Today’s News 10th February 2017

  • CNN’s Cuomo Equates the ‘N Word’ with Using the Term ‘Fake News’ Against Journalists

    These people are unbelievably tone deaf — insulated in their word of fetishes and drugs and all of the worst elements of mankind. Here is neo-liberal Chris Cuomo from CNN, in an interview with Michael Smerconish on Sirius XM yesterday, telling his listeners that saying ‘fake news’ to a journalist is the same, mind you, as calling a black person the ‘N word’ or derogatory term to an Italian (if alive, his father would smack him in the face with a meatball hero).
     
    Nevermind the fact that the ‘N word’ is rooted in hatred for a group of people for nothing other than the color of their skin. Juxtapose that against the term ‘fake news’, used against corrupt journalists and organizations using their platforms to deceive people, purposely, for political/social justard means, and one could make an indelible argument that Mr. Chris Cuomo is, in fact, a fucking moron.
     

     
    Let’s not forget his infamous foray into the Wikileaks dilemma this summer, telling viewers that it was, in fact, illegal to view the Wikileaks — that they should reserve such a privilege to the professionals in the media.
     

     

     

    Content originally generated at iBankCoin.com

  • Politicians Are Now Making Plans In Case The Public Turns Against Them Violently

    Submitted by James Holbrooks via TheAntiMedia.org,

    As protests continue to break out all around the nation over President Donald Trump’s desire to scrap Obamacare, Politico reported Tuesday that many politicians are beginning to worry about their own personal safety — to the point where some are having private sessions to discuss the matter.

    Citing sources who were in the room, Politico writes:

    “House Republicans during a closed-door meeting Tuesday discussed how to protect themselves and their staffs from protesters storming town halls and offices in opposition to repealing Obamacare.”

     

    Some of the suggestions, the news outlet reports, include “having a physical exit strategy at town halls, or a backdoor at congressional offices to slip out of, in case demonstrations turn violent; having local police monitor town halls; replacing any glass office-door entrances with heavy doors and deadbolts; and setting up intercoms to ensure those entering congressional offices are there for appointments, not to cause chaos.”

    While protests are popping up all over, the Republicans’ private session was no doubt prompted by events that happened over the weekend. While speaking before a raucous crowd in Roseville, California, Representative Tom McClintock had to be escorted from the stage and away from the event by local police officers.

    McClintock, who held town hall meetings during the politically volatile days of both the Tea Party and Occupy movements, told The Hill he’s never seen anything like it:

    “This was something very different. After an hour, the incident commander for the Roseville Police Department advised us the situation was deteriorating and felt it necessary to get me out of the venue. That’s never happened before.”

    This sentiment appeared to be echoed at Tuesday’s closed-door session. Commenting on the meeting, Republican Study Committee Chairman Mark Walker of North Carolina stated:

    “The message was: One, be careful for security purposes. Watch your back. And two, be receptive. Honor the First Amendment, engage, be friendly, be nice. Because it is toxic out there right now. Even some of the guys who have been around here a lot longer than I have, have never seen it to this level.”

    Sources told Politico that the potential for violence is serious enough, in fact, that the House sergeant-at-arms has asked congressional offices to report any threat. That office is also passing out manuals on best practices to keep staffers safe.

    Ironically, the backlash over the possible repeal of Obamacare that Republicans are facing now is similar to the backlash faced by Democrats years back as they were trying to force Obamacare into law.

    “It’s not that you run from protesters,” Representative David Reichert of Washington said during an interview after the meeting, “but if someone presents some sort of physical threat or are espousing a verbal threat that could lead to a physical threat, if you feel that you’re in danger and your staff is in danger, call 911 and leave and go out the back door.”

    In other words…run. Call the cops and run.

  • China Vice Premier: "Those Who Manipulate Economic Data Will Be Punished"

    Ask any economist or trader over drinks, or in any other setting, what they think about Chinese economic data or financial reporting and the answer will be one and the same: it’s all fake.

    And it’s not just skeptical outsiders who share this view: China has made it all too easy for anyone to be convinced, with reports such as this one “China Threatens Its Economists And Analysts To Only Write Bullish Reports, Or Else“, and, of course “Chinese Province Admits It Fabricated Economic Data For Three Years.” Apparently, China is also a master when it comes to deadpan humor and/or self-referential irony – or is merely galactically obtuse – because on Thursday China’s Vice Premier, Zhang Gaoli, warned that economic statistics “must not be fabricated” and that those caught manipulating data should be punished and face consequences in their careers.


