, they’re really rich, and they suck.)

  The hacker group Anonymous seized control of the Bilderberg website today, posting the following message as the site’s new home page:

   

  …Dear Bilderberg mEmBers, From NoW(), each OnE of you have 1 year (365 days) to truly work in faVor of HumaNs and not youR private interests…. MiNd the cuRrent situation: We conTrol your expensive connected cars, we control your connecteD house security devices, we control your daughter laptop, we control your wife’s mobile, we tape YoUR seCret meetings, we reAD your emaiLs, we control your faVoriTe eScort girl smartWatch, we ARe inside your beLoved banks and we Are reading YoUr assets  You wont be safe anywhere near electricity anyMore  We WiLL watch yOu, from NoW on you got to WoRk for Us, Humanity, the People

   

  They had other choice words, too; but I don’t know if I recommend going to their site to check it out because who knows what it does to your computer while you’re there, but the link is provided for the brave of heart. I did and lived to tell about it. Maybe I’ll find out otherwise when a certain date clicks by.

  It’s getting harder for the globalists to feel safe in their dark-paneled, smoke filled hotel meeting rooms, high in the citadels of Germany, Switzerland, or down inhabiting the swampy Netherlands and other such heady retreats … and this is why they want to control the internet.

   

  The Christmas present from Fundamentalist Islam

   

  Subsequent to the Christmas bombing in Berlin, Europe is proposing tighter restrictions on the movement of cash and precious metals. (This is one more reason that gold is not necessarily a safe haven in any nation because stringent controls were placed on gold in the US during the Great Depression, too. It happens; so, diversify.)

  The European Commission says that tighter controls will help shut down funding for militant operations on the continent. I’m not sure how that will stop a guy from driving a truck into a crowd in Berlin, but maybe it will keep him from getting money for fuel. I think it is more likely that any excuse will do when bankers see people fleeing their proprietary product (money) for generic gold and need to find reasons to slow down the gold traffic. Probably more concerned about that than they are thinking this plan will slow down truck traffic in crowded streets.

  Of course, that’s also why central banks own so much of the yellow stuff they hate — so they can throw it off as ballast whenever there is a run on banks in order to try to kill the price of gold and scare people away from it. Why else would they keep so much of something they say is a poor investment, other than to control the only competition in town to their monopoly?

  The EU is also proposing stricter controls on the movement of Bitcoin funds. The new rules will allow seizure of funds, including gold, wherever “there are suspicions of criminal activity.” It’s unclear whether suspicion also requires a warrant, or just (that’s a lot of money, and I think you look funny or you had a drink with a bad guy).

  While the European Commission solves its immigrant-created catastrophes with golden rules, widespread unrest is becoming the norm due to the over-exuberant globalists’ drive to soak up unscreened Muslim refuges that are not integrating well into European society. They are almost entirely unemployed and sucking up social welfare that those unemployed Greeks and Italians could sure use. That has got to be a short-fused bomb.

  While the news is bad all over Europe, it’s not going so well for the globalists in the new year either! In light of extenuating circumstances, who could ask for anything more? The serfs are up, and the sooner they set sail from the Eurozone and its globalist control, the sooner they can have a real economy back. So, raise a cup of cheer; the New Year is here!

   

  And now, for some lighthearted New Year’s fun, here are my favorite Putin-Obama cartoons.

  

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• Sweden's Infamous "Bikini Cop" Quits Amid Growing Police Crisis

  Back in August Mikaela Kellner became Sweden’s most famous police officer when she took a short break from sunbathing in the park to tackle and arrest a pickpocket.  Pictures of the event quickly rose to international fame and nearly broke the internet.

  I bet this guy was trying to get caught. Bikini-clad Swedish cop makes arrest while sunbathing https://t.co/EuxnrYpis2

  — Neil Combee (@NeilCombee) August 6, 2016

  Swedish cop in bikini tackles ‘lucky’ homeless crook https://t.co/NjNdhEmNnQ

  — TomoNews US (@TomoNewsUS) August 3, 2016

   

  Spread of the news instantly gained the fit cop nearly 30,000 instagram followers.

  

   

  Now, after 11 years on the force, the famed officer has decided to turn in her badge in protest to her department’s recent reorganization that, according to Kellner, has resulted in personnel being treated unfairly.  Per Sputnik:

  “The main reason is that I’ve not felt comfortable with the recent [police] reorganization. I do not think that personnel are being treated fairly, as they should.”

   

  “[Being a police officer] has become a bit like a second identity, and I feel bad about not doing a good job.”

  Though Kellner didn’t mention it, Sweden’s police force has recently been plagued by understaffing and a rapid rise in violent crime that seemingly corresponded with the arrival of thousands of migrants from the Middle East and Northern Africa.  The level of violence within certain areas rose to such a level that police abandoned efforts to control the streets, leading to the establishment of 55 “no-go zones” (something we discussed in further detail here:  “Sweden Creates 55 “No-Go Zones” As It Loses Control Of Refugee Crisis“).

  All in all, Sweden’s police force has been plagued by severe understaffing, underpayment and low crime detection — despite the allocation of billions of extra kronor in backup. A report published earlier this year suggested as many as 80 percent of Swedish police officers were considering pursuing a different careers due to the danger they face in the field. In recent months, Sweden was plagued by ballooning criminality in the form of sex attacks, burglary, murder, vehicular arson and violence toward the police in blighted suburban areas.

   

  Much of the crime, however, is linked to specific suburbs in urban communities populated by migrants, where police rarely venture outside police stations for fear of being attacked by locals — a fact that the Swedish authorities are loath to admit. In light of the Swedish practice to conceal the identity of the perpetrators, many suggest that the authorities and police conspire to cover up migrant crime to whitewash the country’s immigration policy.

  While we hate to see someone with her particular “talents” get pushed out of the force, we wish Ms. Kellner the best of luck with her personal training career.

  

  

• Trump Is Exactly Where The Elites Want Him

  Submitted by Brandon Smith via Alt-Market.com,

  Cognitive dissonance is a powerful drug. It makes otherwise-very-intelligent people goofy and incoherent in their thinking and blinds them to certain realities that they should normally see right in front of their noses. I witness it all the time in the field of economics — a key piece of logic, a key fact that certain people absolutely refuse to take into account simply because they have a singular idea of how the world works and they cannot allow that idea to ever come into question. They would rather leap into a mental gymnastics routine worthy of an Olympic gold medal than examine the truth. And if you confront them on it, they’ll accuse YOU of being the one in denial.

  This is how we ended up with the credit crisis and market crash of 2008/2009. This is how very few people saw the writing on the wall with Syria and ISIS and the fact that the funding and training of Islamic extremists by Western governments for the purpose of proxy insurgency might not be such a great concept. It is the reason why it took years for the mainstream to acknowledge the advent of the East/West paradigm, the same paradigm that alternative analysts warned about years in advance. This is why most mainstream AND alternative analysts completely discounted a successful Brexit referendum.  And, it is why the vast majority of pundits could not even conceive of a Trump victory in 2016.  I could write a list 20 pages long on all the geopolitical and fiscal developments most people missed because they were clinging to assumptions rather than evidence.

  Unfortunately, the liberty movement is also sometimes vulnerable to such assumptions. The most dangerous of which revolve around the rise of President-elect Donald Trump.

  I have seen endless theories over the past several months on all the ways in which the global elites would sabotage the Trump campaign. I believe the phrase “they will never allow him to win” was repeated in nearly every discussion on the election. The assumption in this instance was that Trump is “anti-establishment” and, therefore, a threat to the globalists. These are the same globalists that people also claimed would “rig the election,” or initiate a “coup” in the electoral college to stop a Trump presidency.

  Of course, this never happened. So, a large percentage of the movement needs to question — why didn’t it happen? How did Trump win within a system we know has been rigged for decades?

  You’ll hear hundreds of theories and rationalizations on Trump’s miraculous victory, but a reason you will almost never hear is also the most likely one: Trump won the election because he serves the interests of the establishment. Trump won because he is a fake.

  This is not an idea that many liberty activists want to entertain. They were so repulsed by the proposition of Hillary Clinton taking the helm at the White House that they would have invested themselves in almost ANYONE running against her, even if they thought that candidate might be controlled opposition. However, not just anyone was fielded as a candidate; Trump was fielded, and for good reason.  I predicted before the Republican and Democratic primaries that the final election would be between Trump and Clinton in my article Will A Trump Presidency Really Change Anything For The Better?, published in March, and here is a quote on why:

  "The other ingenious aspect of the Trump campaign is really who he is running against — Hillary Clinton, a rabidly liberal candidate even more hated than Barack Obama. A candidate with a potentially serious criminal record and a penchant for an outright communistic world view far beyond that of Bernie Sanders. Those of us who have been in the writing field for a long time and have dabbled in fiction know that in order to create a fantastic hero, you must first put even more work into creating a fantastic villain. The hero is nothing without the villain.

   

  The unmitigated horror inherent in the prospect of a Hillary Clinton presidency is like adding jet fuel to the Trump campaign. (And yes, I am assuming according to the results of the primaries so far that the final election will be between Trump and Clinton)."

  My point back then as well as now is that without Clinton as the counter-party, Trump would not have garnered the political following he did.  Any other Democratic candidate would not have galvanized conservatives so fervently. As I continued in my pre-primaries article:

  “Donald Trump appears to be the perfect antithesis to Hillary Clinton. … the real question is, is Trump a reflection of the frustration and defiance of the conservative population, or, is he a clever ruse by the establishment to co-opt and placate the conservative population before we rebel?”

  The staging of the 2016 election might have appeared to some people to be absolute chaos, but to me, it could not have been more perfectly scripted. In later articles covering the election I went on to give Trump a chance.  I stated that I had little doubt that he would win the election and that this would be followed by an economic crisis, probably triggered early in his first term.  Conservative movements would be set up as scapegoats for a crash the globalists had created. However, I believed it (marginally) possible that Trump was not aware of this strategy on the part of the elites. Today, I no longer hold this view.

  The first and worst sign that Trump is not anywhere near “anti-establishment” has been his complete reversal of his original “drain the swamp” rhetoric. Trump is not only NOT draining the swamp that is the Washington D.C. and corporate elitist revolving door, he is adding even more creatures of varying ghoulishness.  As Newt Gingrich, who describes himself as an outside adviser to Trump, recently stated:

  “I’m told he now just disclaims that…” [Draining the swamp] “He now says it was cute, but he doesn’t want to use it anymore…”

  There is a good reason why Trump no longer wants to use that particular slogan — his cabinet is now filled with the exact same elitists he used to slam along with the Washington establishment.

  Trump first placed former Goldman Sachs partner Steven Mnuchin as Treasury Secretary. Goldman Sachs has a long history of insinuating its alumni into vital positions within government bodies dealing directly with the economy.  Mnuchin is particularly troubling because of his ties to George Soros; Mnuchin used to work directly for George Soros at Soros Fund Management up until 2004.

  Then, for those people that thought maybe Mnuchin was just an anomaly, Trump added Gary Cohn, president of Goldman Sachs, as the director of the National Economic Council.

  Trump’s chief strategist and Breitbart executive Steve Bannon is also a former Goldman Sachs investment banker.

  It is interesting to note that over a quarter of the gains in the delusional Dow Jones spike after Trump’s election was tied to a rise in Goldman Sachs stock value.  Imagine that…

  Trump is also now “advised” on economic matters by the likes of JP Morgan’s Jamie Dimon. Are we starting to get the picture here?

  If that is not enough, then how about the fact that Trump is being closely advised by long time globalist Henry Kissinger (just as Vladimir Putin is advised by Kissinger)?  I'm not sure why so many people are surprised by this arrangement; Trump was meeting with Kissinger months before the election. No matter the administration, there is ALWAYS a high level globalist behind the curtain.  Barack Obama had Zbigniew Brzezinski, and Trump and Putin have Kissinger.

  I won’t go into the numerous establishment Republicans that Trump has tapped for his administration, I will save that can of worms for another article, but anyone in the Liberty Movement that is not at least generally suspicious of Trump at this point is probably kidding themselves.  The bottom line is, Trump has already LIED to his political base.  He has surrounded himself with globalists and financial gatekeepers when he originally criticized Clinton for the same behavior.  At this point, as long as he working in close proximity with such parasites there is no way for us to know if he is calling the shots, or if his handlers are making decisions for him.

  I have heard it argued that Trump “has no choices” outside of D.C. insiders, which is why his cabinet is loaded with bottom feeders from Goldman Sachs. I find this argument rather naive. I would argue that there are thousands of brilliant professionals and people far more trustworthy outside of the beltway that could populate Trump’s cabinet and “make America great again.”  I would even argue that ANY person with little experience inside the D.C. corruption chamber would be better suited to the job.

  It seems to me that there are some activists that just can’t let go of the notion that Trump was the candidate the elites wanted all along.  After all, didn’t the powers-that-be do everything in their power to try and stop him from winning the election?

  Well, not really.  The media firestorm surrounding Trump, though highly negative in tone, only boosted Trump’s exposure throughout the election. In fact, Trump received more coverage from outlets like CNN than all the other candidates combined.

  This was the exact opposite tactic that the elitist controlled media used against true liberty candidate Ron Paul in 2012. With Paul, the media went out of their way to ignore him; they even refused to show a single Ron Paul campaign sign in a crowd if they could avoid it. This was a concerted systematic effort on the part of left AND right wing media outlets to ensure that no one outside of the internet heard about Ron Paul.

  So what happened with Trump? Why did the mainstream media abandon a strategy that was very effective against Ron Paul, and why did they give Trump endless free coverage?

  The elites also did not take very stringent measures to disrupt Trump’s candidacy early in the race. The Republican National Convention undertook a campaign of disinformation and rule changes in order to ensure that Ron Paul would have no chance of organizing an upset against establishment choice Mitt Romney. The same exact kind of treachery was used by the DNC in 2016 to sabotage Bernie Sanders — arguably a far more popular and effective candidate than Hillary Clinton. The party elites have numerous tools at their disposal to kill a candidate’s chances before he or she ever makes it on the national stage, yet, we are supposed to believe that Trump just slipped through the cracks, or beat them at their own game?  I think not.

  The election itself was riddled with email leaks and data dumps showcasing the corruption of the Clinton campaign, and yes, this did help to ensure a Trump win. The accusations of “Russian hacking” is clearly a sideshow, but the question remains, who did feed that information to Wikileaks? Some theorize that “disgruntled employees” within the U.S. intelligence apparatus may have leaked the data. I think they were not disgruntled. I think that most of the leaks were part of the election theater from the very beginning. In light of Trump’s clear goal to entrench banking vampires within his administration, I think that the elites always intended for him to “win” the election.

  Of course, for some in the liberty movement this claim is sacrilegious. They don’t want to hear it, they’ll hate me for saying it, and that’s fine.  I started my work in 2006 during the Bush years, and I remember quite well what it was like.  I have little doubt that some people will be accusing me of being a "liberal" before they even finish this article, just as people called me a "Neo-Con" during the Obama administration.  People who held fast to "conspiracy theories" surrounding the election and how Clinton was the "chosen one" will now hypocritically call me a "conspiracy theorist" for pointing out that NO ONE gets into the White House without being vetted by the elites, even Trump.

  Working in alternative media means not caring if people like you or dislike you. I’ve been able to make numerous correct predictions because I do not concern myself with the pressures of conforming to group-think. My only hope is that many in the movement realize sooner rather than later that their faith in Trump has been ill invested. The great danger is that the liberty movement, the best last chance for saving this nation, will sit on its collective hands idle, centralizing all their hopes and eggs into the Trump basket, waiting for him to gallop in on his white horse and save us all from oblivion. And when that time comes, I suspect that he will do nothing, and the movement will be neutralized by its own desperate desire for a hero and an idol.

  

  

• Putin Stunner: "We Will Not Expel Anyone; We Refuse To Sink To 'Kitchen' Diplomacy"

  Vladimir the merciful?

  Following this morning’s reports that Foreign Minister Sergei Lavrov would recommend to Russian President Vladimir Putin a retaliation in kind, and expel 35 American diplomats, saying that “we cannot leave such acts unanswered. Reciprocity is part of diplomatic law”  with Putin spokesman Peskov adding that “there is no doubt that Russia’s adequate and mirror response will make Washington officials feel very uncomfortable as well”, it was ultimately up to Putin to decide how to respond to the US.

  Which he did on Friday morning, when in a stunning reversal, the Russian leader took the high road, rejected the Lavrov proposal, and in a statement posted by the Kremlin said that Russia won’t expel any Americans in retaliation to US moves, in a brutal demonstration of just how irrelevant Obama’s 11th hour decision is for US-Russian relations.

  

  The reversal comes as Russian officials portrayed U.S. sanctions as a last act of a lame-duck president and suggested that Trump could reverse them when he takes over the White House in January.

  President Obama expels 35 ???????? diplomats in Cold War deja vu. As everybody, incl ???????? people, will be glad to see the last of this hapless Adm. pic.twitter.com/mleqA16H8D

  — Russian Embassy, UK (@RussianEmbassy) December 29, 2016

  Earlier Russian Prime Minster Dmitry Medvedev said the Obama administration was ending its term in “anti-Russia death throes.”

  “It is regrettable that the Obama administration, which started out by restoring our ties, is ending its term in an anti-Russia death throes. RIP,” Medvedev, who served as president in 2009 when Obama tried to improve Russia-U.S. relations, wrote on his official Facebook page.

  In the just released statement, Putin laughed off Obama’s 11th hour temper tantrum, and said that Russia won’t cause problems to U.S. diplomats or deport anyone, adding that Russia has the right to respond in tit-for-tat manner, but it will not engage in irresponsible diplomacy.

  The punchline, however, was saved for what may be Russia’s final slam of the debacle that is Obama’s administration saying that “It’s a pity that the current U.S. administration is finishing their work in such a manner” saying that Russia refuses “to sink to the level of this irresponsible “kitchen” diplomacy.”

  Putin ended the statement by congratulating U.S. President-elect Donald Trump, and the American people on the New Year and invited the hildren of US diplomats to a holiday celebration at the Kremlin.

  From the full statement posted on the Kremlin website:

  Although we have the right to retaliate, we will not resort to irresponsible ‘kitchen’ diplomacy but will plan our further steps to restore Russian-US relations based on the policies of the Trump Administration.

  And with that one statement, Obama lost the diplomatic war with Russia.   

  In other news, the Kremlin said it will send a government plane to the US to evacuate the expelled diplomats and their family members. Earlier, there were reports that the diplomats were having problems buying tickets on such short notice, with airlines already booked by New Year’s travelers.
  

  * * *

  Full Putin statement below:

  We regard the recent unfriendly steps taken by the outgoing US administration as provocative and aimed at further weakening the Russia-US relationship. This runs contrary to the fundamental interests of both the Russian and American people. Considering the global security responsibilities of Russia and the United States, this is also damaging to international relations as a whole.

   

  As it proceeds from international practice, Russia has reasons to respond in kind. Although we have the right to retaliate, we will not resort to irresponsible ‘kitchen’ diplomacy but will plan our further steps to restore Russian-US relations based on the policies of the Trump Administration.

   

  The diplomats who are returning to Russia will spend the New Year’s holidays with their families and friends. We will not create any problems for US diplomats. We will not expel anyone. We will not prevent their families and children from using their traditional leisure sites during the New Year’s holidays. Moreover, I invite all children of US diplomats accredited in Russia to the New Year and Christmas children’s parties in the Kremlin.

   

  It is regrettable that the Obama Administration is ending its term in this manner. Nevertheless, I offer my New Year greetings to President Obama and his family.

  My season’s greetings also to President-elect Donald Trump and the American people.

   

  I wish all of you happiness and prosperity.

  

  

• How Musicians Die

  The passing of George Michael this week reminded many of the seemingly short life expectancy of musicians (and performers in general). In fact, as on study found, while blues, jazz, and country singers typically live as long as the average American; rock, techno, punk, metal, rap, and hip hop stars die significantly sooner.

  “I hope I die before I get old,” The Who’s Roger Daltrey sang in “My Generation” in 1965. This didn’t happen for Daltrey, who is now a ripe 71, but it did to many other musicians.

  

  Dianna Theadora Kenny, a professor of psychology and music at the University of Sydney, has conducted a statistical study of premature death among musicians.

  As The Washington Post notes,  she found that musicians from older genres – including blues, jazz, country and gospel – have similar lifespans to American people their own age. The life expectancy for R&B musicians is slightly lower, while the life expectancy for newer genres like rock, techno, punk, metal, rap and hip hop is significantly shorter.

  

  Perhaps unsurprisingly, Kenny finds that accidents – including car crashes and drug overdoses – are a huge cause of premature death for musicians, accounting for almost 20 percent of all deaths across genres. But accidents are much more likely to kill rock, metal and punk musicians. Punk and metal musicians also appear susceptible to suicide, while gospel musicians had the lowest suicide rate of all genres.

  *  *  *

  The bottom line is, stay away from rappers and hip hop stars and make sure your favorite blues singer eats well and exercises.

  

  

• Why Politicians Are To Blame For Most Terrorist Attacks

  Submitted by Patrick Coburn via Strategic-Culture.org,

  European political leaders are making the same mistake in reacting to the massacre at the Christmas fair in Berlin, in which 12 died, as they did during previous terrorist attacks in Paris and Brussels. There is an over-concentration on the failings of the security services in not identifying and neutralising the Tunisian petty criminal, Anis Amri, as the threat he turned out to be. There is too little focus on bringing to an end the wars in Syria and Iraq which make this type of atrocity unstoppable.

  In the aftermath of the killings the visibility of Amri, who was shot dead in Milan this morning, as a potential threat looks misleadingly obvious, and the culpability of those who did not see this appears more glaring than it really was. The number of possible suspects – suspected before they have done anything – is too great to police them effectively.

  No politician or security official wishing to retain their job can tell a frightened and enraged public that it is impossible to defend them. Those in charge become an easy target for critics who opportunistically exploit terrorism to blame government incompetence or demand communal punishment of asylum seekers, immigrants or Muslims. At such times, the media is at its self-righteous worst, whipping up hysteria and portraying horrifying but small-scale incidents as if they were existential threats. This has always been true, but 24/7 news coverage makes it worse as reporters run out of things to say and lose all sense of proportion. As the old American newspaper nostrum has it: “if it bleeds, it leads.”

  But in over-reacting, governments and media play into the hands of the terrorists who want to create fear and demonstrate their strength, but whose greatest gains come when they provoke an exaggerated self-destructive response. 9/11 was the most successful terrorist attack in history, not just because it destroyed the Twin Towers but because it lured the Bush administration into invading Afghanistan and Iraq. Subsequently, Guantanamo, Abu Ghraib, rendition, torture and “targeted killings” (otherwise known as assassination campaigns), all justified by 9/11, have acted as recruiting sergeants for al-Qaeda type organisations.

  The war on terror has failed more demonstrably than most wars: al-Qaeda numbered in the hundreds in 2001, but today – along with Isis – it has tens of thousands of fighters and supporters spread across dozens of countries.

  Political leaders are not blameless, but they tend to be blamed for the wrong thing. Contrary to talk about “lone wolf” terrorism, most people like Amri turn out to have had sympathetic or supportive connections. In his case, US officials say he had communicated with Isis and was in contact with a Salafi preacher. He would have needed little more than inspiration and encouragement, since driving a truck into a crowd of people celebrating Christmas requires no special expertise.

  Isis remains crucial to the present wave of terrorist attacks in Europe because it provides ideological motivation and justification and can, as in Paris and Brussels, control and sustain a terrorist cell. So long as there is a well-organised de facto Isis capable of providing these things, terrorism cannot be defeated; there will always be a “breakdown in security” to be exploited.

  The continuing existence of such a state is proof of the failure of US and European leadership. It is they who created the original conditions for the rise of Isis by invading Iraq in 2003. They allowed Syria to be torn apart by civil war after 2011 and believed the consequent anarchy could be confined to Iraq and Syria. It was only in 2014 and 2015 – after the creation of Isis, the flood of migrants fleeing to central Europe and the terrorist attacks in France and Belgium – that politicians and officials really took on board the potential danger.

  Yet two-and-a-half years after it was first declared, Isis is still in business. Some 2,885 Iraqis were killed in November alone, most of them as a result of fighting between Isis and the Iraqi security forces. Over the last month international focus has been on the fall of east Aleppo and too little attention is given to the fact that Isis has been holding its own in Mosul and has recaptured Palmyra in Syria.

  There is a dangerous disconnect in the minds of governments and news organisations between what happens in the war in Iraq and Syria and the long-term consequences this has on the streets of Europe. When the Iraqi armed forces and their Kurdish allies began on 17 October their advance on Mosul, by far the largest urban centre held by any of the Salafi-jihadi groups, it was widely believed that Isis was about to be defeated in its last lair.

  It has not happened. The elite units of the Iraqi armed forces, notably the 10,000 strong “Golden Division”, have suffered as much as 50 per cent casualties. They are being ground down by skilful tactics in east Mosul whereby mobile Isis units rapidly shift their positions in built-up areas using holes cut in the walls of houses and a network of tunnels. They avoid permanent fixed positions where they can be located and targeted by artillery and the US-led air coalition. They ambush the Iraqi military forces in their vehicles as they move through narrow streets. The UN says that almost 2,000 members of the Iraqi security forces, including paramilitary Shia units and Kurdish Peshmerga units, were killed in November alone.

  The offensive is largely stalled and still has not reached the main part of Mosul city on the west bank of the Tigris River. Districts in east Mosul captured weeks ago have to be captured again. The main thrust of Iraqi government forces attack on Mosul was meant to come from the south, but this front has not moved for six weeks. Isis is even reported to have sent 500 fighters from Mosul across the desert to retake Palmyra, in the first important territorial gain by Isis for 18 months.

  This is not an organisation that is going out of business fast, or even at all. The failure of Jabhat al-Nusra, Ahrar al-Sham and other insurgent groups to defend east Aleppo more resolutely and successfully will probably lead to a haemorrhage of the most experienced and toughest fighters to Isis. It will have the advantage of being less dependent than the other rebel groups on outside support from Turkey, Saudi Arabia and Qatar who are close to accepting defeat in Syria. This may not save Isis in the long term because of the sheer number of its enemies, but it has shown once again that it is more resilient than the Pentagon had supposed.

  There are serious consequences here for Europe: Isis can keep going for years with the low-level terrorist attacks like that which just happened in Berlin. It does not have to do much by way of exhortation or material aid to achieve this. When a terrorist incident does take place it is capable of shifting the political agenda in a country as large as Germany. Isis knows this and while it exists the terrorism will not stop.

  

  

• These Are The Most Expensive Zip Codes In America

  Sagaponack’s 11962 (in the Hamptons) and Atherton’s 94027 retain their top positions as the most expensive ZIPs in the country, despite seeing a considerable drop in median sale prices, but California isn't getting any cheaper! Out of the 100 priciest ZIP codes, an impressive total of 72 are located in CA. NY trails behind, with a total of 21 ZIP codes, half of which are located in New York City.

  

  And the 10 Priciest ZIP Codes in the Country Are…

  #10. 94028, Portola Valley
  The ZIP code that covers the entire Portola Valley town — which has already made a name for itself as one of the wealthiest towns in California — is so appealing to affluent buyers that it has commanded a median selling price of $2,815,000.

  #9. 94022, Los Altos
  Making its way to the top 10 (after landing on the 12th spot on our list last year), this Los Altos ZIP code can brag about median selling prices of $2,831,250.

  #8. 94301, Palo Alto
  This location — on top of being a stone’s throw from major employers, with the Googleplex itself being in the nearby Mountain View — has the added benefit of neighboring Stanford University. Despite that, the Palo Alto ZIP saw a $215,000 drop in selling prices, with the median for the area now sitting at $2,935,000.

  #7. 90210, Beverly Hills
  Registering an 11% drop in home prices, the iconic Beverly Hills ZIP code traded its Top 3 spot from last year for an honorable 7th spot on our list.

  #6. 10007, New York City
  Part TriBeCa, part Financial District, and surrounding the World Trade Center, 10007 saw a spectacular growth in 2016 in terms of selling prices: while the year before, homes in the area commanded a median price of $2,800,000, 2016 median selling prices jumped way past the $3 million mark, at $3,349,657.

  #5. 90402, Santa Monica
  The ritzy neighborhood north of Montana Avenue consolidates its position as a top attraction for affluent (and international) buyers, with a median price of $3,395,000.

  #4. 33109, Miami Beach
  A popular retirement destination for investors and affluent retirees, 33109 stands out as Florida’s most expensive ZIP code, with a median selling price of $3.4 million.

  #3. 10013, New York City
  Few areas can compete with the appeal of this ZIP code, which includes parts of TriBeCa, SoHo and Hudson Square. It then comes as no surprise that properties in the area sold for 12% more in 2016 compared to the previous year, with the median price now up to $3,808,765 — bumping it up one position and securing a top 3 spot among the most expensive ZIP codes in the country.

  #2. 94027, Atherton
  Despite being home to less than 8,000 residents, Atherton can pride itself on having some of the most expensive real estate in the country. Nevertheless, its 2016 median price of $5,425,000 is down 8% from 2015.

  #1. 11962, Sagaponack
  With its sprawling mansions — that sell for about $5.5 million — this Hampton’s ZIP code is the undisputed leader when it comes to hefty prices and exclusive living. But despite managing to maintain its top spot on the list of most expensive ZIP codes, Sagaponack saw a 35% decrease in median sale prices — which translates into a full $3 million price drop.

  Find the full sortable list here…

  Source: PropertyShark.com

  

  

• Mormon Choir Singer Quits To Avoid Performing For "Tyrannical, Fascist" Trump

  First, we had the downtrodden, disaffected Radio City Music Hall Rockette, Phoebe Pearl, who raged against her employer’s decision to perform at Trump’s inauguration saying she was “embarrassed and disappointed” by the upcoming performance.  She even posted a cute picture to her instagram account, in protest, declaring that Trump is “Not My President!”

  

   

  Now, Jan Chamberlin, formerly of the Mormon Tabernacle Choir, is seeking her 15 minutes of fame.  Rather than sing at the President-elect’s inauguration next month, Chamberlin has decided to quit the famed group in epic fashion with a Facebook rant saying the choir is implicitly “endorsing tyranny and fascism by singing for this man” while going on to compare Trump to Hitler on multiple occasions.  Here’s a little taste of the rant:

  I’ve tried to tell myself that it will be alright and that I can continue in good conscience before God and man.

   

  But it’s no use. I simply cannot continue with the recent turn of events. I could never look myself in the mirror again with self respect.

   

  I also know, looking from the outside in, it will appear that Choir is endorsing tyranny and facism by singing for this man.

   

  History is repeating itself; the same tactics are being used by Hitler (identify a problem, finding a scapegoat target to blame, and stirring up people with a combination of fanaticism, false promises, and fear, and gathering the funding).

   

  I only know I could never “throw roses to Hitler.” And I certainly could never sing for him.

  Since when did singing and/or dancing at a political event become an implicit endorsement of a candidate?  Here’s a BREAKING NEWS FLASH for all you disaffected, liberal “artists”: Literally zero people care about your political views so get over yourself, as soon as possible, please. 

  For the record, having a nice singing voice and/or a talent for dancing gives you about the same level intellectual authority to share your political views as to pilot NASA’s first manned mission to Mars…though we wouldn’t necessarily discourage you from pursuing the latter.

   

  And here is the full statement courtesy of Chamberlin’s Facebook page:

  Dear Family and Friends,

   

  This is the message I have sent to Choir:

   

  Dear President Jarrett and Choir,

   

  Today is my birthday. (Happy Birthday to you, happy birthday to you………..)

   

  It is with a sad and heavy heart that I submit my resignation to you and to Choir. I’m am praying that Jesus will help me get through this email before I totally break down.

   

  I thank you all for 5 very meaningful years. There are many memories and experiences which I will cherish and hold dear in my heart.

   

  Since “the announcement”, I have spent several sleepless nights and days in turmoil and agony. I have reflected carefully on both sides of the issue, prayed a lot, talked with family and friends, and searched my soul.

   

  I’ve tried to tell myself that by not going to the inauguration, that I would be able to stay in Choir for all the other good reasons.

   

  I have highly valued the mission of the Choir to be good- will ambassadors for Christ, to share beautiful music and to give hope, inspiration, and comfort to others.

   

  I’ve tried to tell myself that it will be alright and that I can continue in good conscience before God and man.

   

  But it’s no use. I simply cannot continue with the recent turn of events. I could never look myself in the mirror again with self respect.

   

  I love you all, and I know the goodness of your hearts, and your desire to go out there and show that we are politically neutral and share good will. That is the image Choir wishes to present and the message they desperately want to send.

   

  I also know, looking from the outside in, it will appear that Choir is endorsing tyranny and facism by singing for this man.

   

  And Choir’s wonderful image and networking will be severely damaged and that many good people throughout this land and throughout the world already do and will continue to feel betrayed. I believe hereafter our message will not be believed by many that have loved us and adored what we have stood for.

   

  I know that I too feel betrayed.

   

  Tyranny is now on our doorstep; it has been sneaking its way into our lives through stealth. Now it will burst into our homes through storm.

   

  I hope that we and many others will work together with greater dilligence and awareness to calmly and bravely work together to defend our freedoms and our rights for our families, our friends, and our fellow citizens. I hope we can throw off the labels and really listen to each other with respect, love, compassion, and a true desire to bring our energies and souls together in solving the difficult problems that lie in our wake.

   

  In the show Wicked, the Wizard makes a really interesting statement. He says “ I create conflict to stay in power.” This scenario can keep us perpetually distracted and at odds with each other and keep us from working together to solve important issues. This also allows those in office to do whatever they want to unchecked. I believe this has been done to us, both cunningly and intentionally. I believe we have a lot more in common than we have in difference, and if we will listen to each other, we can learn a great deal from one another.

   

  And we can learn to work together to defend our freedoms with sensibility and integrity.

   

  When I first auditioned and entered Choir, it was to follow deep personal impressions, and to honor my late father, who was among the best of men. Now I must leave Choir for the same reasons. My father ( who was an expert airforce bomber) hated tyranny and was extremely distraught over the holocaust. He and Mom both loved people greatly.

   

  I have deep patriotic feelings for this country and for the freedoms of people everywhere throughout the world. I am troubled by the problems we face which seek to destroy our love for liberty and respect for humanity internationally.

   

  History is repeating itself; the same tactics are being used by Hitler (identify a problem, finding a scapegoat target to blame, and stirring up people with a combination of fanaticism, false promises, and fear, and gathering the funding). I plead with everyone to go back and read the books we all know on these topics and review the films produced to help us learn from these gargantuan crimes so that we will not allow them to be repeated. Evil people prosper when good people stand by and do nothing.

   

  We must continue our love and support for the refugees and the oppressed by fighting against these great evils.

   

  For me, this is a HUGELY moral issue. “ as he died to make men holy, let us live to make free” ( The first time I heard this beautiful piece, I was 11 years old; my brother Jim was singing in Honor Choir. IT”S message sent inspirational electricity through my soul and penetrated every fiber of my being. THIS is Choir’s true message, and we don’t want it lost by giving the opposite message).

   

  James 1:27 “Pure religion and undefiled before God and the Father is this, To visit the fatherless and widows in their affliction, and to keep himself unspotted from the world.” This scripture has been resonating with me a lot lately.

   

  I only know I could never “throw roses to Hitler.” And I certainly could never sing for him.

   

  Much love to you all. I wish you all blessings and happiness.

   

  My heart is shattered and broken…………. but my conscience is clear. And THAT, really is all that matters.

   

  Respectfully,

   

  Jan Chamberlin

  

  

• Eric Zuesse: America’s Secret Planned Conquest Of Russia

  Submitted by investigative historian Eric Zuesse is the author, most recently, of  hey’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

  America’s Secret Planned Conquest Of Russia

  The U.S. government’s plan to conquer Russia is based upon a belief in, and the fundamental plan to establish, “Nuclear Primacy” against Russia — an American ability to win a nuclear war against, and so conquer, Russia.

  This concept became respectable in U.S. academic and governmental policymaking circles when virtually simultaneously in 2006 a short-form and a long-form version of an article endorsing the concept, which the article’s two co-authors there named “nuclear primacy,” were published respectively in the world’s two most influential journals of international affairs, Foreign Affairs from the Council on Foreign Relations, and International Security from Harvard. (CFR got the more popular short version, titled “The Rise of U.S. Nuclear Primacy”, and Harvard got the more scholarly long version, which was titled “The End of MAD?”.)

  This article claimed that the central geostrategic concept during the Cold War with the Soviet Union, Mutually Assured Destruction or “MAD” — in which there is no such thing as the U.S. or the U.S.S.R. conquering the other, because the first of the two to attack will itself also be destroyed by the surviving nuclear forces of the one responding to that attack — will soon be merely past history (like the Soviet Union itself already is); and, so, as the short form of the article said, “nuclear primacy remains a goal of the United States”; and, as the long form said, “the United States now stands on the cusp of nuclear primacy.” In other words: arms-control or no, the U.S. should, and soon will, be able to grab Russia (the largest land-mass of any country, and also the one richest in natural resources). 

  Neither version of this article mentioned the key reason why nuclear victory is exceedingly dangerous even under the most favorable conditions, which reason is the concept (and the likely reality in the event of nuclear war between the two superpowers) “nuclear winter” — the scientific studies showing that a resulting sudden sharp cooling of the atmosphere after all those enormous explosions would produce a global die-off. America’s aristocracy and its vassal-aristocracies controlling the U.S.-allied nations (billionaires, centi-millionaires, and their top agents in both the public and private sectors) are buying and building deep-underground nuclear shelters for themselves, but they wouldn’t be able to stay underground and survive on stored feedstuffs forever. (As for everybody else, those other people are not involved in geostrategic decisionmaking, and so are being ignored.) However, many of America’s (and associated) elite are paying those bomb-shelter expenses, but none of the West’s elite are condemning the path toward nuclear war that their governments are on. So: buying or building nuclear-war shelters is more acceptable to them than is stopping America’s planned conquest of Russia. The higher priority is to conquer Russia.

  A far less influential scholarly journal, China Policy, published later in 2006 a critical article arguing against nuclear supremacy, but that article has had no impact upon policymaking. Its title was “The Fallacy of Nuclear Primacy” and it argued that, “American nuclear supremacy removes the root source of stability from the nuclear equation: mutual vulnerability.” It presented a moral argument: “U.S. leaders might try to exploit its nuclear superiority … by actually launching a cold-blooded nuclear attack against its nuclear rival in the midst of an intense crisis. The professors discount significantly the power of the nuclear taboo to restrain U.S. leaders from crossing the fateful threshold. If crisis circumstances grow dire enough, the temptation to try to disarm their nuclear adversaries through a nuclear first-strike may be too strong to resist, they argue.” The concept of “nuclear winter” wasn’t even so much as just mentioned (much less dealt with) in this article, just as it was ignored in the two that it was arguing against. 

  The co-authors of (both versions of) the article that had proposed and endorsed nuclear primacy, then published in 2007 (this one also in International Security), a response to that critical article. This reply’s title was “U.S. Nuclear Primacy and the Future of the Chinese Deterrent”. But it had no more impact than did the obscure article it was arguing against.

  Thus, nuclear primacy has become U.S. policy, and MAD no longer is U.S. policy (though it remains Russian policy). The U.S. government is planning to take over Russia (basically, to install a puppet-regime there). That’s the reality.

  Central to the nuclear-primacy concept is that of what’s variously called a “Ballistic Missile Defense” (BMD) or “Anti Ballistic Missile” (ABM) system: a system to disable or knock out Russia’s retaliatory nuclear weapons so that a U.S. blitz nuclear attack won’t be able to be met by any nuclear counter-attack.

  As “The End of MAD?” put it: “Russia has approximately 3,500 strategic nuclear warheads today, but if the United States struck before Russian forces were alerted, Russia would be lucky if a half-dozen warheads survived.” 

  In other words: America’s aristocracy aren’t necessarily hoping to protect all of the U.S. population from a counter-attack, but are willing to sacrifice perhaps a few million Americans here and there, in order to achieve the intended result: conquest of Russia.

  That article then says that a BMD-ABM system wouldn’t necessarily indicate America’s determination to pursue nuclear primacy against Russia, because it could instead be intended purely and authentically defensively, to protect against nuclear attack from Iran, North Korea or some other country. However: “Other U.S. nuclear programs are hard to explain with any mission other than a nuclear first strike on a major power adversary. For example, the decision to upgrade the fuse of many SLBM warheads (the W76s) to permit ground bursts makes sense only if the mission is destroying hundreds of hardened silos. One might argue that ground bursts could be useful for a variety of other missions, such as destroying North Korean WMD bunkers or remote cave complexes housing terrorist leaders. The United States, however, already has a large number of highly accurate, similar-yield warheads that would be ideal for these purposes.” The article even notes that: “Other analysts have noted that the current U.S. nuclear force looks surprisingly like an arsenal designed for a nuclear first strike against Russia or China.” And, “A group of RAND analysts agrees: ‘What the planned force appears best suited to provide beyond the needs of traditional deterrence is a preemptive counterforce capability against Russia and China. Otherwise, the numbers and the operating procedures simply do not add up.’” So: the co-authors here are claiming to be merely giving a name, “nuclear primacy,” to America’s existing strategic military policy — not to be inventing or creating it. They are, above all, saying that this is the reality now in U.S. policy-making circles; that MAD no longer is.

  And their article has, indeed, described the guiding strategic-planning objective not only of the George W. Bush Administration, but also of Barack Obama’s — as will now be documented.

  U.S. President Obama has always been saying that the reason why America is installing anti-ballistic missiles (“ABM”s, otherwise known as ballistic-missile defense or “BMD”) in Romania, Poland, and other nations that border (or are near to) Russia, is in order to protect Europe against Iranian missiles that might be aimed against Europe. He says that this is purely defensive, not aggressive, and that what it’s defending from is Iran, not Russia — so, Russia has no reason for complaint about it.

  But then, Obama reached his nuclear deal with Iran; and this deal ended, for at least ten years, any realistic possibility that Iran would develop any nuclear-weapons capability — Obama himself emphasized that this was the case; he wasn’t denying it.

  So: Obama’s claimed reason for installing ABMs in Europe was now, quite simply, gone. (Not that it had been credible anyway, since Iran didn’t have any nuclear weapons. It was merely a pretext, not honestly a reason.)

  Here is how Russia’s President, Vladimir Putin, stated the matter, at that time, during the meeting of the Valdai International Discussion Club, on 22 October 2015:

  The use of the threat of a nuclear missile attack from Iran as an excuse, as we know, has destroyed the fundamental basis of modern international security – the Anti-Ballistic Missile Treaty. The United States has unilaterally seceded from the treaty. Incidentally, today we have resolved the Iranian issue and there is no threat from Iran and never has been, just as we said.

  The thing that seemed to have led our American partners to build an anti-missile defence system is gone. It would be reasonable to expect work to develop the US anti-missile defence system to come to an end as well. [But] What is actually happening? Nothing of the kind, or actually the opposite – everything continues.

  Recently the United States conducted the first test of the anti-missile defence system in Europe. What does this mean? It means we were right when we argued with our American partners. They were simply trying yet again to mislead us and the whole world. To put it plainly, they were lying. It was not about the hypothetical Iranian threat, which never existed. It was about an attempt to destroy the strategic balance, to change the balance of forces in their favour not only to dominate, but to have the opportunity to dictate their will to all: to their geopolitical competition and, I believe, to their allies as well. This is a very dangerous scenario, harmful to all, including, in my opinion, to the United States.

  The nuclear deterrent lost its value. Some probably even had the illusion that victory of one party in a world conflict was again possible – without irreversible, unacceptable, as experts say, consequences for the winner, if there ever is one

  He called Obama there a “liar,” and that’s a blatantly truthful characterization of the situation. But Putin missed there saying what’s even more basic for an understanding of what Obama was doing in this matter — and which makes that “lie” from Obama particularly heinous: Putin missed saying that an anti-missile system can be at least as important as an aggressive weapon as it is as a defensive one, because if a first-strike attacker wants to eliminate the defender’s ability to strike back from the attacker’s first-strike attack, then an anti-missile system is the weapon to do that, by eliminating the defender’s missiles before those strike-back missiles can reach their targets. It nullifies the other side’s defense — and to do this is enormously aggressive; it strips the victim’s retaliation. The whole distinction between offensive and defensive can thus be pure propaganda, nothing having to do actually with aggressive and defensive. Whether the use will be defensive, or instead offensive, won’t be known until the system is in actual battlefield use. Only the propaganda is clear; the weapon’s use is not.

  So, Putin understated the heinousness, and the danger to Russians, that was actually involved in Obama’s tricks. All that Putin did was to vaguely suggest an aggressive possibility: “It was about an attempt to destroy the strategic balance, to change the balance of forces in their favour not only to dominate, but to have the opportunity to dictate their will to all.” Most people don’t relate to such abstractions as “strategic balance.”

  Obama and other agents of the U.S. aristocracy know that their public have been trained for decades, to hate, fear, and despise, Russians, and especially the Russian government, as if it were the Soviet Union, and as if its Warsaw Pact and communism still existed and Russia hadn’t ended its hostility to the U.S. in 1991 (though the U.S. continued its hostility to Russia — that rump remaining country from the former communist empire — and during Obama’s second term the hostility soared). So, for example, at the conservative website Breitbart, when that statement quoted here from Putin was posted as part of an honestly written and presented article titled “Vladimir Putin: U.S. Missile Defense System Threatens Russia”, almost none of the reader-comments indicated any ability or inclination of the readers to sympathize with the plight for Russians that Putin had just expressed. Instead, to the extent that the comments there were relevant, they were generally hostile, such as:

  “Russian President Vladimir Putin said Thursday he has concerns that the U.S. ballistic missile defense system threatens Russia’s nuclear capability.”

  Vlad, its supposed to, its called defense. The only way it could harm your nukes is if they were shot down…………….after you launched them!

  and

  How can a defense system threaten anything? Like Obama would attack Russia. That is laughable.

  Most people’s minds are straightjacketed in bigotries of various sorts, preconceptions such as that a “missile defense” system, and a “Defense” Department, can’t be aggressive — even extremely aggressive and war-mongering. The first thought that comes to mind about anything that’s ‘defensive’ is that something else must be ‘aggressive’ or ‘offensive’, and that whatever is ‘defensive’ (such as an ABM) is therefore good and even necessary. That’s thinking, and receiving the term “defense,” like thinking just one move ahead in a chess-game, but this is the mental limit for most people, and every propagandist (such as the people who professionally design propaganda or PR slogans and campaigns) do precisely what Obama and the rest of the aristocracy and their agents do in order to deceive their gulls: they phrase things for one-move-ahead-limit thinkers, like that. The cardinal rule in the deception-professions is therefore, first, to find people with the desired prejudices, and then to play them as that, with one-move-ahead-limit sales-pitches, which are directed to precisely those prejudices. This report at the Breitbart site was instead presenting a high-quality news-report, to a low-quality audience, and so the reader-comments it generated were few, and generally hostile.

  Obama is a master at deception. Another good example of this was 26 March 2012, during Obama’s campaign for re-election, when he confidentially told Dmitry Medvedev, “On all these issues, but particularly missile defense, this can be solved, but it’s important for him [the incoming President Putin] to give me space. … This is my last election. After my election, I have more flexibility.” Obama was privately communicating to Putin (through Medvedev) that Obama was pushing the ABM installations only so as not to be politically vulnerable to charges from the knee-jerk Russia-haters, Republicans, and that Obama’s fakery regarding the supposed ABM-target’s being Iran was only in order to appeal to yet another Republican bigotry (against Iran), and so Obama was intending to back away from supporting the ABM system during his second term.

  But actually, Obama had had Russia in his gunsights even prior to his coming into office. Two specific objects in focus were Moscow-friendly leaders of nations: Assad of Syria, and Yanukovych of Ukraine. America’s strategy, ever since 24 February 1990, has been to strip Russia of allies and friends — to leave Russia increasingly isolated and surrounded by enemies. When Obama entered the White House on 20 January 2009, there already was a plea in the pipeline from the Syrian government for urgently needed food-aid to address the all-time-record drought there, which had decimated Syrian agriculture. Obama’s Administration never even answered it. Well before the Arab Spring demonstrations in 2011, Obama was hoping for turmoil in Syria and the overthrow of Assad — lots of starving Syrians would be just the thing.

  Moreover, the planning for the February 2014 coup to overthrow the Moscow-friendly democratically elected President of Ukraine, Viktor Yanukovych, started in the U.S. State Department by no later than 2011.

  So: when Obama told Medvedev and Putin, on 26 March 2012, not to worry about Obama’s intentions toward Russia, he was lying. He wanted his intended victim to be off-guard, unprepared for what was soon to come.

  On Obama’s way out the door, he did two things that significantly advanced America’s ABM-BMD threat against Russia.

  On 10 December 2016, ‘Defense’ Secretary Ashton Carter stated, burying it in a speech he gave in Bahrain — site of a major U.S. military base — “just this week, we reached an agreement for Qatar to purchase a 5,000-kilometer early-warning radar to enhance its missile defenses,” and he said nothing more about it, as if this announcement weren’t the bombshell it actually was. Alex Gorka headlined about that at Strategic Culture, “US-Qatar Deal Threatens Russia: Reading News Between the Lines” and he explained that this system “is designed to be used as an early warning system against strategic offensive assets – something Iran does not possess.” Near the start of Carter’s speech, Carter had said that he would be talking about “checking Iranian aggression and malign influence, and helping defend our friends and allies,” including Bahrain, Qatar, UAE, and Saudi Arabia. Gorka noted, “The announced range of 5,000km (3,100mi) by far exceeds the requirement to counter a missile threat coming from Iran,” and, “There is no other reasonable explanation for the choice, except the fact that the AN/FPS-132 can monitor large chunks of Russian territory,” the objective being “to surround the Russian Federation with BMD sites and neutralize its capability to deliver a retaliatory strike if attacked.”

  One of Obama’s last actions as the U.S. President was to sign into law a bill that had been quietly passed in Congress, which included a key change in U.S. law that would enable the government to spend unlimited funds on realizing former President Ronald Reagan’s dream of a space-based ABM system, “Star Wars.” On December 22nd, David Willman of the Los Angeles Times, headlined “Congress scrapped this one word from the law, opening the door to a space arms race”, and he reported that the eliminated word was “limited.” Willman explained that, “The nation’s homeland missile defense system is designed to thwart a small-scale, or ‘limited,’ attack by the likes of North Korea or Iran. As for the threat of a large-scale strike by China or Russia, the prospect of massive U.S. retaliation is supposed to deter both from ever launching missiles.” He noted: “The bill awaits action by President Obama. The White House has not said what he will do.” Willman also noted that on an earlier occasion, “the Obama administration criticized the changes in the Senate bill, saying it ‘strongly objects’ to removing ‘limited’ and to placing anti-missile weaponry in space. The statement stopped short of threatening a veto.” But then, the next day, on December 23rd, Willman bannered, “President Obama signs defense bill that could spur new space-based arms race”. Whereas Obama’s public rhetoric portrayed himself as being the type of person who had deserved to win the 2009 Nobel Peace Prize, almost all of his actual decisions in office were the exact opposite — and here was a superb example of that. 

  Whether Obama’s successor, Donald Trump, will continue with that longstanding (ever since 24 February 1990) plan to conquer Russia, or instead finally end the Cold War on the U.S. side (as it already had ended in 1991 on the U.S.S.R.’s), isn’t yet clear.

  This is what happens when what President Eisenhower called “the military-industrial complex” takes over the country, and everything (including the ‘news’ media) serves it, rather than the military-industrial complex’s serving the public.

  It fits in with the massive data which indicates that the U.S. government is run by an aristocracy or “oligarchy”, instead of run by people who represent the public — a “democracy.” Obama as President fit right in.

  

  

• The Political Left's Shmoo Theory Of Education

  Submitted by Matthew McCaffrey via The Mises Institute,

  “Uneducated” is the favorite insult and excuse of the political left. In the past year alone, for example, a lack of education among voters has been used to explain each of the left’s electoral failures, as well as to dismiss criticisms of its people, policies, and institutions. These defenses are dubious to say the least. Yet setting aside the strategic choices of left-wing political groups, the obsession with un-education reveals that there are serious problems with the way education is understood by the intellectual classes.

  Most importantly, the popular use of the word “education” suffers from the same error as the mainstream economic use of the word “capital.” This shouldn’t be a surprise, given that education is often metaphorically described as “human capital.” The error is that both capital and education are thought of as a kind of “homogeneous blob,” or “shmoo.” A shmoo is elastic and can be molded by the user into any shape necessary, and it’s therefore equally serviceable in all possible uses. Anyone who wants to use it as a production input must simply decide how much to apply to a specific problem.

  In reality, of course, capital and education are both highly heterogeneous. The structure of production is extremely delicate and difficult to organize, and so too is the structure of human knowledge.

  Unfortunately, this fact escapes those intellectuals who concern themselves with other people’s lack of education: in current discourse, education is a homogeneous good acquired exclusively through obtaining formal degrees. To lack a college degree is to lack education, while the more degrees one acquires, the better educated one is. Importantly, all education is equally serviceable across all areas of expertise. English majors can talk about economics, and physicists can talk about politics. But anyone who isn’t a product of the university education system is barred from participating in these discussions.

  It should be easy to spot the errors in this kind of thinking. First, no matter what kind of education we pursue, we don’t simply add new blobs of it to a big pile. Instead, we acquire specific, distinct types of knowledge which vary widely in their serviceability. Second, and more important, education is not equivalent to obtaining degrees. It means different things in different contexts, and the education that takes place in higher education institutions reflects only a specific and narrow type of learning. Depending on one’s area of study, this kind of learning can often lack relevance outside the classroom, and in this sense, it actually undermines the role of education as a practical tool for learning how to create value within society. This is part of the reason why university-educated people flock to the intellectual class to begin with.

  In fact, sometimes obtaining the relevant kind of education is impossible within higher education. To take some obvious examples, many of the most successful and world-changing entrepreneurs of the past few decades have been college dropouts. Needless to say, they’ve given a bit more to the human race than the average Huffington Post writer. On a smaller scale, Mises was fond of pointing out that consumers are often better educated about the state of the economy than many economists.

  “Education” is another example of a kind of rhetorical imperialism that has already captured words like “science” and “evidence.” The bias in favor of “education” is basically a bias in favor of the opinions of the contemporary intellectual classes, and a devotion to the status quo in higher education. The intellectuals treat education as a shmoo because often, that’s exactly what it is to them: simply another word for describing their own collection of homogeneous opinions and concepts, which they believe should form the sum of all discussion. Fortunately, more and more people are beginning to realize that true education does not and cannot thrive in this environment, which increasingly closes itself off from the real world and the people in it. This is the perfect time for organizations like the Mises Institute to take up the challenge of bringing genuine learning to the masses, both inside and outside the academy.

   

  

  

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• So Many Questions…

  By Chris at www.CapitalistExploits.at

  There are two things I’ve not done in a while.

  The first of them is to answer some of the questions that come pouring in. My apologies to all those unanswered – lack of response due to volume, not bad manners.

  Hey Chris,

   

  would you mind if I too throw a question at you?

   

  I’m thinking about this for a while now, but never went ahead and actually asked anyone, so here we go: how do you learn all this stuff?

   

  I mean, I don’t have a finance background. I studied philosophy and political science at university, so I’m used to thinking about stuff (from the former, PolSci was mostly BS).

   

  Later this month I’ll turn 28. I work for myself as basically a web developer in the insurance sector and have put away money for a while now. I took notes whenever I saw stuff in the markets for the last two or three years and would’ve been right often enough, but never trusted my judgement and only really invested twice (once in a friend’s company, once in some Mongolian companies just before they went down 90% around 2014).

   

  When a friend introduced me to some people in Mongolia a few years ago and I started consulting in the financial services sector there I asked him if there’s anything I should read to fix my lack knowledge of in finance, but he replied that it was mostly just common sense. I’ve also talked to your friend Kuppy a few times when I was in UB and got a similar impression: that it was just about thinking stuff through.

   

  On the other hand, there’s shitloads of numbers and terms and metrics I don’t know. Most of them are probably irrelevant, but I guess some of them are important I don’t yet know which is which. And you guys do have analysts, right?

   

  When this year I told my aforementioned friend that I wanted to get a CFA to understand the lingo, he told me that all stuff didn’t matter anymore and I think I remember reading something similar in one of your emails a few months ago.

   

  So I’m wondering, how would you go about learning this stuff?

   

  For me, the obvious thing is thinking stuff through, reading financial history, keep earning money from work, slowly migrate it into making money from money through small trial and error steps. I’m wondering though whether I’m missing the quant part. And at the same time I’m worried of getting myself into the sway of dumb non-functioning economic theories and missing the stuff that’s of real importance if I were to focus on the quant part.

   

  I’m curious to hear your thoughts.

   

  – D

  Answer:

  Let’s start with what a friend and business partner loves to say: What equation are you trying to solve?

  I’m going to suggest it’s the following: You’re wanting to know how to evaluate things in order to be comfortable with your investment decisions. Sound fair?
  

  It’s one problem with our education system. It doesn’t teach us how to think, how to critically examine and question, test and retest in order to find the truth.

  Kuppy is right when he says just think stuff through. So let’s take two real world examples which come to mind.

  Example 1:

  I was just having a discussion with an associate about my belief that we’ve seen the top of the bond market and I think rates are going higher (something I’ve written a lot about). My friend’s in private equity and we had the discussion which he’d not thought about.

  Let’s say you’re an asset manager with a few billion to allocate. What happens to your base case assumptions on asset allocation in a rising rate environment? Well, private equity, which is nuts at the moment anyway, has been competing against fixed income. Easy! How hard is it to beat zero?

  So take away some of the zero and on a relative basis you get capital shifting. This doesn’t require you to understand Black-Scholes pricing, risk parity, foreign exchange flows, or any other “financial” knowledge. Think stuff through and take it beyond first level thinking. Do it lots, do it regularly, and you start training your brain. It’s just a muscle, after all.

  Example 2:

  I’m trying to make sure my kids aren’t completely ignorant. The other day we were at a mall, and I bought them an ice cream in a food hall. Their purpose was to eat an ice cream and mine to get them to think. So there were a dozen food outlets. I asked them to tell me which one they’d buy and why.

  The responses were typical from a 10 and 11-year old. They picked their favourite foods. I told them to pick the one that will make them the most money. So how do you figure that out?

  Basic math and metrics. Shop size (some are bigger than others). Those with larger footprint have higher lease costs but potentially more traffic. So I told them to spend a few minutes and tell me which one is getting the most traffic. Easy: It was McDonald’s.

  Next question. Who’s second? Easy. Sushi place.

  Then a trickier question. I told them to tell me which one is getting the most traffic relative to size. Done. Sushi place. After doing some napkin math with them and making it easy at 50% size difference (it wasn’t but this was teaching them how to evaluate the world and think).

  Next: What’s the average dollar spend at the sushi shop and what’s the average dollar spend at McDonald’s? So they had to do some math, a bunch of guessing, and so on. They guessed the average dollar spend at McDonald’s was about $12 and about $18 at Sushi.

  Back to size of shop. Sushi shop is about half the footprint so probably half the lease costs.

  Staffing was only 2 at Sushi shop and about 8 at McDonald’s (as far as we could tell). That’s the biggest cost (labour). So McDonald’s has about a double on lease costs and a 4x on labour costs, and the average dollar spend is $12 compared to Sushi place at $18.

  Our guesstimates where that McDonald’s runs about 30% more traffic so we can level the playing field by saying that Sushi place gross dollar spend isn’t $18 but 30% less (due to 30% less traffic) so this is $12.60. Easy. Now factoring in half the lease costs and a quarter labour costs my kids quickly figured out that they’d buy Sushi place.

  Sitting there doing my own math on it, if you put a gun at my head and told me to buy one I’d buy Sushi place and I reckon I’d be correct, and that’s without ever touching their financial statements.

  Now, obviously you wouldn’t go out and buy Sushi place based on these variables and based on sitting and eating an ice cream for 10 minutes at a food hall. That would be sillier than blindly buying a low volatility ETF right now but when you do this regularly, fast, and repeatedly (I have trouble not doing it – just a defect, I guess), then you’ll find you’re pretty good at quickly rapidly analysing the world around you.

  Hi there

   

  Thanks for all the great content. I was just wondering if you knew of any great books etc that really explain the global financial system/geopolitics in depth that you have come across or would recommend?

   

  I’m fascinated by all this stuff now but I’m finding that because I lack some of the basic understanding, I’m unable to distinguish between “doom porn merchants/permabears” etc and intelligent analysis (I don’t doubt that you’re the latter btw lol).

   

  Thanks in advance, will continue to listen/read and have introduced a few friends to your work.

   

  All the best, Rob. (London, UK)

  Answer:

  I used to read a ton of financial books in my twenties but not much anymore. I tend to read about science, history, and philosophy more now.

  I’d recommend any of Soros’ books, not because I like the guy (or even agree with some of his thinking) but he has a very different and extremely valuable way of assessing risk and understanding market dynamics.

  I honestly hesitate to suggest books because I feel like you can gain something from most any of them but the critical components are making sure you think for yourself as mentioned in the answer to the previous question above. Otherwise you’re just left taking in information and believing it no matter how poor it may be.

  For example, I’d suggest reading work by that pillar of stupidity, Paul Krugman. Why? Because understanding how he and many of his ilk think is valuable but not because it’s sound reasoning. I mean, I’m all for immortalising Paul Krugman. Make a statue out of him, if only so the the pigeons can poop on him for eternity.

  The second part of the question is around distinguishing wheat from chaff.

  Ok, so this question I get all the time.

  Do your due diligence. Most of the stuff you’re referring to will be one of the publishing sites which use “professional” marketing firms to write copy and then flog something based around hype. Just go look for previous marketing they’ve done and then see whether any of it worked out.

  It’s pretty easy to spot.

  If you’re being told that “there is some catastrophic event that is coming on X date and go here to learn how to protect yourself.” Or that some “secret” meeting in a dark room with an “un-named man” has just been revealed and riches/catastrophe await. Or some special code designed in a bunker in World War II that has now revealed the most incredible information and you, some unknown dude on the internet, get to find out.

  Because if you did find something that was truly going to make you a billionaire that’s the first thing you’d do, right?

  I mean you wouldn’t tell your loved ones and set yourself up. No, you’d immediately set up a website and hire a bunch of marketing copywriters and you’d spam people about it. That’s what you’d do. For sure!

  You get the picture. Any variation of that theme and you’re about 99% probability it’s full of nonsense.

  Here is the thing: Information is actually free. What’s valuable isn’t information per se, it’s knowing how to synthesise that information and execute on it. I know that sounds boring because everyone wants some magic wand or some guru with a crystal ball to tell them what to do. I’ll be the first to tell you that I’ve two balls and I assure you neither are crystal.

  And that brings me to the end of today’s post.

  I mentioned at the beginning there were two things I’d not done in a while.

  And the second is taking a break. And since it’s the silly season I’m going to do just that for the next week so you won’t hear from me.

  I do wish you joy, happiness, and money because, well, this is Capitalist Exploits.

  – Chris

  “Christmas is a season not only of rejoicing but of reflection.” — Winston Churchill

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• DRUDGE REPORT HIT WITH MASSIVE DDOS ATTACK; MATT DRUDGE PONDERS IF GOVERNMENT WAS BEHIND ATTACK

  Drudgereport.com was the number 1 source of information during the elections. It was and always has been, or at least for the past decade or so, the single most popular destination for news — especially during elections. On the same day that the Obama administration announced sanctions again Russia, Drudge goes down.

  Coincidence?

  Drudge ponders aloud on Twitter.

  Is the US government attacking DRUDGE REPORT?

  Biggest DDoS since site’s inception. VERY suspicious routing [and timing].

  — MATT DRUDGE (@DRUDGE) December 30, 2016

  Attacking coming from ‘thousands’ of sources. Of course none of them traceable to Fort Meade…

  — MATT DRUDGE (@DRUDGE) December 30, 2016

  

  One of my favorite interviews ever was when Drudge showed up to the Alex Jones show for a chat.

   

   

   

   

  Content originally generated at iBankCoin.com

  

• Paul Craig Roberts Worries "What Is Henry Kissinger Up To?"

  Authored by Paul Craig Roberts,

  The English language Russian news agency, Sputnik, reports that former US Secretary of State Henry Kissinger is advising US president-elect Donald Trump how to “bring the United States and Russia closer together to offset China’s military buildup.” 

  If we take this report at face value, it tells us that Kissinger, an old cold warrior, is working to use Trump’s commitment to better relations with Russia in order to separate Russia from its strategic alliance with China.

  China’s military buildup is a response to US provocations against China and US claims to the South China Sea as an area of US national interests. China does not intend to attack the US and certainly not Russia.

  Kissinger, who was my colleague at the Center for Strategic and International studies for a dozen years, is aware of the pro-American elites inside Russia, and he is at work creating for them a “China threat” that they can use in their effort to lead Russia into the arms of the West. If this effort is successful, Russia’s sovereignty will be eroded exactly as has the sovereignty of every other country allied with the US.

  At President Putin’s last press conference, journalist Marat Sagadatov asked if Russia wasn’t already subject to forms of foreign semi-domination: “Our economy, industry, ministries and agencies often follow the rules laid down by international organizations and are managed by consulting companies. Even our defense enterprises have foreign consulting firms auditing them.” The journalist asked, “if it is not time to do some import substitution in this area too?”

  Every Russian needs to understand that being part of the West means living by Washington’s rules. The only country in the Western Alliance that has an independent foreign and economic policy is the US.

  All of us need to understand that although Trump has been elected president, the neoconservatives remain dominant in US foreign policy, and their commitment to the hegemony of the US as the uni-power remains as strong as ever. The neoconservative ideology has been institutionalized in parts of the CIA, State Department and Pentagon. The neoconservatives retain their influence in media, think tanks, university faculties, foundations, and in the Council on Foreign Relations.

  We also need to understand that Trump revels in the role of tough guy and will say things that can be misinterpreted as my friend, Finian Cunningham, whose columns I read, usually with appreciation, might have done.

  I do not know that Trump will prevail over the vast neoconservative conspiracy. However, it seems clear enough that he is serious about reducing the tensions with Russia that have been building since President Clinton violated the George H. W. Bush administration’s promise that NATO would not expand one inch to the East. Unless Trump were serious, there is no reason for him to announce Exxon CEO Rex Tillerson as his choice for Secretary of State. In 2013 Mr. Tillerson was awarded Russia’s Order of Friendship.

  As Professor Michel Chossudovsky has pointed out, a global corporation such as Exxon has interests different from those of the US military/security complex. The military/security complex needs a powerful threat, such as the former “Soviet threat” which has been transformed into the “Russian threat,” in order to justify its hold on an annual budget of approximately one trillion dollars. In contrast, Exxon wants to be part of the Russian energy business. Therefore, as Secretary of State, Tillerson is motivated to achieve good relations between the US and Russia, whereas for the military/security complex good relations undermine the orchestrated fear on which the military/security budget rests.

  Clearly, the military/security complex and the neoconservatives see Trump and Tillerson as threats, which is why the neoconservatives and the armaments tycoons so strongly opposed Trump and why CIA Director John Brennan made wild and unsupported accusations of Russian interference in the US presidential election.

  The lines are drawn. The next test will be whether Trump can obtain Senate confirmation of his choice of Tillerson as Secretary of State.

  The myth is widespread that President Reagan won the cold war by breaking the Soviet Union financially with an arms race. As one who was involved in Reagan’s effort to end the cold war, I find myself yet again correcting the record.

  Reagan never spoke of winning the cold war. He spoke of ending it. Other officials in his government have said the same thing, and Pat Buchanan can verify it.

  Reagan wanted to end the Cold War, not win it. He spoke of those “godawful” nuclear weapons. He thought the Soviet economy was in too much difficulty to compete in an arms race. He thought that if he could first cure the stagflation that afflicted the US economy, he could force the Soviets to the negotiating table by going through the motion of launching an arms race. “Star wars” was mainly hype. (Whether or nor the Soviets believed the arms race threat, the American leftwing clearly did and has never got over it.)

  Reagan had no intention of dominating the Soviet Union or collapsing it. Unlike Clinton, George W. Bush, and Obama, he was not controlled by neoconservatives. Reagan fired and prosecuted the neoconservatives in his administration when they operated behind his back and broke the law.

  The Soviet Union did not collapse because of Reagan’s determination to end the Cold War. The Soviet collapse was the work of hardline communists, who believed that Gorbachev was loosening the Communist Party’s hold so quickly that Gorbachev was a threat to the existence of the Soviet Union and placed him under house arrest. It was the hardline communist coup against Gorbachev that led to the rise of Yeltsin. No one expected the collapse of the Soviet Union.

  The US military/security complex did not want Reagan to end the Cold War, as the Cold War was the foundation of profit and power for the complex. The CIA told Reagan that if he renewed the arms race, the Soviets would win, because the Soviets controlled investment and could allocate a larger share of the economy to the military than Reagan could.

  Reagan did not believe the CIA’s claim that the Soviet Union could prevail in an arms race. He formed a secret committee and gave the committee the power to investigate the CIA’s claim that the US would lose an arms race with the Soviet Union. The committee concluded that the CIA was protecting its prerogatives. I know this because I was a member of the committee.

  American capitalism and the social safety net would function much better without the drain on the budget of the military/security complex. It is more correct to say that the military/security complex wants a major threat, not an actual arms race. Stateless Muslim terrorists are not a sufficient threat for such a massive US military, and the trouble with an actual arms race as opposed to a threat is that the US armaments corporations would have to produce weapons that work instead of cost overruns that boost profits.

  The latest US missile ship has twice broken down and had to be towed into port. The F-35 has cost endless money, has a variety of problems and is already outclassed. The Russian missiles are hypersonic. The Russian tanks are superior. The explosive power of the Russian Satan II ICBM is terrifying. The morale of the Russian forces is high. They have not been exhausted from 15 years of fighting without much success pointless wars against women and children.

  Washington, given the corrupt nature of the US military/security complex, can arms race all it wants without being a danger to Russia or China, much less to the strategic alliance between the two powers.

  The neoconservatives are discredited, but they are still a powerful influence on US foreign policy. Until Trump relegates them to the ideological backwaters, Russia and China had best hold on to their strategic alliance. Anyone attempting to break this alliance is a threat to both Russia and China, and to America and to life on earth.

  

  

• Dollar Flash Crashes On Last Trading Day Of 2016

  It is oddly appropriate that in a year everyone finally admitted markets are manipulated by central banks and broken by HFT algos, that on the last trading day of 2016, the dollar flash crashed with for no reason whatsoever.

  Shortly after 6:30pm Eastern, the dollar plunged by 150 pips against the Euro, once 1.05 stops were taken out, with algos sending the EURUSD as high as 1.07 in a matter of seconds…

  

  … while concurrently the Swiss Franc soared as much as 1.6% against the greenback, as the USDCHF tumbled from just over 1.025 to just above 1.0050 as the pair briefly flirted with parity.

  

  What caused it? As there was no fundamental news, the answer is the same catalyst as the pound sterling flash crash: once EURUSD stops were taken out, algos all piled up on the same side of the trade and with virtually non existent market depth, it sent the world’s most actively traded currency pair soaring. Indeed, as FX traders in Asia, cited by Bloomberg said, the EUR/USD jump was partly driven by a surge of algo-buy orders after pair rose above 1.0500 in early session.

  Others agreed: as Shigeki Yoshitoshi, head of Japan FX and commodities sales at Australia & New Zealand Bank said, it “seems to be no particular factor driving euro sharply higher in extremely thin volume” adding that “there wasn’t any particular news. Markets are extremely thin and perhaps position tuning occurred.”

  So after the initial freak out where are markets now? Well, according to Bloomberg, after the Euro was dealt as high as 1.07 on the EBS platform, though that price level has been dismissed by banks and clients according to Asia-based FX traders, the pair is slowly returning to its pre-freakout level. As Bloomberg adds, the post-mortem of the EURUSD spike already has “traders swapping stories of clients dealing away and banks shedding tears” especially those who were stopped out by a few good stop-busting algos. 

  And while funds were seen buying under 1.0500, when the pair hit 1.0540 one trader says he had to take the loss.

  Finally, if any readers missed the move, fear not: with the world’s most actively traded market having become a farcical, flash crashing joke, it is only a matter of time before the next algo-driven freak out returns.

  

  

• Anthony Bourdain Slams "Privileged" Liberals For Their "Utter Contempt" Of Working-Class America

  Celebrity chef and host of CNN’s Parts Unknown Anthony Bourdain is no fan of Trump, and he made as much clear in today’s interview with Reason. When asked what concerns him about Trump, he responded: “what I am not concerned about with Trump? Wherever one lives in the world right now I wouldn’t feel too comfortable about the rise of authoritarianism. I think it’s a global trend, and one that should be of concern to everyone.”

  

  However, while a liberal bashing Trump is hardly news, what was more noteworthy is that the celebrity chef also unloaded on “his own side”, when he called out elite east coast liberals – of which he admitted he is part of – saying that their “utter contempt” for working-class Americans was unhelpful and nauseating.

  The utter contempt with which privileged Eastern liberals such as myself discuss red-state, gun-country, working-class America as ridiculous and morons and rubes is largely responsible for the upswell of rage and contempt and desire to pull down the temple that we’re seeing now.

  Bingo. It is also why the “shocking” Trump presidency is nothing more than the public’s revolt to “Eastern liberals” shooting themselves in the foot by overly believing their own BS.

  But Bourdain did not stop there, next lashing out at the tidal wave of artificial political correctness sweeping over the nation: “I hate the term political correctness, the way in which speech that is found to be unpleasant or offensive is often banned from universities. Which is exactly where speech that is potentially hurtful and offensive should be heard” Bourdain said.

  He continued:

  The way we demonize comedians for use of language or terminology is unspeakable. Because that’s exactly what comedians should be doing, offending and upsetting people, and being offensive. Comedy is there, like art, to make people uncomfortable, and challenge their views, and hopefully have a spirited yet civil argument. If you’re a comedian whose bread and butter seems to be language, situations, and jokes that I find racist and offensive, I won’t buy tickets to your show or watch you on TV. I will not support you. If people ask me what I think, I will say you suck, and that I think you are racist and offensive. But I’m not going to try to put you out of work. I’m not going to start a boycott, or a hashtag, looking to get you driven out of the business.

  But it was his commentary on the arrogance of the liberal superclass that all other liberals (and conservatives) should note and learn from, and it is 100% accurate.

  I’ve spent a lot of time in gun-country, God-fearing America. There are a hell of a lot of nice people out there, who are doing what everyone else in this world is trying to do: the best they can to get by, and take care of themselves and the people they love. When we deny them their basic humanity and legitimacy of their views, however different they may be than ours, when we mock them at every turn, and treat them with contempt, we do no one any good. Nothing nauseates me more than preaching to the converted.

   

  The self-congratulatory tone of the privileged left—just repeating and repeating and repeating the outrages of the opposition—this does not win hearts and minds. It doesn’t change anyone’s opinions. It only solidifies them, and makes things worse for all of us. We should be breaking bread with each other, and finding common ground whenever possible. I fear that is not at all what we’ve done.

  Bourdain is, of course, correct, although we fail to see how America manages to cross so many great divides – racial, ethnic, social, religious, and of course, wealth – in the near future, no matter who the president is, in a peaceful manner.

  Finally, in an amusing twist, Bourdain despises such shining examples of self-righteous liberals as Bill Maher even more than he hates Trump. When asked what he thinks of Bill Maher, his answer was emphatic:

  Insufferably smug. Really the worst of the smug, self-congratulatory left. I have a low opinion of him. I did not have an enjoyable experience on his show. Not a show I plan to do again. He’s a classic example of the smirking, contemptuous, privileged guy who lives in a bubble. And he is in no way looking to reach outside, or even look outside, of that bubble, in an empathetic way.

  In retrospect, if more people could see the world through Bourdain’s eyes, there may still be hope.

  

  

• The Rich Got Richer In 2016 – $237 Billion Richer!

  While Warren Buffett did best of all the billionaires in 2016, he was far from alone.

  

   

  The biggest fortunes on the planet whipsawed through $4.8 trillion of daily net worth gyrations in 2016.

  The volatility — triggered by disappointing economic data from China at the start of the year, the U.K.’s vote to leave the European Union in the middle and the election of billionaire Donald Trump at the end — didn’t prevent the richest from getting richer.

  

  Their fortunes rose 5.7 percent for the year at the close of trading on Dec. 27, or some $237 billion, according to the Bloomberg Billionaires Index.

  

  

• Oliver Stone Slams The Establishment's "The Russians Are Coming" Narrative

  Authored by Oliver Stone (via Facebook),

  THE RUSSIANS ARE COMING

  As 2016 draws to a close, we find ourselves a deeply unsettled nation. We’re unable to draw the lines of our national interest. Is it jobs and economy, is it national security, or is it now in our interest to ensure global security — in other words, act as the world’s policemen?

  As the “failing” (to quote Trump) New York Times degenerates into a Washington Post organization with its stagnant Cold War vision of a 1950s world where the Russians are to blame for most everything — Hillary’s loss, most of the aggression and disorder in the world, the desire to destabilize Europe, etc. — the Times has added the issue of ‘fake news’ to reassert its problematic role as the dominant voice for the Washington establishment. Certainly this is true in the case of Russia’s ‘hacking’ the 2016 election and putting into office its Manchurian Candidate in Donald Trump. Apparently the CIA (via various unnamed intelligence officials), and the FBI, NSA, Director of National Intelligence James Clapper (who notoriously lied to Congress in the Snowden affair), President Obama, the DNC, Hillary Clinton, and Congress agree that Russia, and Mr. Putin predominantly, is responsible.

  Certainly the psychotic, war-loving Senator John McCain is right up there alongside these patriots, calling President Putin a “thug, bully and a murderer and anybody else who describes him as anything else is lying.” He actually said this — the man whose sound judgment chose Sarah Palin as his VP nominee in ’08. And the Times followed by printing the story in its full glory on page one, clearly agreeing with McCain’s point of view. I don’t remember Presidents Eisenhower, Nixon, or Reagan, in the darkest days of the 1950s/80s, ever singling out a Russian President like this. The invective was aimed at the Soviet regime, but never were Khrushchev or Brezhnev the target of this bile. I guess this is a new form of American diplomacy. If a black youth in our inner cities were killed or a Pakistani wedding party were murdered by our drones, would President Obama be singled out as a murderer, bully, thug? Such personalization is a sign of sickness in our thinking and way beneath what should be our standards.

  Note the enclosed link from the Veteran Intelligence Professionals for Sanity (which includes the ex-NSA reformer Bill Binney, a mathematical genius who inspired the Nic Cage character in “Snowden,” and who talks here about what hacking really means, as opposed to a ‘leak’). The Times and other mainstream media have surprisingly evaded any contrary evidence, such as that presented by Craig Murray, ex-ambassador and Wikileaks spokesman who says he was given the information in a Washington park by a Democratic ‘insider’ who was disgusted by the behavior of the DNC; Murray then gave it to Wikileaks. This was a ‘leak,’ not a ‘hack,’ and always seemed to me the likely source for this scandal (as I think the Sony leak was as well, falsely blamed on North Korea, but that’s another matter). And if this were to be properly investigated, it might very well lead to the discovery that this was Hillary Clinton’s ‘Nixon moment.’ Clearly the DNC offices were up to no good. Ironically, Clinton first made her name as one of the investigators into Watergate. See Mark Ames’s article, “Site Behind McCarthyite Blacklist,” tracking this foul play to Washington Post journalist Craig Timberg.

  I remember well in the 1950s when the Russians were supposed to be in our schools, Congress, State Department — and according to many Eisenhower/Nixon supporters — about to take over our country without serious opposition (and they call me paranoid!). It was this same media who insisted on our need to go to Vietnam to defend our freedoms against the communists 6,000 miles away. And after the Red Scare finally went away for good in 1991, let us remind ourselves that It never ended. It became Hussein of Iraq with his weapons of mass destruction, and talk of the ‘mushroom cloud.’ It became a Demon, as real as any Salem Witch Trial. It was Gaddafi of Libya, and then it was Assad of Syria. In other words, as in an Orwellian prophesy, it never ended, and I can guarantee you it never will — unless we the people who can still think for ourselves in this existential matter, can say “Enough” to this demon act. “Enough,’ “go away” — laugh in their faces.