    According to Xinhua, the central government requires authentic and reliable economic data to set policy, and China should have a traceable system to punish those found responsible for faking statistics, Zhang said Wednesday during a visit to the National Bureau of Statistics, the official Xinhua News Agency reported.

    Zhang also encouraged local authorities and other agencies to better coordinate their work and enact statistical reforms.

    It gets better. 

    Following the recent humiliation when in January it was revealed that Liaoning province had faked its fiscal revenue and other statistics from 2011 to 2014, the government was humiliated, not so much that Chinese data was fabricated data – everyone knew that was the case long ago – but that it was caught. And since the genie was officially out of the bottle, Beijing had no choice but to show a bold facade and signal that China’s leaders are “attaching greater importance to data accuracy”, to demonstrate to the world just how serious it is in cracking down against data manipulators.

    Meanwhile, Bloomberg reported last month that the central government has planned steps that will “improve” the independence of data collection and reduce the influence of local governments. In other words, Beijing is trying to scapegoat provinces and regional governments, for engaging in what it itself does.

    And since the data rigging will not end for the economy which always comes within 0.1% – and usually just above – of the “consensus” GDP number, we wonder if the Chinese government will be as quick to “punish” its own members once more data manipulation cases are exposed following the crackdown on “regionally” fabricated data. We doubt it.

  • Trump's Game Of Chess

    Submitted by NicklethroweR via The Burning Platform blog,

    During the last 18 months or so I’ve heard a lot of talk about chess. This guy or that guy is playing chess while everyone else is playing checkers or some mastermind is playing 3 dimensional chess, etc. I find it odd that these statements are made given that only a tiny percentage of Americans know how to play chess with that number sitting around 5% or slightly over 14 million people. This is too bad because if the population, as a whole, had a better understanding of chess then the actions of President Trump would make perfect sense.

    History: The school district where I was employed drastically cut its music programs and decided that chess would be an appropriate alternative to music instruction. I was not entirely opposed to this as there were published research papers extolling the virtues of chess and there appeared to be a direct relationship between playing chess and higher academic achievement. Besides, anyone can play chess while not everyone has the dexterity to be a musician. Wishing to be part of the solution, I agreed to become a coach and took on after school chess programs on three different campuses.

    Our school district was kind enough to foot the bill for some necessary chess coaching and needed chess supplies. Not only that but I had the great fortune of having World Chess Champion Garry Kasparov’s former full time coach as my new teacher as the former Russian coach had relocated to the very city where I lived and had been contracted by the School District to get us up to speed. Private lessons with Kasparov’s coach! Can you imagine it?

    It took my new coach all of about 30 seconds to figure out my level of chess competence which was not very high and I will paraphrase what he said next: “You are not very good and there is not enough time to teach you the correct way. But, I can teach you simple rules that will enable you to defeat anyone that doesn’t study chess full time.” He called his method “active chess” whereas a weak player like myself could use a simple formula to play the most aggressive game possible and win against stronger players. He believed that strategy flowed from tactics and his method allowed for a very fluid game of strategy.

    So, what did he teach me and how does it relate to our president? Is Trump playing chess?

    Chess is a game where the number of possible positions rises at an astronomical rate. By the 2nd move of the game there are already 400 possible positions and after each person moves twice, that number rises to 8902. My coach explained to me that I was not trained enough to even begin to keep track of those things and that my only chance of ever winning was to take the initiative and never give it up. “You must know what your opponent will do next by playing his game for him.” was the advice I received.

    Now, I wont bore you with the particulars but it boiled down to throwing punches each and every turn without exception. In other words, if my opponent must always waste his turn responding to what I am doing then he never gets an opportunity to come at me in the millions of possibilities that reside in the game. Again, if I throw the punch – even one that can be easily blocked, then I only have to worry about one combination and not millions.

    My Russian chess coach next taught me that I should Proudly Announce what exactly I am doing and why I am doing it. He explained to me that bad chess players believe that they can hide their strategy even though all the pieces are right there in plain sight for anyone to see. A good chess player has no fear of this because they will choose positions that are unassailable so why not announce them? As a coach, I made all of my students tell each other why they were making the moves that they made as well as what they were planning next. It entirely removed luck from the game and quickly made them into superior players.

    My Russian coach next stressed Time as something I should focus on to round out my game. He said that I shouldn’t move the same piece twice in a row and that my “wild punches” should focus on getting my pieces on to the board and into play as quickly as possible. So, if I do everything correctly, I have an opponent that will have a disorganized defense, no offense and few pieces even in play and this will work 9 out of 10 times. The only time it doesn’t work for me is when I go against players that have memorized hundreds of games and have memorized how to get out of these traps.

    With all that said, let’s see if President Trump is playing chess.

    First, we can all agree that Trump, if nothing else, throws a lot of punches. We really saw this in the primaries where barely a day could go by without some scandal that would supposedly end his presidential bid. His opponents and the press erroneously thought that responding to each and every “outrage” was the correct thing to do without ever taking the time to think whether or not they had just walked into a trap. They would use their turn to block his Twitter attack but he wouldn’t move that piece again once that was in play but, instead, brought on the next outrage – just like my coach instructed me to do.

    Second, Trump is very vocal in what he is going to do. Just like I had my students announced to each other their plans, Trump has been nothing but transparent about what he intends to do. After all, announcing your plans only works if your position is unassailable. It demoralizes your opponent. You rub their face in it. Another benefit to being vocal is that it encourages your opponent to bring out his favorite piece to deal with said announced plans. This is a big mistake as any good chess player will quickly recognize which piece his opponent favors and then go take them.

    Time has been the one area that our president is having problems. Executive Orders and Twitter Wars have pushed the opposition off balance but he has not been able to use this time to get all of his pieces into play. The Justice Department (his Queen) is still stuck behind a wall of pawns. Furthermore, only 5 of his 15 Cabinet picks have been confirmed as of this writing. Without control over these departments, the president can fight a war of attrition but he really can’t go on the offensive. In chess, I will gladly trade a piece for a piece if it means you have to waste your turn dealing with it. It isn’t a long term strategy if you do not have all of your pieces ready to go.

    In the end it would appear that Trump is playing the kind of game that I was taught to play by my coach.

    His opponents are never given time to mount an attack.

     

    Their queen – the MSM has been removed from the board and their favorite piece – the Celebrities are locked in a war of attrition while Trump gets the rest of his pieces on the board.

     

    Remember, these are all Tactics but Strategy flows from Tactics.

     

    Sooner or later the Left will find itself in some terrible position and the Strategy to drain the swamp will present itself.

    Also, since I did mention Garry Kasparov’s, he had this to say on his Twitter feed just yesterday.

    “It’s the birthday of Ronald Reagan, whose courage and moral clarity helped win the Cold War & free many millions from Communist servitude.”

    Damn right Garry, damn right.

  • Nearly Half Of Early-20s Millennials Still Get A Monthly Housing Allowance From Mom And Dad

    In an age when our pampered, snowflake millennials can’t manage to engage in a simple conversation with someone holding a dissenting opinion, at least not without being “triggered” repeatedly by a barrage of “micro-aggressions”, let along determine their own gender absent a pamphlet from their enabling college of choice, it should come as no surprise that nearly half of young adults between the ages of 22-24 receive monthly housing allowances from their parents. 

    According to a study by Patrick Wightman of the University of Michigan, roughly 40% of millennials between the ages of 22-24 receive an average of $3,000 from their parents every year.  Per the New York Times:

    According to surveys that track young people through their first decade of adulthood, about 40 percent of 22-, 23- and 24-year-olds receive some financial assistance from their parents for living expenses. Among those who get help, the average amount is about $3,000 a year.

     

    It’s a stark reminder that social and economic mobility continues past grade school, high school and even college. Economic advantages continue well into the opening chapters of adulthood, a time when young people are making big personal investments that typically lead to higher incomes but can be hard to pay for.

    Unsurprisingly, the frequency and amount of financial assistance varies greatly depending on each young millennial’s chosen field of study.  To our complete shock, “Art and Design” students are the most likely to require help from mommy and daddy and get $3,600, on average, each year. 

    The amount of help that parents provide varies by career and geography. Among young people who aspire to have a career in art and design, 53 percent get rent money from their parents. Young people who live in urban centers are more likely to have their parents help pay the rent.

     

    The choice of career path matters. Those in the art and design fields get the most help, an average of $3,600 a year. People who work in farming, construction, retail and personal services get the least.

     

    Some jobs in science, technology, engineering, management and law have clearer and more substantial payoffs after years of internships and postgraduate training. But pay in art, design and education is low in the early years, and for some people, it remains low.

     

    Someone who wants to go into graphic design or marketing requires a fair amount of time to get up to the point where you’re independent,” Mr. Wightman said. “Someone contemplating that kind of career isn’t going to take that first step unless they know they’re going to have that support to take an unpaid internship. If you don’t have other sources of support, that’s not even an option.”

    Millennials

     

    Of course, the amount of annual parental support required by millennials is also highly dependent upon where they’re living.  We can’t honestly expect young Johnny or Susie to become wildly successful actors without living in Manhattan or Hollywood, now can we?