  Of course, the NYT/WaPo nexus rarely will publish any of our serious dissents and thus we must take refuge in alternate media, such as ‘Consortiumnews,’ ‘The Intercept,’ ‘Naked Capitalism,’ ‘Counterpunch,’ ‘Zero Hedge,’ ‘Antiwar.com,’ ‘Truthdig,’ ‘Common Dreams.’ Yet I think we were all quite shocked (but not surprised) when recently we saw 200 websites listed as tools of the Kremlin (WaPo’s November 24, “Russian propaganda effort helped spread ‘fake news’ during election”).

  My God, the ghost of Izzy Stone is back from the 1950s! For that matter, so is Tom Clancy from the ’80s. False thrillers will now be written about the Russians hacking the American elections. Money and TV serials will be made. I’ve never read such hysterical junk (call it what it is — “fake news”) in the New York Times, in which the editorials have become outrageous diatribes, many of them presumably written by Serge Schmemann, one of those ideologues who still finds Russians under his bed at night (called ‘White Russians’ in the old days who, like right-wing Cubans in Miami, can never live down past grievances). Schmemann is obviously riding high at the NYT edit board. We can make fun of this, but it’s an irresponsible and dangerous editorializing, which has invaded the MSM’s reporting. Their thinking has clearly influenced the Pentagon and many of our Generals’ statements. When one group-think controls our national conversation, it’s so sad, a pathetic loss of judgment, and it becomes ultra dangerous. In this spirit, I’m linking several crucial essays of new vintage, pointing out the disgrace the MSM has become.

  As much as we may disagree with Donald Trump (and I do) he’s right now target number one of the MSM propaganda — until, that is, he changes to the anti-Kremlin track over, God knows, some kind of petty dispute cooked up by CIA, and in his hot-headed way starts fighting with the Russians. It wouldn’t be long then until he declares a state of war against Russia. I have no doubt then that our over-financed military ($10 to every 1 Russian dollar) will mean NOTHING against a country that right now believes the US, with the largest buildup of NATO on its borders since Hitler’s World War II, is crazed enough to prepare for a preemptive strike. In his analysis, “The Need to Hold Saudi Arabia Accountable,” Robert Parry points out that this conflict ironically started in the 1980s with the Neoconservatives defining Iran as the number one terrorist sponsor in the world. How this leads to our present mess is a brilliant analysis that is unknown to the American public.

  I urge you to read the following articles and stay calm in your thinking. But bring it to bear in some way.

  Robert Parry, “Making Russia ‘The Enemy’,” Consortiumnews
  http://bit.ly/2hz4jTI

  Joe Lauria, “Russia-Hack Story Another Media Failure,” Consortiumnews
  http://bit.ly/2hmndK4

  Justin Raimondo, “Stop the CIA Coup,” Antiwar.com
  http://bit.ly/2hgka9c

  Robert Parry, “The Need to Hold Saudi Arabia Accountable,” Consortiumnews
  http://bit.ly/2ifNRZ3

  Ray McGovern, “US Intel Vets Dispute Russia Hacking Claims,” Consortiumnews
  http://bit.ly/2gB2yWo

  Mark Ames, “Site behind Washington Post’s McCarthyite Blacklist,” Naked Capitalism
  http://bit.ly/2goUVT5

  Robert Parry, “A Sour Holiday Season for Neocons,” Consortiumnews
  http://bit.ly/2imXXVb

  As a believer in what Thich Nhat Hanh says, every single one of us, even through our prayers, can add to the betterment of this world. I never thought I’d find myself at this point in time praying for the level-headedness of a Donald Trump. You might remember “The Iliad.” As Homer would have it, the gods would huddle up during each day’s battles and decide on the outcome. Who would die and who would live. Are the gods still listening?

  

  

• Duterte Says US Ambassadors Are CIA "Spies" As Alleged US Plot To Overthrow Him Emerges

  Coming at an awkward time, just as the US accused Russia of doing (once again, without a shred of valid proof as opposed to a report which the DHS was quick to disown) what the CIA has done to other nations for decades, earlier today everyone’s favorite volatile, vulgar and outspoken Philippine President Rodrigo Duterte derided U.S. ambassadors as “spies”, responding to a media report of an alleged American plot to destabilize his government, a job he said some envoys were appointed solely to do.

  Quoted by Reuters, the former mayor said though had received no intelligence reports of any U.S. plan to undermine his presidency, he believed most ambassadors were in cahoots with the Central Intelligence Agency (CIA), which had a track record of meddling in other countries’ affairs. 

  The reason for the latest outburst is because the Manila Times newspaper on Tuesday reported a former U.S. ambassador to the Philippines had prepared a “blueprint to undermine Duterte“, citing a document it had received from a what it described as a “highly placed source”.

  The Manila Times said Philip Goldberg, who recently ended his term as ambassador in Manila, had outlined various strategies over an 18-month period to destabilize Duterte. That would include supporting the opposition and co-opting the media, the military, neighboring countries and senior government officials to turn against Duterte and isolate him economically.

  Duterte has previously called Goldberg a “gay son of a bitch” and referred to him in three successive live television interviews on Thursday, as Washington’s “superstar” with a track record of trying to undermine governments.

  He may well be right: Goldberg was expelled as ambassador to Bolivia in 2008 by then President Evo Morales, who accused him of siding with his rightist opponents and of orchestrating street protests. The United States rejected that and said his expulsion was a “grave error”.

  “Maybe he will deny it but it’s not good,” Duterte said of Goldberg’s alleged blueprint, which he said was plausible because of Goldberg’s history.

  The U.S. State Department, which has yet to admit on the record that it is in the government overthrow business, naturally described the allegations as “false.”

  Duterte, however, had a more cynical view: “most of the ambassadors of the United States, but not all, are not really professional ambassadors. At the same time they are spying, they are connected with the CIA,” Duterte said in a television interview.

  He added that “the ambassador of a country is the number one spy. But there are ambassador of the U.S., their forte is really to undermine governments.”

  Meanwhile, U.S. Assistant Secretary of State for East Asia and the Pacific Daniel Russel dismissed the Manila Times report.

  “No such blueprint exists,” he said in a statement on Tuesday.

  “The United States respects the sovereignty of the Philippines and the democratic choices made by the Philippine people.”

  Sure it does, and just to “prove” it here is a paper which showed that between 1946 and 2000, the US intervened in foreign elections “only” 81 times, of which 65% were covert.

  

  

• US Retaliates Against Russia For "Hacking The Election": Expels 35 Diplomats, Unveils Sanctions

  As promised (or threatened), the Obama administration has unveiled – via the US Treasury – new sanctions against Russia over election hacking allegations (that as yet have not been supported by any actual evidence). Despite president-elect Trump’s comments that “we ought to get on with our lives,” the sanctions apply to five entities and six individuals, and also including the expulsion of 35 Russian diplomats and closing two Russian compounds in New York and Maryland in response to a campaign of harassment against American diplomats in Moscow, a senior U.S. official said on Thursday.

  Amusingly, one of the entities is Russia’s FSB, aka the Federal Security Service, i.e. the Russian spy service, to the list of Specially Designated Nationals and Blocked Persons. Which, perhaps, means that previously the US would look the other way when known spies would enter the US.

  The move against the diplomats from the Russian embassy in Washington and consulate in San Francisco is part of a series of actions announced on Thursday to punish Russia for a campaign of intimidation of American diplomats in Moscow and interference in the U.S. election.

  The Russian diplomats would have 72 hours to leave the United States, the official said. Access to the two compounds, which are used by Russian officials for intelligence gathering, will be denied to all Russian officials as of noon on Friday, the senior U.S. official added.

  “These actions were taken to respond to Russian harassment of American diplomats and actions by the diplomats that we have assessed to be not consistent with diplomatic practice,” the official said .The State Department has long complained that Russian security agents and traffic police have harassed U.S. diplomats in Moscow, and U.S. Secretary of State John Kerry has raised the issue with Russian President Vladimir Putin and his foreign minister, Sergei Lavrov.

  “By imposing costs on the Russian diplomats in the United States, by denying them access to the two facilities, we hope the Russian government reevaluates its own actions, which have impeded the ability and safety of our own embassy personnel in Russia,” the official said.

  As for proof, well just trust Obama, who said that “data theft and disclosure activities could only have been directed by the highest levels of the Russian government.” And Iraq had WMD, or something….

  The outgoing president finally threatens that he will continue to take more sanctions against Russia, without noting in advance just what they will be. He better hurry: Obama has 23 days left as US president.

  * * *

  Full statement from President Obama

  Statement by the President on Actions in Response to Russian Malicious Cyber Activity and Harassment

   

  Today, I have ordered a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election. These actions follow repeated private and public warnings that we have issued to the Russian government, and are a necessary and appropriate response to efforts to harm U.S. interests in violation of established international norms of behavior.

   

  All Americans should be alarmed by Russia’s actions. In October, my Administration publicized our assessment that Russia took actions intended to interfere with the U.S. election process. These data theft and disclosure activities could only have been directed by the highest levels of the Russian government. Moreover, our diplomats have experienced an unacceptable level of harassment in Moscow by Russian security services and police over the last year. Such activities have consequences. Today, I have ordered a number of actions in response.

   

  I have issued an executive order that provides additional authority for responding to certain cyber activity that seeks to interfere with or undermine our election processes and institutions, or those of our allies or partners. Using this new authority, I have sanctioned nine entities and individuals: the GRU and the FSB, two Russian intelligence services; four individual officers of the GRU; and three companies that provided material support to the GRU’s cyber operations. In addition, the Secretary of the Treasury is designating two Russian individuals for using cyber-enabled means to cause misappropriation of funds and personal identifying information. The State Department is also shutting down two Russian compounds, in Maryland and New York, used by Russian personnel for intelligence-related purposes, and is declaring “persona non grata” 35 Russian intelligence operatives. Finally, the Department of Homeland Security and the Federal Bureau of Investigation are releasing declassified technical information on Russian civilian and military intelligence service cyber activity, to help network defenders in the United States and abroad identify, detect, and disrupt Russia’s global campaign of malicious cyber activities.

   

  These actions are not the sum total of our response to Russia’s aggressive activities. We will continue to take a variety of actions at a time and place of our choosing, some of which will not be publicized. In addition to holding Russia accountable for what it has done, the United States and friends and allies around the world must work together to oppose Russia’s efforts to undermine established international norms of behavior, and interfere with democratic governance. To that end, my Administration will be providing a report to Congress in the coming days about Russia’s efforts to interfere in our election, as well as malicious cyber activity related to our election cycle in previous elections.

  More details from the NYT:

  The Obama administration struck back at Russia on Thursday for its efforts to influence the 2016 election, ejecting 35 Russian intelligence operatives from the United States and imposing sanctions on Russia’s two leading intelligence services, including four top officers of the military intelligence unit the White House believes ordered the attacks on the Democratic National Committee and other political organizations.

   

  In a sweeping set of announcements, the United States was also expected to release evidence linking the cyberattacks to computer systems used by Russian intelligence. Taken together, the actions would amount to the strongest American response ever taken to a state-sponsored cyberattack aimed at the United States.

   

  The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

   

  Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

  As Bloomberg reports, among those targeted were officials of GRU, Russia’s military intelligence agency, which cybersecurity experts in the U.S. have linked to the hacking of the Democratic National Committee and party officials through a group they have nicknamed APT 28 or Fancy Bear. The U.S. also is sanctioning some Russian state institutions and cyber companies associated with them.

  The NYT adds that the Obama administration is also planning to release a detailed “joint analytic report” from the Federal Bureau of Investigation and the Department of Homeland Security that is clearly based in part on intelligence gathered by the National Security Agency. A more detailed report on the intelligence, ordered by President Obama, will be published in the next three weeks, though much of the detail — especially evidence collected from “implants” in Russian computer systems, tapped conversations and spies — is expected to remain classified.

  In the most amusing twist, even the NYT admits that “despite the fanfare and political repercussions surrounding the announcement, it is not clear how much real effect the sanctions may have.”
  

  And while we are confident Putin is thoroughly amused at this moment by Obama’s last ditch effort to posion US-Russian relations, we eagerly await the Russian response.

  

  * * *
  

  From the US Treasury
  

  Issuance of Amended Executive Order 13694; Cyber-Related Sanctions Designations

  12/29/2016

  Today, the President issued an Executive Order Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities.  This amends Executive Order 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities.”  E.O. 13694 authorized the imposition of sanctions on individuals and entities determined to be responsible for or complicit in malicious cyber-enabled activities that result in enumerated harms that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States.  The authority has been amended to also allow for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.  Five entities and four individuals are identified in the Annex of the amended Executive Order and will be added to OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List).  OFAC today is designating an additional two individuals who also will be added to the SDN List.  

  Specially Designated Nationals List Update

  ---

  The following individual has been added to OFAC’s SDN List: 

  • ALEXSEYEV, Vladimir Stepanovich; DOB 24 Apr 1961; Passport 100115154 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

  • BELAN, Aleksey Alekseyevich (a.k.a. Abyr Valgov; a.k.a. BELAN, Aleksei; a.k.a. BELAN, Aleksey Alexseyevich; a.k.a. BELAN, Alexsei; a.k.a. BELAN, Alexsey; a.k.a. “Abyrvaig”; a.k.a. “Abyrvalg”; a.k.a. “Anthony Anthony”; a.k.a. “Fedyunya”; a.k.a. “M4G”; a.k.a. “Mag”; a.k.a. “Mage”; a.k.a. “Magg”; a.k.a. “Moy.Yawik”; a.k.a. “Mrmagister”), 21 Karyakina St., Apartment 205, Krasnodar, Russia; DOB 27 Jun 1987; POB Riga, Latvia; nationality Latvia; Passport RU0313455106 (Russia); alt. Passport 0307609477 (Russia) (individual) [CYBER2].

  •  BOGACHEV, Evgeniy Mikhaylovich (a.k.a. BOGACHEV, Evgeniy Mikhailovich; a.k.a. “Lastik”; a.k.a. “lucky12345”; a.k.a. “Monstr”; a.k.a. “Pollingsoon”; a.k.a. “Slavik”), Lermontova Str., 120-101, Anapa, Russia; DOB 28 Oct 1983 (individual) [CYBER2].

  •  GIZUNOV, Sergey (a.k.a. GIZUNOV, Sergey Aleksandrovich); DOB 18 Oct 1956; Passport 4501712967 (Russia); Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

  •  KOROBOV, Igor (a.k.a. KOROBOV, Igor Valentinovich); DOB 03 Aug 1956; nationality Russia; Passport 100119726 (Russia); alt. Passport 100115101 (Russia); Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

  •  KOSTYUKOV, Igor (a.k.a. KOSTYUKOV, Igor Olegovich); DOB 21 Feb 1961; Passport 100130896 (Russia); alt. Passport 100132253 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

  The following entities have been added to OFAC’s SDN List:

  •  AUTONOMOUS NONCOMMERCIAL ORGANIZATION PROFESSIONAL ASSOCIATION OF DESIGNERS OF DATA PROCESSING SYSTEMS (a.k.a. ANO PO KSI), Prospekt Mira D 68, Str 1A, Moscow 129110, Russia; Dom 3, Lazurnaya Ulitsa, Solnechnogorskiy Raion, Andreyevka, Moscow Region 141551, Russia; Registration ID 1027739734098 (Russia); Tax ID No. 7702285945 (Russia) [CYBER2].

  •  FEDERAL SECURITY SERVICE (a.k.a. FEDERALNAYA SLUZHBA BEZOPASNOSTI; a.k.a. FSB), Ulitsa Kuznetskiy Most, Dom 22, Moscow 107031, Russia; Lubyanskaya Ploschad, Dom 2, Moscow 107031, Russia [CYBER2].

  •  MAIN INTELLIGENCE DIRECTORATE (a.k.a. GLAVNOE RAZVEDYVATEL’NOE UPRAVLENIE (Cyrillic: ??????? ???????????????? ??????????); a.k.a. GRU; a.k.a. MAIN INTELLIGENCE DEPARTMENT), Khoroshevskoye Shosse 76, Khodinka, Moscow, Russia; Ministry of Defence of the Russian Federation, Frunzenskaya nab., 22/2, Moscow 119160, Russia [CYBER2].

  •  SPECIAL TECHNOLOGY CENTER (a.k.a. STC, LTD), Gzhatskaya 21 k2, St. Petersburg, Russia; 21-2 Gzhatskaya Street, St. Petersburg, Russia; Website stc-spb.ru; Email Address stcspb1@mail.ru; Tax ID No. 7802170553 (Russia) [CYBER2].

  •  ZORSECURITY (f.k.a. ESAGE LAB; a.k.a. TSOR SECURITY), Luzhnetskaya Embankment 2/4, Building 17, Office 444, Moscow 119270, Russia; Registration ID 1127746601817 (Russia); Tax ID No. 7704813260 (Russia); alt. Tax ID No. 7704010041 (Russia) [CYBER2].

  *  *  *

  Additionally – potentially unrelated:

  • U.S. TO CLOSE TWO RUSSIAN COMPOUNDS IN MARYLAND AND NEW YORK USED FOR INTELLIGENCE-RELATED ACTIVITIES – U.S. OFFICIAL
  • U.S. EXPELS 35 RUSSIAN DIPLOMATS IN WASHINGTON AND SAN FRANCISCO, GIVES THEM 72 HOURS TO LEAVE – U.S. OFFICIAL

  Bloomberg reports that The FBI and Homeland Security Department will release a report Thursday with technical evidence intended to prove Russia’s military and civilian intelligence services were behind hacking attacks during this year’s presidential campaign, according to a U.S. official.

  The documentation will be offered in tandem with sanctions that the Obama administration announced Thursday in retaliation for the breach of Democratic National Committee e-mails as Democrat Hillary Clinton and Republican Donald Trump were campaigning for the White House. The Russian government, which has denied responsibility for the hacking, has vowed to respond to any new sanctions with unspecified counter-measures.

   

  The joint report will include newly declassified information exposing the internet infrastructure that Russia used in the cyberattacks, including malware and computer addresses, according to the official who asked asked not to be identified before the report is made public.

   

  The release is intended to serve two purposes: to help prove the Russian government carried out the hacking while also frustrating officials in Moscow by exposing some of their most sensitive hacking infrastructure, the official said.

  And now we await as Putin retaliates, which he will momentarily, just as promised…

  Anticipating the sanctions Wednesday, Russia accused Obama of acting out of spite, and pledged retaliation.

   

  “People in the White House need to understand clearly that if Washington really takes new hostile steps, then it will receive a response,” foreign ministry spokeswoman Maria Zakharova said in a video statement.

  As The New York Times reports,

  The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

  Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

  Obama’s executive order is below.

  

  

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• Chinese Professor Writing for Pine River Capital Says China Will Win Trade War with America

  The shills over at the Minnesota based hedge fund, Pine River, are making the media rounds these evening, after issuing a letter featuring a Hong Kong Professor named James Wang who said China would defeat the United States in a trade war. The entire article is suspect and wreaks of enemy propaganda.

  Have a look, penned by <<<Bei Hu>>> (hmm).

  This is what Wang had to say about a prospective trade war with the US,  which includes Trump slapping the shit out of China with 45% tariffs.

  “By design, decision-makers in a democracy face difficulties coordinating a relief effort and must eventually face a political backlash from impacted domestic producers,” Wang wrote. “On this basis, the Chinese may have more runway to play the long game in a trade war.”
   
  “The balance of power worldwide is much more diffuse compared to the early 20th century, and players like China and India have emerged to create new political centers of gravity,” Wang wrote.
   
  “However, as economic and political paralyses spread across the developed world, the most likely outcome is a trade war.”

  In other words, Pine Capital believes America is finished and the balance of power now lies in Beijing.
   
  The math, however, tells a different story, as China enjoys nearly a $300 billion per annum trade surplus with the United States, wholly dependent on the US consumer to keep their bedraggled populace at bay, saddled with incredibly high levels of debt (250%+) and soaring NPLs.

  

  Goldman analyst, Kinger Lau, believes punitive tariffs will clown-rape China’s GDP by 3% in 2017. Kevin Lau from Daiwa Capital isn’t as optimistic as Goldman. He thinks an American-Sino trade war will result in an 87% drop in Chinese exports to the US — a drop of $420 billion. That would equate to a 4.85% blow to the Chinese parasitical ‘economy.’

  Even in a Trump light environment of just 15% tariffs, Chinese GDP stands to drop by 1.8%, according to Daiwa.

  China’s protest would involve selling US treasuries, which have proven to be meaningless with QE programs and they might give Boeing, Ford and GM the boot. They might shut down a few disgusting KFC restaurants too.

  Bottom line: Investors freak the fuck out when China misses by one tenth of one percent. Can you imagine if Chinese exports dropped by $420 billion or 87%?

  Pain.

   

   

  Content originally generated at iBankCoin.com

  

• 2016: The Terrible, Horrible, No Good, Very Bad Year

  Submitted by John Whitehead via The Rutherd Institute,

  “What’s past is prologue.” ? William Shakespeare, The Tempest

  What a terrible, horrible, no good, very bad year this has been.

  Endless wars. Toxic politics. Violence. Hunger. Police shootings. Mass shootings. Economic downturns. Political circuses. Senseless tragedies. Loss. Heartache. Intolerance. Prejudice. Hatred. Apathy. Meanness. Cruelty. Poverty. Inhumanity. Greed.

  Here’s just a small sampling of what we’ve suffered through in 2016.

  After three years of increasingly toxic politics, the ruling oligarchy won and “we the people” lost. The FBI’s investigation of Hillary’s emails ended with a whimper, rather than a bang. FBI director James Comey declared Clinton’s use of a private email server to be careless rather than criminal. Bernie Sanders sparked a movement only to turn into a cheerleader for Hillary Clinton. Clinton won the popular vote but lost the election. Donald Trump won the White House while the American people lost any hope of ending the corporate elite’s grip on the government.

  The government declared war on so-called “fake news” while continuing to peddle its own brand of propaganda. President Obama quietly re-upped the National Defense Authorization Act, including a provision that establishes a government agency to purportedly counter propaganda and disinformation.

  More people died at the hands of the police. Shootings of unarmed citizens (especially African-Americans) by police claimed more lives than previously estimated, reinforcing concerns about police misconduct and the use of excessive force. Police in Baton Rouge shot Alton Sterling. Police in St. Paul shot Philando Castile during a traffic stop. Ohio police shot 13-year-old Tyre King after the boy pulls out a BB gun. Wisconsin was locked down after protests erupt over a police shooting of a fleeing man. Oklahoma police shot and killed Terence Crutcher during a traffic stop while the man’s hands were raised in the air. North Carolina police killed Keith Lamont Scott, spurring two nights of violent protests. San Diego police killed Alfred Olango after he removed a vape smoking device from his pocket. Los Angeles police shot Carnell Snell Jr. after he fled a vehicle with a paper license plate.

  We lost some bright stars this year. Supreme Court justice Antonin Scalia’s death left the court deadlocked and his successor up for grabs. Joining the ranks of the notable deceased were Muhammad Ali, David Bowie, Fidel Castro, Leonard Cohen, Carrie Fisher, John Glenn, Merle Haggard, Harper Lee, George Michael, Prince, Nancy Reagan, Janet Reno, Elie Wiesel, and Gene Wilder.

  Diseases claimed more lives. The deadly Zika virus spread outwards from Latin America and into the U.S.

  The rich got richer. The Panama Papers leak pulled back the curtain on schemes by the wealthy to hide their funds in shell companies.

  Free speech was dealt one knock-out punch after another. First Amendment activities were pummeled, punched, kicked, choked, chained and generally gagged all across the country. The reasons for such censorship varied widely from political correctness, safety concerns and bullying to national security and hate crimes but the end result remained the same: the complete eradication of what Benjamin Franklin referred to as the “principal pillar of a free government.”

  The debate over equality took many forms. African-Americans boycotted the Oscars over the absence of nominations for people of color, while the Treasury Department announced its decision to replace Andrew Jackson with Harriet Tubman on the $20 bill. North Carolina’s debate over transgender bathrooms ignited a nationwide fury. Meanwhile, the U.S. military opened its doors to transgender individuals. A unanimous Supreme Court affirmed a Texas law that counts everyone, not just eligible voters, in determining legislative districts. The nation’s highest court also upheld affirmative action, while declaring a Texas law on abortion clinics to be an unnecessary burden on women.

  Environmental concerns were downplayed in favor of corporate interests. Flint, Michigan’s contaminated water was declared a state and federal emergency, while thousands protested the construction of the Dakota Access Pipeline and its impact on water sources.

  Technology rendered Americans vulnerable to threats from government spies, police, hackers and power failures. The Justice Department battled Apple in court over access to its customers’ locked, encrypted iPhones. Microsoft sued the U.S. government over its access to customers’ emails and files without their knowledge. Yahoo confirmed that over half a billion user accounts had been hacked. Police departments across the country continued to use Stingray devices to collect cellphone data in real time, often without a warrant. A six-hour system shutdown resulted in hundreds of Delta flights being cancelled and thousands of people stranded.

  Police became even more militarized and weaponized. Despite concerns about the government’s steady transformation of local police into a standing military army, local police agencies continued to acquire weaponry, training and equipment suited for the battlefield. In North Dakota, for instance, police were authorized to acquire and use armed drones. Likewise, the use of SWAT teams for routine policing tasks has increased the danger for police and citizens alike.

  Children were hurt. A 17-year-old endangered silverback gorilla was shot preemptively after a 3-year-old child climbed into its zoo enclosure. In Disney World, an alligator snatched a 2-year-old boy off one of the resort’s man-made beaches. A school bus crash in Tennessee killed five children. And police resource officers made schools less safe, with students being arrested, tasered and severely disciplined for minor infractions.

  Computers asserted their superiority over their human counterparts, who were easily controlled by bread and circuses. Google’s artificial intelligence program, AlphaGo, defeated its human opponent in a DeepMind Challenge Match. Pokemon Go took the world by storm and turned users into mindless entertainment zombies.

  Terrorism took many forms. Brussels was locked down in the wake of terrorist attacks that killed dozens and wounded hundreds. A shootout between a gunman and police wrought havoc on a gay nightclub in Orlando. Terrorists armed with explosives and guns opened fire in Istanbul Airport. A trucker drives into a crowd of revelers on Bastille Day in France. Acts of suspected terrorism take place throughout Germany, including attacks using axes, knives and machetes. Japan undergoes a mass killing when a man armed with a knife targets disabled patients at a care facility. Syria continued to be ravaged by bomb strikes, terrorism and international conflict.

  Science crossed into new frontiers. Doctors announced the birth of the first healthy three-parent baby created with DNA from three separate people. Elon Musk outlined his plan to populate Mars.

  Tragedies abounded. An Amtrak train derailed outside of Philadelphia. A commuter train crashed through a barrier in New Jersey. Floods in Texas killed nine soldiers stationed at Fort Hood. Heatwaves swept the southwest, fueling wildfires. Flash floods and heavy rain devastated parts of Maryland and Louisiana.

  The nanny state went into overdrive. Philadelphia gave the green light to a tax on sugary drinks. The FDA issued guidelines to urge food manufacturers and chain restaurants to reduce salt use.

  The government waged a war on cash. Not content to swindle, cheat, scam, and generally defraud Americans by way of wasteful pork barrel legislation, asset forfeiture schemes, and costly stimulus packages, the government and its corporate partners in crime came up with a new scheme to not only scam taxpayers out of what’s left of their paychecks but also make us foot the bill. The government’s war on cash is a concerted campaign to do away with large bills such as $20s, $50s, $100s and shift consumers towards a digital mode of commerce that can easily be monitored, tracked, tabulated, mined for data, hacked, hijacked and confiscated when convenient.

  The Deep State reared its ugly head. Comprised of unelected government bureaucrats, corporations, contractors, paper-pushers, and button-pushers who are actually calling the shots behind the scenes, this government within a government is the real reason “we the people” have no real control over our so-called representatives. It’s every facet of a government that is no longer friendly to freedom and is working overtime to trample the Constitution underfoot and render the citizenry powerless in the face of the government’s power grabs, corruption and abusive tactics. These are the key players that drive the shadow government. They are the hidden face of the American police state that has continued past Election Day.

  The U.S. military industrial complex—aided by the Obama administration—armed the world while padding its own pockets. According to the Center for International Policy, President Obama has brokered more arms deals than any administration since World War II. For instance, the U.S. agreed to provide Israel with $38 billion in military aid over the next ten years, in exchange for Israel committing to buy U.S. weapons.

  Now that’s not to say that 2016 didn’t have its high points, as well, but it’s awfully hard to see the light at the end of the tunnel right now.

  Frequently, I receive emails from people urging me to leave the country before the “hammer falls.” However, as I make clear in my book Battlefield America: The War on the American People, there is nowhere in the world to escape from the injustice of tyrants, bullies and petty dictators. As Ronald Reagan recognized back in 1964, “If we lose freedom here, there is no place to escape to. This is the last stand on Earth.”

  Let’s not take the mistakes of 2016 into a new year with us. The election is over. The oligarchs remain in power. The police state is marching forward, more powerful than ever. All signs point to business as usual. The game continues to be rigged.

  The lesson for those of us in the American police state is simply this: if there is to be any hope for freedom in 2017, it rests with “we the people” engaging in local, grassroots activism that transforms our communities and our government from the ground up.

  Let’s get started.

  

  

• Post-Election Sale

  Still too rich?

   

  

  Source: Branco

  

  

• India Fears Run On Banks: Capital Controls And Withdrawal Limits To Continue

  Submitted by Michael Shedlock via MishTalk.com,

  Indian banks are fearful of running out of cash as lines queue up to withdraw money.

  Bankers say they cannot cope with any sudden increase in demand, and warn against lifting cash withdrawal limits.

  

  A decision by New Delhi on November 8 to scrap all large-denomination banknotes overnight removed 86 per cent of India’s currency from circulation. In an effort to prevent banks running out of cash, the finance ministry then imposed strict limits on the amount of new notes that could be withdrawn. Customers can currently withdraw just Rs2,500 from an ATM per day — equivalent to $37 — or Rs24,000 over the counter per week.

   

  “If the government lifts the limits on Friday and there is a sudden rush, banks will be totally dependent on the central bank to give them enough liquidity,” said Soumyajit Niyogi, associate director at India Ratings and Research. “The Reserve Bank of India has been giving assurances that it has enough cash but reports of how much currency there currently is in the system suggest this might not be the case.”

   

  New Delhi claims that purging most of India’s old cash supply, and replacing it with a smaller quantity of new banknotes, will eliminate illicitly earned or unaccounted for income that has been beyond the reach of tax officials.

   

  But as of December 19, banks had replaced just 38 per cent of the Rs15.3tn in demonetised notes that was sucked out of the system by November’s announcement, according to RBI data.

   

  The figures have alarmed bankers, who are now urging the government not to lift the curbs immediately. One executive said: “The government and the RBI need to make sure there is enough cash in the system before they lift the withdrawal limits.” A private banker told the Indian Express newspaper: “If the limits are relaxed, people will ask for more cash and there is limited cash. This will only turn banks into villains.”

   

  When the policy was first announced, the government estimated that Rs5tn would remain undeclared as it would be part of illicit money hoards. But R Gandhi, RBI deputy governor, said earlier this month that over Rs12tn had already been handed back, and a newspaper report on Wednesday said the figure had since climbed to Rs14tn, leaving just over Rs1tn remaining.

   

  This suggests either that the amount of illicit money in the system was overestimated by the government – or that new ways to launder cash have been discovered despite the government’s efforts.

   

  The RBI did not respond to a request to comment.

  More Experiments Coming

  Speculation is rife that further unorthodox measures are coming: Modi to Crank Up Campaign Against India’s Black Money.

  Well before India’s surprise ban on using 86 per cent of its cash supply, rightwing circles were abuzz with speculation about prime minister Narendra Modi taking such a step to fight so-called black money.

   

  Mainstream economists paid little heed to the chatter — deeming it “too preposterous” to take seriously, given the economic damage it would inflict.

   

  But with India now reeling from the acute cash crunch triggered by the decision to cancel its old Rs500 and Rs1,000 notes, many economists and observers are debating what other unorthodox economic policy experiments may lie ahead.

   

  Mr Modi is expected to intensify his campaign against black money, with his next target likely to be property purchased with illicit wealth and not registered in the true owners’ names. Speculation is rife that he is also seriously considering other dramatic and unusual reform measures — including possibly abolishing income tax and replacing it with a banking transaction tax.

  Expect More Pain, Failures

  The hit to India’s GDP will be much larger than expected.

  Nonetheless, it appears that Modi is prepared to follow up with the popular economic philosophy: If it doesn’t work, do more of it.

  

  

• With China Facing Currency, Liquidity Crises, Ex-PBOC Official Urges Use Of "Nuclear Option"

  With the PBOC fighting tooth and nail to slow outbound capital flight, which according to Goldman has reached $1.1 trillion since August 2015, and which these days mostly means keeping the Yuan from depreciating to new all time lows below 7 Yuan to the Dollar, the Chinese central bank may have its work cut out for it in the immediate future. The reason is that, as Bloomberg reminds us, the first day of 2017 is when an annual $50,000 quota to convert the yuan into foreign exchange resets, stoking concern there will be a rush to sell the local currency.

  With tax payments and a regulatory assessment also tightening liquidity in the money market toward year-end, manifesting itself in soaring unsecured funding rates such as the overnight repo hitting 33% as noted yesterday, paralyzing both the overnight…

   

  

  and longer-dated interbank lending markets…

  

  …  January may bring scant relief as lenders prepare for stronger cash demand before Lunar New Year holidays, which are only a month away.

  The narrative is familiar: China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. The declines are capping off a tough year for investors during which bonds, shares and currency all slumped, with the last hitting all time lows, just as Kyle Bass had predicted roughly one year ago.

  Much of the blame is on the unique calendar this year: “You have Chinese New Year quite early, and because of that one-month window, most of the banks will try to lock the money in a three-month cycle,” said Arthur Lau, Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments. “The current situation in the bond market is partly because of year-end and because of Chinese New Year.”

  But two far bigger culprits are the tightening Fed, and the rapidly deteriorating standoff between China’s housing bubble, which Beijing desperately wants to deflate into a soft landing by withdrawing liquidity, and China’s banking system which in turn is desperate for more liquidity, more easing, or at least a reduction in required reserves.

  Meanwhile, the local debt market is flashing red warning lights, yet most market participants seem to be blissfully ignoring them: China’s 10-year government bond yield has surged 21 basis points in December, poised for its biggest monthly increase since August 2013, when the local banks nearly collapsed as a result of a failed deleveraging effort. The yuan’s 6.6 percent decline in 2016 puts it on course for its worst year since 1994, while the Shanghai Composite Index is headed for its largest drop in five years. The three-month interbank rate known as Shibor rose for a 50th day, its longest streak since 2010, to an 18-month high on Wednesday. The overnight repurchase rate on the Shanghai Stock Exchange jumped to as high as 33 percent the day before, the highest since Sept. 29. As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei, an analyst at Guotai Junan Securities Co. in Shanghai.

  But the worst news for China is that the local population is well-aware of the financial problems facing Beijing, and has been scrambling to transfer its cash offshore. As Bloomberg notes, the recent surge in onshore yuan trading volume suggests outflows are quickening, according to Harrison Hu, chief greater China economist at Royal Bank of Scotland. The daily average value of transactions in Shanghai climbed to $34 billion in December as of Wednesday, the highest since at least April 2014, according to data from China Foreign Exchange Trade System.

  Which brings us to the January 1 clock reset, and the imminent surge in perfectly legal capital outflows.

  “In the new year, the new foreign-exchange purchase quota starts, so we expect yuan positions in January to drop significantly,” Liu Dongliang, an analyst at China Merchants Bank Co., wrote in a note this month. “Within the foreseeable future, the market will be pessimistic about funding conditions. It happens to be near year-end now, where money markets are tight, and after New Year’s Day it’s almost Chinese New Year.”

  Ultimately, trying to keep a lid on the Yuan is a game China will lose, and some are already preemptively admitting defeat. Among them is Yu Yongding, a former academic member of the PBOC’s monetary policy committee, who overnight urged his former PBOC colleagues to engage the “nuclear option” – a sharp, one off devaluation similar to what China did in August of 2015. 

  In emailed comments to Bloomberg, Yongding said that China has a window from now to President-elect Donald Trump’s inauguration to halt FX intervention and let yuan depreciate to its equilibrium level.

  Yongding believes that once FX reserves fall below a certain psychological threshold, capital outflows will only accelerate, and while depreciation expectations may weaken occasionally, they will never disappear until the yuan free floats and finds its equilibrium.

  He also warned that concerns over depreciation have severely affected the PBOC’s monetary-policy independence and said that while tightening capital controls is right move, this has massive side effects and can be evaded.

  His conclusion: letting yuan fall won’t be as scary as some imagine because Chinese companies have been paying down their FX debt and a large drop isn’t supported by nation’s economic fundamentals.

  Will the PBOC stun everyone and unveil a surprise devaluation in the next three weeks? We don’t know, but according to bitcoin, which has soared by 20% in just the past week, someone does appear to “know” something, and if they are right, a devaluation is precisely what the Chinese central bank has in store.

  

  

  

• Contagion Concerns Slam Japanese Financials As Toshiba Crashes 50% In 3 Days

  After two days of total carnage in Toshiba stocks, bonds, and credit risk, the bloodbath continues with the once-massive Japanese company is collapsing once again in early trading – now down 50% in 3 days. Following the semiconductor and nuclear business catastrophes, the company had nothing to add regarding today's crash but more worryingly the massive loss of market cap is spreading contagiously to Japanese financials with Sumi down 4%, and MUFG down almost 3%.

  

   

  As we noted yesterday, Tsunukawa said that “I apologize to shareholders, business partners and all stakeholders for the trouble we have caused,” after Toshiba said cost overruns at U.S. nuclear reactors it is building were likely to force a write-down of as much as several billion dollars, clouding its turnaround plan after the 2015 accounting scandal. Specifically, the company said it may have to book several billion dollars in charges related to a U.S. nuclear power plant construction company acquisition, rekindling "concerns about its accounting acumen."

  The problem is that the nuclear business, together with the semiconductors, has been positioned as one of key pillars underpinning Toshiba's growth which has been trying to shift away from its consumer electronics core. Alas, the latest gaffe now means that much of Toshiba's growth is gone, and the stock price reflect that overnight, when Toshiba's stock plunged by 20%, the most permitted, before it was halted for trading.

  The derisking is weighing heavily on USDJPY…

  

   

  And now, as Bloomberg reports, Japanese financials are tumbling on cross-default, contagion concerns…

  Sumitomo Mitsui Trust Bank has highest capital exposure to Toshiba, with loans equaling 5.5% of the bank’s equity, analyst Shinichiro Nakamura writes in report.

   

  SMTB would also suffer greatest earnings hit, with a Toshiba impairment charge of 100b-190b yen shaving ~9.9% off bank’s current profit for fiscal year to March 31: SMBC Nikko ests.

   

  If Toshiba impairment charge reaches over 400b yen, banks may conduct debt/equity swap; would lower near-term earnings impact while carrying risk of preferred shares losing value

   

  In 3rd scenario, Toshiba could undertake private placement with strategic partner; major banks would be limited to funding support but could be asked to waive claims

  Sumitomo Mitsui Trust shares fall as much as 4%, MUFG -2.6%, Mizuho -2.4%, SMFG -2.4%

  

  

  

• Bankruptcy Asset Hunters Confirm What Most Of Us Already Knew: Everyone Lies On Social Media

  Earlier this year Curtis Jackson III (aka “50 Cent”) raised some concerns with his bankruptcy judge, Ann Nevins, after he posted a couple of ill-advised pictures on Instragram of himself posing with $100,000s of dollars worth of cash.  Apparently Chapter 7 trustees frown upon omitting “buckets of cash” from your official bankruptcy disclosures and then subsequently posing with that cash on social media.  But, after being ordered to appear in court to explain the pictures, an embarrassed 50 Cent was forced to admit that the cash was fake.

  

   

  As the Wall Street Journal points out, chapter 7 trustees all around the country are finding out that “fiddy” isn’t the bankrupt person “frontin” on social media. 

  This October, when Ido Alexander saw photos a young man had posted on social media, he thought he had hit the bankruptcy jackpot.

   

  Mr. Alexander, a Florida lawyer working for a court-appointed trustee, dispatched an appraiser to the man’s home to inspect the expensive-looking gold chains and other jewelry he had been posing in, which he hadn’t declared as assets in court filings.

   

  The appraiser made another discovery that is becoming all too common in the age of social-media braggadocio. “At the end of the day, it was really costume jewelry,” Mr. Alexander says. “It was really disappointing.”

   

  The industry’s detectives—lawyers and accountants who serve as chapter 7 bankruptcy trustees—are learning what most teenagers have already figured out, which is that you can’t always believe what you see on Facebook and Twitter. “Gotcha” moments in which they discover people in bankruptcy posing in glamorous-looking jewelry, piloting boats and ATVs and even displaying buckets full of cash have fallen flat as the items turn out to be fake, or not theirs at all.

  Of course, some people are dumb enough to actually hide real assets from the bankruptcy court which rarely works out all that well.  Just ask Gregory Sipe of Virginia who decided to omit nearly $1 million worth of vintage guitars from his asset disclosures and earned himself five months of house arrest and nice little fine to boot.

  Trustees say efforts to hide assets don’t happen often, but nevertheless have been going on for years. An Oklahoma man who filed for bankruptcy in 2005 failed to turn over profits from his ownership stake in a television show, the court ruled. The name of the show: “Cheaters.”

   

  Tipped off by a creditor, North Carolina bankruptcy trustee John Bircher III, ran an online search on a Chesapeake, Va., businessman and found a newspaper article about his collection of 250 guitars. The man, Gregory Sipe, had only listed “several collectible guitars” worth $10,000 in his August 2010 bankruptcy filing.

   

  When Mr. Bircher paid Mr. Sipe a visit, he recalls, he discovered a garage full of vintage guitars that later sold for almost $900,000. Lawyer Raymond Tarlton, who represented Mr. Sipe, said his client didn’t disclose the guitars because he thought he could fully pay his debts without selling them.

   

  Mr. Sipe pleaded guilty, was sentenced to five months of house arrest and had to pay $5,900 for falsifying court records.

  Who knew that people sensationalize their lives on social media?  We thought we were the last remaining miserable people on the planet…this is a good news day.

  

  

• Is 100% Of "US Warming" Due To NOAA Data Tampering?

  Submitted by Tony Heller via RealClimateScience.com,

  Climate Central just ran this piece, which the Washington Post picked up on. They claimed the US was “overwhelmingly hot” in 2016, and temperatures have risen 1,5°F since the 19th century.

  

  The U.S. Has Been Overwhelmingly Hot This Year | Climate Central

  The first problem with their analysis is that the US had very little hot weather in 2016. The percentage of hot days was below average, and ranked 80th since 1895. Only 4.4% of days were over 95°F, compared with the long term average of 4.9%. Climate Central is conflating mild temperatures with hot ones.

  

  They also claim US temperatures rose 1.5°F since the 19th century, which is what NOAA shows.

  

  Climate at a Glance | National Centers for Environmental Information (NCEI)

  The problem with the NOAA graph is that it is fake data. NOAA creates the warming trend by altering the data. The NOAA raw data shows no warming over the past century

  

  The adjustments being made are almost exactly 1.5°F, which is the claimed warming in the article.

  

  The adjustments correlate almost perfectly with atmospheric CO2. NOAA is adjusting the data to match global warming theory. This is known as PBEM (Policy Based Evidence Making.)

  

  The hockey stick of adjustments since 1970 is due almost entirely to NOAA fabricating missing station data. In 2016, more than 42% of their monthly station data was missing, so they simply made it up. This is easy to identify because they mark fabricated temperatures with an “E” in their database.

  

  When presented with my claims of fraud, NOAA typically tries to arm wave it away with these two complaints.

  1. They use gridded data and I am using un-gridded data.
  2. They “have to” adjust the data because of Time Of Observation Bias and station moves.

  Both claims are easily debunked. The only effect that gridding has is to lower temperatures slightly. The trend of gridded data is almost identical to the trend of un-gridded data.

  

  Time of Observation Bias (TOBS) is a real problem, but is very small. TOBS is based on the idea that if you reset a min/max thermometer too close to the afternoon maximum, you will double count warm temperatures (and vice-versa if thermometer is reset in the morning.) Their claim is that during the hot 1930’s most stations reset their thermometers in the afternoon.

  This is easy to test by using only the stations which did not reset their thermometers in the afternoon during the 1930’s. The pattern is almost identical to that of all stations. No warming over the past century. Note that the graph below tends to show too much warming due to morning TOBS.

  

  NOAA’s own documents show that the TOBS adjustment is small (0.3°F) and goes flat after 1990.

  

  https://www.ncdc.noaa.gov/img/climate/research/ushcn/ts.ushcn_anom25_diffs_pg.gif

  Gavin Schmidt at NASA explains very clearly why the US temperature record does not need to be adjusted.

  You could throw out 50 percent of the station data or more, and you’d get basically the same answers.

  One recent innovation is the set up of a climate reference network alongside the current stations so that they can look for potentially serious issues at the large scale – and they haven’t found any yet.

  

  NASA – NASA Climatologist Gavin Schmidt Discusses the Surface Temperature Record

  NOAA has always known that the US is not warming.

  

  U.S. Data Since 1895 Fail To Show Warming Trend – NYTimes.com

  All of the claims in the Climate Central article are bogus. The US is not warming and 2016 was not a hot year in the US. It was a very mild year.

  

  

• It's The Dollar, Stupid!

  Submitted by Paul Brodsky via Macro-Allocation.com,

  We think the markets have it fundamentally wrong. US investors are anticipating a cyclical shift towards economic expansion via new tax incentives, business de-regulation and Keynesian government spending that promise to increase output, demand and asset prices. However, there is a far more influential driver of future asset prices – a structural shift that has begun but has yet to be acknowledged by economic and political authorities, and, judging by financial asset markets, by most investors. We expect weak equity markets and a strong treasury market beginning in 2017.

  It’s the Dollar, Stupid.

  The financial model used by advanced economies since 1971 is quickly losing its ability to support economic growth and rising asset prices.1 Western economic policy, which had previously relied heavily on credit creation from 1971 to 2008, was replaced in 2009 by monetary policy that relied heavily on base money creation through asset purchases. The structural shift in central bank focus from credit to monetary creation marked a paradigm shift in the decades-long finance-based economic model – from the leveraging phase to the de-leveraging phase.

  The Fed shifted to relying on a communications policy in 2013, which focused on renewing the broad perception that by “normalizing” US interest rates the economy would again begin to react to credit incentives it could manage. It also emphasized the need for fiscal stimulus, which would ostensibly create demand and stimulate production growth. Last month the Fed hiked overnight rates for the second time in two years and the markets expect it to hike rate three times in 2017.

  Fed rate hikes tighten credit conditions in the US and, given the continued execution of QE by other major global central banks, increase the exchange value of the dollar. A stronger dollar theoretically increases other economies’ exports into the US, provided that US consumers and businesses are able to maintain the same level of demand for foreign goods and services. This is an open question.

  Donald Trump’s election raised hope that new tax incentives, business de-regulation and Keynesian government spending will create sufficient demand. The dollar and US financial markets have reacted in sympathy with stock prices rising and bond prices falling…despite the Fed’s renewed credit tightening. A strong dollar would tend to attract global wealth to the US, wealth that theoretically could find its way into US risk assets including US equities. Thus, US equity strength since the election reflects a strong dollar, which is based on the combination of Fed rate hikes and renewed hope for US government stimulus.

  

  This is not the first time the Fed has had to actively increase the exchange value of the dollar. Paul Volcker’s Fed had to hike overnight rates to 20% in 1980-81 so the dollar would be reaffirmed as a store of global value for US trading partners, including OPEC. We believe the Fed is doing the same today, in spite of its de-stimulative impact, because it wants to attract global capital to US banks and asset markets. Doing so would ensure USD hegemony, which would be necessary if/when global leverage leads to hyperinflation and multilateral trade and currency wars. Once substantial wealth is held in dollars and dollar-denominated assets, the US political dimension and the Fed, through the BIS and IMF, would be able to control the terms of a global monetary reset, which in turn would de-leverage balance sheets across currencies and economies in a controlled manner; in effect, a pre-packaged bankruptcy in real terms.

  Nothing has changed structurally (or cyclically) since the US election. Global central banks are de-leveraging their banks through QE, with the exception of the Fed, which already did. Commercial bank liquidity and solvency is a precondition for a global monetary reset. The table is being set for more, not less, central bank intervention in the form of monetary inflation, and more intervention from the political dimension, which would choose which non-bank creditors (and debtors) will experience credit deflation.

  The markets have it wrong

  We believe fiscal measures like those being speculated about now in the US, even if successfully executed, would fail to generate meaningful new production and demand within the US and global economies. Financial markets are vulnerable to a reversal of their recent trends.

  We cannot place specific figures or exact times when benchmark equity and fixed-income indexes will reverse current trends; however, we are increasingly confident that US and global economies have begun to experience necessary structural changes that directly impact: 1) incentives to produce and consume, 2) the fundamental manner in which the political dimension approaches monetary and fiscal policies, and 3) the way in which investors think about assets, liabilities, economics and capital markets.

  The secular US fixed income bull market, which began in 1981 when the Fed embarked on what would become a forty five-year credit easing regime that benefitted, treasury, mortgage, corporate, municipal, small enterprise and consumer borrowers, and would eventually spread globally to other advanced and emerging bond markets; which allowed the US government to deficit-spend (eventually without the expectation of recourse) its way to unrivaled military might that defeated and then contained potential hostile threats abroad; which provided primary funding for bank and shadow bank lending that gave the US dollar and financial markets status as the ultimate sanctuary of global wealth; which provided a platform on which global bank and non-bank counterparties could swap contingent liabilities amounting to many times the size of underlying cash markets without fear of regulatory interference; and which provided speculators across other asset markets (including real estate) to continually sponsor unsustainable valuations, no longer produces capital or serves an economic purpose, and is almost over.

  The secular US equity bull market, which not coincidentally also began in 1981 and served as the principal funding mechanism for great advances in digital technologies, communications, finance, logistics, health care, energy, retail, and other industries; which helped raise and maintain competitive trade advantages for the US and its allies; which expanded capital expenditures, productive output and consumer demand; which helped collateralize expansive public and private credit issuance and debt assumption, in turn creating a positive feedback loop that further increased nominal production, consumption and asset prices, and which created nominal wealth for US and non-US asset holders, is also in its evanescence.

  Stock and bond markets in advanced, financially-oriented economies, have devolved more into political imperatives necessary to maintain social services and the perception of wealth, rather than serving as the traditional means to build and price wealth and capital. They no longer serve societies or global trade.

  In over-leveraged economies, stock and bond markets become co-dependent. To sustain market prices, debt and equity require nominal output growth. To sustain market values, they require real output growth. The only way to increase nominal output growth and raise nominal equity prices in a highly leveraged economy with leveraged currency is to raise the quantity of credit, which must eventually reduce real output and asset values. The question before us is whether “eventually” is occurring now.

  The primary reason we think stocks are peaking is scale. Aggregate market caps, valuations, revenues and earnings of public companies cannot be sustained by the level of real production in the underlying US and global economy. We think bonds are on the eve of reconciliation for the same basic reason: the scale of systemic leverage has already begun to reduce incentives to expand credit for capital formation, which, in turn, promotes debt deflation.

  We expect debt deflation coincident with central bank monetary inflation, which would offset the deflation…on paper (like feet in the oven, head in the freezer producing a reasonable average). Before this occurs, we expect a financial or economic event that focuses public attention on the leverage problem.

  Drilling Down

  The incentive to invest in the stock market is to build wealth, which is accomplished by generating positive real (inflation-adjusted) returns. This presents a problem looking forward. Many of the companies the market rewards most in terms of market cap drive goods and service prices lower by innovating and connecting buyers and sellers (e.g. Amazon, Facebook).

  Against this backdrop, the Fed’s economic mandate from Congress is to work towards stable prices and full employment. To do so, it has a specific annual inflation target of 2%. If the Fed is successful in this target, then it will reduce the purchasing power of US dollars by more than 64% over the next 25 years:

  

  As the table above makes clear, through its specific economic mandates and acceptance of the Fed’s 2% inflation target, the US Congress effectively promotes a decline in the value of ongoing savings earned and amassed by American labor. For investors, the policy also acts as a hurdle over which investor returns must rise to create positive real returns (i.e., wealth).

  On one hand, commercial competition is naturally driving prices lower, making goods and services more economical for producers and consumers, and equity markets are inflating the asset values of businesses that deflate prices. On the other hand, the Fed is trying to drive goods, services and asset prices higher, which would drive the purchasing power value of savings lower.

  

  Since 1998, asset prices (portrayed by the Wilshire 5000 on the graph above) have been supported in great part by Fed liquidity and debt-driven buybacks while US economic activity, (portrayed by monetary velocity), has been in secular decline. It is tough to sustain 2% inflation for very long through financial maneuverings when domestic economic activity continues to weaken. Any further inflation the Fed might help create (as it hikes rates!?) will not be demand driven, but rather the result of more financial leverage.

  It can’t persist much longer

  The current excitement among US equity and credit investors over the promise of a best-case stimulative mix of deregulation, tax cuts, and Keynesian government spending has created a very optimistic market tone. The Fed has further intimated December’s rate hike was the start of a new regime of interest rate normalization. Together, these dynamics have caused treasury yields across the curve to rise. Rising treasury yields in past business cycles have further signaled economic recovery, which has seemed to confirm to most investors that economic and equity market optimism are warranted. We disagree.

  Any fear of demand-driven goods and service inflation is un-warranted given 1) the already-leveraged nature of public and private sector balance sheets, 2) the need to perpetuate the relative strength of the dollar, and 3) the expectation of further Fed rate hikes. Even a successful multi-trillion dollar US government spending program that provides a few jobs and necessary American capital improvements could not provide sufficient consumer demand to overcome US and global balance sheet leverage and the attendant necessity to maintain US dollar strength to sustain the current monetary system.

  The graph below plots the secular decline in long-duration treasuries against the year-over-year rate of US goods and service inflation. (The gap in 30-year treasuries is due to the elimination of Long Bond issuance from August 2001 to February 2006.) We believe the rise at the extreme right of the graph representing their most recent trends is not indicative of the next big move for long-duration treasuries.

  

  Given the need to maintain the US dollar as the fulcrum of the US monetary system, the most influential input for future treasury yields has become global output, which is in secular decline. This trend is logical, established and seems to be accelerating. It is logical because the secular post-War decline in global output growth was only interrupted by the emergence over the least twenty years of large new economies like the BRICs. The continuation of that secular downward trend would make sense once those emerging economies are established. The graphs below confirm that balance sheet leverage within emerging economies have surpassed those in developed economies and that, not surprisingly, global output growth is truly struggling. As a result, we expect one last spasm that takes long-term treasury yields to new lows.

  

  

  Relevant Economics for Equity Investors

  Investors will soon be forced to better understand the macro world around them. The perception of the deflation/inflation metric should determine near term and secular debt and equity market directions.

  Prices are determined by supply/demand equilibriums – where the supply of goods, services, labor and assets meets the demand for each. This is theoretically true in classical economics. However, in the current flexible exchange rate monetary system administered by banking systems and the political dimension (i.e., a fiat regime), both supply and demand are determined by the prevailing quantity of credit available to producers of supply and the quantity of credit available to consumers who create demand. (Credit is simply a claim on base money, which is created by central banks.)

  The most insipid structural problem threatening economic vitality and equity market returns is public and private sector leverage. High and rising debt-to-GDP ratios, which threaten economic liquidity, and high and rising debt-to-base money ratios, which threaten balance sheet solvency, must eventually be reconciled. Aging demographics within the world’s largest economies is accelerating the timing of the necessary reconciliation, which must occur through debt deflation, monetary inflation, or both.

  Thus, investors seeking to create wealth by investing in broad equity markets face a fundamental structural problem caused by the irreconcilability of 1) naturally occurring commercial deflation, 2) economies and political systems that rely on inflation, and 3) the crowding out of consumption and investment by necessary debt service.

  

  Consider the 2% inflation target established by the Fed and accepted by most political economists. See table, page 4.) The target ostensibly limits the annual loss of purchasing power to 2%, and therefore it is generally thought that having such a target is in the best interest of American workers. Such an argument is inaccurate, naïve and disingenuous. As the graph on the previous page shows, the Fed was unable to cap goods and service inflation when energy prices spiked from limited supply in the 1970s, and unable to cap inflation at 2% throughout the credit-led secular bull market in corporate and property equity in the 1980s, 1990s and 2000s.

  Goods and service inflation more recently has struggled to rise to 1.7%, where it stands today. A 2% inflation target has shifted from a target to preserve the purchasing power of the dollar to a target to ruin it. Nowhere in the public discussion has this been mentioned. As discussed above, we think the Fed’s “fear of inflation”, which is ostensibly driving the new rate hike regime, is a necessary public narrative that will let the Fed pursue its true objective – a stronger dollar and deflation amid a contracting real economy.

  Even if US domestic economic activity were to somehow reverse its secular downtrend enough to warrant current equity valuations, it is difficult to conceive how much more asset prices could rise – especially in real terms. Simple math, anachronistic economic policies and poor demographics pose insurmountable barriers for creating wealth through public share ownership. (We further discussed the current negative implications of over-valuation and the negatively convex nature of equity markets in The Grift.)

  Can the Establishment really be that wrong?

  In classic economics, both employment and inflation are derived from production. Political economists, a moniker that defines the academic discipline from which the great majority of contemporary economists spring, argue that a fully-employed labor force suggests that rising labor inflation will lead to rising goods and service inflation. Thus, the Fed is trying to raise rates currently, citing the second Fed mandate – full employment – which threatens stable prices. The ultimate policy goal is to protect the US (and global) economy from shrinking.

  According to logic and classic economics, there is nothing wrong with a shrinking economy. Why? Because an economy should shrink commensurate with a rise in leisure time. Seriously. An economy is theoretically supposed to serve its factors of production. The more economical it is, the more leisure time it produces for its participants. (We suspect economies are called “economies” because they were formed naturally as systems that actually economized.)

  In such an economy, only theoretical today, deflation would be a good thing because it would increase the purchasing power value of savings produced from past labor. In fact, an increase in deflation (i.e., an increase in declining prices) would actually raise real (inflation-adjusted) GDP because the gain in the dollar’s purchasing power from deflation would offset the declining volume of goods and services (nominal GDP). (We suspect this fundamental economic truth is the reason Congress’s mandate to the Fed includes only stable prices and employment, and not economic growth.)

  The graph below shows the decline in the American work force since 2000. It should not strike you as alarming, given 1) all the great new innovations and technologies replacing human capital and 2) the expansion of global human capital from emerging economies. Tell us again, we ask sarcastically, what “full employment” is?

  

  Market cap-weighted indexes notwithstanding, it may be worthwhile here to ask yourself again why an increase in the majority of US equity shares is generally perceived as a given as the US economy becomes more efficient.

  Why it is all about the Dollar Now?

  In today’s global monetary system, currencies are tranched liabilities of: 1) commercial banks that create deposits through the lending process; 2) central banks on the hook to collateralize member commercial banks that create deposits and credit without commensurate reserves or circulated currency (base money), and; 3) treasury ministries that ask constituent factors of production to have faith that its taxing authority and, as has been demonstrated throughout history, its ability to wage war to loot enough resources outside its taxing domain to protect its currency’s purchasing power value.

  As liabilities without directly-linked offsetting assets, the purchasing power value of currencies are always susceptible to dilution. Dilution comes in the form of credit issued by banks (and, potentially, non-bank lenders) that is either not collateralized by assets or collateralized by assets that themselves are liabilities (like Treasury notes). The wider the gap separating the amount of un-collateralized credit denominated in a currency from that currency’s base money (bank reserves and currency in float) – the ratio that determines monetary leverage – the greater the amount of future monetary de-leveraging will have to occur. (De-leveraging must ultimately occur so that debtors can service or repay their obligations and so producers have incentive to continue to supply goods and services in exchange for that currency.)

  We expect global monetary authorities to protect the dollar as long as they can and we expect them to fail. Stocks and bonds will react violently; stocks and weak credits falling, treasuries prices rising (at first). That failure will lead to hyperinflation – not driven by demand, but rather by central bank money printing. A new global monetary understanding will then emerge.

  We expect weak equities and a strong treasury market in 2017, as they begin to discount this fundamental structural shift.

  

  

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• Europe Proposes Confiscating Gold In Crackdown On "Terrorist Financing"

  Hot on the heels of China gold import restrictions, and India's demonetization and gold confiscations, The European Commission proposed tightening controls on cash and precious metals transfers from outside the EU under the guise of shutting down one route for funding of militant attacks on the continent, following the Berlin Christmas attack.

  China has already begun de facto gold import restrictions, and as Jayant Bhandari detailed previously, India is experiencing a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization. There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow.

  

  And now, as Reuters reports, it appears last Monday's attack on a Christmas market in Berlin, where 12 people were killed as a truck ploughed into a crowd, has given The European Commission just the excuse to tighten capital controls – specifically cash and precious metals – into and out of Europe.

  It is part of an EU "action plan against terrorist financing" unveiled after the bombings and shootings in Paris in November 2015.

   

  Under the new proposals, customs officials in European Union states can step up checks on cash and prepaid payment cards sent by post or in freight shipments.

   

  Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU.

   

  People carrying more than 10,000 euros (8,413.56 pounds) in cash already have to declare this at customs when entering the EU. The new rules would allow authorities to seize money below that threshold "where there are suspicions of criminal activity," the EU executive commission said in a note.

   

  EU officials said some of the recent attacks in Europe were carried out with limited funds, sometimes sent from outside the EU by criminal networks.

  The Commission is also considering whether to set up an EU-focussed "terrorist finance tracking programme" along the lines of the U.S.-EU TFTP, which has long been opposed by EU lawmakers and privacy campaigners because it allows widespread checks on consumers' bank transfers.

  The plan complements Commission proposals after the Paris attacks to tighten controls on virtual currencies such as bitcoin, and prepaid cards, which French authorities said were used to fund the bombings.

   

  EU states backed these proposals on Tuesday. Under the deal, which still needs European Parliament approval, holders of prepaid cards would have to show some form of identity when they make payments of 150 euros or more.

  But it gets better…

  The Commission is also proposing common rules for the 28 EU countries on freezing "terrorists' financial resources" and on confiscating assets even from those thought to be connected to criminals.

  So – cash, bitcoin, precious metals, and prepaid cards over $150 are all instruments of the "terrorists" and are now open to confiscation if you are a suspicious person… which, by their rhetoric, you are if you actually hold any of these assets.

  

  

• How The Crackdown On Patriots Will Occur: "Dissent Will Become Unthinkable"

  Submitted by Mac Slavo via SHTFPlan.com,

  

  Despite the rise of populism and a resurgence of American values, it has become more dangerous than ever to speak out. A new war on patriots has begun…

  In the visible future, Americans may see real tyranny take hold at home. The deep state, which operates both inside and outside of the official channels and independently of presidents and Congress, is waging a war against the constitutional rights, financial independence and the rugged individualism that has allowed freedom to exist to a certain degree in this country.

  Speaking out as a patriot – despite the sense of victory in the people with the election of Donald Trump – has never been more dangerous.

  This is the time when people will start to disappear. But it begins digitally….

  While a major event is likely to take place in the next several years that could justify red level action on the ground to raid, round-up and re-shelter patriots and prominent voices in the alternative media may well take place in an American future – and has historically taken place in several notable regimes – it is more likely to happen online.

  The forum of social media on the internet is not only shutting down outlawed opinions, but it is also re-educating the populace about what is acceptable to think. It is doing more to reprogram the mind than TV ever could. Algorithms for censorship mean that dissent will no longer be heard by many people. Mere association with outlaws and undesirables will hurt social and credit scores, and society is likely to cluster around redundant groups of safe speech and like viewpoints reinforced by a narrow band of news coverage.

  You will see individuals in the news who are labeled as domestic terrorists; some of them will have done nothing more than spoken out against the system. The NDAA and, now, the

  BLEACHING PUBLIC OPINION

  Wash and rinse, concentrating down certain artificial attitudes, and bleaching out the undesirable ones. This has been an objective of the CIA, the State Dept., US AID and other government agencies for decades now.

  Television programming, radio broadcasts, leaf-letting and other forms of propaganda are dissemintated, both here and at home, and routinely carry pro-state messages. The coordination of public thought and discourse is alarming.

  

  Here’s a theory: Maybe the TV will only show you what you’re allowed to believe. Political pundits already have a name for this concept: the Overton window.

  A shift in the “window of discourse,” known as the Overton window determines what the public will accept. Will any political question, the two opposing viewpoints, and all the middle ground, will fall within the accepted plane of thought, no matter how vehemently there are cries of right or left, yes or no, less or more, tyranny or freedom. Wikipedia summarizes:

  The Overton window, also known as the window of discourse, is the range of ideas the public will accept. It is used by media pundits. The term is derived from its originator, Joseph P. Overton (1960–2003), a former vice president of the Mackinac Center for Public Policy, who in his description of his window claimed that an idea’s political viability depends mainly on whether it falls within the window, rather than on politicians’ individual preferences. According to Overton’s description, his window includes a range of policies considered politically acceptable in the current climate of public opinion, which a politician can recommend without being considered too extreme to gain or keep public office.

  Because the public perceives that it has been offered multiple choices, individual members of the public take stake in whichever view – confined within that acceptable window – best fits theirs. But they lack perception of the shifts in direction that window has taken; they have forgotten all previous attitudes – or regard them as taboo or ridiculous.

  Right now, the biggest shift in the Overton window is happening on social media. Facebook and Google are leading the charge, hiring new hit teams to flag and censor news.

  Because it all works on algorithms, the “window” effect becomes literal, rather than just figurative. News and information that falls outside of the acceptable range of view is simply not seen by the public – it is hidden from view, and omitted from search results.

  Yet increasingly, Facebook accounts, Google credentials and etc. are needed for identification, transactions, etc. Banking and commerce is leaning towards becoming completely digital. Cash controls have begun in the United States and abroad.

  This is where prepping, patriotism and independence has begun to be outlawed. Politically-correct speech is now just programmed into the system.

  Electricity and data are now intertwined. Smart meters, smart grids and smart appliances go together and make tracking built in. The concept of digital footprints expands…

  OUTLAWING DISSENT & INDEPENDENCE

  In the next two decades – independence will be ferreted out.

  While a truly free spirit can never be crushed, they are making it harder than ever to go rogue in occupied America.

  Living off the grid has been criminalized in many places, and strongly discouraged in most, with codes leading to conformity in the real world. True individuals are few and far between, but the struggle goes on.

  Pockets of resistance continue to be met with public relations problems and threats of government raids. Malheur and Bundy Ranch have offered a glimpse into what may be ahead; Waco and Ruby Ridge provide examples from the past.

  Patriots will endure… but in the coming years, they will either work inside the system – where hackers and whistle blowers have become traitors – or operate outside of its boundaries altogether. Patriots will need people on the inside and outside.

  Individuals will be rounded up through police encounters; speech will flag people as dangerous, and arrests will be made in conjunction with domestic disputes, nosy neighbors, false reports, etc. Database “pings” will pre-mark dissenters for detention or prison.

  Patriots have been marked for suspicion, and so have the symbols that express those positions. Beware in how you are seen, particularly, if there is a need to stay below the radar and avoid detection. Unless you have shielded your identity, your past actions and words could give you away.

  

  The system places patriots under suspicion, and closely monitors independent, unaccountable actions… because they are control freaks.

  A COMING CIVIL WAR

  A civil war is being created as a response from the system to maintain long-term dominance through banking and information management.

  Meanwhile, they will be coming for those who are speaking out. The only question is when.

  As Michael Snyder reported:

  According to a senior government official who served with high-level security clearances in five administrations, “There exists a database of Americans, who, often for the slightest and most trivial reason, are considered unfriendly, and who, in a time of panic, might be incarcerated. The database can identify and locate perceived ‘enemies of the state’ almost instantaneously.” He and other sources tell Radar that the database is sometimes referred to by the code name Main Core. One knowledgeable source claims that 8 million Americans are now listed in Main Core as potentially suspect. In the event of a national emergency, these people could be subject to everything from heightened surveillance and tracking to direct questioning and possibly even detention.

  War will be asymmetrical, and physical conflict will be balanced with cyber engagement of public perception.

  As resistance continues, the liberty contingent will have to be wary of an evolving threat matrix that seeks to use technology as a means of control.

  Above all, recognize that the system will phase in their control gradually – it is this seamless shift of perception, stretched out over time, that is its greatest weapon.

  HOW TO DISAPPEAR COMPLETELY

  Identity protection will be crucial, and use of technology should reflect the state of the art of surveillance.

  If you want to get yourself totally outside of the system, and stay there, it will be increasingly difficult to do, but not impossible.

  Sargent Survival at BeSurvival.com has some very solid tips for making this a reality. Here are just a few, but read them all and be thorough about your process:

  • There are 30 million plus surveillance cameras on the US, one camera for every ten Americans.
  • The average American is in 200 databases.
  • Putting a plan in motion to keep you from being tracked is a good idea if you want to devise a new life for yourself

  • Right before you leave, change your appearance significantly
  • Before you leave, terminate all of your accounts (email, bank accounts, credit cards, etc).
  • Don’t terminate your social network sites as you can use these sites to provide disinformation.
  • Before you leave, delete all of your computer files and get rid of your computer’s hard drive  – boil; smash; run a Degausser/ electromagnetic wand
  • Get rid of all of your personal items like photos, trophies, mementos, etc. that could tie you to your old life.
  • Get rid of your cell phone or tablet as these can be easily used to track your location

  • Break your normal patterns (what you eat, where you frequent, how you shop, the kind of work you do, etc).
  • Completely change your lifestyle [and employment]
  • Pay for everything with cash.
  • Avoid frequenting your usual places
  • Ditch your car and find a substitute; get rid of the toll pass which can track your movements

  • To determine the best place to resettle, choose a mid-sized city in a not overly cold place. Big cities and small towns are not good places for anonymity because of all the cameras.
  • To change your identity … petition the court to change your name legally to a new–and common–name.
  • Apply for a driver’s license under your new name.

  • Buy a basic pre-paid cell phone (not a smart phone). Replace the pre-paid phone frequently, about every 2 weeks.
    When you are not using the cell phone, remove the battery
  • To get back online use a new laptop. Stay away from libraries!
  • Always use a hard wire to your laptop and turn off the wi-fi; reroute your ip address so your location can’t be determined
  • Be aware of the NSA spying and the ECHELON program in the US which monitors phone and computer transmissions for keywords and messages.
  • The police now consider common activities suspicious such as bird watching, sketching or painting, or taking photographs in public.
  • There are 70+ FUSION centers in the US which coordinate surveillance and other information.
  • Technology is now available to identify you by the way you walk, your facial measurements and biometrics
  • It will be 7 to 10 years before your old identity drops off of databases, if ever.
  • The less you interface with technology, the better off you will be.

  In the next few years, you must make careful decisions about when you will and will not engage the system, use technology, or participate in society.

  Freedom will not be compatible with the digital control grid; it will endure in ways that out think the constraints that have been placed on us, in whatever way it can.

  

  

• CNBC's John Harwood Blames "White Fear" For Democrat Losses Under Obama

  In the months leading up the 2016 election, daily WikiLeaks dumps repeatedly exposed CNBC’s John Harwood as nothing more than a pawn of the Hillary Clinton campaign who constantly behaved like a subservient puppy who would stop at nothing to garner his master’s love and affection (see our posts on the topic here and here).  And while the embarrassment of being exposed as a complete fraud would be sufficient motivation for most people to actually start performing their jobs with some level of integrity, John Harwood is apparently immune to the side effects of public humiliation that afflict the masses.

  As the latest testament to his extreme impartiality as CNBC’s chief Washington Correspondent, Harwood sent out the following tweet storm aimed at all of “those making [the] silly argument that Obama hurt [the] Democratic Party” to confirm, once and for all, that “white fear” (aka racism) was responsible for democratic losses in Congress under Obama’s leadership and not his failed policies. 

  for those making silly argument that Obama hurt Democratic Party: last 5 presidents have left both houses of Congress in opposition hands

  — John Harwood (@JohnJHarwood) December 27, 2016

  drivers of D casualties under Obama: a) depth of financial crisis/Great Recession b) accumulated angst over 30-year income stagnation 1/2

  — John Harwood (@JohnJHarwood) December 27, 2016

  drivers of D casualties under Obama: c) effective/unified R opposition, esp to ACA; d) Obama’s race amid white fear of cultural change 2/2

  — John Harwood (@JohnJHarwood) December 27, 2016

  among 2-term presidents, Clinton/Bush/Obama all began w/both houses of Congress run by their party, saw both flip. Reagan had & lost Senate

  — John Harwood (@JohnJHarwood) December 27, 2016

   

  If true, perhaps Mr. Harwood could explain to us why the “racist” and “angry” white people of Michigan, Wisconsin and Pennsylvania voted for Obama by margins of 10-20 points in 2008 before suddenly turning on Democrats in 2016?  Did those people who voted overwhelmingly for the first black President in U.S. history in 2008 suddenly become racists over the course of 8 years?  Or, is it just maybe possible that those people were disappointed that Obama’s “Hope and Change” rhetoric turned out to be nothing more than a pretty speech by yet another superficial politician?

  

  

• India's Prime Minister Has Singlehandedly Crushed The Economy With His Reckless Cash Ban

  Submitted by Mike Krieger via Lberty Blitzkrieg blog,

  

  Today’s piece should be seen as a bit of a followup to yesterday’s post, India’s Demonetization Debacle Highlights the Dangers of Monetary Monopoly. While yesterday’s piece was more philosophical/strategic in nature, today’s zeroes in on some of the devastating real world impacts of Narendra Modi’s insane and inhumane cash ban. It’s hard to overstate the damage this policy has done to India’s economy. Modi is quickly solidifying his place as one of monetary history’s biggest idiots.

  First, let’s take a look at the destructive impact the move has had on India’s massive small businesses community. The Washington Post reports:

  NOIDA, India — Over the past two years, this suburb of New Delhi mushroomed into a flourishing enclave of small cellphone manufacturers, attracting tens of thousands of workers from the countryside. Noida, known as the “handset hub,” was touted as a showcase for Prime Minister Narendra Modi’s pet “Make in India” initiative.

   

  Then on Nov. 8, Modi’s government took a step that has jolted the bustling industrial quarter. It scrapped high-denomination currency, with a view, officials said, to curbing illicit wealth and the financing of terrorism. But the cash shortage triggered by the move has also curbed legitimate small enterprises. Many of Noida’s manufacturing units have slashed production by nearly half, and more than a quarter of the workers have gone back to their villages.

   

  “It was a booming sunrise industry before November 8th. Not now,” said Vipin Malhan, president of the Noida Entrepreneurs Association, who also runs a business that makes cellphone accessories here. “Many small factories and assembling units, which used to work round-the-clock, with three shifts, have scaled down to just a single shift. We are all in shock now. One word that businesses dread is ‘uncertainty.’ The government has thrown that at us.”

   

  Several small- and medium-scale industrial clusters, employing a total of more than 80 million people across India, are reporting declining sales, production slowdowns and layoffs since bills worth 500 and 1,000 Indian rupees were invalidated (500 Indian rupees is worth about $7.40). Towns famous for weavers, lockmakers, power looms, bicycle-parts manufacturers, ready-made garments and handicrafts face rising inventories of unsold goods.

   

  Even large car manufacturers have halted production in some of their factories for several days because of a sharp dip in consumer spending. And in a reflection of the belt-tightening that has accompanied the general sense of uncertainty, credit card companies have posted a decline in the total value of transactions, even as the cash shortage is forcing people to use their cards more.

   

  “We started hearing murmurs that there were no fresh orders from the market. That our raw material was stuck because we could not pay. Stocks were piling up,” said Sudhir Ramphool Singh, 33, who lost his job at a cellphone assembly unit in Noida and returned to his Dharavu village in northern India this month. He is the sole breadwinner for his family of seven. “Production slowed. The unit was shut down for 10 days. When it reopened, many of us were asked to go.”

   

  With the large bellwether state of Uttar Pradesh slated to hold elections early next year, the business slump — and the lines at the banks — have become campaign issues.

   

  “Forget about creating new jobs. Modi’s decision is taking away people’s jobs,” the opposition Congress party leader, Rahul Gandhi, said at a public meeting this month.

   

  Modi has urged people to adopt digital payment methods and bear some pain to support the long-term goal of rooting out corruption.

   

  Mishra’s office is conducting 50 training sessions every day in small industrial hubs to help residents transition to cashless transactions. But many business owners in these clusters say it is not easy to change because daily wage laborers do not accept checks and do not have smartphones with Internet.

  Well done Modi.

  Last week, about 200 business executives in Ludhiana staged a sit-in against the cash-swap decision, calling it “ill-conceived.” They even formed a “stick brigade” and are threatening to beat tax officers who show up to “scrutinize our books needlessly and harass us.”

   

  In the country’s largest textile town, Bhiwandi, in western India, more than 2 million power looms used to operate round-the-clock. Countless machines are silent now.

   

  “The cash shortage has come as the latest blow to the industry that was already hit by global competition. Fifty to 60 percent of power looms have shut down, and more than 150,000 workers have gone back to their villages,” said Rashid Tahir Momin, whose family owns about 400 power looms.

  Naturally, this is just the tip of the iceberg. The Indian diamond market has also been thrown into total chaos.

  As Reuters reports:

  The global diamond industry is facing disruption that could stretch through the first few months of next year, including Valentine’s Day in February, as a result of Indian Prime Minister Narendra Modi’s radical move to abolish most of the nation’s cash overnight.

   

  In the western Indian city of Surat craftsmen usually spend 10-12 hours a day in small mills or grimy sheds cutting and polishing 80 percent of the world’s diamonds but the business is based on cash and the demonetization of the high-value banknotes from Nov. 8 has prevented many from operating. Thousands of diamond brokers in the area’s narrow lanes are also doing little business.

   

  In India, jewelry demand typically climbs in the winter months’ wedding season. But this year sales are plunging as nearly two-thirds of jewelry is usually purchased with cash, which is in short-supply.

   

  Ishu Datwani, owner of Mumbai-based Anmol Jewellers, says his sales are down nearly 70 percent since the government scrapped the high-value notes.

   

  The demand is unlikely to revive any time soon as India struggles to dispense enough new notes, industry officials say.

  Let this be a lesson to all of us regarding the dangers of centralized power. There’s no reason we should ever allow ourselves to be in a position where the foolish, capricious actions of one man can have such a devastating impact on an economy of more than one billion. This is precisely why we need to move toward a more decentralized way of living and discard many of the archaic, unnecessary and harmful institutions of the past.

  

  

• Post-Christmas Chaos Strikes America's Malls: SWAT, Gunfire, & Mass Brawls From Texas To New Jersey

  Two days ago, we reported that heading into Christmas, countless “mall brawls” had broken out across America’s as last minute holiday shoppers were filmed fighting with each other in shopping malls in New Jersey, Alabama, Georgia and other states for those last minute “holiday cheer” purchases. The videos made for for a very Unmerry Christmas.

  Now, in the spirit of holiday symmetry, following the one day lull on Christmas Day, the brawls returned on the day after Christmas, with fights, disturbances and false reports of gunfire causing chaotic scenes and shutting down several malls across the United States on Monday, as shoppers scrambled for the best deals in the typically busy post-Christmas shopping day.

  The first calls from the The Mills at Jersey Gardens came in just after nightfall Monday. Witnesses said they thought they had heard shots fired. That, along with a fight, led to what Elizabeth police Officer Greg Jones described as a “chaotic panic and everybody running all at once.”  Eight to 10 people suffered minor injuries during a melee in the food court at the Jersey Gardens malls the mayor there said on Twitter.

  Panic followed when someone shouted “gun,” after a chair hit the ground, causing a loud noise in the mall’s food court, Elizabeth Mayor Chris Bollwage tweeted.

  

  The incident led to a SWAT team with riot shields and body armor raiding the mall, while shoppers either ran or hid in stores. No weapons were found and no-one was arrested.

  Photos and video clips posted on social media showed heavily armed police officers responding to the incident as shoppers raced to exits and alarms rang out inside the mall.

  Similar disturbances unfolded across the United States on Monday at malls that were packed with shoppers returning gifts, using gift cards they received over the holiday weekend or simply searching for clearance deals. Many involved calls of shots being fired and youths fighting. It was unclear if the incidents were connected.