    Millennial

     

    But don’t worry, young millennials, we’re sure everything will work out in due course…

    Millennial

  • The Game (Theory) Of Trump – "Not Every Tweet Is A Constitutional Crisis"

    Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,

    Death inspires me
    Like a dog inspires a rabbit.
    ? Twenty One Pilots, “Heavydirtysoul” (2017)

     

    Sometimes a cigar is just a cigar.
    ? Sigmund Freud, who probably never actually said this (but should have)

    Over the past few weeks, I’ve had a fight with my wife, spoiling an otherwise wonderful night out, and email spats with two of my best and oldest friends. It was about Trump, of course. Not directly, but always on some silly tangential issue like “Should Sally Yates have resigned instead of countermanded an executive order on the basis of her personal beliefs?” or, better yet, “Is Lady Gaga authentic?” In each case, I didn’t recognize that we weren’t really talking about what I thought we were talking about, and by the time I did recognize the real issues, I was already too far down the path of combative Ben (think Bruce Banner but without the green skin) to care. Not my finest moments.

    I suspect a lot of Epsilon Theory readers have had similar individual experiences of late. Certainly it seems that our collective experience as a nation and political society is breaking down this way.

    What I want to write about today is not the specifics of this policy or that policy. It’s not to make an argument of any sort. It’s to write about argumentation itself, and the way in which the GAME of our politics and our society has shifted. Yeah, I know this is all very meta and has zero direct impact on your investing or portfolio decisions. But it’s actually the only thing that I think really matters for our social lives, including our lives as citizens and as investors, because it’s only by recognizing the game that we’re playing that we can survive it. Together. Maybe.

    The most widely read Epsilon Theory note ever was “Virtue Signaling: Or Why Clinton is in Trouble”, published last September, where I wrote about why I thought Hillary could lose the election. The argument was that this was a turn-out election for a handful of swing states, and Democrats were all too keen to proclaim their political virtue by being anti-Trump in easy places like the Huffington Post or California metro advertising markets, where lots of like-minded Democrats would see them, rather than to barnstorm FOR Clinton in places where unlike-minded Democrats would see them, like Pennsylvania or Michigan or Wisconsin. Hubris, thy name is Debbie Wasserman Schultz and the rest of the DNC cartel.

    But here’s what I wrote about Trump in that note:

    Trump, on the other hand … I think he breaks us. Maybe he already has. He breaks us because he transforms every game we play as a country — from our domestic social games to our international security games — from a Coordination Game to a Competition Game.

    Blowing up our international trade and security games with Europe, Japan, and China for the sheer hell of it, turning them into full-blown Competition Games … that’s really stupid. But we have a nasty recession and maybe a nasty war. Maybe it would have happened anyway. We get over it. Blowing up our American political game with citizens, institutions, and identities for the sheer hell of it, turning it into a full-blown Competition Game … that’s a historic tragedy. We don’t get over that.

    Geez. Like anyone else with a public persona, I loooove being right. But I didn’t expect to be this right, this quickly. The election of Trump IS breaking us, and not because of the specifics of his policies or whether they’re right or wrong or anything like that. It’s breaking us because of the nature of repeated-play competitive games and the shifting meaning of cooperation.

    That first bit — the nature of repeated-play competitive games — is a mouthful. All it really means, though, is that our real-life social interactions, whether in politics or markets or everyday life with our family and friends, are never a single, solitary game. We play the same core game over and over and over, each single interaction setting the stage for the next, and what we really should be concerned about is the overall pattern of the entire set of interactions. That’s real life, as opposed to some 2×2 matrix of Cooperate/Defect like you’d see in a game theory textbook.

    And famously, repeated plays can help improve competitive games that otherwise end up in a sad equilibrium, like the Prisoner’s Dilemma. A political scientist named Robert Axelrod (not to be confused with David Axelrod of Obama campaign and CNN fame … this is a different guy) wrote a really influential book back in 1984 called The Evolution of Cooperation, where he showed that a cooperative but non-patsy player (i.e., willing to cooperate first and reluctantly forgive an opponent’s occasional defection) would, over time, find enough similarly “nice” players to create an ecosystem of cooperators and dominate, over time, those not-so-nice players who were looking to WIN BIGLY in every single interaction. Axelrod’s book was one of the most popular political science books of the past 40 years, and it spawned a cottage industry of academics looking to expand this insight in theory and practice. It’s a powerful idea because it’s a hopeful idea for nice people. If only us nice people can signal each other and band together, why golly, this proves that there’s nothing we can’t overcome together in this mean old world.