  As Reuters reports, a large fight between teenagers broke out in the food court at the Cross Creek Mall in Fayetteville, North Carolina. Police fielded several unconfirmed reports of shots fired, said a Facebook post by the Fayetteville Police Department, which also said the mall was evacuated.

  
  The Cross Creek Mall in Fayetteville, North Carolina, was evacuated as police arrived
  to break up the fight. Claims were made that shots were fired.

  “Once people start running in that area or chairs are getting knocked over, tables, that sort of thing, that echoes and it could resemble the sound of a gunshot to a lot of people,” he said.

  Ref Cross Creek Mall. Reported shots fired. Unconfirmed. No shooting victims or property damage. Mall made the decision to evacuate, not PD

  — Fayetteville Police (@FayettevillePD) December 26, 2016

  The Hulen Mall in Fort Worth, Texas, was on lockdown, Fort Worth police said on Twitter. The CBS website there reported that police said officers responded to reports of gunshots but arrived to find that several fights had broken out involving 100-150 people. There were no injuries, police said.  Fort Worth Police spokeswoman Tamara Velle said officers initially responded to reported gunfire inside the mall. After breaking up the fights, officers stopped by each store to let people leave while the lockdown remained in effect, KTVT reported.

  hulen mall wild for this one lmao pic.twitter.com/4rD4ZO5h1H

  — cyn ???? (@CyNinja) December 27, 2016

  At least one fight shut down the Fox Valley Mall in Aurora, Illinois, late on Monday, and police were called to quell the disturbance, the Chicago Daily Herald reported, citing managers of businesses in the building.

  Online videos showed uniformed personnel directing mall patrons out of the building and customers fleeing down an escalator. Police and mall management could not be reached for comment.

  
  Hundreds of people (left) were in the vicinity of a food court brawl (right) in the
  Fox Valley Mall in Aurora, Illinois. Seven juveniles were arrested in the fight

  In Memphis, Tennessee, seven people were arrested after incidents at two malls, CNN affiliate WMCA reported. Police said a group started a disturbance in the Wolfchase Galleria food court and started running, which prompted some customers to call 911, according to Fox 13.

  
  Cops at Wolfchase Mall in Memphis removed both adults and juveniles.

  
  An officer leaves Oak Court Mall in Memphis, Tennesse where police were called
  after a fight broke out and reports were made of shots being fired.

  Then a crowd gathered outside Oak Court Mall, about 10 miles west, and
  started a disturbance, WMCA said. Both malls were cleared and closed
  early for the night.

  
  Visitors to Oak Creek Mall linger in the parking lot outside as police patrol the area

  The Town Center Aurora in Aurora, Colorado, was also closed early after multiple skirmishes were reported inside the mall, the Aurora Police Department said on Twitter.

  
  Teens were tackled by cops at the Aurora Mall in Colorado. There were several
  large fights ‘involving juveniles’, cops said

  Aurora PD spokesman Sgt. Chris Amsler said about 100 people had gathered in the food court before the brawls broke out — prompting the Colorado mall to close early on Monday afternoon. “(It) kind of morphed into this large disturbance,” Amsler said.

  When off-duty police officers working as security guards tried to break up a fight, people circled the officers, who called for backup, Amsler said. As police officers on duty arrived, fights broke out throughout the mall, at a movie theater and at a nearby park-and-ride lot, he said. He estimated 500 people were involved. Authorities arrested five people, all juveniles, and recovered no weapons, he said. One person assaulted at the park-and-ride lot suffered “significant” injuries and was taken to a hospital, Amsler said.

  The mall is closing early this evening due to a disturbance. No immediate threats exist. We will open tomorrow at 10 a.m.

  — Town Center Aurora (@TCAurora) December 27, 2016

  In Monroeville, Pennsylvania, seven people were arrested after incidents at two malls, CNN affiliate WMCA reported. Police said a group started a disturbance in the Wolfchase Galleria food court and started running, which prompted some customers to call 911, WMCA said. Then a crowd gathered outside Oak Court Mall, about 10 miles west, and started a disturbance, WMCA said. Both malls were cleared and closed early for the night.

  Shots were reported in both incidents, but police said they found no evidence of gunfire, WMCA said. No injuries were reported, CNN affiliate WATN said.

  Police put the Arizona Mills mall in Tempe, Arizona, on lockdown after reports of shots fired inside the shopping center. Two people, including a juvenile, were arrested after two fights broke out at the mall, an ABC affiliate reported.

  In Beechwood, Ohio, a juvenile was arrested for hitting a police officer after police used pepper spray to break up a fight that started about 6:30pm near a food court. Crowds were seen falling over themselves in a stampede towards the exits at the Beechwood Place mall, which went into lockdown as police investigated. Officers initially responded to the scene for a report of shots fired. Police later confirmed that there were no gunshots.

  
  Shoppers rush into a wild stampede at the Beechwood Place Mall after a fight broke
  out and someone shouted – incorrectly, police said – that a gun had been drawn

  Fire officials say a man and a police officer were exposed to the pepper spray and received medical treatment. No one else was injured. John Boyd, the 19-year-old who was hit with pepper spray, described the sensation to Cleveland.com.  ‘My face burned… it went into my skin,’ Boyd said. ‘My whole body burned.’ It wasn’t clear what caused the fight, but police told USA Today that the incident had apparently been ‘loosely organized on social media’.

  Finally, a fight at The Shoppes at Buckland Hills mall in Manchester, Connecticut, led to the mall being evacuated around 5:30pm, according to police. Video shows boys throwing swift jabs at one another while other youths crowd around to watch.

  ‘Up to ten’ teenagers were involved in the fights, according to police. One police officer was assaulted while trying to break up one of the first fights, authorities said, but didn’t seek medical attention.

  
  Crowds peered through glass as boys threw punches at one another in The Shoppes
  at Buckland Hills mall in Manchester, CT. Several boys were arrested

  There were several hundred teens in the mall when the fights broke out, and several were arrested, Manchester police Captain Chris Davis said on Twitter. There were no weapons involved and no sign that the fight was gang related, police said.  It’s not known whether the rash of incidents across the country were coordinated in any way, or were just coincidental.

  

  

• Things That Make You Go Hmm… Like The Death Of The Petrodollar, And What Comes After

  Excerpted from “Get It. Got It. Good” by Grant Williams, author of “Things That Make You Go Hmm…”

  

  The story begins in the 1970s when Henry Kissinger and Richard Nixon struck a deal with the House of Saud — a deal which gave birth to the petrodollar system.

  The terms were simple The Saudis agreed to ONLY accept U.S. Dollars in return for their oil and that they would reinvest their surplus dollars into U.S. treasuries.

  In return, the U.S. would provide arms and a security guarantee to the Saudis who, it has to be said, were living in a pretty rough neighbourhood. As you can see, things went swimmingly (chart below)

  

  Saudi purchases of treasuries grew along with the oil price and everyone was happy.  (We’ll come back to that blue box on the right shortly)

  The inverse correlation between the dollar and crude is just about as perfect as one could expect (until recently that is… but again, we’ll be back to that).

  

  And, as you can see here, beginning when Nixon slammed the gold window shut on French fingers and picking up speed once the petrodollar system was ensconced, foreign buyers of U.S. debt grew  exponentially.

  Having the world’s most vital commodity exclusively priced in U.S. dollars meant everybody needed to hold large dollar reserves to pay for it and that meant a yuuuge bid for treasuries. It’s good to be the king.

  

  By 2015, as the chart on the next page shows quite clearly, there were treasuries to the value of around 6 years of total global oil supply in the hands of foreigners (if we assume a constant 97 million bpd supply which I think is a pretty reasonable estimate).

  Now… with that brief background on the petrodollar system, here’s where I need you to stick with me. I promise you it’ll be worth the mental effort

  Ready? Here we go.

  Now, back in 2010, then-World Bank President Robert Zoellick caused something of a commotion when he suggested that an entirely new global monetary system maybe wasn’t such a bad idea.

  The system he had in mind involved a freely-convertible Yuan and, controversially was constructed around gold as its central reference point:

  (Robert Zoellick, November 8, 2010): …the G20 should complement this growth recovery programme with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account.

   

  The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old  money, markets are using gold as an alternative monetary asset today.

  In seemingly unrelated news, two years later, Iran began accepting Yuan in payment for its oil amid US sanctions. The transactions were conducted through Russian banks:

  (Financial Times, May 2012): Iran is accepting renminbi for some of the crude oil it supplies to China…

   

  …Tehran is spending the currency, which is not freely convertible, on goods and services imported from China…

   

  The trade is worth as much as $20bn-$30bn annually according to industry estimates…

   

  The renminbi purchases began some months ago…much of the money is transferred to Tehran through Russian banks, which take large commissions on the transactions…

   

  Beijing has been trying to get its trading partners to use the renminbi, in effect transferring the exchange rate risk to its counterparties, since the price of crude is set in US dollars. It also frees Beijing of the need to hold as many dollars in its reserves.

  The crucial part of this deal was that, by diversifying their purchases in this way, the Chinese had found a path towards not only needing to hold fewer U.S. dollar reserves, but to circumventing the petrodollar system altogether.

  By 2013, the penny had clearly dropped at the PBoC who declared an end to the era of their accumulation of U.S. treasuries:

  (Bloomberg, November 2013): The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.

   

  “It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range

  Yes, it was, apparently “no longer in China’s interest” to accumulate foreign exchange reserves.

  Sure enough, in 2014, global FX reserves began to decline at the fastest rate in 80 years as you can see from this chart:

  

  That same year, another piece of the puzzle was laid in place when Xu Luode, the Chairman of the newly-founded Shanghai Gold Exchange, explained that gold would be priced and sold in Yuan as a step towards what he called the “internationalization of the renminbi” (for those of you confused by Yuan and Renminbi, just think of them as the Chinese equivalent of ‘Pound’ and ‘Sterling’):

  (Xu Luode, Speech to LBMA, May 2014): Foreign investors can directly use offshore yuan to trade gold on the SGE international board, which is promoting the internationalization of the renminbi…

   

  Shanghai Gold will change the current gold market “consumption in the East priced in the West” situation.

   

  When China will have a right to speak in the international gold market, pricing will get revealed…

   

  Interestingly, Luode acknowledged what he accurately described as the “consumption in the East, priced in the West” situation and assured the world that the ‘real’ price of gold would become apparent once China took its rightful place at the centre of the gold market.

  We can but hope he is correct. When that day comes, the change on the world’s gold markets will be unprecedented.

  In 2015, another announcement slipped by the world when it was revealed that Russia’s Gazprom would also begin selling oil to the Chinese in exchange for yuan and that they were negotiating further agreements to use rubles and yuan to settle natural gas trading directly, without the need for dollars:

  (Moscow Times, June 2015): “Two state energy companies, gas producer Gazprom and its oil arm Gazprom Neft, said they would use more Chinese currency in trade, while Russia’s largest bank, Sberbank, has also promoted the use of the yuan…

   

  Gazprom Neft announced that it began settling shipments of oil to China in yuan. And previously, the head of Gazprom, Alexey Miller, said in a TV interview that the company was negotiating with China to use yuan and rubles for gas deliveries via a planned pipeline in Western Siberia.

  OK… hands up if you’re still with me… great!

  Oh… you’re reading this so I can’t see you but hopefully you’re following the dots…

  For those of you who aren’t, here’s a little recap of where we are so far to help you get things into the right order before we push on to the end:

  

  Get it? Got it? Good.

  So… here we are, in 2016 and, as it turned out, April was a hell of a month if you were paying attention.

  Firstly, the Saudis threatened to sell almost a trillion dollars of U.S. assets—including over $300 billion of treasury bonds—should a bill be passed by the congress allowing the Saudis to be held responsible for the 9/11 attacks:

  NY Times, April 16, 2016): Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the 9/11 attacks.

   

  Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi would be forced to sell up to $750B in treasury  securities & other assets in the US before they could be in danger of being frozen by American courts.

  In a rare show of bipartisanship, the bill was subsequently passed before being vetoed by President Obama who then had to watch in ignominy as he suffered the first veto override of his presidency.

  Just days later, the Saudis were the cause of a seemingly surprise failure by OPEC to agree a production cut as the oil price languished in the low-$30s:

  (Wall Street Journal, April 17, 2016): DOHA, Qatar—Oil producers that supply almost half the world’s crude failed Sunday to negotiate a production freeze intended to strengthen prices.

   

  The talks collapsed after Saudi Arabia surprised the group by reasserting a demand that Iran also agree to cap its oil production.

   

  Oil prices had rallied in recent weeks on speculation that Saudi Arabia might successfully lead an initiative between members of the Organization of the Petroleum Exporting Countries and Russia, which joined the talks. 

   

  A deal would have marked a new level of cooperation between non-OPEC countries and OPEC members that producers hoped would keep prices above January lows of $26 a barrel.

  Just 48 hours after that surprise, the Chinese finally launched their twice daily gold fixing, setting the price at 256.92 yuan per gram:

  (Bloomberg, April 19, 2016): China, the world’s biggest producer and consumer of gold, started a twice-daily price fixing on Tuesday in an attempt to establish a regional benchmark and bolster its influence in the global market.

   

  The Shanghai Gold Exchange set the price at 256.92 yuan a gram ($1,233.85 an ounce) at the 10:30 a.m. session after members of the exchange submitted buy and sell orders for metal of 99.99 percent purity.

   

  “This is a very important development and will obviously be very

   

  closely watched,” said Robin Bhar, an analyst at Societe Generale SA in London. “But as long as it exists inside a closed monetary system it will have limited global repercussions. It could be a very important development if the new benchmark is a precursor to greater use of gold in the Chinese monetary system, Kenneth Hoffman…said by e-mail on Monday. It may also boost interest in the Shanghai free-trade zone, he said.

  As Soc Gen’s Robin Bhar correctly identified, if the ability to trade gold for yuan exists within a closed monetary system, its importance will be limited BUT, as Bloomberg’s Ken Hoffman also correctly pointed out, if this was the thin end of the wedge, things could get very interesting indeed. Now, this chart shows the oil price going back to before the U.S. Civil War:

  

  Between 1865 and 1973, the price of oil was incredibly stable against a backdrop of perhaps the greatest simultaneous economic, demographic and technological expansion in human history.

  How was that possible?

  Well simply put, because oil was effectively priced in gold.

  However…

  Once the gold window closed and the petrodollar system was implemented, the price of oil soared 50-fold in just 35 years.

  The move on the right? With the question mark against it? We’re getting there, I promise.

  Now, you remember this next chart and the yuuuuuge supply of treasuries which exists compared to oil now? Well, when we add in the roughly $100 trillion in boomer entitlements that will need to be paid for by issuing—you guessed it, more treasuries—the chart changes somewhat:

  That red circle down at the bottom of the second chart is the spike you see on the first chart.

  

  Ruh-roh!

  It’s safe to say that, relative to even oil, and without any infrastructure spending by Donald Trump, treasuries are going to be…. abundant in the coming years.

  Conversely, if we look at the value of gold relative to foreign-held treasuries, we see an altogether different story unfold.

  During Reagan’s presidency, US treasuries were backed 132% by the market value of the country’s gold reserves.

  Today, that number has fallen to just 4.7%

  If we do the same thing and account for the $100 trillion in entitlement promises, as you can see from the chart on the next page, the number falls to 0.3% in 2025.

  So the second chart (below, right) should come as no surprise to anybody.

  

  Yes, the Chinese have started to do what they promised to start doing, when they promised to start doing it.

  Now, this next part of the presentation was a rattle through a whole bunch of charts showing the recent activity in the U.S. treasury, corporate bond, agency bond and securities markets so you’ll have to brace yourself.

  The charts will appear on the next page.

  Chinese sales of US treasuries (1) have been consistent for the last three years…

  …as have their sales of US securities (2) since 2015 after plateauing in 2013 when treasury divestiture began Concurrently, Chinese sales of corporate bonds (3) have accelerated over the same period…

  …though agency sales (4)—despite a few periods of consistent selling—have yet to follow suit.

  But now, as tensions rise and the cross-currents get harder to discern, guess who else has showed up as a seller?

  That’s right, the Saudis are now steady sellers of US treasuries (5)…

  …and even more aggressive sellers of U.S. securities (6)…

  Meanwhile, taking a broader view, net foreign purchases of treasuries, according to the TIC data, have been in a clear downtrend since 2009 (7) and have been largely outflows for the last three years.

  If we look at the 12-month sum of sales (8), we see an even sharper decline…

  

  …and if we take the trailing net official demand chart for treasuries back to 1979, the scale and extent of the change is evident—as are the catalysts for the acceleration (and we’re back on this page once  again):

  

  Take a long, hard look at that last chart folks—particularly within the context of the bond bull market and the ‘bid’ for treasuries we’ve seen throughout 2015 and 2016…

  Meanwhile, the Russians—who, as we’ve seen are now selling oil for yuan to the Chinese, remember?— have been picking up the pace of their accumulation of gold reserves yet again, with the most recent monthly data setting yet another record…

  …and the pick up in pace is evident when we look at average monthly purchases prior to 2013 and post the agreements put in place around that time between the various parties. Now, the next chart (top of the following page) is crucial to understand because a look at the market value of Russia’s gold reserves shows just how crucial their ongoing accumulation of bullion has been for the country’s finances over the last two years…

  …and that increase in value has cushioned the effects of, amongst other things, the bailing out of the ruble.

  

  As you can see from the green line, Russia’s gold reserves in Ruble terms have soared as the country’s currency has weakened—something which confounded all the doommongers who called Game Over for Russia amidst sharply declining oil revenues:

  (Bloomberg, April3, 2015): Here’s why Governor Elvira Nabiullina is in no haste to resume foreign-currency purchases after an eight-month pause: gold’s biggest quarterly surge since 1986 has all but erased losses the Bank of Russia suffered by mounting a rescue of the ruble more than a year ago.

   

  While the ruble’s 9 percent rally this year has raised the prospects that the central bank will start buying currency again, policy makers have instead used 13 months of gold purchases to take reserves over $380 billion for the first time since January 2015.

  Hmmm…

  Now, crucially, being given the ability to sell oil to the Chinese for yuan and buy gold with that same yuan directly through the Shanghai Exchange has completely changed the game for the Russians and those changes are being reflected where they matter most—in the energy markets, the supply/ demand dynamics of which are quietly morphing in plain sight.

  By August of this year, Russia had overtaken Saudi Arabia as the largest exporter of oil into China…:

  (Al Awsat, August 3, 2016): During the first seven months of this year, China imported about 30.5 million metric tons of Saudi oil, a 0.4% decrease than that of last year. Whereas, China imported about 29.5 million metric tons of Russian oil with 27% increase than last year.

  …and that wasn’t something the Saudis could take lying down:

  Amid this fierce competition, it is important for Saudi Arabia to fortify its oil position in China with more political and strategic support

  On the contrary, they rededicated their efforts to increase what they call “political and strategic support” for China.

  Now, I hope you’re all still with me because here’s where we get to the final piece of this glorious puzzle—the piece that ties all these seemingly unrelated threads together: China’s own crude oil futures contract, to be priced in Yuan and traded at the Shanghai International Energy Exchange—a yuan contract which will be made fully-convertible:

  (Bloomberg, November 5, 2015): By the end of 2015, China, the world’s No. 1 oil importer as of April, may start its own crude futures contract.

   

  The idea is to establish a Chinese rival to the world’s two most traded oil contracts: West Texas Intermediate, housed on the New York Mercantile Exchange, and Brent Crude Futures, owned by ICE Futures Europe in London.

   

  The yuan-based contract will trade on the Shanghai International Energy Exchange and will be among the first Chinese commodity contracts available to foreign investors as China promotes global use of its currency…

   

  Participation will be open to all foreign investors and the yuan will be fully convertible under the contract, according to Song Anping, the chairman of the Shanghai Futures Exchange.

  As you can see from the date of the article, this contract has been postponed several times— ostensibly for reasons such as stock market volatility in China, but perhaps there is more going on behind the scenes that is causing the delay because, once this contract is in place, things change.

  Dramatically.

  In the interim, China has supplanted the U.S to become the world’s biggest importer of oil, which serves to increase both its importance in the oil markets and the likelihood of it launching its own yuan-denominated contract at some point in time:

  (Bloomberg, October 13, 2016): China is now the world’s biggest oil importer, unseating the U.S. The country’s crude imports climbed to a record 8.08 million barrels a day in September, a year-on-year increase of 18 percent, customs data released Thursday showed.

  So, the world’s largest exporter of oil is now dealing with the largest importer directly in yuan and it has the ability to convert those yuan proceeds into physical gold through the Shanghai exchange— which the data suggest it is doing as fast as possible.

  Currently, the bilateral oil for gold trade is only available to what the U.S. would no doubt consider a ‘basket of deplorables’ in Iran and Russia…but just think what happens once that fully convertible oil contract is up and running…?

  Suddenly, the availability to price oil in gold is available to everybody and, given rising Saudi/U.S. tensions and the Middle East nation’s recent rededication to providing “political and strategic support” to China it’s easy to see why this would be attractive to the Saudis, for example.

  

  Whatever happens, opening that contract creates a market-wide arbitrage opportunity which affords anybody with oil to sell the ability to exchange said oil for gold and anybody wanting oil to acquire it cheaply by buying cheap gold in the West and shipping it to Shanghai or HK where it can be sold for yuan.

  Already, places like Tokyo, Seoul and Dubai are opening physical gold markets and discussing linking their nascent markets for bullion to the Shanghai exchange which has rapidly become the largest physical delivery market in the world.

  Now, were this arbitrage to begin happening in any meaningful size, with the market for oil far bigger than that for gold, it would immediately be evident in the ratio between the two commodities…

  …which, interestingly, is precisely what has happened since the peak of global reserves in 2014 and the Sino-Russian agreement to essentially transact oil for gold. With those conditions in place, the gold/oil ratio has broken out to its highest level in 80 years (chart, next page):

  …which brings us right back to the question mark on the second chart which we left hanging like a matzah ball earlier in this presentation

  

  The recent move in the oil price looks to me suspiciously like a sign that a move has started to return to pricing oil in gold.

  That move, if indeed it is happening beneath the surface, allied with the endless possibilities enabled by the potential full convertibility of the yuan under the Shanghai-based oil contract leaves oil producing nations with a rather obvious choice for the first time in almost half a century—a choice made perfectly clear by the two charts on the next page:

  If you are an oil producing country, do you…:

  MINIMIZE your production in order to MAXIMIZE your holdings of one of the most abundant and easily-produced commodities in the world—U.S. treasuries—as has been the case for the last 40 years… knowing full well that, with the level of entitlements due in the next decade, more will need to be printed like crazy?

  

  Or……

  Do you MAXIMIZE production in order to gain the largest possible market share in the biggest oil market in the world and, through the ability to buy gold for yuan, thereby maximize your reserves of a scarce, physical commodity which is impossible to produce from thin air and which happens to be not only the most undervalued asset on the planet, but is trading at its most undervalued relative to U.S. treasuries in living memory?

  

  With an annual production of $170bn, gold is by far the largest metal market by value.

  However, that figure is dwarfed by the oil market which is 10x the size of the gold market on an annual production basis.

  

  If we throw in the average annual foreign holdings of U.S. treasuries over the last 2 years, we see that the ‘other’ commodity is at a different magnitude altogether.

  So, which one of these commodities has any scarcity value? Given the choice, which one would you seek to maximize your holdings of?

  U.S. treasuries which can be conjured out of thin air by the U.S. government and which, are described thus by The Securities Industry and Financial Markets Association:

  Because these debt obligations are backed by the “full faith and credit” of the government, and thus by its ability to raise tax revenues and print currency, U.S. Treasury securities – or “Treasuries” – are generally considered the safest of all investments. They are viewed in the market as having virtually no “credit risk,” meaning that it is highly probable your interest and principal will be paid fully and on time.

  Or how about oil? Which the Saudis, for example, can simply print pull out of the ground at will at a cost of a little under $10/barrel?

  

  Or gold? A commodity which is limited in availability, trading at its all-time low relative to U.S. treasury supply and is not only getting harder and more expensive to produce, but which is also catching the eye not only of the central banks of the world’s two largest producers, but of the largest importer and largest exporter of oil?

  * * *

  Much more in the full PDF below

  

  

• Here's Who Democrats Say Are The Top 15 Presidential Candidates For 2020

  As Democrats continue to slowly come to terms with their stunning defeat on November 8th, one coping mechanism that has helped them to deal with the grief is getting a head start on a list of most likely new saviors who can defeat the evil Donald Trump in 2020 and restore “Hope” to America.  As such, Niall Stanage of The Hill has compiled a list of the 15 most likely challengers.  Most of the list is not terribly surprising and includes a number of establishment politicians which, given how the 2016 election cycle evolved, would almost certainly result in another Trump victory.

  Among the “establishment” names on the list, both Hillary Clinton and Tim Kaine were noted as 2020 hopefuls despite their epic defeat in 2016.  Vice President Joe Biden eked out a top-10 place after having been defeated twice before in 1998 and 2008.  Meanwhile, despite repeated denials, First Lady Michelle Obama came in at a respectable 6th place.

  Potential political newbies that could vie for the presidency in 2020 included Cory Booker, a senator of New Jersey, and Senator-elect Kamala Harris of California.  While The Hill notes that Harris could face criticism for her lack of “political experience,” Trump’s victory would seems to suggest that to be a positive rather than a negative attribute and ironically, she would have the same level of “political experience” in 2020 as Obama had when he ran in 2008.

  Finally, in the “outlier” category, The Hill rounded out their Top 15 with Oprah Winfrey who, for the most part, stayed out of politics until going all-in for Barack Obama in 2008.

  Of course, the only prominent contender for 2020 that didn’t seem to make The Hill’s list was Kanye West.  We assume this was a simple mistake and look forward to the prompt correction.

  

   

  With that, here is The Hill’s official list of the 15 democratic hopefuls for 2020:

  1. Sen. Elizabeth Warren (Mass.)

   How would the 2016 election have panned out had Warren challenged Clinton in the primary? That’s one of the great unknowables of Democratic politics. But now, there is little doubt that the Massachusetts senator is the leading contender for the 2020 nomination.

   

  Warren, a former Harvard Law School professor, has been beloved by the left throughout her late-blooming political career, largely because of her no-punches-pulled attacks on banks and the financial industry. She got under Trump’s skin via Twitter during the 2016 campaign too.

   

  The recent news that Warren will join the Senate Armed Services Committee in January has stoked speculation that she is looking to bolster her foreign policy and national security credentials in advance of a presidential run. Warren would be 71 by the time of the next election, but she is three years younger than Trump.

   

  2. Sen. Bernie Sanders (I-Vt.)

   Sanders came from semi-obscurity in the Senate to give Clinton a serious run for her money in the battle for the Democratic nomination this year.

   

  He won 23 contests and amassed more than 13 million votes. He also fired the enthusiasm of young voters and progressives, two pillars of the Democratic base that Clinton struggled to charm.

   

  The Vermonter’s focus on income inequality and his broader point that the system is rigged against working Americans resonated. Sanders’s main problem when it comes to a 2020 run could be his age. He will be 79 next Election Day. Still, Sanders might well be tempted to try one more time — especially if Warren stood aside.

   

  3. Sen. Cory Booker (N.J.)

   Booker raised eyebrows earlier this month when it emerged that he would join the Senate Foreign Relations Committee when the new Congress convenes. As with Warren and the Armed Services panel, his decision was interpreted as an effort to burnish his resume for a potential presidential run.

   

  Booker is just 47, and he is one of only two African-Americans in the Senate for now. (That number will rise to three in January when California’s Kamala Harris will be sworn in.)

   

  He is also one of the most media-savvy members in the upper chamber — a trait that has been apparent since the start of his career, when his first, failed bid to become mayor of Newark was captured in a sympathetic documentary, “Street Fight.”

   

  Booker is far from the most liberal member of the caucus. During the 2012 presidential campaign, he criticized an Obama campaign ad that hit Mitt Romney’s business record, insisting on NBC’s “Meet the Press”, “I’m not about to sit here and indict private equity.”

   

  An optimistic view is that he could bridge the gap between the progressive and center-left strands of the party. Skeptics will question whether he is a little too corporate-friendly for the tastes of Democratic primary voters.

   

  4. Sen. Amy Klobuchar (Minn.)

  Klobuchar has already appeared on several shortlists of likely contenders for the nomination, and it’s not hard to see why.

   

  The New Yorker called her, “popular, practical, appealing [and] progressive.” She is from a state where the currents of labor and progressivism run strong. But the no-nonsense, affable Klobuchar could also plausibly appeal to Rust Belt voters whom her party needs to win over.

   

  One issue for Klobuchar right now is that she does not have a high profile outside of her native state and the Beltway. There is plenty of time to change that if she wants to run and win in 2020. But she could be eclipsed by higher-wattage candidates.

   

  5. Sen. Kirsten Gillibrand (N.Y)

   Gillibrand followed in Clinton’s footsteps when she replaced her as a New York senator in 2009. Could she do the same at the presidential level — but actually win the White House?

   

  It’s certainly possible. Gillibrand’s profile has risen in tandem with her making the prevention of sexual assaults in the military a signature issue. Representing New York, she has easy access to the national media and to powerful Democratic fundraising networks.

   

  But Gillibrand’s similarities with Clinton, superficial though they may be, could go against her. It’s just not clear Democrats would roll the dice again, as soon as 2020, on another prominent female nominee from New York.

  Critics also charge that Gillibrand emphasized more centrist positions as a congresswoman from a somewhat conservative district than she does as a senator from a liberal state.

   

  6. First lady Michelle Obama

   If the first lady exhibited even a slight inclination to run, she would be ranked near the top of this list.

   

  There is no figure in public life, with the possible exception of her husband, who has so strong a hold on liberal hearts and minds.

   

  Obama has become more comfortable with her public role over the years. Her two major speeches during the 2016 campaign — one at the Democratic convention, another excoriating Trump for “hurtful, hateful language about women” — were among the most powerful delivered during the cycle.

   

  The first lady insists that she won’t run, citing the effect such an effort would have on her two daughters among other factors. But Malia and Sasha Obama will be 22 and 19, respectively, by the time of the next election. When it comes to the first lady’s future plans, many Democrats still cling to the audacity of hope.

   

  7. Gov. John Hickenlooper (Colo.)

   Hickenlooper presides over a state that is considered a key battleground, even though it has become more solidly Democratic in recent years. Colorado has gone for the Democratic nominee in the past three presidential elections and Clinton won the state by five points.

   

  Hickenlooper, who has a politically effective down-to-earth persona, could potentially boost the party’s appeal in the heartlands. He has enjoyed solid approval ratings during his time in office.

   

  One problem? While his chances are talked up among Beltway pundits, he is almost unknown in the nation at large.

   

  8. Sen. Chris Murphy (Conn.)

   Murphy has come to the fore on the issue of gun control. He can speak with moral authority on the issue: In his state, a gunman killed 20 young children, as well as six adults, at Sandy Hook Elementary School in December 2012. President Obama has called that moment the worst day of his presidency.

   

  Politically speaking, Murphy would need to display more policy breadth and heighten his national profile if he is to be a genuine contender. For the moment, he’s one to watch.

   

  9. Vice President Joe Biden

  The vice president could have definitively ruled himself out of the running, but hasn’t. He joked with reporters about the possibility earlier this month, and then sought to clarify by saying he had “no intention” of running.

   

  Biden would clearly have loved to run in 2016, were it not for the fact that he was still grieving the loss of his son, Beau. Biden’s age is a real issue, however. He would be 77 by next Election Day. If he won, he would turn 78 before being inaugurated.

   

  For all his political skills, his two previous runs for the presidency, in 1988 and 2008, ended in failure.

   

  10. Gov. Andrew Cuomo (N.Y.)

   On paper, Cuomo looks like a strong candidate. He is the governor of a huge, liberal state and hails from a well-established political family. Cuomo’s late father, Mario, served as governor of the Empire State for three terms.

   

  No one doubts the younger Cuomo’s ambition, but whether he is the right fit for the times is a tougher question. In a party where the left is ascendant, he has positioned himself as a centrist foil to New York City’s liberal mayor, Bill de Blasio. It’s not clear what Cuomo’s power base would be for a primary fight.

   

  11. Sen.-elect Kamala Harris (Calif.)

   Harris is one of the bright spots for Democrats who are dismayed by their failure to retake the Senate. She will succeed the retiring Sen. Barbara Boxer in January.

   

  Harris has been seen as a rising star in the party for some time, her fans including President Obama, who once praised her in imprudent terms.

   

  Harris, a leading lawyer before shifting into politics, is the daughter of an Indian-American mother and a Jamaican-American father. It’s not clear she has any presidential ambitions and, if she ran in 2020, she would face criticism about her relative lack of political experience. But she would be as experienced as then-Sen. Obama was when he began his 2008 White House run.

   

  12. Former Secretary of State Hillary Clinton

   Could she run again? It’s possible. Many people thought Clinton’s electoral ambitions had ended in 2008, with her devastating loss to Obama in the Democratic primary. That turned out not to be the case.

   

  There is still a large, wealthy circle of Clinton loyalists, who would back any future run. But, even if she had the appetite for a 2020 bid, she would have enormous hurdles to overcome.

   

  One of the biggest would be the question of how she lost the presidency to Donald Trump. Beyond the hardline Clintonistas, there aren’t many Democratic insiders who were wowed by her campaign. In a USA Today/Suffolk University poll released earlier this month, 62 percent of Democrats and independents said Clinton should not run again.

   

  13. Former Gov. Deval Patrick (Mass.)

   Patrick has considerable political skills and was once talked up as a potential inheritor of President Obama’s mantle. David Axelrod, one of the aides closest to Obama, worked with Patrick as well, and both Patrick and Obama adopted “Yes We Can!” as a campaign slogan.

   

  But Patrick left office in 2015, and it’s just not clear whether he could — or would want to — come off the sidelines for 2020. He also joined Bain Capital, which is hardly the ideal launching pad for a quest to win over liberal activists.

   

  14. Sen. Tim Kaine (Va.)

   Kaine achieved a new national prominence when Clinton named him as her 2016 running mate. But his performance was a mixed bag.

   

  The Virginia senator gave some energetic speeches on the campaign trail, defying his reputation for dullness. On the other hand, his showing in his sole debate with his counterpart, Indiana Gov. Mike Pence, was uneven at best.

   

  15. Oprah Winfrey

   Trump proved how powerful a currency celebrity can be — and there may be no more trusted celebrity in America than Oprah. Having steered largely clear of partisan politics for most of her career, Winfrey became an enthusiastic backer of Obama when he looked a long shot to beat Hillary Clinton to the 2008 nomination.

   

  Winfrey has said she “couldn’t breathe” after Trump won in November. She softened her stance later, but could she be tempted into a race to defeat the president-elect?

  

  

• The Great "Fake News" Scare Of 1530

  Submitted by Rick Falkvinge via PrivateInternetAccess.com,

  Fake news has always been around for humor purposes, but the real “fake news” scares happen when the establishment is so used to getting away with lying, that any alternate narrative is demonized as factually false, irresponsible, and dangerous.

  “The Onion” was next to “The Economist” in the newspaper stands for almost two decades. “Weekly World News”, which one-ups most British tabloids with regular Elvis sightings and vivid descriptions of two-mile fish orbiting in the rings of Jupiter, is still next to “Foreign Policy” in the same newspaper stands. This was never considered problematic in the slightest. Why, then, is a unified establishment screaming bloody murder about “fake news” all of a sudden?

  To see the pattern here, it helps to know a little history – let’s look at the great “Fake News” scare of 1530. It has a lot of elements similar to ours today.

  After the Black Death hit Europe hard around 1350, the monasteries were chronically short on manpower. The families that had used to send a child or two to become monks or nuns simply needed all their kids to work in the fields, to ensure food production, before such luxuries as manning the monasteries could even be considered. Therefore, any work that required involving monasteries became increasingly steep or scarce for the coming century.

  This is relevant as those monasteries were the only places that produced books, all of which were in Latin, and all of which were in complete synchronization with the messages of the Catholic Church, the owner of the monasteries and therefore the owner of all mass media at the time. To compound the situation, the same owner also employed all the news anchors – the village preachers, who were the ones who read the books (in Latin) and translated them to the common tongue in villages.

  A book was hideously expensive to produce. Not only was each page copied by hand, but the pages were made from animal hides: it was estimated that a single book may require the hides of as much as 300 calves. We don’t have a lot of comparative numbers from Europe of the time, but we do have them from elsewhere: a fine book in the Islamic world of the time could cost 100 dinars, with the annual paycheck required to support a middle-class family being about 25 dinars. Put differently, the prospect of buying one single book would consume an entire family income for four years – or in the $500k to $1M range in today’s value.

  To the day, almost a century later, Johannes Gutenberg combined the four inventions of the squeeze press, oil-based inks, metal movable type, and cheap rag-based pages to produce the first printing press. All of a sudden, books could be mass produced cheaply, and there was an enormous profit motive to be made in producing books for the common people. You could accurately and shamelessly call it an undercutting of the monastery business. (“How will the monks get paid if we allow cheap copying technologies?”)

  Gutenberg was convinced his invention would strengthen the Church, as the ability to mass produce books from a single original would eliminate all the small copying errors invariably introduced in the manual book production process. The result was the exact opposite, through mechanisms Gutenberg did not foresee.

  It’s important to remember here, that through the media cartel of the medieval ages (where the Catholic Church produced all news and reported all news), that there was an absolute gatekeeper position over the narrative. The Church could essentially claim that something was true, and everybody would believe it. This is a very powerful position, being the gatekeeper of true and false – one that is prone to abuse without any opposition, or competition, in reporting. As it turned out, the Catholic Church would indeed come to abuse this power quite egregiously, and paid the price for it.

  In the late 1400s, the Catholic Church needed to raise money, and came up with the idea of selling forgiveness for sins, the basic idea being that you didn’t need to be a good person to gain the favor of the Church (and divine beings), you only needed to be Rich. A priest, monk, and theologist named Martin Luther took particular exception to this message, seeing how it stood in complete opposition to everything the Church was supposed to be about, and nailed his 95 theses to the church door in 1517.

  These 95 theses outlined how the entire practice of selling divine forgiveness was based on falsehoods, fabrications, and fiction. However, it’s important to look at the bigger picture here: what Martin Luther protested was only superficially the selling of salvation to raise funds. More fundamentally, he was objecting to abuse of the gatekeeper position over truth and lie to twist the narrative for the gatekeeper’s material benefit.

  This is where the story should start to feel familiar with modern day conflicts over the Power of Narrative.

  Luther was excommunicated – banished, exiled – in 1521. This was one of the graver punishments administered, short of the death penalty, and the only thing remaining for somebody thus punished was normally to leave for foreign lands. However, in Luther’s case, he was given refuge in lands siding with him instead of the Catholic regime, ultimately setting off a century of civil war over the Power of Narrative.

  The final death knell came when Luther published bibles in German and French using the new printing press, the so-called Luther Bibles, first published in 1522. These set off shockwaves, as they were 1) distributed by the cartload in the streets of Paris and France, 2) were readable by the common people without translation by the clergy, and 3) didn’t cost the equivalent of a million dollars each.

  The Church immediately went into a panic, as they had instantly lost their gatekeeper position. No longer were they able to stand unchallenged when they were reading from the Bible in Latin, as people could – and would – verify the claims made, using their own direct sources. And as it turned out, a lot of the things that had been claimed – selling salvation among them – had been baloney of the highest order with no support in the Christian Bible as claimed.

  The Catholic church went on a rampage and a crusade against this new spread of ideas that would challenge its narrative, and in particular, against the technology which enabled people to challenge its narrative. Copying books cheaply and efficiently instead of paying four annual salaries for a single book – the audacity, the outrageous heresy! How dared people copy books themselves without respecting the Church? Obviously, books could only be properly copied in monasteries, to ensure proper quality.

  (“How will the monks copying books get paid otherwise?” was as much a smokescreen then as it is today.)

  The church kept up the pressure against the printing press, as it saw all the resulting non-sanctioned news channels as completely fake, not just being wrong, but being dangerous. They were irresponsible. They were deliberately spreading misinformation – at least the Church saw it that way, a Church which was institutionally incapable of unlearning that it was no longer the single source of information and would no longer have whatever outlandish claim accepted without question.