    Unfortunately, the evolution of cooperation through adopting “nice” strategies is not a particularly robust finding. Or rather, it’s robust, but only in a particular subset of competitive games and only if the players agree on the meaning of cooperation. For example, if you’re playing a game of Chicken over and over again rather than a game of Prisoner’s Dilemma over and over again, being nice and forgiving doesn’t work very well. At all. Google “Sudetenland 1938” if you don’t believe me. In fact, the entire concept of repeated-play doesn’t fit neatly with the competitive game of Chicken, which is a problem because it’s the dominant competitive game form in the modern world, both internationally and domestically. It wasn’t always this way, particularly in our domestic politics. But it sure is now.

    The fundamental reason that a repeated-play cooperative strategy doesn’t work in a game of Chicken is that the meaning of cooperation is different in this class of games. You see it in the title of the game itself. If you cooperate in a game of Chicken — i.e., you’re driving your tractor straight on at Kevin Bacon’s pick-up truck and you veer off from the looming crash, or you and James Dean are racing towards a cliff and you put on your brakes first — you are the LOSER. You are the COWARD. That becomes your identity and your reputation, which means that others will now treat you like a loser and a coward in the games that they play with you in the future. Compare that to the meaning of cooperation in a game of Prisoner’s Dilemma, where cooperation — i.e., you refuse to rat out your partner and cut a deal for yourself at his expense — means that you are STRONG and LOYAL. The words and the examples used to illustrate bloodless, mathematical game theoretic matrices are not accidental! If we believe that our identity is at risk in a repeated-play competitive game, we behave very differently than if it’s not. More to the point, we should behave differently if our identity is at stake. It’s the rational thing to do. If Trump inspires you like a dog inspires a rabbit, then you should never cooperate if it’s a game of Chicken with his tribe and you should always cooperate if it’s a Prisoner’s Dilemma game with your tribe. Maybe you’ll crash the car in this particular game of Chicken and maybe your partner will rat you out in this particular game of Prisoner’s Dilemma. But your identity and reputation will be strengthened, not damaged, for the next game you play with the other tribe or within your own tribe. And there’s always another game.

    Okay, Ben, fair enough. We don’t want to be cowards but we still want to think of ourselves as nice. For the big identity-is-at-stake games, we should play nice strategies within our own mob and play mean strategies with the other guys. Got it. But how do we avoid crashing the car in our everyday lives? How do we avoid talking past or yelling at our friends, family, and fellow citizens with whom we share so much common ground on the really big ideas of what it means to be Americans or, more fundamentally still, a good human being?

    Well … first off I’m going to suggest that we should all prepare for impact. The evolution of competition and the success of “mean” strategies in games like Chicken is at least as robust as the evolution of cooperation and the success of “nice” strategies in games like Prisoner’s Dilemma. Once you introduce, say, mustard gas into the trench warfare game, it doesn’t just un-introduce itself on its own. These bells are really hard to un-ring, and it typically takes a lot of car crashes on both sides before you get a peace treaty and a chance to rebuild a cooperative game structure. That’s at least four mixed metaphors, but you get what I mean. And unfortunately, all of these metaphors apply just as aptly to a social structure of family and friends as to a social structure of a political party or an entire nation. The evolution of competition is a powerfully contagious virus, and it hops easily from a big tribe like a nation to a small tribe like a family.

    But I do have two suggestions to limit the damage that the evolution of competition inevitably spews in its wake.

    First, whatever competitive social interaction we’re having, at whatever level we’re having it, the most important thing in that interaction is to figure out the meaning of cooperation for yourself and whoever you’re dealing with. Otherwise you’re going to find yourself playing a different game from the other person, and that never ends well. This is a tough piece of advice to follow (myself included!) because we assume that whatever our “identity weighting” might be for a given issue, the person or group we’re interacting with attaches that same meaning. So, for example, if you voted for Clinton as an affirmation of a personal identity that rejects the racism and sexism you see in Trump, your natural assumption is going to be that anyone who voted for Trump similarly did so as an affirmation of a personal identity, but one that accepts racism and sexism. Or vice versa. Or whatever. We’ve all seen a dozen variations of this theme over the past eight weeks, and we’ve all (yes, every single one of us) engaged in it, as well. This sort of projection is an innate behavioral bias of the human animal. I get it. But it is also entirely wrong-headed when it comes to complex and over-determined social behaviors like voting. Or buying a stock. Believe it or not (and many people reading this note won’t), behaviors like voting or purchasing or speaking or tweeting are not necessarily markers of personal identity. Maybe they are, and when they are they MUST be respected if you care about having a peaceful social interaction. But maybe they aren’t. And that must be respected, too.