  However, the nobility and royalty of the time were certainly paying attention to the Church. After all, the Archbishop installed Kings, so there was a mutual dependence for power between the clergy and royalty at the time. Therefore, when the Church exclaimed the sky is falling (“there is fake news everywhere! We must do something!!!!!!!”), the royalty tended to listen.

  As a result, on January 13, 1535, the French King Francis I signed into law the death penalty by hanging for using a printing press at all. Yes, you read that right: there was a death penalty for making unauthorized copies. The justification for the law, as still readable in the preserved logs from 1535, was to “prevent the spread of misinformation and false news”.

  So the gatekeepers of knowledge and culture in 1530, on losing their gatekeeper position over the narrative, didn’t counter with higher-quality reporting, but instead attacked the technology enabling competition, calling it out as spreading misinformation and irresponsible fake reports. Does any of this seem… familiar?

  The law was a complete fiasco. Once people had learned to read competing reporting, there was no unlearning it. The law was repealed shortly thereafter. England went another route to prevent the success of the printing press by establishing a censorship regime with printing monopolies, known as copyright, but that’s a story for another day.

  As a final touch, let’s consider the words of Paul Graham, in his excellent essay “what you can’t say”:

  “No one gets in trouble for saying that 2 + 2 is 5, or that people in Pittsburgh are ten feet tall. Such obviously false statements might be treated as jokes, or at worst as evidence of insanity, but they are not likely to make anyone mad. The statements that make people mad are the ones they worry might be believed. I suspect the statements that make people maddest are those they worry might be true. […] If Galileo had said that people in Padua were ten feet tall, he would have been regarded as a harmless eccentric. Saying the earth orbited the sun was another matter. The church knew this would set people thinking.”

  Privacy and narrative remain your own responsibility.

  

  

• Obama Set To Announce Economic Sanctions And "Covert Cyber Ops" Against Russia For "Election Hacking"

  Just a week after Obama held a press conference announcing that he sent a stern warning to Vladamir Putin regarding his alleged “election hacking” efforts (see “Obama Told Putin To “Cut It Out” On Hacking“), the Washington Post is reporting that the Obama administration is close to announcing a series of economic sanctions and other measures to punish Russia for its “interference” in the 2016 presidential election.  Quoting “U.S. officials,” WaPo said that an announcement from the Obama administration could come as early as this week and would likely include “covert cyber operations.”

  According to WaPo’s “sources”, the delay in sanctions against Russia have come from Obama’s inability to take unilateral actions under current laws.  While Obama previously signed an executive order that would allow him to freeze the assets in the United States of people overseas who have engaged in cyber acts, it only applies to actions that have threatened U.S. national security or financial stability.  Further, per a “senior administration official,” use of the existing law would require (1) actual election infrastructure to be designated as ‘critical infrastructure’ and (2) the administration to prove that such infrastructure was actually “harmed,” conditions which the National Security Council say have not been met. 

  The White House is still finalizing the details of the sanctions package. Holding up the announcement is an internal debate over how best to adapt a 2015 executive order that gave the president the authority to levy sanctions against foreign actors who carry out cyberattacks against the United States.

   

  The order was used as the “stick” in negotiations over a highly-publicized 2015 agreement with China that neither nation would hack the other for economic gain.

   

  But officials concluded this fall that the order does not cover the kind of covert influence operation that the Intelligence Community believes Russia carried out during the election — hacking political organizations and leaking stolen emails with the goal of influencing the outcome.

   

  The April 2015 order allows the Treasury Department to freeze the assets of individuals or entities who used digital means to damage U.S. critical infrastructure or engage in economic espionage.

   

  The National Security Council concluded that it would not be able to use the authority against Russian hackers because their malicious activity did not clearly fit under its terms, which require harm to critical infrastructure or the theft of commercial secrets.

   

  “You would (a) have to be able to say that the actual electoral infrastructure, such as state databases, was critical infrastructure, and (b) that what the Russians did actually harmed it,” a senior administration official told The Post. “Those are two high bars.”

  

   

  Of course, laws are merely suggestions for an Obama administration that has grown quite comfortable legislating through executive action from the White House.  As Zachary Goldman, a sanctions and national security expert at New York University School of Law, points out the current laws simply require the Obama administration to “engage in some legal acrobatics to fit the DNC hack into an existing authority, or they need to write a new authority.”

  “Fundamentally, it was a low-tech, high-impact event,” said Zachary Goldman, a sanctions and national security expert at New York University School of Law. And the 2015 executive order was not crafted to target hackers who steal emails and dump them on WikiLeaks or seek to disrupt an election. “It was an authority published at a particular time to address a particular set of problems,” he said.

   

  So officials “need to engage in some legal acrobatics to fit the DNC hack into an existing authority, or they need to write a new authority,” Goldman said.

   

  Administration officials would like Obama to use the power before leaving office to demonstrate its utility.

  And, not surprisingly, another administration official points out that “part of the goal here is to make sure that we have as much of the record public or communicated to Congress in a form that would be difficult to simply walk back.”  Yes, that is the problem with legislating through executive action rather than acknowledging the will of the American people and trying to work with Congress.

  And while Obama and Democrats continue their crusade to deligitamize the Trump administration, we would point out once again that, despite all the rhetoric, not a single person has gone on the record and/or presented a single shred of tangible evidence to confirm Russian involvement in the DNC and/or John Podesta email hacks. 

  

  

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• Racist White Professor Calls For “White Genocide,” Then Blames Everyone Else For Misinterpreting His Racist Tweets

  A Drexel University Political Science professor – who has a book coming out in February – and is a communist, graced the world with his Christmas wish to see an entire race of human beings exterminated. You know, like Hitler. 

   

  

  Hilarious, right? Especially if you replace the word “white” with any other race. This warm holiday sentiment comes from the mind of George Ciccariello-Maher, a cultishly liberal academic who’s never existed outside of a university environment, having previously corrupted young minds at U.C. Berkeley and the Venezuelan School of Planning in Caracas. Ciccariello then doubles down on his Christmas Eve banter:

  

  To review, this is what he’s talking about:

  

  Nice guy. Now, in an attempt to backpedal during an Eichenwaldian moment of clarity liberals get after haphazardly revealing they’re fucking idiots underneath that academic exterior, Ciccariello is lashing out by blaming everyone who was offended for not having “bothered to do their research” in preparation for his satirical tweets.

  

  Drexel university has issued a statement:

  

  No word on which wrist Drexel plans to slap, but 4chan anon knows what’s up: 

  

  People like Ciccariello-Maher exist to indoctrinate adult children into a reactionary class of morons who hear a trigger word and start regurgitating information without even moderate possession of the facts. These perpetual winners are are easily manipulated by identity politics which “intellectual” losers like Ciccariello capitalize on. While undeniably atrocious, slavery in America was conducted almost entirely by rich southern democrats – a small percentage of Americans, in the 1800’s. It has been a fucked up institution for thousands of years, and is still happening today in many parts of the world. It’s also been abolished in the USA for over 130 years, and the playing field has been legally leveled for over half a century despite structural racism legislated into society. There are of course vestiges of slavery which affect minorities to this day, none of which should be used as a tool for manipulation to generate guilt or resent – or as a reason to exterminate white people. I wonder if Ciccariello-Maher would issue the same call to genocide for all brown people, since slavery is alive and well in places like Saudi Arabia?

  As long as angry radicalized career academics continue peddling white guilt to impressionable snowflakes – many of whom entered into lifelong debt to fund their own brainwashing, untold millions of basement-dwelling failures to launch will have a perpetual villain to blame for their shitty lives. That is, until the last white person has been exterminated.

  

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• India's Demonetization Debacle Highlights The Dangers Of Monetary Monopoly

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  As longtime readers know, I believe we are at the beginning stages of what will be historical paradigm level change across the planet. We sit on the precipice of the self-destruction of almost all the dominant institutions we’ve been accustomed to throughout our lifetimes. To borrow a bit of played out and painfully clichéd Silicon Valley lingo, everything is on the table for “disruption.”

  Naturally, this doesn’t necessarily mean the paradigm that follows the current one will be materially better, but I am personally optimistic about what will emerge following a period of considerable confusion, hardship and conflict. In order to tilt the scales toward a positive outcome, those of us who wish to usher in a world characterized  by human freedom, decentralization, self-government and kindness, need to recognize the most likely avenues we have to get there. Technology is obviously extremely important, as a recent move by Whisper Systems to thwart censorship demonstrates.

  As Wired reported last week:

  Any subversive software developer knows its app has truly caught on when repressive regimes around the world start to block it. Earlier this week the encryption app Signal, already a favorite within the security and cryptography community, unlocked that achievement. Now, it’s making its countermove in the cat-and-mouse game of online censorship.

   

  On Wednesday, Open Whisper Systems, which created and maintains Signal, announced that it’s added a feature to its Android app that will allow it to sidestep censorship in Egypt and the United Arab Emirates, where it was blocked just days ago. Android users can simply update the app to gain unfettered access to the encryption tool, according to Open Whisper Systems founder Moxie Marlinspike, and an iOS version of the update is coming soon.

   

  Signal’s new anti-censorship feature uses a trick called “domain fronting,” Marlinspike explains. A country like Egypt, with only a few small internet service providers tightly controlled by the government, can block any direct request to a service on its blacklist. But clever services can circumvent that censorship by hiding their traffic inside of encrypted connections to a major internet service, like the content delivery networks (CDNs) that host content closer to users to speed up their online experience—or in Signal’s case, Google’s App Engine platform, designed to host apps on Google’s servers.

  It goes without saying how critical technology such as the above, combined with dedicated activists such as Moxie Marlinspike, will be to making the world a better place. Beyond that, we also need to understand what our adversaries will do. I define such adversaries as the defenders of the status quo, who will do whatever it takes to retain power and influence in the face of their increasing irrelevance. As it becomes more and more obvious to people that these legacy institutions have become so corrupt and bureaucratic that they do far more harm than good, their leaders are likely to resort to more and more authoritarian tactics in order to defend their untenable position. This is where we need to see opportunity as opposed to cowering in fear.

  We are on the right side of history, while the old institutions are simply living on borrowed time. We must be smart about how we see the world and understand that Donald Trump is likely to react to such a situation quite similarly to a Barack Obama. Whoever’s in charge of the government will by definition work to preserve the power of government as opposed to the liberty of the citizenry. This goes for pretty much every political leader and government worldwide. As such, we must assume government will lash out in increasingly irrational and authoritarian ways in the coming years, as the old paradigm becomes unglued.

  As I mentioned earlier, when a government reacts in an absurd and harmful way, we need to see this for the opportunity it presents as opposed to becoming overcome with fear concerning its inevitable near-term harm. A perfect example is the recent extremely destructive decision by Indian Prime Minister Narendra Modi to unilaterally scrap old 500 and 1,000 rupee notes, which merely represents a particularly egregious move within a broader push by elitist and status quo bureaucrats across the world to ban cash. As disruptive as this move has been, it also carries with it a significant silver lining. For example, it’s causing us to ask the really big questions we need to be asking.

  As R. Jagannathan wrote earlier today in Swaraja Magazine, where he is the editorial director:

  A philosophical question that economists need to answer after Lehman, zero-interest money, QEs, and demonetisation (in our case) is whether central banks ought to have that kind of monopoly over money.

   

  Most free-market economists would agree that monopolies are bad, but they do not usually challenge the state’s monopoly over violence and law-making or the central banks’ monopoly over the issue and regulation of currency.

   

  Leaving aside the state’s monopoly on some kinds of power, let’s ask whether a central bank’s money monopoly is worthwhile since it does not appear to have delivered the kind of benefits to the world in recent decades which can justify the conferment of a monopoly.

   

  The fundamental reason why we have grown to love (or learned to live with) central banks is that we cannot remember a time when they did not exist. So the argument is better the devil you know…

   

  But consider their track record…

   

  The US Fed could not prevent or even moderate the 1930s depression. It took a world war to rescue the US economy from deflation.

   

  The US government (and the Fed) reneged on their most important commitment – to link the dollar value to gold – in 1971. This link was crucial to getting the world to accept payment in US dollars. But once that got done, the US did not want to honour its commitment since this was costing it a bit. In short, central banks cannot always be trusted.

   

  “Independent” central banks were never able to prevent governments from debasing the currency by resorting to huge fiscal deficits. So they could not maintain the exchange values of their currencies without creating hardships for their people.

   

  Central banks have been particularly bad at predicting when money was too cheap or too expensive – the main job they are supposed to do – and we have seen that in bold relief post-Lehman, and with the ongoing Eurozone crisis and Japan’s never-ending stagflation.

   

  In India, we were happy to assume that for Reserve Bank of India (RBI) governor Raghuram Rajan brought inflation down, but this is a story we concocted after noting that the man was talking a lot about inflation. We presumed that what he did must have helped inflation come down, but we can never be sure. But his predecessor D Subbarao spent five years chasing down both inflation and disinflation (pre-2008, post-2008, and post-2011-12) and was considered “behind the curve” on policy. As if one human being can predict the net outcomes from the individual actions of a billion-and-a-quarter people responding to inflation or deflation.

   

  And now we have a new Governor, Urjit Patel, taking the flak for a decision he was only partially involved in – demonetisation.

   

  But the real question to ask of Urjit Patel and the government that appointed him is not whether demonetisation was a good idea or whether it has been implemented badly, but whether either government or the central bank should have had this monopoly power at all?

   

  That Patel and the Modi government are being attacked both by Left and Right for demonetisation leads us to a larger and more basic question: Could demonetisation have happened if the Indian state did not have a monopoly in central banking, and there were several money issuers vying for the citizen’s custom?

   

  The answer is probably no, for it is only monopoly that assures central banks this kind of power. If India had another currency issuer, the RBI could not have demonetised the currency in one go. It would have had to announce a plan, and take the bad money out in stages.

   

  But the central bank’s monopoly is really a consequence of the state’s monopoly on law-making and power. This is why states, despite being at odds with their central banks on the short-term direction of monetary policy, are equally keen to let them retain their money monopoly.

   

  In the US, a private player launched a gold-based currency called e-Gold, but when it grew big enough, the powers-that-be had it wound up. Launched in 1996, e-Gold, founded by Douglas Jackson, allowed account-holders to make cash transfers to other e-Gold account-holders through its website. At its zenith, e-Gold was said to be handling more than $2 billion worth of annual transactions. (Read more about e-Gold here and here).

   

  But governments can’t stand a rival who challenges their own right to mint currency, and so in 2009, e-Gold was shut down, ostensibly because it did not have a licence to transfer money. The Patriot Act, enacted after 9/11, gave the US government powers to do this.

   

  The 21st century will challenge the idea of the state and its monopoly powers, but Step One in that process is whether central banks should have a monopoly on money.

   

  The answer is no. Competition will be good even in the business of creating money and managing its ebbs and flows.

  All of this reminds me of something I wrote recently with regard to the self-implosion of mainstream media in the post, ‘Then We Will Fight in the Shade’ – A Guide to Winning the Media Wars:

  It is when you get desperate, scared and panicky that you make the biggest mistakes, and the legacy media is currently desperate, scared and panicky.  As Napoleon Bonaparte allegedly said:

   

  “Never interrupt your enemy when he is making a mistake.”

   

  We mustn’t get in the way of the legacy media’s inevitable self-destruction. Part of this means that we do not self-destruct in the process. We need to recognize that there’s a reason independent, alternative media is winning the battle of ideas in the first place. For all the warts, mistakes and bad actors, the emergence of the internet is indeed the historical equivalent of the invention of the printing press on steroids.

  The same mindset and strategy should be applied to the state as well. One thing I’m relatively certain of, is that as economies continue to decay under the weight of the status quo way of doing things, the incredibly corrupt men and women in charge of our dominant institutions will flail from one destructive, authoritarian action to the next. We must expect this and prepare to respond.

  Technology will do its part by providing the necessary tools to transition from one paradigm to the other, but equally important will be winning the narrative when it comes to the 7 billion people inhabiting the planet. This is where websites such as Liberty Blitzkrieg and others will play an increasingly significant role in pointing out and articulating the harmful, irrational and destructive nature of the status quo response to challenges that arise. In this way, we can be sure to win the battle of ideas, which will be crucial to successfully ushering in a new age of human freedom, creativity, opportunity and progress.

  

  

• Commodity Futures Plunge Following China Growth Downgrade

  Less than a month ago we warned that the Chinese commodity bubble 2.0 was bursting as speculative volume had exploded relative to open interest and exchanges had begun (after unreal surges in prices) to crackdown on the speculation. The carnage continued and over the last few days has bloodbath'd even more as China warns that it will miss its growth targets.

  Spot The Odd One Out…

  • Zinc -22%
  • Iron Ore -20%
  • Steel Rebar -20%
  • China Coking Coal -25%
  • Copper -13%
  • Bitcoin +18%

  

   

  It appears as China housing bubble pops, commodity bubble pops, and credit-fueled growth bubble pops… there is only one place left for Chinese trend-followers to flee to – Bitcoin.

  

  

• Refugee Admissions Surge 86% YoY As Obama Rushes Arrivals Ahead Of Trump Inauguration

  In the first 84 days of the 2017 fiscal year (October 1, 2016 – December 23, 2016), the Obama administration has accepted 25,584 refugees into the United States, according to data provided by the State Department.  Per Breitbart, compared to the same period in FY2016, that represents an 86% increase year-over-year.  And while we were expecting a large increase in refugee admittances in 2017 (see “Hillbama Administration Plans To Admit At Least 110,000 Refugees In 2017“), the ~30% increase that Secretary John Kerry estimated back in September is looking like a fairly modest increase now compared to actual numbers. 

  And while the new Trump administration will likely slow the rate of the new arrivals after taking office next month, the current Obama run-rate puts us on track to blow through the 20-year record high set back in 1999.

  

   

  As we’ve noted before, per data from the U.S. State Department, the overwhelming majority of refugees admitted into the U.S. over the past couple of months are coming from Syria, Iraq and Somalia… 

  

   

  …and being resettled in Texas, California, Arizona and New York.

  

   

   

  Obviously, Trump has been fairly clear about is intention to “suspend immigration from areas in the world where there is proven history of terrorism against U.S.” which likely was a stance that helped him win the presidency in November. 

  Trump: Will suspend immigration from areas in the world where there is proven history of terrorism against U.S. https://t.co/rHkpUr7xiL

  — The Situation Room (@CNNSitRoom) June 13, 2016

   

   

  But, Obama doesn’t seem to care about any of that…nothing like completely ignoring the will of the American people to pursue your own agenda.  

  

  

• "Operation Cankles" – Russian Intervention Exposed

  Did the Russians really rig the 2016 US election? The Daily Telegraph's Tim Blair exposes 'the truth' – You bet they did!

  Secret documents recently discovered in a bin behind a Kremlin-district 24-hour cabbage and tobacco store reveal for the first time the devious extent of Russian interference. These plans were decades in the making.

  

  Read on, as never-before-seen communiques between Russian agents Sergei Potrov and Dimitri Bienko outline the wicked plot – beginning in 1947, on the day of Hillary Clinton’s birth:

  Dearest Dimitri

   

  I am pleased to report that phase one of Operation Cankles is total success! Soviet implantation of stupid American woman resulted in birth today of hefty girl-child destined to be unelectable candidate 70 years from now.

   

  Child is basically just ankles and head, similar to sturdy and hard-working female stock from adored Ilmensky Mountains. In decadent America, nobody will ever vote for such a noble being.

   

  Yours in Soviet solidarity,

  Sergei

  Back in Moscow, Bienko receives the news from his undercover US-based operative with communist glee:

  Dearest Sergei,

   

  You have done very well, comrade! Especially with the implantation. I trust the child has your eyebrow.

   

  We have already begun looking at similar strategies in other western nations. When you are next on leave, ask me to show you plans for Operation Julia. Australia is next to face unforgiving Soviet wrath!

   

  Yours,

  Dimitri

  As the years go by, our pair of dedicated spies continue to monitor Hillary’s progress and other events:

  Dearest Dimitri,

   

  Greetings again from Americas. Heh heh heh! Apologies for chuckles, but am watching hilarious documentary called Honeymooners. Is about domestic violence. Very good.

   

  Am needing laugh because hips in pain from imitating the Elvis Presley. Will send you LP of the Presley once Russia has record players.

   

  Hillary now at school and shunned by corrupt classmates in thrall of military-industrial capitalism. All proceeding exactly according to strategic project timeline.

   

  Yours in everlasting revolution,

  Sergei

  Called away from Operation Cankles for a brief and triumphant mission to Dallas in 1963, Potrov soon returns to his main quest:

  Dearest Dimitri,

   

  My ‘holiday’ in Texas was wonderful, thank you for asking. Not so good for Agent Oswald, however. I will miss him. He could make a fine okroshka soup, which is very rare here. The Americans, they prefer their eggs shelled and cooked. And from birds.

   

  How is this for funny? Hillary ran for president of high school and lost to braggart teen with big crazy hair and grabby hands! Is almost like a practice run or something.

   

  Next step is to find university for her. Wellesley is ideal. More communists than all of Soviet Union, except parents drive Cadillacs (sort of like our ZiL, but wheels stay on).

   

  Yours in earnest progress,

  Sergei

  Occasionally Agent Potrov would vanish from the attention of his Soviet overlords, as this urgent 1967 cable shows:

  Comrade Sergei Potrov,

   

  We have not heard from you since you volunteered to investigate the ‘counterculture movement’ in San Francisco three months ago. We assume that your one message, requesting ‘more bread, man’ to buy ‘reefer and doobies’, was written in a code unknown even to our finest cryptographers.

   

  Also, the message was sent on paper from which several strips had been torn. Have you insufficient funds to purchase cigarettes? Please contact your superiors immediately. And stop playing Creedence on our interspy sonic network. This is not what the Soviet surveillance system is for.

   

  Yours in concern,

  Central Command

  During the mid-70s, the Russians toast a mission-advancing coup:

  It is not to be believed! Hillary is getting married – to a man! You owe me 50 rubles, Dimitri.

   

  The fellow is Bill, called by friends ‘horn dog’, ‘el squeezo’ and ‘the Arkansas assman’. He is very political. All his girlfriends say so. By ‘all his girlfriends’, I mean whole female population of Little Rock. He go through them like great winter purge of traitor generals.

   

  This can only assist our mission. Perhaps this Bill will even make it to the White House, if he can keep it in his pants for long enough (is phrase I pick up here).

   

  Yours in jubilation,

  Sergei

  Even tectonic global changes could not sway Agents Potrov and Bienko from their cause:

  Dearest Sergei,

   

  Alas, our beloved Soviet Union is no more. Gorbachev has ruined everything. Please do not give up on Operation Cankles. It may prove to be the final major accomplishment of our great land and heroic peoples.

   

  In other news, our budget has been slightly trimmed. Suggest you monitor Hillary from American streets, where lucrative sign-holding job will provide cover and help pay rent.

   

  Yours in Glasnost,

  Dimitri

  Finally, on November 8, 2016, Sergei’s long mission comes to a victorious conclusion – on the veteran agent’s 94th birthday:

  Dearest Dimitri,

   

  I know you have been dead ten years already, but I write to you for fondness and memories. Great friend, it is done. All that we have worked for, all that we have planned, all that we have dreamed. Our unelectable candidate was truly unelectable. Even the other patients here in the home did not vote for her. One voted for Eisenhower.

   

  My time is not long, Dimitri. Soon I shall see you again, in the heaven that is a frozen-solid Siberian grave. We will rest in honour. Our work on this earth is complete.

   

  Yours in espionage,

  Sergei

  Satirical Source: The Daily Telegraph

  

  

• As Mystery Of China's Multi-Billionaire Default Deepens, A New "Bond Scare" Emerges

  Last week, in a largely “under the radar” event, one of China’s wealthiest billionaires (if only on paper), Wu Ruilin, chairman of the Guangdong based telecom company Cosun Group, and whose personal fortune of 98.2 billion yuan ($14 billion) makes him wealthier than Baidu founder Robin Li who is ranked 8th on the Hurun Rich List 2016, shocked Chinese bond market watchers when he defaulted on a paltry 100 million yuan ($14 million) in bonds sold to retail investors through an Alibaba-backed online wealth management platform, citing “tight cash flow.”

  Needless to say, many were stunned that a billionaire for whom $14 million is pocket change, blamed “tight cash flow” for defaulting on mom and pop investors. In any case, as South China Morning Post reported, despite the founder’s personal fortune, according to a notice put up by the Guangdong Equity Exchange on Tuesday, two subsidiaries of Cosun Group are each defaulting on seven batches of privately raised bonds they issued in 2014. According to the notice, “the issuer had sent over a notice on December 15, claiming not to be able to make the payments on the bonds on time, due to short-term capital crunch.”

  To be sure, yet another default in a Chinese landscape suddenly littered with bankrupting debt dominoes would have been the end of it, however this morning Reuters added to the mystery when it said that the fate of the defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online wealth management platform was thrown into doubt on Monday, after a bank said letters of guarantee for the bonds were counterfeit.

  Quoted by Reuters, China Guangfa Bank Co Ltd (CGB) said guarantee documents, official seals and personal seals presented by the insurer of the bonds “are all fake” and that it has reported the matter to the police.

  The dispute highlights challenges in China’s loosely regulated online finance industry, where retail investors often buy high-yielding bonds and other assets, expecting them to be “risk-free” due to guarantees provided by various parties.

  As first reported last Wednesday, at the center of the latest dispute are up to 312 million yuan ($45 million) worth of high-yielding bonds issued by southern Chinese phone maker Cosun Group that defaulted this month. The bonds were sold through Zhao Cai Bao, an online platform run by Ant Financial Services Group, the payment affiliate of e-commerce firm Alibaba Group Holding Ltd.

  Ant Financial has asked Zheshang Property and Casualty Insurance Co Ltd, which wrote insurance on the bonds, to repay investors. On Sunday, Zheshang Insurance published two documents on its website that it said were from CGB carrying the bank’s official seals, and that guaranteed Zheshang Insurance policies for the Consun bonds. The letters were issued at CGB’s Huizhou branch in December 2014, when the Cosun bonds were sold, Zheshang Insurance said.

  And yet, suggesting there is a massive landmine hiding just below the surface of China’s bond market, far worse than merely the consequences rising interest rates, on Monday, CGB said the documents were fake and that it had reported the incident to police as “suspected financial fraud.”

  While material misrepresentation of facts in Chinese finance is hardly new, the recent alleged violations usher in a whole new breed of fraud, one which is far less nuanced and far more simpllistic and includes outright forgeries of documents that backstop tens if not hundreds of billions in debt. The Cosun dispute follows similar instances of financial fraud this year including forged bond agreements that led to brokerage Sealand Securities sharing potential losses of up to $2.4 billion. In May, the government advised banks to be vigilant after several cases of bill fraud.

  Ant Financial on Tuesday said Zheshang Insurance “hasn’t any reason to refuse repayment” which it was obliged to do “within three days” of default.

  Making matters worse, the fraud has taken place in the context of a bond default that, according to an Ant Financial spokeswoman cited by Reuters, was a “a one in billions incident” on the platform.

  Incidentally, Cosun’s bond issuance totals 1 billion yuan, according to Zheshang Insurance. The insurer’s total registered capital is 1.5 billion yuan.

  Should more such “one in billions incidents” emerge, Chinese bond investors – already freaked out by the recent record plunge in Chinese govt bond futures, soaring overnight funding rates, and fears over Fed rate hikes – will rush for the exits just as China’s housing bubble is also popping as reported yesterday, leading to a rerun of the US 2006/2007 dual bursting of the housing/credit bubbles, only this time instead of an $8 trillion financial system, the world will have to backstop China… whose banking system at last check had over $30 trillion in liabilities.

  Incidentally, we wonder if now that China’s bond insurers are also under the spotlight, if that means China’s very own MBIA/Ambac moments is imminent, as billions in bond insurance contracts are deemed “fake” by the insurers who would rather not pay up on what is set to be an avalanche of defaults.

  * * *

  Finally, for those interested in what Bloomberg last week dubbed the “latest China Finance Scare”, namely outright forgeries in various debt products, mostly focusing on Entrusted Bonds, here is a useful primer courtesy of BBG:

  There’s another Chinese financial practice that’s prompting high-decibel warnings. So-called entrusted bond holdings are a way for financial institutions to skirt rules on using borrowed money to invest in bonds. How? By getting a third party to buy the bonds and agreeing to purchase them at a later date. What could possibly go wrong? How about the worst rout in China’s bond market in a decade. That’s left regulators concerned about the prospect of investors failing to make good on such arrangements, estimated to involve at least $144 billion of bonds.

  1. Why entrust us with this news only now?

  Concerns about entrusted bond holdings have worsened the tumble in the debt market. Last week, Caixin cited market rumors when it reported a brokerage called Sealand Securities Co. had refused to take over bonds held by a counterparty. That got investors worried. Oversea-Chinese Banking Corp. then said in a note, citing media reports it didn’t identify, that the entrusted holding agreement may have been tied to alleged fraud by ex-staff. Sealand cleared the air when it said it would in fact fulfill the bond contracts that had been stamped with a forged seal. The whole incident was enough to frighten an already jittery market.

  2. So why do investors use entrusted holding agreements?

  Brokerages and other institutional investors ask counterparties to buy bonds from them when they need to circumvent internal rules on note holdings and leverage, according to Xu Hanfei, a bond analyst at Guotai Junan Securities Co. Or they can simply have third parties buy the notes directly from the market. The practice boosts leverage by effectively giving the financial institutions loans: As brokerages and institutional investors don’t carry the bonds on their books, they can use the funds freed up on paper to purchase more bonds, which can then be rolled into more such agreements. “Non-bank financial institutions, which emphasize returns, have more motivation to amplify leverage through entrusted holdings,” said Li Liuyang, a market analyst at Bank of Tokyo-Mitsubishi UFJ in Shanghai.

  3. How widespread is the practice?

  Outstanding entrusted holdings are “in the trillions of yuan,” according to Guotai Junan’s Xu. That estimate is based on the bond holdings of the brokerages and smaller banks that are major participants in such transactions. That means the amount of money tied up in such deals is at least 5 percent of the 21 trillion yuan ($3 trillion) of outstanding corporate notes in China, according to data compiled by Bloomberg.

  4. What broader risks does it pose to China’s financial markets?

  A default in an entrusted holding could turn what otherwise might have been a problem with one company’s liquidity into a broader credit event, given that multiple parties may be involved, according to Li at Bank of Tokyo-Mitsubishi UFJ. Li says “everyone is worried about similar situations in their transactions with non-bank financial institutions.” OCBC said that things had got so bad that banks were reluctant to lend to non-bank institutions amid a breakdown in trust between investors.

  5. What are regulators doing about it?

  Authorities including the central bank and the China Securities Regulatory Commission are investigating some financial institutions’ entrusted bond holdings after the Sealand incident, people familiar with the matter said Tuesday. The holdings run contrary to the central bank’s push to trim investments made on borrowed money, according to China Merchants Bank Co. “It’s just a question of when Chinese regulators will clean up entrusted bond holdings,” said Liu Dongliang, a senior analyst at the bank. Tommy Xie, an economist in Singapore at OCBC, says China’s market rout may prompt regulators to strengthen rules on entrusted holdings. He describes them as “a common practice in the grey area of the bond market.”

  

  

• The Future Of Passports (& Citizenship By Investment)

  Submitted by Jeff Thomas via InternationalMan.com,

  "The bottom line is that anyone can be ISIS. We therefore need an approach to securing civilized societies that doesn't allow individuals to hide behind the cloak of Western passports… The time has come for a "global passport," a parallel digital certification of a person's identity, background, criminal record, travel history, and other details. The digital record would be regularly updated based on databases from airlines, customs agencies, banks and other sources, and could be managed by an independent international authority.”

  The above quote comers from CNN, an American news network that has done such an exemplary job in recent years in serving as a mouthpiece for the US Government.

  The argument for global passports is a familiar one – “You are in danger of being killed by terrorists. We will save you by removing yet another of your freedoms.” Or, as Hermann Goering said,

  “The people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”

  Over one billion people presently cross borders each year. In addition, there are over 250 million people who are expatriates – living outside their home country. These numbers are higher than ever before in history and growing. As The Great Unravelling progresses, we will witness a dramatic increase in both statistics. Along the way, we can expect the more restrictive governments, particularly those of the EU and US, to institute limitations on travel for their citizens, in order to keep them captive at home.

  So, we can therefore anticipate changes in the issuance of passports. There are two concepts afoot with regard to the future of passports, and they’re direct opposites of each other. The first is for a Global Passport, that all countries would issue and all would share computer information on all passport holders. The other is a proliferation of passports created by an easing of citizenship requirements in small countries, resulting in each individual having the ability to possess several passports, thus diminishing his “ownership” by his home country.

  These two concepts are both almost certain to develop considerably in the coming years and for the same reason. As stated, the more restrictive countries are likely to push for a global passport – an Orwellian document that says, “No matter where you are, you travel on our document. We have all your information and we own you.” The more this trend increases in prominence, the more the second trend will increase, in direct reaction. More and more countries will offer citizenship to non-nationals, as the demand for freedom increases amongst oppressed people.

  Most of the countries that presently offer “Citizenship by Investment” are small countries – Malta and Cyprus in the Mediterranean, plus five island nations in the Caribbean: Grenada, Antigua & Barbuda, St. Kitts & Nevis, Dominica and, recently, St. Lucia.

  A visit to any of the small Caribbean countries will reveal that since the decline of the sugar industry, they have had few choices with regard to future prosperity. Quaint small towns and villages and nice beaches attract a certain amount of tourism, but something greater is needed to support an entire population. Decades ago, St. Kitts & Nevis decided to try Citizenship by Investment. At first, the takers were few, but, in recent years, with much of the world imploding, the programme has attracted greater interest.

  The way it works is that an applicant can either buy citizenship (approval takes only a month or two) for $250,000, or he can buy into a real estate project for $400,000 or more. Due to recent success, other island nations have jumped on board, offering their own programmes… and here’s where it gets interesting.

  As soon as eight or 10 island nations are offering similar programmes, it will become a citizenship norm for the Caribbean. And, of course, that will mean competition will develop. With many countries to choose from, prices will need to drop. At some point, national leaders will seek to increase gross sales by lowering the sale price. Although $400,000 is out of reach to most who dream of buying an alternate passport, there will be far more takers at $200,000 or even $100,000, but I believe the magic price point to be $50,000. At that price, hundreds of thousands of second-passport seekers will jump on board. Indeed, many will purchase passports from several islands. (If one backup passport is good, multiple backup passports are better.)

  But, why are “bargain” passports not already available? From my own experience, as a West Indian, this is due to the fact that our political leaders often fear a dramatic influx of new voters. They feel safer appealing to natives than outsiders and worry that the electorate balance may be upset and cost them their seats in future elections.

  Yet, many West Indian countries already have laws that limit the rights of new citizens (with particular regard to the right to run for public office). To date, none of these countries has figured out that citizenship without the right to vote is an easy solution. Once they twig onto this new category of citizenship, we may see a major drop in citizenship costs and a dramatic increase in the number of applicants.

  At present, the passport schemes have attracted Russians, Canadians, Middle Easterners, Chinese and, increasingly, Americans. At present, the US is the foremost objector to Citizenship by Investment, describing its purpose to be “to provide cover for financial crimes.” However, over one hundred other countries, including most of Europe, accept the passports and the US is very much in the minority here.

  This is an issue to be watched closely. Historically, whenever governments have put the squeeze on their citizens’ freedoms, citizens have reacted by trying to wriggle out. The squeeze in many countries is presently at its zenith and many, many people are voting with their feet. There will always be takers in the world when this occurs and, in the Caribbean, opportunities for increased freedom are very much on the increase.

  *  *  *

  A second passport is the ultimate insurance policy against an out-of-control government. Think of it as your “freedom insurance.” The rules on second passports can change quickly. This is why it’s so important to have the most up-to-date, accurate, and actionable information out there. Be sure to get the guide we just released on the easiest countries to get a second passport from. Click here to download the PDF.

  

  

• Did Donald Trump Just Jump The 'Dow 20,000' Shark?

  It appears the sugar-high from holiday celebrations is still running through president-elect Trump's veins as his tweets took an even more narcisistic tone on this oh-so-aptly-named 'Boxing Day' in America.

  First Trump decided to take credit for the unprecedented short-squeeze in US stock markets – and the Christmas spending numbers…

  The world was gloomy before I won – there was no hope. Now the market is up nearly 10% and Christmas spending is over a trillion dollars!

  — Donald J. Trump (@realDonaldTrump) December 26, 2016

  We just wonder what he will sat if/when Goldman Sachs stops rising and stocks tumble ("never gonna happen", probably The Fed's fault after all), but perhaps even more importantly, how does he feel about the $1.2 trillion of value he has erased from global capital markets since his election?

  

   

  The drop in global debt and equity values in Q4 2016 is very reminiscent of the drop into 2015's Fed rate hike… which did not end well…

  

   

  But, the last time that global stocks and global bonds decoupled so aggressively was following the end of QE3… here's what happened next…

  

  But it's probably different this time, right? China is fine (oh wait, failed auctions and liquidity crisis), Europe is fine (oh wait, Italian banks are collapsing), and the US economy is great (oh wait, automakers are shuttering plants due to credit-created excess inventory).

  *  *  *

  But Trump was not done there, he took on the arrogance of Obama, as we detailed earlier…

  President Obama said that he thinks he would have won against me. He should say that but I say NO WAY! – jobs leaving, ISIS, OCare, etc.

  — Donald J. Trump (@realDonaldTrump) December 26, 2016

  Invincible politician and stock market savior…Let's just hope nothing goes wrong to break that narrative in the next 4 years (or 4 weeks).

  

  

• Exit, Hope & Change – The Obama Post-Mortem

  Submitted by Howard Kunstler via Kunstler.com,

  By now, anyone in this country still of sound mind knows that Barack Obama presided through eight years of remarkable continuity – of changeless conditions that left a great many hopeless. As the days of his tenure dwindle, what do we make of the departing 44^th president?

  He played the role with cool-headed decorum, but that raises the question: was he just playing a role? From the get-go, he made himself hostage to some of the most sinister puppeteers of the Deep State: Robert Rubin, Larry Summers, and Tim Geithner on the money side, and the Beltway Neocon war party infestation on the foreign affairs side. I’m convinced that the top dogs of both these gangs worked Obama over woodshed-style sometime after the 2008 election and told him to stick with the program, or else.

  What was the program?

  On the money side, it was to float the banks and the whole groaning daisy chain of their dependents in shadow finance, real estate, and insurance, at all costs. Hence, the extension of Bush Two’s bailout policy with the trillion-dollar “shovel-ready” stimulus, the rescue of the car-makers, and a much greater and surreptitious multi-trillion dollar hand-off from the Federal Reserve to backstop the European banks with counter-party obligations to US banks.

  In April of 2009, Obama’s new SEC appointees, strong-armed by bank lobbyists, pushed the Financial Accounting Standards Board (FASB) into suspending their crucial Rule 157, which had required publically-held companies to report their asset holdings based on standard market-based valuation procedures — called “mark-to-market.” After that, companies like Too-Big-Too-Fail banks could just make shit up. This opened the door to the pervasive accounting fraud that allowed the financial sector to pretend it was healthy for the eight years that followed. The net effect of their criminal fakery was to only make the financial sector artificially larger, more dangerously fragile, and more prone to cataclysmic collapse.

  Another feature of life on the money-side of the Obama presidency was that nobody paid a personal price for financial misconduct. This established the basic ethos of Obama-era finance: anything goes, and nothing matters. All the regulators looked the other way most of the time. And when forced to act by egregious behavior, they made deals that let banking executives off-the-hook while their companies shelled out fines that amounted to the mere cost of doing business. It happened again and again. The poster boy for this kind of “policy” — or just plain racketeering — was Jon Corzine, the head of the commodities brokerage MF Global, whose company looted “segregated” customer accounts to the tune of nearly a billion dollars in the fall of 2011. Corzine was never prosecuted and remains at large to this day.

  Another signal failure in the money realm was Obama’s response to the 2010 Citizen United Supreme Court decision, which declared that the alleged legal “personhood” of corporations entitled them to exercise “free speech” by giving as much money as they wanted to political candidates for election. Big business no longer had to just rent congressmen and senators, they could buy them outright with cash.

  A conservative Supreme Court made the call, but Obama could have acted forcefully in the face of it. The former constitutional law professor-turned-politician could have marshaled a response in his Democratic Party-controlled congress to draft legislation, or a constitutional amendment, that would properly redefine the personhood of corporations. It should be obvious, for instance, that corporations, unlike human citizens, do not have duties, obligations, and responsibilities to the public interest; by legal charter they have only to answer to their shareholders and boards of directors. How does this confer the kind of political free speech “rights” that the court allowed them to claim? And how did the Obama and his allies in the legislative branch roll over to allow this disgraceful affront to the constitution to stand? And how is that almost nobody in the mainstream press or academic law even pressed these issues? Thanks to all of them, we’ve set up the primary means for establishing a fascist Deep State: the official marriage of corporate money and politics. Anything goes and nothing matters.

  Finally, in foreign affairs, there is Obama’s mystifying campaign against the Russian Federation. The US had an agreement with Russia after the fall of the Soviet Union that we would not expand NATO if they gave us a quantity of nuclear material that was in danger of falling into questionable hands in the disorder that followed the collapse. Russia complied. What did we do? We expanded NATO to include most of the former eastern European countries (except the remnants of Yugoslavia), and then under Obama, NATO began holding war games on Russia’s border. For what reason? The fictitious notion that Russia wanted to “take back” these nations — as if they needed to adopt a host of dependents that had only recently bankrupted the Soviet state. Any reasonable analysis would call these war games naked aggression by the West.

  Then there was the 2014 US State Department-sponsored coup against Ukraine’s elected government and the ousting of President Viktor Yanukovych. Why? Because his government wanted to join the Russian-led Eurasian Customs Union instead of an association with European Union. We didn’t like that and we decided to oppose it by subverting the Ukrainian government. In the violence and disorder that ensued, Russia took back the Crimea — which had been gifted to the former Ukraine Soviet Socialist Republic (a province of Soviet Russia) one drunken night by the Ukraine-born Soviet leader Nikita Khrushchev. What did we expect after turning Ukraine into another failed state? The Crimean peninsula had been part of Russia for longer than the US had been a country. Its only warm water naval ports were located there. They held a referendum and the Crimean people voted overwhelmingly to return to Russia. So, President Obama decided to punish Russia with economic sanctions.

  Then there was Syria, a battleground between the different branches of Islam, their sponsors (Iran and Saudi Arabia), and their proxies, (Hezbollah and the various Salafist jihad armies). The US “solution” was to sponsor the downfall of the legitimate Syrian government under Bashar al-Assad. We apparently still favored foreign relations based on creating failed states — after our experience in Iraq, Somalia, Libya, and Ukraine. President Obama completely muffed his initial attempt at intervention — the “line-in-the-sand” moment — and then decided to send arms and money to the various Salafist jihadi groups fighting Assad, claiming that our bad guys were “moderates.” Meanwhile, Russia stepped in to prop up Assad’s government, apparently based on the idea that the Middle East didn’t need yet another failed state. We castigated Russia for that.

  The idiotic behavior of the US toward Russia in these matters led to the most dangerous state of relations between the two since the heart of the Cold War. It culminated in the ridiculous campaign this fall to blame Russia for the defeat of Hillary Clinton. And here we are.

  I didn’t vote for Hillary or Donald Trump (I wrote-in David Stockman). I’m not happy to see Donald Trump become president. But I’ve had enough of Mr. Obama. He put up a good front. He seemed congenial and intelligent. But in the end, he appears to be a kind of stooge for the darker forces in America’s overgrown bureaucratic Deep State racketeering operation. Washington truly is a swamp that needs to be drained. Barack Obama was not one of the alligators in it, but he was some kind of bird with elegant plumage that sang a song of greeting at every sunrise to the reptiles who stirred in the mud. And now he is flying away.

   

  

  

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• A Loser's Malice: What's Behind Obama's Attacks On Putin

  Submitted by Michael Jabara Carley via Strategic-Culture.org,

  Relations between Russian president Vladimir Putin and US president Barack Obama are poisoned and irretrievably damaged. It’s therefore a good thing that Obama is leaving office on 20 January. Bad US-Russian relations are of course nothing new. Since the Anglo-American war against Iraq in 2003, the US-Russian relationship has been headed downhill. For Obama, it appears that everything has gotten personal. The US president often acts like a petulant adolescent, jealous of a high school rival. You know, the kid who does everything better than he does. The lad takes it badly and won’t let it go. He challenges his nemesis to some new contest at every opportunity only to lose again and again. That’s got to be hard on the ego. Between Obama and Putin there have been many such encounters. Nor can it help that western cartoonists so often ridicule Obama as out of his depth in comparison to Putin.

  Let’s consider Obama’s remarks at his last press conference on Friday, 16 December. «The Russians can’t change us or significantly weaken us», said Obama: «They are a smaller country. They are a weaker country. Their economy doesn’t produce anything that anybody wants to buy, except oil and gas and arms. They don’t innovate». This was insulting both Putin and his country, but not enough apparently for Obama. «They [the Russians] can impact us if we lose track of who we are. They can impact us if we abandon our values. Mr. Putin can weaken us, just like he’s trying to weaken Europe, if we start buying into notions that it’s okay to intimidate the press, or lock up dissidents, or discriminate against people because of their faith or what they look like».

  

  Western cartoonists so often ridicule Obama as out of his depth in comparison to Putin

  What on earth is Mr. Obama talking about? Intimidate the press? The Moscow newspapers and television media are loaded with «liberals». Many Russians call them «fifth columnists». They are «people with ‘more advanced’ worldview[s] who do not tolerate ‘Russian propaganda’ themselves», according to one colleague in Moscow. But Mr. Putin tolerates them and pays them no mind.

  «Lock up dissidents… discriminate against people»? What alternate reality does Mr. Obama live in? Doesn’t produce anything people want to buy? The United States buys rocket engines that it does not now produce at home. Maybe the Americans, a Russian commentator joked, can use high tech trampolines to get into space and do without Russian technology.

  In an interview the previous day with the American National Public Radio Obama ranted about Putin. It must have been a rehearsal for his press conference. «This is somebody, the former head of the KGB», said Obama, «who is responsible for crushing democracy in Russia… countering American efforts to expand freedom at every turn; is currently making decisions that's leading to a slaughter in Syria». What stupefying hypocrisy; what utter nonsense. Putin was a lieutenant colonel in the KGB, but never its head, and he certainly has not «crushed democracy in Russia». He even treats his political opposition with respect compared to Obama who dismisses president-elect Donald Trump as some kind of Russian Manchurian candidate. The Russians, according to Obama, interfered in the US presidential elections, and helped defeat fellow Democrat Hillary Clinton. They hacked the Democratic National Committee’s hard drive and passed thousands of emails to WikiLeaks, although, according to others, an outraged Clinton insider leaked the cache of embarrassing emails. Obama has dismissed that possibility. The Russians did the hack, he insists , and Putin must be held personally responsible.

  

  In Syria, the United States and its NATO and regional vassals are waging a war of aggression against the legitimate government in Damascus, backing jihadist terrorists

  Where’s the evidence? In Moscow, an angry Putin challenged Obama to put up or shut up. This is a hard thing for Obama to do. The Russians, he says, «counter American efforts to expand freedom at every turn». One wonders where that would be. In the Ukraine where the United States and European Union backed and guided the coup d’état against the democratically elected Ukrainian government? Or in Syria where the United States and its NATO and regional vassals are waging a war of aggression against the legitimate government in Damascus, backing jihadist terrorists? How many democratic governments or popularly supported political movements has the United States plotted against or destroyed since 1945? The list is long, including the 1996 Russian presidential election.

  

  Remember 2013, when the US government started a propaganda campaign about Syrian chemical weapons and warned of «red lines» that could not be crossed?

  Obama directly raised the issue of Syria during his NPR interview. The liberation of E. Aleppo from Al-Qaeda and other jihadists has infuriated the west. To the everlasting shame of France, the Eiffel Tower was darkened to mourn the defeat of Al-Qaeda. The Mainstream Media (MSM) is up in arms. Russia, Iran, Hezbollah, Palestinian and Iraqi militias have helped the Syrian Arab Army to cleanse Aleppo of jihadist terrorists, and thwart the United States and its vassals. This is what galls Obama, being outmanoeuvred by a lesser man than he and a lesser country than the United States. How deplorable to speak of the liberation of E. Aleppo as «a slaughter in Syria».

  Obama’s frustrations began several years ago. Remember back in 2013, when the US government started a propaganda campaign about Syrian chemical weapons and warned of «red lines» that could not be crossed? Apparently, the US government came within an ace or two of launching massive air attacks on Syria. Putin intervened and the Syrian government gave up its chemical weapons, removing the US pretext for intervention. The print media had a field day showing Putin helping Obama out of a corner of his own making. All the while, Putin kept urging Russian-US cooperation against the jihadists in Syria, trying to draw the United States away from its ruinous policies. To no avail. Who then acted with greater statesmanship, Putin or Obama?

  

  In 2013, when the US government started a propaganda campaign about Syrian chemical weapons, Putin intervened and the Syrian government gave up its chemical weapons, removing the US pretext for intervention. The print media had a field day showing Putin helping Obama out of a corner of his own making.

  Temporarily thwarted in Syria, the United States opened up a new front on Russia’s southern frontier in the Ukraine. It backed the coup d’état in Kiev and turned a blind eye to the fascist vanguard, which kept the new Ukrainian junta in power. «The fascists are just ‘a few bad apples’», officials said in Washington, thinking that NATO had scored a great victory in getting its hands on Sevastopol so it could kick the Russian Black Sea fleet out of its traditional home base.

  You have to give credit to Obama; he was ambitious, aiming for a big prize and the humiliation of Russia and its president. Again, he was thwarted not so much by President Putin but by the Russian people of the Crimea who immediately mobilised their local self-defence units backed by «polite people», Russian marines stationed in Sevastopol, to kick out the Ukrainians with scarcely a shot fired. They organised a referendum to approve entry into the Russian Federation. Reunification was quickly approved by a huge majority and celebrated in Moscow. Putin gave a remarkably candid speech, explaining the Russian position. «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory. I simply cannot imagine that we would travel to Sevastopol to visit NATO sailors. Of course, most of them are wonderful guys, but it would be better to have them come and visit us, be our guests, rather than the other way round».

  

  «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory», Putin said

  It all happened so quickly, Obama must have looked on, dumbfounded, sputtering with angry frustration at having been outmanoeuvred by Crimean Russians who knew a thing or two after all about «innovating» and defending their land. Russians in the eastern Ukraine also resisted, taking up arms to defend themselves against Kiev’s fascist battalions.

  That was too much. Putin became Obama’s nemesis. The US president struck back with economic sanctions, which his European vassals quickly endorsed. When Malaysian Airlines, MH17, was shot down over the eastern Ukraine, Obama and the EU at once accused Putin of being responsible without a shred of evidence. In fact, the available evidence points to the Kiev junta as the guilty party, but the MSM paid no attention. It ran an orchestrated propaganda campaign leading to harder sanctions against Russia intended to sabotage the Russian economy and break the Russian government.

  Obama and his advisors again miscalculated. The Russian government instituted its own sanctions against the EU, and looked for other sources of supply or replaced foreign imports with Russian products. «We can do without Polish apples and French cheese», most Russians thought. «Liberals» sulked over the loss of their camembert, but that’s a small price to pay for Russian independence. Obama was outsmarted again by Russians who, he insists, can’t innovate. As for the EU, it suffered huge economic losses because of sanctions at American behest in a classic case of shooting oneself in the foot. It’s getting to be a habit; the EU has again renewed its sanctions against Russia.

  

  The EU has suffered huge economic losses because of its anti-Russia sanctions at American behest in a classic case of shooting oneself in the foot.

  Whilst the Ukrainian crisis dragged on, Obama had to turn his attention back to Syria. In the autumn of 2015, Putin ordered Russian aerospace and naval forces to intervene on behalf of the hard-pressed Syrian government which asked for assistance against the western-backed jihadist invasion. The tide of battle slowly turned. Again, Obama was caught off guard; again, the US plan to overthrow the Syrian government was thwarted by Obama’s nemesis. The United States tried bogus truces to allow its jihadist mercenaries to refit and resupply. At first, the Russians did not seem to catch on, accepting American proposals as genuine. They had to learn the hard way, but they did eventually. The liberation of E. Aleppo, although overshadowed by the simultaneous loss of Palmyra, is another blow to Obama’s policies and to his fragile ego.

  

  How could this «weaker… smaller country» outsmart the all-powerful Mr. Obama and the great US Hegemon?

  No wonder the US president is lashing out at Putin, publically insulting him and his country. No wonder the MSM is up in arms. How could this «weaker… smaller country» outsmart the all-powerful Mr. Obama and the great US Hegemon?

  Like the USSR before it, Russia has always had to pursue a politique du faible, a poor man’s policies, never having the abundant resources of it western adversaries. Russians learned early on to innovate. The fox has to make its way in a world full of dangerous wolves.

  What Obama must hate most of all is Putin’s exposure of US support for Al-Qaeda and the Islamic State. Who indeed is responsible for the «slaughter» in Syria? Obama calls it fighting for democracy. «Airstrike democracy», Putin once derisively replied. «Do you realise what you have done?» Putin asked at the UN in 2015, shocking the MSM. Obviously not, if one is to judge by Obama’s remarks of the last few days. He’s still the obsessive adolescent with doubts about himself and in over his head against a real statesman. Thank heavens Obama is on his way out the door of the White House. It’s not a minute too soon. Olliver Cromwell’s famous remark in 1653 to the Rump Parliament seems apposite. «You have sat too long for any good you have been doing lately… Depart, I say; and let us have done with you. In the name of God, go!»

  

  

• Goldman Sachs' 2016 Review (Crossword-Style)

  2016 was chock-full of surprises, both in markets and in politics.

  As Goldman's Allison Nathan explains, the year began with a perfect storm of worries that had become all too familiar already in 2015. Oil prices plunged and fears of faltering growth and a sharp depreciation of China’s currency escalated, driving disruptive sell-offs in credit and other risk assets. Confidence in global growth faltered, particularly after an anemic US GDP report for Q1.

  But oh, how the world has changed. Today, the price of crude oil is almost exactly double its January low in the wake of announced production cuts by OPEC and key non-OPEC producers (Russia). We expect WTI oil prices to move higher to a peak of $57.50/bbl in 1H17 as the cuts push the oil market into deficit and whittle down the current large inventory surplus. But we also expect shale producers to respond to the higher prices, implying limited upside from there.

  The rebound in oil prices led to a remarkable turnaround in credit markets, with HY Metals & Mining and E&Ps returning 49% and 36%, respectively, YTD; default rates normalizing; and spreads no longer pricing recession risk. We expect a further moderate compression of spreads in 2017 given expectations of a generally positive macro environment, gradual improvement in credit fundamentals, and, of course, our somewhat rosier oil outlook.

  And fears about China have generally receded into the background as Chinese policymakers continued an ambitious stimulus program that helped stabilize growth. A more dovish tilt by the Fed in response to the tightening of financial conditions caused by the Q1 sell-off also assuaged market fears. But we warn that China risk is not far from the surface.

  Capital outflow pressures have resumed amid the renewed strengthening in the US dollar. And policies that re-ignited growth in the short-term have just increased concerns about the future, particularly as credit growth has climbed. These potentially destabilizing trends merit watching next year, despite our mainline view of orderly currency moves and a continued bumpy deceleration in Chinese growth. (Side note: Meeting growth targets will be paramount next year amid China’s leadership transition.)

  It was not long after the market left China, oil, and credit concerns in the dust that political uncertainty took center stage—a place where it has solidly remained since. Brazil had its president impeached amid one of the country’s longest recessions/depressions on record; French primaries established an unexpected presidential candidate in former Prime Minister François Fillon; and Italy will enter the new year with an interim government following the resignation of Matteo Renzi.

  And we’ve not forgotten about one of the biggest political shocks of the year (decade, century?!): the UK’s vote in favor of Brexit. The now infamous Article 50, which needs to be activated to formally start the UK’s withdrawal process, still has not been triggered, and likely won’t be before March.

  Meanwhile, UK and EU priorities for their future relationship remain at odds, leaving market participants closely watching “soft Brexit”/”hard Brexit” swings in the headlines. That said, UK growth has proved remarkably resilient, and assets have held up with the exception of sterling, which is 10% weaker than before the referendum. Next year, we expect a formal start to Brexit talks, a moderation in UK growth, and further declines in sterling as uncertainty over Brexit sinks in.

  While it was hard to trump (sorry, we couldn’t resist!) the shock of Brexit, we dare say that Donald Trump defying almost all polls and betting markets to win the US Presidential election did just that. Trump’s cabinet and policy leanings are still being sorted out, but there appears to be potential for significant change ahead, be it in taxes, or environmental policy. There is no question that the policies of the new administration and their market implications will be Top of Mind throughout 2017.

  The unexpected election outcome also super-charged the narrative around two themes already in train: the global trade slowdown and reflation. Trump’s protectionist rhetoric—and the considerable executive power he will have on trade policy—do not bode well for global trade growth, which had already slowed considerably in recent years, or for some multilateral trade deals on the table (think the Trans-Pacific Partnership or TPP). Although we are keeping an eye on potential protectionist measures (a particular risk for EM Asia and Mexico, but also a likely drag on US growth), we otherwise see signs of a moderate improvement in trade ahead. Key to watch: how countries respond to the apparent shelving of the TPP (e.g., bilateral vs. multi-lateral trade talks).

  On reflation, we expect fiscal expansion and some further tightening in the labor market to sustain inflationary momentum in the US alongside moderately stronger growth, with US 10-year yields expected to end 2017 at 2.75%. This should be good news for equity markets at first: We expect the S&P 500 to rise to 2400 through 1Q2017, but then see the index settling to 2300 by year-end as rates rise further and investors recalibrate their policy outlooks. We still caution that equities are vulnerable should rates move too much, too fast, given stretched valuations following years of exceptionally low rates.

  Lastly, despite recent market optimism about fiscal expansion providing more stimulus, central bank policy will never be too far from investors’ minds next year. (And let’s not forget that ECB and BOJ asset purchases in fact enable more fiscal spend, so the lines between monetary and fiscal policy continue to blur.) We expect an acceleration of divergence as the Fed follows last week’s hike with three more in 2017 while the ECB and BOJ continue their asset purchases under new and apparently more sustainable parameters.

  Between this divergence, Trump, China, and a number of important European elections, 2017 is sure to be yet another interesting year for markets.

  We wish you a happy, healthy, and prosperous New Year.

  *  *  *

  While you're relaxing on the sofa, full of food, and wine,  here's Goldman's year-end crossword…

  

  

   

  Solution here.

  

  

• How Americans Spent Their Money In The Last 75 Years (In 1 Simple Chart)

  Consumer spending makes up a large percentage of the United States economy. We all have bills to pay and mouths to feed, but where do Americans spend their money? Here is a breakdown of how Americans spent their money in the last 75 years…

  

  In the chart above, spending is broken into 12 categories: Reading, alcohol, tobacco, education, personal care, miscellaneous, recreation & entertainment, healthcare, clothing, food, transportation and housing. Each category is further broken down into spending by year, from 1941 to 2014, and each category is given a unique color. The data were collected from the Bureau of Labor Statistics. The data is adjusted for inflation and measures median spending of all Americans.

  Unsurprisingly, housing expenses have almost always been the largest area of spending in America for over 70 years. The only exception is 1941, when spending on food averaged $8,311, whereas spending on housing came to $7,537. However, in 1941 the government included alcohol in the food spending category, which inflates the food spending data for that year. In the other years, alcohol was given its own category. In every other year measured, spending on housing outpaced every other category.

  Another interesting trend is the downward slope of spending on clothing. Americans spent the most on clothing in 1961 for an average of $4,157. In every year measured since 1961, spending on clothing fell, even when accounting for inflation.

  At the same time, Americans began spending more on education, transportation and healthcare. Spending on education has increased far more than any other category, jumping from $242 in 1941 to $1,236 in 2014. Education spending increased at a particularly fast rate between 1984 and 1994 and onward. While spending on healthcare increased between 1941 and 2014, overall spending dipped between 1973 and 1984, but then began rising rapidly thereafter.

  Between 1941 and 2014 Americans spent money on most of the same things, with a few changes. Housing has persisted as a large area of spending for Americans, as has the food category. However, spending on food and clothing has fallen when adjusting for inflation while spending on education and healthcare has risen quickly.

  Source: HowMuch.net

  

  

• The 'Triggered' 12 Days Of Trumpian Christmas

  It’s been quite a year…

  

  Source: Ben Garrison

  

  

• At What Age Do You Outgrow IKEA?

  By Priceonomics

  

  If you’re a twenty something, it may already have happened: that awkward moment when you realize all your friends have the same Pinsoshen coffee table from IKEA. 

  The Swedish brand’s reputation for stocking stylish furniture and selling it for low prices has made it a one-stop shop for cash-strapped students furnishing their first apartments. 

  But when do they leave IKEA behind in favor of something more grown-up? We wanted to find out, so we analyzed data from Earnest , a Priceonomics customer. We analyzed a dataset of more than 10,000 anonymous user responses on spending habits. When does it begin? When does it end? And where do people turn when they’re ready for something new? 

  We first wanted to know how reliance on IKEA changes over a person’s lifetime, so we calculated the percent of our clients who shopped at IKEA. For the sake of comparison, we did the same for Lowe’s, a home improvement chain with similar overall popularity within our dataset.

  As it turns out, age 34 is when you start to outgrow IKEA:

  
  Data source: Earnest

  It’s written in the data: you’re more likely to buy from IKEA when you’re 24 than at any other time in your life. IKEA remains popular throughout the late 20s and early 30s, but drops after age 34. We may as well call the 10-year period spanning the mid-20s and mid-30s the “IKEA decade.”

  Lowe’s, meanwhile, shows the opposite trend: people are more likely to shop there as they get older. This makes sense, as increasing homeownership means more home improvement projects.

  We wanted to further explore where shoppers turn once they grow out of their IKEA interiors. For each of 14 top furniture retailers, we found the age when the most respondents reported shopping at that store. We tabulated those “peak customer ages” below.

  
  Data source:  Earnest

  Not only is IKEA popular among young adults, it is the only retailer with a peak customer age below 30. 

  People in their 30s are more likely to shop stores that specialize in housewares and home accessories like Bed Bath & Beyond and Williams-Sonoma – perhaps because their IKEA furniture is still serving them well. 

  The oldest customers in our dataset prefer to do it themselves, favoring Home Depot and Lowe’s. When buying ready-to-use furniture, they visit big-box retailers like Ashley Furniture.

  Beyond age, we were curious about which personal attributes predict furniture retailer preference. We calculated the percent of men and women in our sample claiming to shop each brand.

  
  Data source:  Earnest

  By and large, men and women visit the same stores when they go furniture shopping. And they visit IKEA in particularly even numbers. But do-it-yourself stores like Home Depot and Lowe’s are visited by men more often than women, and women visit most of the other stores we considered in greater numbers than men.

  Does geographic location influence retailer preference? We next looked at the percent of respondents from each state who identified themselves as IKEA shoppers. Results are listed below for all states for which we had at least 10 respondents.

  
  Data source:  Earnest

  The Swedish brand began its North American expansion in the mid-Atlantic states, and this region still has the most IKEA brick-and-mortars. But it doesn’t lay claim to the most shoppers; that distinction goes to the Midwest and West Coast, which are home to the top 8 states.

  This ranking is curiously uncorrelated to a listing of IKEA’s store locations. The top 4 states have just one store apiece. The popularity of IKEA in the west may have less to do with store ubiquity and more to do with lifestyle attributes that make the brand a natural fit.

  

  

• Singer George Michael Dead At 53

  In a year that has claimed the lives of some of the most prolific and visible musical talents of more than one generation, including Prince and David Bowie, it is morbidly fitting that the man who gave us “Last Christmas”, George Michael, passed away on Christmas Day, “peacefully at home” according to his publicist.

  As the BBC first reported, the star, who launched his career with Wham in the 1980s and later continued his success as a solo performer, is said to have “passed away peacefully at home”.

  

  Thames Valley Police said South Central Ambulance Service attended a property in Goring in Oxfordshire at 13:42 GMT. Police say there were no suspicious circumstances.

  The cause of death has not been revealed.

  Michael, who was born Georgios Kyriacos Panayiotou in north London, sold more than 100m albums throughout a career spanning almost four decades.

  In a statement, the star’s publicist said: “It is with great sadness that we can confirm our beloved son, brother and friend George passed away peacefully at home over the Christmas period.

  “The family would ask that their privacy be respected at this difficult and emotional time. There will be no further comment at this stage.”

  Michael nearly died from pneumonia in late 2011. He received treatment in a Vienna hospital after which he made a tearful appearance outside his London home.

  He said it had been “touch and go” whether he lived. Surgeons had performed a tracheotomy to keep his airways open and he was unconscious for some of his time in hospital.

  Michael’s 1990 album Listen Without Prejudice Vol. 1 had been set to be reissued.

  It was due to be accompanied by a new film featuring Stevie Wonder, Elton John and the supermodels who starred in the video to his hit single Freedom! ’90.

  * * *

  Together with so many other greats who passed away in 2016, we thank George for the memories.

  

  

• Bank Of Canada Lays Out In YouTube Clip How The Economy Could Tank

  As MacLean’s Jason Kirby points out, the Bank has taken to YouTube to warn Canadians about the dangers of too much debt and unrealistic house price expectations. He wonders, however, whether anyone will listen as one after another real estate bubble form in Canada, a nation whose household debt ratio has never been higher.

  

  As BMO pointed out, when the latest household debt ratio data was released, the upward trend in household debt goes back for the 26 years for which it has records and is showing no signs of slowing down.

  “While it looks as though the Vancouver housing market is cooling after the foreign buyers’ tax was implemented, the Toronto market remains very strong, and others are showing signs of improving as well,” said BMO senior economist Benjamin Reitzes.

  Meanwhile, none other than Canada’s central bank has ramped up its warnings about heavily indebted households and the unreasonable expectations driving the housing market, yet all indications are that Canadians have stuffed cotton in their ears.

  In Toronto, for instance, house prices are up nearly 15 per cent since the summer when Bank of Canada governor Stephen Poloz warned that price gains in the city were “difficult to match up with any definition of fundamentals that you could point to.” In the more than 15 years that the Teranet-National Bank House Price Index has tracked property prices in the city, there’s never been a six-month period when prices rose that fast. Meanwhile, the latest figures released by Statistics Canada showed the household debt-to-income ratio broke yet another record in the third quarter.

  Now Canada’s central bank is trying a different platform to get its message across: YouTube.

  In a video posted Monday on YouTube, in conjunction with the release of the Bank’s semi-annual financial system review last Thursday, Bank of Canada senior policy adviser Joshua Slive sketches out how Canada’s dangerous brew of debt and inflated house prices could combine to devastate the economy.

  Here’s the scenario that worries the Bank.

  1. As the Bank has pointed out already, households are highly indebted and house prices are rising at an unsustainable rate, though as Slive observes, people can often cope with these vulnerabilities for an extended period.

  

  2. That is, until an economic shock triggers a negative chain of events. For instance, a severe recession would lead to “a sharp increase” in unemployment.

  

  3. A lot of households, especially those carrying the heaviest debt loads, would have trouble meeting their debt payments. As a result, some households would start to default on their loans, and in turn, banks and trust companies would foreclose and try to sell those houses.

  

  4. At the same time, with the economy slowing, new buyers would delay house purchases until the economy improved. Given the challenges already facing the economy, this could “cause a large drop in house prices.”

  

  5. If house prices fell, it would push down household wealth, which has received a huge boost from the housing boom, and that could curtail consumer spending, which itself has become a primary driver of growth. The added stress on the financial sector would also weigh on the economy as lenders cut back on making new loans. Slive doesn’t use the term, but what he’s talking about is a credit crunch.

  

  There is good news, Slive says. Stress tests show Canada’s big banks will be just fine even with a large drop in house prices (stress tests also showed that both Belgian Dexia and Spanish Bankia were perfectly solvent just months prior to their respectively failrues). It’s also important to note that the Bank, in its financial system review, said there is a “low probability” of a sharp correction in house prices. But there’s no getting around the immense damage such a scenario would have on the economy.

  The video is a break from regular fare on the Bank of Canada’s YouTube channel, which is largely made up of speeches by top Bank officials. And even if Slive’s delivery is trademark central-banker dry, the message is stark, and shows the Bank is desperate for Canadians to heed its warnings on debt and rising house prices.

  If there’s one quibble to be made, it’s with the initial domino that the Bank sees setting everything in motion—a severe recession leading to job losses. Since the U.S. housing bubble popped and that country went into its long, dark funk, a chicken-versus-egg debate has raged over whether the housing collapse triggered the U.S. recession, or whether something else, like soaring oil prices, brought on the recession and turned the housing slowdown into a total collapse. What’s beyond debate is that America’s housing market reached its frothiest in mid-2006, and then began its decline, one-and-a-half years before the recession began.

  Whatever the case, the Bank’s video should be another wake-up call for Canadians, but “not that anyone’s listening” as Jason Kirby laments.

  Here’s the video in full.

  

  

• Islamists Attack Christmas, But Europeans Abolish It

  Submitted by Giulio Meotti via The Gatestone Institute,

  • A statue of the Virgin Mary was ordered taken away by a court in the French municipality of Publier. Senator Nathalie Goulet slammed the judges as "ayatollahs of secularism".
  • A German school in Turkey just banned Christmas celebrations: the school, Istanbul Lisesi, funded by the German government, decided that Christmas traditions and carol-singing would no longer be allowed. A Woolworth's store in Germany scrapped Christmas decorations telling customers that the shop "is now Muslim".
  • Europe is already mutilating her own traditions "to avoid offending Muslims". We have become our own biggest enemy.
  • Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the Catholic Church's claim of ownership of the cathedral. Now Islamists want it back.
  • The final result of Europe's self-destructive secularism could seriously be a Caliphate.

  "Everything is Christian", Jean-Paul Sartre wrote after the war. Two thousand years of Christianity have left a deep mark on the French language, landscape and culture. But not according to France's Minister of Education, Najat Vallaud-Belkacem. She just announced that instead of saying "Merry Christmas", state officials should use "Happy Holidays" — clearly a deliberate intent to erase from discourse and the public space any reference to the Christian culture in which France is rooted.

  Jean-François Chemain called it the "eradication of any Christian sign in the public landscape". A year ago, the controversy was ignited in the French town of Ploermel, where a court decided that the statue of Pope John Paul II, erected in a square, had to be removed for violating "secularism".

  Then, a statue of the Virgin Mary was ordered taken away by a court in the municipality of Publier. Senator Nathalie Goulet slammed the judges as "ayatollahs of secularism".

  The newspapers of the French "left", outraged by the "right's" ban on burkinis on the French Riviera, have been endorsing this anti-Christian policy.

  France's Council of State has just ruled that "the temporary installation of cribs [nativity scenes] in a public place is legal if it has a cultural, artistic or festive value, but not if it expresses the recognition of a cult or a religious preference". What precautions to justify a millenary tradition!

  In the town of Scaer, a nursing home has been the subject of a similar secularist complaint, for the presence of a fresco of the Virgin Mary. Then, it was the turn of the manger in the train station of Villefranche-de-Rouergue, in Aveyron. In the town of Boissettes, the church bells have been muted by court decision.

  Fortunately, some ideas from the Observatory of Secularism — the organ established by President François Hollande to coordinate his neo-secularist policies — have not been implemented. One proposed even to eliminate some Christian national holidays to make room for the Islamic, Jewish and secular holidays.

  President Hollande, on the occasion of Easter, "forgot" to express holiday wishes to the Christians of France. But a few months before, Hollande had extended his best wishes to the Muslims during the feast of Eid, which closes Ramadan. "Hollande's greeting to Muslims is opportunistic and political. For the Socialist Party, it is a crucial electoral clientele", said the French philosopher Gerard Leclerc in the newspaper, Le Figaro.

  This Christianophobia is the Trojan Horse of Islam. As Charles Consigny writes in the weekly Le Point, "Through this tabula rasa of the past, France will make a clean sweep of its future". Unfortunately, France is not an isolated case. Everywhere in Europe, a weary, secularist absence of purpose and confused values damns Christianity in favor of Islam.

  A jihadist terrorist, targeting a symbol of Christian tradition, last week slaughtered 12 people at a Christmas market in Berlin. But Europe is already mutilating her own traditions "to avoid offending Muslims". We have become our own biggest enemy.

  The annual candlelit Saint Lucia ("Sankta Lucia") procession, a Swedish Christian tradition celebrated for hundreds of years, is "dying" out. Uddevalla, Södertälje, Koping, Umeå, and Ystad are among the growing numbers of cities no longer holding this lovely cultural event. According to Jonas Engman, an ethnologist at the Nordic Museum, the declining interest in the St. Lucia procession accompanies a more general alienation from the culture of Christian Sweden. A study conducted by Gallup International reveals that in observing the Christian religion, Sweden is "the least religious in the West". In the meantime, with a young, strong, driven sense of purpose and a set of sharia values, Islam is growing.

  A German school in Turkey just banned Christmas celebrations. The school, Istanbul Lisesi, funded by the German government, decided that Christmas traditions and carol-singing would no longer be permitted. The Washington Post summarized the decision: "No teaching of Christmas customs, no celebrations and no Christmas caroling". It is not an isolated incident. A Woolworth's store in Germany also scrapped Christmas decorations, telling customers that the shop "is now Muslim".

  In Britain, David Isaac, the new head of the Equalities and Human Rights Commission (EHRC), told employers that they should not suppress Christian tradition out of fear of offending anyone. Previously, Dame Louise Casey, the British government's integration "tsar", warned that "traditions such as Christmas celebrations will die out unless people stand up for British values".

  In many Spanish towns, such as Cenicientos, the municipality of this Autonomous Community of Madrid removed the Christian Stations of the Cross. Then, Madrid's mayor, Manuela Carmena, decided to remove the city's traditional Nativity display at the Puerta de Alcalá.

  Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the claim of ownership of the cathedral by the Catholic Church. Built on the site of Saint Vincent's church, it then served as a mosque for over 400 years when Islamic Spain was part of a caliphate, before the Christian kingdom of Castile conquered the city and converted it again into a church. Now Islamists want it back.

  Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the claim of ownership of the cathedral by the Catholic Church. Built on the site of Saint Vincent's church, it then served as a mosque for over 400 years when Islamic Spain was part of a caliphate, before the Christian kingdom of Castile conquered the city and converted it again into a church. (Image source: James (Jim) Gordon/Wikimedia Commons)

  Belgium, the most Islamized democracy in Europe, is also purging its Christian heritage. The Nativity, the traditional manger scene, has not been put up in the Belgian town of Holsbeek, just outside Brussels. Claims were scenes it was scrapped to "avoid offending Muslims".

  As reported by the newspaper La Libre, school calendars within Belgium's French speaking community are also using a new secularized terminology: All Saints Day (Congés de Toussaint) is now be referred to as Autumn Leave (Congé d'automne); Christmas Vacation (Vacances de Noël) is now Winter Vacation (Vacances d'hiver); Lenten Vacation (Congés de Carnaval) is now Rest and Relaxation Leave (Congé de détente); and Easter (Vacances de Pâques) is now Spring Vacation (Vacances de Printemps). Then Belgium installed an abstract, de-Christianized Christmas tree in the capital, Brussels.

  In the Netherlands, the Christian tradition of Black Pete is under attack and it will soon be abolished. In Italy, Catholic priests this year canceled Christmas to "avoid offending Muslims".

  The final result of Europe's self-destructive secularism could seriously be a Caliphate, in which the fate of its ancient and beautiful churches recapitulates those in Constantinople, where the Hagia Sophia, for thousand years Christianity's greatest cathedral, was recently turned into a mosque. The muezzin's call now reverberates inside this Christian landmark for the first time in 85 years.

  Islamic terrorists targeted Christmas in Berlin, but it is the Christian secularists who are abolishing it all over Europe.

  

  

• The Scariest Forecast For Treasury Bulls

  With Trump’s border tax adjustment looking increasingly likely, the stock market – as JPM has warned in recent days – is starting to fade the relentless Trumponomic, hope-driven rally since election day instead focusing on the details inside the president-elect’s proposed plans. And, as explained earlier in the week, if the border tax proposal is implemented, economists at Deutsche Bank estimate the tax could send inflation far above the Federal Reserve’s 2% target and drive a 15% surge in the dollar.

  While this would be bad for stocks, as a 5% increase in the dollar translates into about a 3% negative earnings revision for the S&P 500 all else equal, a surge in inflation would also wreak havoc on bond prices, and send interest rates surging, at least initially, before they subsquently plunge as a result of a rapidly tightening, deep “behind the curve” Fed unleashes a curve inversion and recessionary stagflation becomes the bogeyman du jour.

  There’s more.

  In a separate report by Deutsche, the bank looks at future prospects for rates and concludes that “tightening monetary policy, higher breakevens, and declining central bank purchases relative to net supply should all contribute to significant bearish steepening during 2017.”

  In its analysis of future bond rates, Deutsche Bank says that the biggest risk is that when looking at the menu of “threats” presented by the Trump stimulus, “there is a significant risk that if the Fed decides to aggressively lean against higher inflation expectations, the entire “regime shift” might stall. That is, higher wages and inflation expectations are a prerequisite to the substitution of capital for labor, which is in itself necessary for more rapid productivity growth and hence higher potential growth and sustainably higher levels of r*.”

  And then the focus shifts so that whatever degree of accommodation is warranted, there will be the push to rebalance away from rising short rates to shrinking the Fed’s balance sheet, in other words, the Fed begins real normalization.

  In DB’s model, the net effect of ending reinvestment of SOMA portfolio run-off, some asset sales, and an ECB taper is almost 200 bps. This would allows 10s to move well over 4 percent in 2018. That although roll offs are significant – maybe $50 billion/month – in order to get the balance sheet down from more than $4 trillion to say $1 trillion before the 4-year presidential term is over would still require asset sales of  approximately $50 billion.

  Assuming Deutsche Bank is correct, the result would be the scariest forecast bond bulls have seen in years: a 10-Year TSY whose yield fades all gains attained during the past decade, in the span of just two short years, hitting 4.5% in early 2019. The adverse implications from such a fast, steep move on all asset classes, not just bonds, would be devastating.

  

  Will this forecast come true? Readers can make their own determinations upon reading DB’s assumptions:

  Formally, DB’s model of 10s has three explanatory variables. The main driver is the ratio global QE purchases to net supply in nominal terms with a nine-month lead, i.e., the market is forward looking. Global QE and supply figures are from the US, Europe and Japan. The other two variables in the model are Fed funds and the 2s/funds spread. The model is estimated between October 2006 and September 2016.

  These assumptions are summarized in the following three scenarios:

  1. Base case: Trump’s fiscal stimulus, amounting to about $530 billion per year for ten years.
  2. Base case + ECB taper + Fed portfolio rolloff. In this case, 10s are about +70bp higher in yields than in the base case.
  3. Base case + ECB taper + Fed portfolio rolloff + Fed asset sales. 10s are about +100bp higher in yields than in base case.

  The assumptions in the scenarios are:

  • President-elect Trump’s stimulus package, scored by the Committee for a Responsible Federal Budget adds $5.3 trillion to the deficit over the next decade. This averages to $530 billion per year, starting in July 2017, around the time the plan is expected to be passed by Congress.
  • The ECB tapers QE purchases by ½ in 2018, and stops all purchases in 2019.
  • Fed balance sheet reductions: The Fed stops reinvestments of maturing Treasuries and MBS pre-payments starting Q4 2017. Asset sales at $250 billion in 2018 and $500 billion in 2019.
  • The Fed funds target range rises to 2.50%-2.75% by year end 2019, with the 2s/funds spread at 60bp.

  Visually:

  

  Needless to say, DB is convinced that there is a lot of pain coming for the bond market. To wit:

  “Our strongest market view, therefore, is that investors should be short duration. Rates are going higher. The curve should end up steeper but this Fed’s initial reaction as per this week can confuse curve dynamics. Real rates should not rise more than breakevens. In the short run dollar strength should persist.”

  We are far less confident, especially if indeed the border tax is implemented, sending the dollar soaring, US exports, and GDP crashing, and corporate profits plunge. In short: if Trump unleashes a recession by implementing a policy which is meant to eliminate the US trade deficit.