    Second, it’s crucial to recognize that not all political arguments or competitive games are really existential in nature or fraught with questions of identity. Not every tweet is a constitutional crisis. Sometimes a cigar is just a cigar. This is also a tough piece of advice to follow (also myself included!) because the ringleaders of the various Team Elite cabals, whether it’s the Trump Plutocrats or the Davos Globalists or the Central Bank Mandarins or the NeoCon Spymasters or whoever, are working diligently day in and day out to convince you that it is. That every action or statement by the other ringleaders is an OUTRAGE. That this is how Hitler got started or how liberty is lost.

    Of course, the really scary thing is that this IS how Hitler got started and it IS how liberty is lost, it’s just not clear to me which of our contending factions or geographies is supplying the 21st century version. History rhymes roughly; it doesn’t repeat neatly.

    Meanwhile the barrage of fiat news and alternative facts continues from all sides unabated. We are caught in the crossfire of the “mean” strategies implemented by the various factions as they quite rationally engage in a massive repeated-play game of Chicken, where winning means mobilizing the hearts and minds of the cannon fodder. And by cannon fodder I mean us.

    It’s the oldest saying in poker, and one I can’t repeat often enough. If you’ve been playing poker for 30 minutes and you don’t know who the sucker is … it’s you. We are — all of us, without exception — being played. That doesn’t mean we stop playing the game, whether it’s the game of markets or the game of citizenship. It means, though, that we resolve not to be the sucker. That we turn a clear eye to the stories that others tell us and the stories that we tell ourselves. That we demand to be treated as the rightful, autonomous owners of our identities, and we extend that right to others.

    Know thyself.

    Treat others as you would have them treat you.  

    Pretty good advice 2,000 years ago in some pretty hard times. Pretty good advice today.

  • US, China Military Aircraft Have "Unsafe, Close Encounter" Over Contested Islands

    After years of 'close encounters' of the Russian-kind, it appears the US military has found a new nation to fly close to.

    Nine months after China demanded US "immediately cease" spying near its borders

    "It must be pointed out that U.S. military planes frequently carry out reconnaissance in Chinese coastal waters, seriously endangering Chinese maritime security," China's Foreign Ministry spokesman Hong Lei Hong told reporters, adding that  "we demand that the United States immediately cease this type of close reconnaissance activity to avoid having this sort of incident happening again."

    CNN reports that two US defense officials confirmed that there was an "unsafe" close encounter between a US Navy P-3 Orion aircraft and a Chinese surveillance aircraft Wednesday in the general vicinity of the contested Scarborough Shoal in the South China Sea.

    One official said the Chinese plane was a People's Liberation Army Air Force KJ-200.

    CNN reports the two planes flew within 1,000 feet of each other in the general vicinity of the contested Scarborough Shoal in the South China Sea.

    A second official said that the American P-3 had to alter course to ensure that there wasn't an aerial collision.

    A spokesperson for US Pacific Command, which oversees US troops in the region confirmed, the incident, calling it "unsafe" in a statement provided to CNN.

    "The U.S. Navy P-3C was on a routine mission operating in accordance with international law," Maj. Rob Shuford said.

     

    "The Department of Defense and US Pacific Command are always concerned about unsafe interactions with Chinese military forces," he added.

     

    "We will address the issue in appropriate diplomatic and military channels."

    While the Navy considers the encounter to be "unsafe," it does not assess that any malign intent was behind the incident, though the event was considered serious enough to be raised up the chain of command.

    The official called encounters between US and Chinese aircraft like the one that took place Wednesday "extremely rare," noting that there were zero such incidents in 2015 and two in 2016. It was the first such instance of 2017.

    We look forward to China's official response tomorrow, especially considering President Trump's positive outreach earlier today.

  • Record Number Of Americans Renounce U.S. Citizenship In 2016; 2,200% Surge During Obama Reign

    Obama warned everyone back in 2009 that “elections have consequences.”  Now, eight years later, we learn that apparently the “consequences” of running around the country for nearly a decade threatening to raise taxes, “spread the wealth around” and pursue any number of other socialist policies are a record number of people renouncing their U.S. citizenship.

    Per a post from the International Tax Blog, the U.S. Treasury recently published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2016 and it shattered all previous records.

    The number of published expatriates for 4Q 2016 was 2,365, bringing the total number for 2016 to 5,411, setting a new all-time quarterly and annual record.  By comparison, the number of expatriates for 2016 reflects a 26% increase over 2015 and a 58% increase over 2014 (3,415).