  In such a case, forget steepeners: buy every flattener you can get your hands on, and then use leverage, because before you know it the 2s30s will be back in the double digits, then single, and then, not too long from now, negative.

  Whether that is the catalyst that will kick off QE4 or whatever the current number is, we don’t know, but by that point China will be spitting up blood as a result of a historic collapse in the Yuan, hundreds of billions in monthly outflows and a paralyzed, and crushed financial system. Ironically, in light of the devastation that may soon befall China should Trump’s policies pan out, the US – recession or not – may still be the “cleanest dirty shirt” in a world where things are about to get very messy.

  

  

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• Shifting Power: Visualizing The World's Largest Cities For The Last 6000 Years

  In 300 B.C., Carthage was one of the world’s largest cities with up to 700,000 people living within its walls. The Carthaginian republic was a force to be reckoned with, controlling inconceivable amounts of wealth and land all around the Mediterranean.

  However, just over a century later in 146 B.C., Carthage was burnt to the ground by the Romans. The destruction of Carthage was so thorough that many things are still not known about their civilization today. Carthage went from being a major power to literally being wiped off of the map.

  A few decades after the annihilation of Carthage, it was Rome’s turn to become the world’s largest city for close to 500 years. Of course, Rome itself would fall by 476 A.D. for a variety of reasons.

  And so the title of the world’s largest city would transfer again, this time to Constantinople across the Mediterranean.

  The World’s Largest Cities Throughout History

  In the grand scheme of history, things change quite fast. As Visual Capitalist's Jeff Desjardins explains, one cataclysmic choice or event can turn even the greatest empire into a heap of rubble. Sometimes the decline of a world-class city is more gradual – and it is over time that it loses its title to another place in a far and distant land.

  The following animated map from KPMG Demographics tracks the world’s largest cities from 4,000 BC to today, and it shows how temporary a city’s rise to prominence can be.

  
  (Keep in mind that there is some disagreement by historians over which cities were the biggest in certain time periods.)

  The power of industrialization and technology can be seen here. Up until the 1800s, it was almost unfathomable to have a city of more than a million inhabitants.

  Sanitation was a major limiting factor, but other issues like transportation and a lack of density also made it a challenge. The Industrial Revolution changed that, and starting in the 1800s you see cities like London, New York, and Tokyo taking the title in an exponential fashion. It caps off with Delhi in 2050, expected to have a whopping 40 million inhabitants by that time.

  Source: Visual Capitalist

  

  

• Trump 'Triggers' Social Media Over Democrat-Bashing Putin Tweet

  President-elect Donald Trump 'triggered' the social media world into a frenzy Friday night with a tweet that praised Russian president Vladimir Putin's criticism of Democrats. As The Hill reports, Putin on Friday deflected accusations of Russian interference in the U.S. election, saying at a press conference: "Democrats are losing on every front and looking for people to blame everywhere. They need to learn to lose with dignity."

  Later Friday, Trump piled on, lauding Putin and continuing his denial that Russia interfered in the election.

  Vladimir Putin said today about Hillary and Dems: "In my opinion, it is humiliating. One must be able to lose with dignity." So true!

  — Donald J. Trump (@realDonaldTrump) December 24, 2016

    Trump's words drew widespread condemnation on Twitter,   from journalists, liberals, conservatives and those in the entertainment industry…

   

  Mr. Pres-elect, is it necessary to cite as an authority on democratic norms a thug whose regime commits war crimes and murders journalists? https://t.co/aSmMyxvrLY

  — Nicholas Kristof (@NickKristof) December 24, 2016

  No puppet https://t.co/5mXR2s0Srh

  — Dave Itzkoff (@ditzkoff) December 24, 2016

  Just an FYI, Putin has all of his elections rigged. Like, actually rigged. https://t.co/YmqeSpHt78 https://t.co/tAWjoXXjAo

  — Jordan Zakarin (@jordanzakarin) December 24, 2016

  You’re tweeting Vladimir-freaking-Putin. The KGB master is coming to your defense and you’re proud of this? Have you no dignity whatsoever? https://t.co/aOf7GuoUtV

  — John Aravosis (@aravosis) December 24, 2016

  This is your leader America. Merry fucking Christmas. https://t.co/gUZzXshehM

  — digby (@digby56) December 24, 2016

  He isn't even disguising it. The Republican Party has succeeded in bringing a madman to power. But once again, they will make excuses. https://t.co/lINQStMcHV

  — Elliott Lusztig (@ezlusztig) December 24, 2016

  Joining a Russian dictator in mocking an American is disgusting. https://t.co/9N3t5DV3kA

  — Kristy Campbell (@kristymcampbell) December 24, 2016

  What if Hillary had won in the Electoral College but lost the popular vote by 3 million? How would Trump and Trump Nation have reacted? https://t.co/1SleLbKuhC

  — Jay Nordlinger (@jaynordlinger) December 24, 2016

  Republican leaders must condemn @realDonaldTrump's alliance with Putin, a foreign adversary who is actively undermining our democracy. https://t.co/7q0OkzNF2T

  — Evan McMullin (@Evan_McMullin) December 24, 2016

  you use more exclamation points than a menu in a Guy Fieri restaurant https://t.co/iXfYzjLLAO

  — Matt Oswalt (@MattOswaltVA) December 24, 2016

  You empty-suit, empty-souled fuck. You're quoting a man who poisons his political opponents, murders critical journos. No dignity for them. https://t.co/QnIGcMLVZX

  — David Simon (@AoDespair) December 24, 2016

  Truth hurts eh?

  

  

• The Radical Jesus: How Would The Baby In A Manger Fare In The American Police State?

  Submitted by John Whitehead via The Rutherford Institute,

  “Jesus is too much for us. The church’s later treatment of the gospels is one long effort to rescue Jesus from ‘extremism.’”—author Gary Wills, What Jesus Meant

  Jesus was good. He was caring. He had powerful, profound things to say – things that would change how we view people, alter government policies and change the world. He went around helping the poor. And when confronted by those in authority, he did not shy away from speaking truth to power.

  Jesus was born into a police state not unlike the growing menace of the American police state.

  But what if Jesus, the revered preacher, teacher, radical and prophet, had been born 2,000 years later? How would Jesus’ life have been different had he be born and raised in the American police state?

  Consider the following if you will.

  The Christmas narrative of a baby born in a manger is a familiar one.

  The Roman Empire, a police state in its own right, had ordered that a census be conducted. Joseph and his pregnant wife Mary traveled to the little town of Bethlehem so that they could be counted. There being no room for the couple at any of the inns, they stayed in a stable, where Mary gave birth to a baby boy. That boy, Jesus, would grow up to undermine the political and religious establishment of his day and was eventually crucified as a warning to others not to challenge the powers-that-be.

  However, had Jesus been born in the year 2016…

  Rather than traveling to Bethlehem for a census, Jesus’ parents would have been mailed a 28-page American Community Survey, a mandatory government questionnaire documenting their habits, household inhabitants, work schedule, how many toilets are in your home, etc. The penalty for not responding to this invasive survey can go as high as $5,000.

  Instead of being born in a manger, Jesus might have been born at home. Rather than wise men and shepherds bringing gifts, however, the baby’s parents might have been forced to ward off visits from state social workers intent on prosecuting them for the home birth. One couple in Washington had all three of their children removed after social services objected to the two youngest being birthed in an unassisted home delivery.

  Had Jesus been born in a hospital, his blood and DNA would have been taken without his parents’ knowledge or consent and entered into a government biobank. While most states require newborn screening, a growing number are holding onto that genetic material long-term for research, analysis and purposes yet to be disclosed.

  Then again, had his parents been undocumented immigrants, they and the newborn baby might have been shuffled to a profit-driven, private prison for illegals where they would have been turned into cheap, forced laborers for corporations such as Starbucks, Microsoft, Walmart, and Victoria’s Secret. There’s quite a lot of money to be made from imprisoning immigrants, especially when taxpayers are footing the bill.

  From the time he was old enough to attend school, Jesus would have been drilled in lessons of compliance and obedience to government authorities, while learning little about his own rights. Had he been daring enough to speak out against injustice while still in school, he might have found himself tasered or beaten by a school resource officer, or at the very least suspended under a school zero tolerance policy that punishes minor infractions as harshly as more serious offenses.

  Had Jesus disappeared for a few hours let alone days as a 12-year-old, his parents would have been handcuffed, arrested and jailed for parental negligence. Parents across the country have been arrested for far less “offenses” such as allowing their children to walk to the park unaccompanied and play in their front yard alone.

  Rather than disappearing from the history books from his early teenaged years to adulthood, Jesus’ movements and personal data—including his biometrics—would have been documented, tracked, monitored and filed by governmental agencies and corporations such as Google and Microsoft. Incredibly, 95 percent of school districts share their student records with outside companies that are contracted to manage data, which they then use to market products to us.

  From the moment Jesus made contact with an “extremist” such as John the Baptist, he would have been flagged for surveillance because of his association with a prominent activist, peaceful or otherwise. Since 9/11, the FBI has actively carried out surveillance and intelligence-gathering operations on a broad range of activist groups, from animal rights groups to poverty relief, anti-war groups and other such “extremist” organizations.

  Jesus’ anti-government views would certainly have resulted in him being labeled a domestic extremist. Law enforcement agencies are being trained to recognize signs of anti-government extremism during interactions with potential extremists who share a “belief in the approaching collapse of government and the economy.”

  While traveling from community to community, Jesus might have been reported to government officials as “suspicious” under the Department of Homeland Security’s “See Something, Say Something” programs. Many states, including New York, are providing individuals with phone apps that allow them to take photos of suspicious activity and report them to their state Intelligence Center, where they are reviewed and forwarded to law-enforcement agencies.

  Rather than being permitted to live as an itinerant preacher, Jesus might have found himself threatened with arrest for daring to live off the grid or sleeping outside. In fact, the number of cities that have resorted to criminalizing homelessness by enacting bans on camping, sleeping in vehicles, loitering and begging in public has doubled.

  Viewed by the government as a dissident and potential threat to its power, Jesus might have had government spies planted among his followers to monitor his activities, report on his movements, and entrap him into breaking the law. Such Judases today—called informants—often receive hefty paychecks from the government for their treachery.

  Had Jesus used the internet to spread his radical message of peace and love, he might have found his blog posts infiltrated by government spies attempting to undermine his integrity, discredit him or plant incriminating information online about him. At the very least, he would have had his website hacked and his email monitored.

  Had Jesus attempted to feed large crowds of people, he would have been threatened with arrest for violating various ordinances prohibiting the distribution of food without a permit. Florida officials arrested a 90-year-old man for feeding the homeless on a public beach.

  Had Jesus spoken publicly about his 40 days in the desert and his conversations with the devil, he might have been labeled mentally ill and detained in a psych ward against his will for a mandatory involuntary psychiatric hold with no access to family or friends. One Virginia man was arrested, strip searched, handcuffed to a table, diagnosed as having “mental health issues,” and locked up for five days in a mental health facility against his will apparently because of his slurred speech and unsteady gait.

  Without a doubt, had Jesus attempted to overturn tables in a Jewish temple and rage against the materialism of religious institutions, he would have been charged with a hate crime. Currently, 45 states and the federal government have hate crime laws on the books.

  Rather than having armed guards capture Jesus in a public place, government officials would have ordered that a SWAT team carry out a raid on Jesus and his followers, complete with flash-bang grenades and military equipment. There are upwards of 80,000 such SWAT team raids carried out every year, many on unsuspecting Americans who have no defense against such government invaders, even when such raids are done in error.

  Instead of being detained by Roman guards, Jesus might have been made to “disappear” into a secret government detention center where he would have been interrogated, tortured and subjected to all manner of abuses. Chicago police “disappeared” more than 7,000 people into a secret, off-the-books interrogation warehouse at Homan Square.

  Charged with treason and labeled a domestic terrorist, Jesus might have been sentenced to a life-term in a private prison where he would have been forced to provide slave labor for corporations or put to death by way of the electric chair or a lethal mixture of drugs.

  Either way, whether Jesus had been born in our modern age or his own, he still would have died at the hands of a police state. Indeed, as I show in my book Battlefield America: The War on the American People, what Jesus and other activists suffered in their day is happening to those who choose to speak truth to power today.

  Thus, we are faced with a choice: remain silent in the face of evil or speak out against it. As Nobel Prize-winning author Albert Camus proclaimed:

  Perhaps we cannot prevent this world from being a world in which children are tortured. But we can reduce the number of tortured children. And if you don’t help us, who else in the world can help us do this?

  

  

• "Lines Out The Door": How Americans Respond When Liberal States Restrict Their Gun Rights

  Submitted by Mac Slavo via SHTFPlan.com,

  The window is closing on freedom in the Golden State, as liberal government leaders and increasingly bureaucratic laws are being used to strip away the rights of the people.

  Gov. Jerry Brown has signed a slew of new laws, seen by many as unconstitutional, that will make it incrementally more difficult for Californians to keep and bear arms.

  But in response to new restrictions on owning so-called “assault weapons” and certain types of semi-automatic firearms, millions are lining up to make purchases during the last legal time frame to do so.

  While the state tramples on freedom and bites back at the spirit of the founders who abhorred such bureaucratic tyranny, these patriots are sending a message that they won’t take it lying down, and will do all they can to hold onto their American heritage – and pass it down to future generations.

  Government passes stupid laws, and the people respond reasonably.https://t.co/yLbwB5F00x

  — Eric Scott (@EricScottUSA) December 20, 2016

  As of today, people can no longer legal purchase under the new laws taking effect, due to the 10-day waiting period law already in place.

  via The Blaze:

  Gun sales in California have skyrocketed during the second half of 2016 after California Gov. Jerry Brown, a Democrat, signed into law earlier this year a sweeping new set of gun control laws that are set to take effect Jan. 1.

   

  Brown signed into law six measures, including one that requires California citizens to allow the government to confiscate their “high capacity” magazines, a law that requires a background check for ammunition sales, in addition to a “bullet button law.”

   

  So-called bullet buttons are devices on semi-automatic rifles that allow a user to easily eject and insert a new magazine. You will still be able to own rifles that have a bullet button in California, but you’ll no longer be able to purchase a firearm that has one, according to the Los Angeles Times.

   

  However, citizens who own firearms with the “bullet button” will have one year to register the gun with the state of California as an “assault weapon.”

   

  […]

   

  The new guns laws have led to a run on firearms in California… Joshua Deaser, the owner of Just Guns in Sacramento, told the Times, “When Gov. Brown signed that bill, the first 30 days in July were just insane. It died down for a while but now we are back with everyone trying to get what they can before the end of the year.”

   

  “We have people lined up out the door and around the block,” Terry McGuire, owner of the Get Loaded gun store in San Bernardino, added.

  And they aren’t stopping there.

  Breitbart is reporting that Californian lawmakers are planning an attempt at all-out ban of semi-automatic weapons in the coming year.

  How that will play out remains to be seen, but the continued assault on the 2nd Amendment rights of all Americans trapped inside the country’s most populous state:

  In a recent conversation with Breitbart News, Gun Owners of California’s (GOC) Sam Paredes told us to be ready for an all-out ban on semi-automatic long guns in California’s coming legislative session.

   

  Paredes suggested the “assault weapons” ban and the “bullet button” ban have both been part of an incremental move…

   

  “These laws are the tip of the iceberg here in California. We expect they are going to introduce legislation to totally ban semi-automatic long guns in California. They will do this because they know we will come up with a new way to beat their latest ban–the ‘bullet button’ ban–if given time.”

  Eventually, a chaotic world will attempt to take away all the rights of the individual to self-defense.

  California to ban all semi-automatic guns, confiscate guns & limit ammo saleshttps://t.co/YO32Eo7NNl#gunrights #2ADefenders #GunsSaveLives pic.twitter.com/49IRTajToD

  — DrSueDVM?????????for???????? (@DrSueDVM) December 21, 2016

  If there wasn’t so much push back, it would surely be overnight.

  Never mind that it opens up big cities to unrestricted violence and an overall diminished quality of life and access to opportunity.

  This is a system that wants control, and to achieve that, they will stop at nothing short of a totally-disarmed population.

  Read more:

  The Watchlist Gun Bans Begin: Obama Enlists Governors to Bypass Congress: “By Executive Order”

  Are You Designated As A “Super Gun Owner” And Will You Soon Be Targeted For Disarmament?

  Texas Police Chief Warns Obama That Gun Control Will “Cause A Revolution… You’re Not Our Potentate, Sir”

  Confiscation Is Coming: Obama To Issue Executive Order Targeting 4.2 Million Retirees With Massive Gun Ban

  The Push For Full Disarmament of America Has Begun: “Outright Gun Ban and Mass Confiscation Once and For All”

  

  

• IceCap Asset Management On Investing Through The Eyes Of An Ostrich

  Submitted by Keith Dicker IceCap Asset Management

  The ostrich is an awesome bird. It has awesome legs, awesome eggs and an even more awesome history. 5,000 years ago, the Mesopotamians featured the giant bird on cups, shirts, and walls; and even used its eggs as currency in trade. 2,000 years later, the ostrich continued to be revered and this time in Egypt. On special occasions, pharaohs received ostrich eggs, ostrich feathers, and even ostrich hats as gifts of honor and respect.

  Yet, despite all of these accolades, the ostrich is also incredibly odd. During heated moments of battle, the giant bird chooses not to use its powerful legs as weapons, but instead uses its head to slam it repeatedly against its opponent. As well, the ostrich loves a good bath. Sight of the slightest pool of water is enough to make the ostrich circle about in delight.

  But when it comes to oddities, nothing is more odd than the ostrich and the most famous coping mechanism of all – sticking its head in the sand.

  Today, the ostrich population is in decline but not its relevance. With the financial and political world in chaos, investors everywhere are suddenly imitating this legendary bird.

  Some investors recognise global financial risks are accelerating, yet they remain stubborn, refusing to acknowledge where the risk runs deepest and are repeatedly slamming their heads against the wall in frustration. Others meanwhile, refuse to believe that any risk exists at all, continue to wear their favourite market hat and shirt, while sticking their heads in the sand at the next sight of trouble. So, for everyone with a bruised and sandy head, we suggest you alter your perspective, shed any biases and embrace the opportunity to run around in delight in our rapidly changing world.

  * * *

  Our research firmly reasons that the world is in the late stages of an enormous bubble in the bond market, and as it turns over it will affect all markets and strategies – regardless of where you sit in the world.

  This convergence of political, social, economic, monetary and fiscal factors is developing, that while may seem chaotic to many – appears quite plain and simple to those who are able to see straight.

  Our view has remained very consistent and has been stated through various media outlets and in private presentations – which results in our view as being “made public” with a “time stamp”. This means we cannot suddenly twist any of our past words to reconcile with current markets. Considering all of the recent chaos in the world, it’s important for us to revisit our success in forecasting many of these seemingly low probability events.

  Of course, we share these experiences not because we want to tout our success in forecasting these events, but rather because it helps investors understand our perspective, why it has been correct, and most importantly – why we continue to maintain our view.

  Our September 2016 Global Outlook “Fright Night” described in detail how and why long-term interest rates will catapult higher and therefore create an incredible rush of capital away from bonds and into USD and the stock market. After publishing, we had many kind emails, meetings and conversations thanking us for providing a simplified explanation of the risk in bond markets. We also had people shrug their shoulders and roll their eyes – after all, while bonds may not provide much of a return anymore, they are the safest investment in the world.

  Or, so you’ve been told. The reason why the world’s bond market was turned upside down, inside out and tossed out with the trash was because of the following:

  Long-term interest rates increased from +1.7% to +2.4%

  Yes, that is not a typo. A mere 0.7% move higher was enough to wake up sleepy bond investors, create $1.7 Trillion in losses, and devastate the entire bond world.

  Our Chart 1 below puts this historical event in perspective.

  

  It’s at this point where big bank economists and bond lovers everywhere carelessly proclaim this is not a big deal. In fact, they say it’s easy to see that long-term rates have increased like this before and everyone adjusted swimmingly.

  Of course, this kind of linear thinking fails to consider the following:

  • massive accumulation of government debt
  • deteriorating government deficits
  • increasing taxes & increasing government spending
  • NEGATIVE and 0% interest rates
  • money printing

  Analysing these points obviously shows that the problems in the world today are squarely centered in the public/government sector – not the private sector. Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important. Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

  Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important.

  Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

  And since these crises were in the private sector – the risks eventually manifested themselves (they always do) in the stock market.

  Since today’s sovereign debt crisis is in the public sector – the risks will manifest not in the stock market, but in the bond market.

  This really is the most important point to understand today. Yet because the big bank mutual fund machines cannot find (or really, even bother to look) this risk or perspective, trillions of investment Dollars, Yen, Pounds and Euros are all fighting yesterday’s war and refuse to see where the front has opened.

  To be clear – the front is the bond market. Of course, many investment managers clearly know there is a certain big risk in today’s market place. As well, we’ve commented before that many of the really big investment firms in the world do not really manage your wealth. Instead, they simply collect your assets, plunk them into their various investment funds, make micro-changes at the fringe and then proceed to watch the trillions in fees roll through the door.

  Those who are in the investment industry are quietly nodding in agreement, while those not in the investment may be rather unconvinced. After all every investment manager and mutual fund manager is sharp as a tack, and has their finger on the pulse of the global financial system. Sadly, this isn’t true. Instead, if it hasn’t happened already, many investment managers are actually slowly morphing into – an ostrich.

  As this can be a tricky and uncomfortable transition, our Chart 2 below provides an easy to follow analysis to help you determine whether your investment manager is in fact a giant, bird-like creature.
  The first type of manager is the one who believes the world is just fine. Yes, growth may be a little slow but markets are forward looking and have discounted any and all future worries.

  

  While the optimism is to be respected, the ignorance towards zero and negative interest rates, money printing strategies to suppress long-term interest rates, and the sharpening knife of the anti-establishment political movement – results in these managers sticking their heads in the sand at the first sight of trouble. Since these managers are always seeking the best growth opportunities around the world, today they find themselves drooling over emerging market stocks as well as emerging market bonds, and high yield bonds.

  Next up, we have the investment manager who is acutely aware of the many risks running around the world today. They clearly see the rise of political uncertainties, fear the consequences of zero and negative interest rates and feel queasy towards all of the money printing going on.

  This deep respect and acknowledgment of the risks around the world is a sign of a dynamic thinking investment firm. There are many of these firms out there, and some of them correctly foresaw the housing market crash.  However, while we obviously respect this group of managers we politely point out that while we agree with their deep concern about market risk, we disagree with their conclusion as to where the risk lies. This group believes the stock market & USD are the center of the evil universe and investment in these areas should be avoided at all cost.

  Unfortunately, if you avoid stocks and the USD then by default you love bonds, Euros and gold.

  And even more unfortunately – bonds, Euros and especially gold are growing weaker by the minute, which is resulting in these managers repeatedly slamming their heads in frustration.

  Investments in these markets are eliciting not only painful negative returns, but also painful reasons why the market is wrong and it will turn around any day now. While investment markets are always full of unexpected events, we do hope that these managers are able to see the error of their ways, otherwise there’s the very real probability that eventually they turn into a different bird altogether – a turkey.

  Code Red

  Days after the dust settled on the bond market debacle, we had a meeting with one of the world’s largest bond managers. We asked them on a scale of 1-10 with 10 being complete devastation, how would they rate the recent decline in the bond market?

  The answer = 8

  Again, we stress to you that a 0.7% increase in long-term interest rates created untold havoc throughout the bond world. Imagine what would happen if long-term interest rates increased by 1% or 3%, or even 6%? The short answer is a surging USD and a surging stock market.

  The best thing (or worst, depending upon your view), is that this tiny 0.7% increase in long-term rates is merely the tip of the iceberg.

  The long end of the bond market is now broken and the 30 year bull market in long duration, fixed income is over, kaput, done. If you own any of this stuff, it’s time to make a change. If you manage any of this stuff, it’s time to get a new job. But, if you need to borrow money, now is the time to borrow and lock in the longest maturity possible. Doing any of these three, will help you prosper in a devastating world for bonds.

  * * *

  Optimism is a human trait, and since bond managers are humans it is only natural to expect optimism to arise from the bond ashes in some shape or form. And that form is clearly in the shape of inflation-protected bonds.

  While most investors are enthralled with the stock market, the bond market is THE most interesting investment market on the planet. After all, there are seemingly no limits as to what Wall Street can create. In effect, if Wall Street thinks they can convince someone to buy it, they’ll create it (look no further than the 2008 housing crisis).

  And one ‘different’ product from the bond market has actually stood the test of time, and that is the ‘Real Return Bond’. To begin, know that besides rising interest rates – the other giant monster that scares the crap out of bond managers is inflation.

  Since bond interest/coupon payments are usually fixed, any rise in inflation means the income from your bond can’t buy as much stuff as it could before. Therefore, inflation is bad for bonds and it causes bond prices to decline. To counter this, Wall Street created a bond that actually benefits from rising inflation. These Treasury Inflation Protected Securities (TIPS) have been around now for over 20 years, and aside from short-term spikes in inflation, these bonds haven’t exactly set the world on fire.

  Until now.

  The narrative goes something like this – Donald Trump will dramatically cut taxes which means there will be dramatically more money available for spending, AND he will also borrow dramatically to spend even more money. While all of this spending is considered to be good for the economy and jobs, bond investors see it as creating a devastating surge in inflation. And since inflation is bad for regular bonds, it must be awesome for TIPS. This would be true if the world was experiencing a normal business and interest rate cycle.

  But since the world is not experiencing a normal business and interest rate cycle, we suggest investors be cautious or at least somewhat skeptical about a focus on TIPS. Should the geopolitical and economic world continue to trend as we expect, yes there will be inflation around the world – but not in the United States.

  Let us explain.

  There are 3 kinds of inflation:

  1. inflation caused by an increase in demand for certain things
  2. inflation caused by a decrease in supplies of certain things
  3. inflation caused by a currency moving sharply

  Investors who are trumpeting TIPS are clearly expecting inflation to rise due to #1.

  All else being equal, if there are no further disruptions across the political establishment, social tensions decline, zero and negative interest rates disappear, and European banks magically replace their bad loans and bad investments with new capital – then yes, TIPS will be a good investment. As you may sense, our view is different and TIPS investors should take notice. As the world continues to trend towards our outlook and forecast, our expectation for a surging USD will absolutely create inflation, but not in the United States.

  Instead, the surging USD will actually create deflation in the US making TIPS a not so good investment. Investors everywhere should know that the world does not work with an extremely strong USD. And unfortunately, the world continues to venture down the path that we have explained very clearly.

  A strong USD is negative for global growth, which means less demand for global goods and global services. The United States will not be immune and their exports will be affected – which is deflationary. As well, a strong USD makes foreign goods/services cheaper for people who own USD – this is also deflationary.

  The net effect of slower economic growth and a stronger USD therefore means less inflation for the United States which is not good for TIPS investors.

  Naturally, financial markets move in anticipation of something happening. And, since the bond world has suddenly realized their days in the sun are over – they will be tripping over themselves to climb onto to this next sure thing. Yes, this trade may work out for a while. However, as the world continues to move along as we expect, the USD will surge which will be good for some markets and not so good for other markets. Unfortunately for TIPS investors, financial markets will eventually anticipate this as well meaning they will be on the wrong side of this trade.

  Much more in the full report below

  

  

• Is Obama A Russian Agent?

  Authored by Dmitry Orlov,

  Sometimes a case looks weak because there is no “smoking gun”—no obvious, direct evidence of conspiracy, malfeasance or evil intent—but once you tally up all the evidence it forms a coherent and damning picture. And so it is with the Obama administration vis à vis Russia: by feigning hostile intent it did everything possible to further Russia’s agenda. And although it is always possible to claim that all of Obama’s failures stem from mere incompetence, at some point this claim begins to ring hollow; how can he possibly be so utterly competent… at being incompetent? Perhaps he just used incompetence as a veil to cover his true intent, which was always to bolster Russia while rendering the US maximally irrelevant in world affairs. Let’s examine Obama’s major foreign policy initiatives from this angle.

  Perhaps the greatest achievement of his eight years has been the destruction of Libya. Under the false pretense of a humanitarian intervention what was once the most prosperous and stable country in the entire North Africa has been reduced to a rubble-strewn haven for Islamic terrorists and a transit point for economic migrants streaming into the European Union. This had the effect of pushing Russia and China together, prompting them to start voting against the US together as a block in the UN Security Council. In a single blow, Obama assured an important element of his legacy as a Russian agent: no longer will the US be able to further its agenda through this very important international body.

  Next, Obama presided over the violent overthrow of the constitutional government in the Ukraine and the installation of an American puppet regime there. When Crimea then voted to rejoin Russia, Obama imposed sanctions on the Russian Federation. These moves may seem like they were designed to hurt Russia, but let’s look at the results instead of the intentions.

  • First, Russia regained control of an important, strategic region.
  • Second, the sanctions and the countersanctions allowed Russia to concentrate on import replacement, building up the domestic economy. This was especially impressive in agriculture, and Russia now earns more export revenue from foodstuffs than from weapons.
  • Third, the severing of economic ties with the Ukraine allowed Russia to eliminate a major economic competitor.
  • Fourth, over a million Ukrainians decided to move to Russia, either temporarily or permanently, giving Russia a major demographic boost and giving it access to a pool of Russian-speaking skilled labor. (Most Ukrainians are barely distinguishable from the general Russian population.)
  • Fifth, whereas before the Ukraine was in a position to extort concessions from Russia by playing games with the natural gas pipelines that lead from Russia to the European Union, now Russia’s hands have been untied, resulting in new pipeline deals with Turkey and Germany.

  In effect, Russia reaped all the benefits from the Ukrainian stalemate, while the US gained an unsavory, embarrassing dependent.

  Obama’s next “achievement” was in carefully shepherding the Syrian conflict into a cul de sac. (Some insist on calling it a civil war, although virtually all of the fighting there has between the entire Syrian nation and foreign-funded outside mercenaries). To this end, Obama deployed an array of tactics. He simultaneously supported, armed, trained and fought various terrorist groups, making a joke of the usual US technique of using “terrorism by proxy.” He made ridiculous claims that the Syrian government had used chemical weapons against its own people, which immediately reminded everyone of similarly hollow claims about Saddam’s WMDs while offering Russia a legitimate role to play in resolving the Syrian conflict. He made endless promises to separate “moderate opposition” from dyed-in-the-wool terrorists, but repeatedly failed to do so, thus giving the Russians ample scope to take care of the situation as they saw fit. He negotiated several cease fires, then violated them.

  There have been other achievements as well. By constantly talking up the nonexistent “Russian threat” and scaremongering about “Russian aggression” and “Russian invasion” (of which no evidence existed), and by holding futile military exercises in Eastern Europe and especially in the geopolitically irrelevant Baltics, Obama managed to deprive NATO of any residual legitimacy it once might have had, turning it into a sad joke.

  But perhaps Obama’s most significant service on behalf of the Russian nation was in throwing the election to Donald Trump. This he did by throwing his support behind the ridiculously inept and corrupt Hillary Clinton. She outspent Trump by a factor of two, but apparently no amount of money could buy her the presidency. As a result of Obama’s steadfast efforts, the US will now have a Russia-friendly president who is eager to make deals with Russia, but will have to do so from a significantly weakened negotiating position.

  As I have been arguing for the last decade, it is a foregone conclusion that the United States is going to slide from its position of global dominance. But it was certainly helpful to have Obama grease the skids, and now it’s up to Donald Trump to finish the job. And since Obama’s contribution was especially helpful to Russia, I propose that he be awarded the Russian Federation’s Order of Friendship, to go with his Nobel Peace Prize.

  

  

• America Has Unofficially Declared War On The Homeless

  Submitted by Josie Wales via TheAntiMedia.org,

  Police departments across the country have been ramping up raids on the homeless, stealing coats, blankets, and other personal items and leaving those on the street with no protection from the cold and rain.

  The Homelessness San Diego Facebook page recently posted a video of city workers conducting an “encampment sweep” that was recorded by homeless advocate Michael McConnell. According to CW6, “the city says it routinely posts clean-up notices downtown as part of its regular weekly abatement schedule.”

  The Denver Police Department released a statement last Thursday evening defending police officers caught on video taking blankets, sleeping bags, and tents from homeless people and issuing some citations. Freezing temperatures didn’t stop the cold-hearted cops from confiscating the items “as evidence of the violations.”

  The video taken by a bystander went viral after being shared by the ACLU of Colorado’s Facebook page. It was swiftly followed up by an open letter to Denver Mayor Michael Hancock, Denver City Council, and city officials. The letter, which expresses horror at the willingness of the local government officials to endanger the lives of the homeless, “demands that the City immediately (1) direct its police officers to cease confiscation of blankets and other survival gear possessed by people experiencing homelessness, (2) suspend enforcement of the Denver Urban Camping Ban through the winter months, using that time to explore alternative approaches to homelessness that do not criminalize people for having nowhere they can afford to live and (3) end the coordinated sweeps of people experiencing homelessness, whether they are conducted through police, public works, private security, all of the above, or any other means.”

  This is not the first time Colorado authorities have come under fire for their brutal treatment of the homeless. In February of this year, Denver Law School released a report called Too High A Price: What Criminalizing Homelessness Costs Colorado, which examined the economic and social cost of the anti-homeless laws. According to the paper, “Laws that criminalize panhandling, begging, camping, sitting or lying in public, and vagrancy target and disproportionately impact homeless residents for activities they must perform in the course of daily living.”

  Los Angeles deployed an entire task force to crack down on homeless people, imposing their own “encampment sweeps” in September. The ironically named “Homeless Outreach and Proactive Engagement” teams are supposed to help reduce the number of people living on the street, but they appear to be doing nothing more than turning those who are less fortunate into criminals.

  The ACLU declared a small victory over the summer when it successfully defended the rights of a man charged with trespassing after trying to gain access to emergency shelter. According to Jessie Rossman, a staff attorney with the ACLU of Massachusetts:

  “Today’s landmark, unanimous ruling has affirmed, e.in the state high court’s own words that ‘our law does not permit the punishment of the homeless simply for being homeless.’”

  Anti-homeless laws are cruel, unconstitutional, and create more hardship for those targeted, making it harder for them to get back on their feet. It is unthinkable to believe that stealing blankets and clothing from people living on the street is justifiable by any legislation, and it is terrifying to see law enforcement follow orders to do so without blinking an eye.

  

  

• Duterte: "I Will Burn Down The United Nations"

  The United Nations is making a lot of enemies.

  Yesterday, when the Obama administration refused to veto a UN vote over Isreal settlements, one which provoked Israel to lash out at the Obama administration saying “friends don’t act that way”, but more importantly defied Trump who in a previous tweet urged Obama to veto the resolution, the President-elect had one message, or rather tweet, to the UN:

  As to the U.N., things will be different after Jan. 20th.

  — Donald J. Trump (@realDonaldTrump) December 23, 2016

  However, Trump is not the only one to hold a prominent grudge against the international organization, which many have accused of being nothing but an ineffective, if material, waste of taxpayer funds: taking Obama’s threat several steps further, Philippines President Rodrigo Duterte threatened to “burn down” the United Nations headquarters in New York, in response to mounting international criticism over his bloody crackdown on suspected drug dealers.

  “You go and file a complaint in the United Nations, I will burn down the United Nations if you want,” Duterte said, quoted by the New York Times. “I will burn it down if I go to America,” he added during a speech at an army base in the country’s southern city of Zamboanga.

  Earlier in the week, Duterte called Zeid Ra’ad Al Hussein, a top UN official, an “idiot” and “son of a bitch” after the UN High Commissioner for Human Rights suggested launching an investigation into Duterte’s own accounts of killings when he was mayor of Davao City, and the “shocking” number of deaths during the ongoing anti-drug war.

  “This guy [Zeid] is ever the joker or crazy,” Duterte said during a televised speech, repeatedly calling him stupid. “You UN officials, sitting there on your asses, we pay you your salaries. You idiot, do not tell me what to do… Who gave you the right?” he said quoted by Reuters

  Needless to say, the UN does not appear to be very popular among the Philippines ruling elite.

  In September, the outspoken Philippines leader refused to meet UN Secretary-General Ban Ki-moon, and even threatened to leave the UN after it criticized his ‘War on Drugs.’ A UN official told Reuters it was “basically unheard of” for a leader to be too busy to meet the secretary-general.

  More than 6,000 people have been killed as part of Duterte’s crackdown, a third by police and the rest still officially under investigation. Duterte says the shootings by police were in self-defence.

  Duterte’s “controversial” methods of cracking down on illegal drugs stem from his 22 years as mayor of Davao City. Last week, Duterte admitted he personally killed suspected criminals during his time as mayor of Davao City (the third most populous metropolitan area in the Philippines with more than 1.6 million inhabitants), patrolling the streets on a motorcycle.

  “In Davao I used to do it personally. Just to show to the guys [the police] that if I can do it, why can’t you,” Duterte said, as quoted by AFP.

  He added that he would “go around in Davao with a motorcycle, with a big bike around, and I would just patrol the streets, looking for trouble also. I was really looking for a confrontation so I could kill.”

  As for his parting shot at the UN’s employee and the overall organization, Duterte lashed out: “please shut up because your brain is lacking there,” he told Zeid.

  “Go back to school. You United Nations, you do not know diplomacy. You do not know how to behave to be an employee of the United Nations” adding “You do not talk to me like that, you son of a bitch.”

  And now, Trump seems to agree.

  

  

• While Blaming Trump For "Arms Race", Obama Signs Momentous "Star Wars II" Defense Bill

  As politicians and mainstream media blast Trump's apparently incendiary tweet regarding nuclear arms, none other than President Obama just signed legislation that, by striking a single word from longstanding US nuclear defence policy, could heighten tensions with Russia and China and launch the country on an expensive effort to build space-based defense systems.

  

  Oh the irony… Following Trump's tweet…

  The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes

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

  The mainstream media has lambasted the president-elect for "endangering the world" and "starting another nuclear arms race." However, that same mainstream media appears mute in their response to what President Obama just did…

  The National Defence Authorisation Act, a year-end policy bill encompassing virtually every aspect of the US military, contained two provisions with potentially momentous consequences. As AP reports,

  One struck the word “limited” from language describing the mission of the country’s homeland missile defence system. The system is said to be designed to thwart a small-scale attack by a non-superpower such as North Korea or Iran.

   

  A related provision calls for the Pentagon to start “research, development, test and evaluation” of space-based systems for missile defence.

   

  Together, the provisions signal that the US will seek to use advanced technology to defeat both small-scale and large-scale nuclear attacks.

   

  That could unsettle the decades-old balance of power among the major nuclear states.

   

  Huge bipartisan majorities in both houses of Congress approved the policy changes over the past month, with virtually no public debate.

   

  Although the White House had earlier criticised the changes, it stopped short of threatening a veto. On Friday, Obama signed the legislation.

  Leading defence scientists said the idea that a space-based system could provide security against nuclear attack is a fantasy…

  “It defies the laws of physics and is not based on science of any kind,” said L. David Montague, a retired president of missile systems for Lockheed and co-chair of a National Academy of Sciences panel that studied missile defence technologies at the request of Congress.

   

  “Even if we darken the sky with hundreds or thousands of satellites and interceptors, there’s no way to ensure against a dedicated attack,” Montague said in an interview. “So it’s an opportunity to waste a prodigious amount of money.”

   

  He called the provisions passed by Congress “insanity, pure and simple.”

   

  Republican Congressman Trent Franks, who introduced and shepherded the policy changes in the House, said he drew inspiration from former president Ronald Reagan’s Strategic Defence Initiative of the 1980s, which was intended to use lasers and other space-based weaponry to render nuclear weapons “impotent and obsolete.” Known as “Star Wars”, the initiative cost taxpayers US$30 billion, but no system was ever deployed.

  Philip E. Coyle III, a former assistant secretary of defence who headed the Pentagon office responsible for testing and evaluating weapon systems, described the idea of a space-based nuclear shield as “a sham”.

  “To do this would cost just gazillions and gazillions,” Coyle said. “The technology isn’t at hand – nor is the money. It’s unfortunate from my point of view that the Congress doesn’t see that.”

   

  He added: “Both Russia and China will use it as an excuse to do something that they want to do.”

  Finally, when asked whether the country could afford it, Franks replied: “What is national security worth? It’s priceless."

  Priceless indeed.

  So who is "starting an arms race?"

  

  

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