    Expats

     

    Taking a more granular look at the past 20 years illustrates the staggering surge in the number of published expatriates that “coincidentally” corresponds with Obama’s election in 2008.  In fact, the 2016 list is over 22x larger than 2008, the year just before Obama moved into the White House. 

    Expats

     

    As the New York Times notes, perhaps the most notable citizenship renouncement came from British Foreign Secretary Boris Johnson who gained fame as one of the most vocal supporters of the Brexit referendum and an early critic of Trump describing him as “out of his mind” and of “a quite stupefying ignorance.”

    Boris Johnson, Britain’s colorful and blustery foreign secretary, who is perhaps best known for his leading role in campaigning for his country’s departure from the European Union, has given up his American citizenship, a United States Treasury Department list showed Wednesday.

     

    Born in New York, Mr. Johnson, 52, held dual citizenship until last year. He had long complained about having to pay taxes in the United States even though he was 5 when he last lived there. Unlike most countries, the United States taxes nationals who live abroad on their worldwide income.

     

    Mr. Johnson, a Conservative, has not been known for his diplomatic skills. His relations with Donald J. Trump took a blow in December 2015, when he accused Mr. Trump, then a presidential candidate, of being “out of his mind” and of “a quite stupefying ignorance” that made him unfit for the presidency.

    Guess we can add this to the “Obama legacy”…

    Obama

  • NGO Fleet Bussing Migrants Into The EU Has Ties To George Soros, Hillary Clinton Donors

    Via Disobedient Media

    In November 2016, a number of NGO’s were revealed by independent European news source GEFIRA to be smuggling migrants from the northern coast of Africa across the Mediterranean into the EU using a ramshackle fleet of ships. Research by Disobedient Media shows that a number of the organizations sponsoring ships in the armada are funded in part by Hillary Clinton donors and organizations run by billionaire George Soros. The actions taken by sponsors of ships in the fleet may be illegal under EU law and possibly run the risk of aiding ISIS operatives hiding among the migrant population.

    I. A Fleet Of NGO Operated Ships In The Mediterranean Operate Around The Clock Delivering Migrants From North Africa To Italy

    On November 15, 2016 GEFIRA published evidence they had gathered that various NGOs were utilizing a fleet of more than a dozen boats in the Mediterranean to illegally transport migrants from the North African coast to Italy. GEFIRA used AIS Marine Traffic (Ship-tracking software) signals, Twitter and the live reports of a Dutch journalist on board of the ship Golfo Azzurro to document alleged collaboration between NGOs, the Italian Coast Guard and smugglers coordinate their actions. The ships were caught on radar moving between the Italian and Libyan coast moving migrants into the EU.

    Source: GEFIRA

    The Italian coast guard directed ships in the fleet to Libyan territorial waters, where they would engage in “rescue operations” and take migrants onboard before delivering them to the Sicilian coast of Italy. This would allow migrants to bypass Malta, which is used as a major processing center for immigrants and refugees entering the EU. GEFIRA speculated that the Dutch, Maltese and German based NGOs’ facilitation of human smuggling made them, in effect, operations of international criminal organizations.

    Source: GEFIRA

    The NGOs tied to boats involved in the operation were Migrant Offshore Aid Station (MOAS), Jugend Rettet, Stichting Bootvluchting, Médecins Sans Frontières, Save the Children, Proactiva Open Arms, Sea-Watch.org, Sea-Eye and Life Boat.

    II. Several Organizations Operating Ships In The Fleet Have Ties To George Soros, Hillary Clinton Donors

    Information uncovered in an investigation by Disobedient Media has revealed that several of the NGO groups involved with the migrant fleet have received funds from George Soros aligned organizations or financial backers of Hillary Clinton.

    The Migrant Offshore Aid Station (MOAS) was founded in 2014 by entrepreneurs Christopher and Regina Catrambone. MOAS operates the ships the Topaz Responder and the Phoenix in the migrant fleet. Mr. Catrambone was listed as a major donor to Hillary Clinton, giving over $416,000 to her presidential campaign bid in 2016. Another major supporter of MOAS is avaaz.org, who donated €500,000 to MOAS’ “search and rescue operations.” Avaaz.org was founded by Moveon.org, an American organization owned by George Soros. Avaaz.org acts as the European branch for Moveon.org.

    NGO group Save the Children operates the Astral in the migrant fleet. Save the Children is supported in part by George Soros’ Open Society Foundation.

    Médicins Sans Frontiéres (MSF) also operates several ships in the migrant fleet – the Dignity 1, the Bourbon Argos and the  Aquarius. MSF has also received funding from the Open Society Foundation.

    Other organizations running ships in the fleet, such as Sea Eye, have denied to news sources that they were delivering migrants to Italy, despite being caught by GEFIRA doing exactly that.

    No matter what good intentions might be behind the decisions of these various NGO groups to operate ships in this fleet, they are likely illegal and are in effect subverting European law. The financial involvement of George Soros and other big name supporters raises questions about the true intentions of various sponsors operating ships within the fleet.

    Many of the migrants seeking entry to the EU are not refugees and are attempting to enter for purely economic reasons. Even more concerning are recent reports that terror group ISIS has begun to dominate the trafficking networks in North Africa and is actively recruiting members from among the migrant population with promises of small amounts of cash and guaranteed safe passage into the EU. The involvement of ISIS in human trafficking and recruitment indicates that there is a very real possibility that the NGO groups operating ships within this fleet may be (intentionally or not) aiding and abetting terror by transporting undercover operatives into the EU.

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Today’s News 9th February 2017

  • Globalists Want To Destroy Conservative Principles – But They Need Our Help

    Submitted by Brandon Smith via Alt-Market.com,

    For months now, long before the 2016 election, I have been warning about a specific social dynamic which is likely to lead to a form of civil war within the U.S.; namely, the reality that people on the left side of the political spectrum would become despondent at the inevitable loss of their candidate, Hillary Clinton, and that they would react by becoming far more militant. In my article 'Order Out Of Chaos: The Defeat Of The Left Comes With A Cost', published November post-election, I stated:

    “When I mentioned in my last article the crippling of social justice, I did not mention that this could have some negative reverberations. With Trump and conservatives taking near-total power after the Left had assumed they would never lose again, their reaction has been to transform. They are stepping away from the normal activities and mindset of cultural Marxism and evolving into full blown communists. Instead of admitting that their ideology is a failure in every respect, they are doubling down.

     

    When this evolution is complete, the Left WILL resort to direct violent action on a larger scale, and they will do so with a clear conscience because, in their minds, they are fighting fascism.”

    I believed at that time that the social-justice cult would lose mainstream influence but that the existing minority would resort to even more insidious tactics and greater violence to get what they want; and, the so-called "moderate left" would cheer them on.  As it turns out, I have been proven right so far.

    Not that extreme Leftists have been averse to violence over the past year, but I think it is safe to say that the volume on the cultural Marxist machine has been turned up a notch. The riot at UC Berkeley over a scheduled speech by gay, conservative speaker Milo Yiannopoulos is a perfect example:

    Then, there was the raid by SJWs at NYU on a speech by conservative journalist and comedian Gavin McInnes, in which they shouted down all discussion with mindless chants until the event had to be canceled. This was, of course, after they had already physically attacked people outside the building, including McInnes:

    The social justice mantra is changing. At first, it was predominately about forming mobs to “shame” target political opponents into silence. Now, it is about forming mobs to do what they call “punching Nazis.” Leftists are now often seen regurgitating the claim — “This is only the beginning…”

    I agree, this IS only the beginning. The Left is driven not only by the ideology of cultural Marxism, but also a very specific activist strategy outlined in Saul Alinsky’s 'Rules For Radicals'. The very core of Alinsky’s method revolves around one important rule in particular: the ends justify the means.

    This is the key ingredient of moral relativism, and when a movement is motivated by moral relativism, there is no limit to the depths they will sink to get their way. Activists adopting the “ends justify the means” mentality are not interested in being “right,” or wise, or rational or logical or factual; they ONLY care about “winning.” This is their goal, and they will do anything to achieve it.

    It is important to note, however, that all of these protests and the increase in violence is not taking place in a vacuum. As many liberty analysts have noted, Trump has hardly had time to do anything yet that would warrant national protests. Is Trump really the only catalyst? Not quite. The mainstream media and globalists like George Soros have been very effective in agitating or outright paying protesters and provocateurs to generate zombie mobs of gullible Leftists to use as a billy club for harassing conservatives.

    That said, I want liberty activists and analysts to ponder on this for a moment — to what end is this being done? Why is Soros so interested in fomenting leftist rage? Is it designed to overthrow Trump? To initiate mob action and frighten conservatives into silence? Or do the globalists have a greater and more important goal in mind?

    I have been writing often on the idea of 4th Generation Warfare the past month, and I think my readers are now well versed in the concept of the “three-steps-ahead” style of tactics, as well as the concept of manipulating an opponent to destroy himself, rather than fighting him directly. These are not new methods, the globalists have merely taken them to the next level.

    But how do 4th Gen warfare tactics apply to the current Right vs. Left scenario in the U.S.? Well, everything is not as obvious as it seems.

    As I outlined in-depth in my article Clinton Versus Trump And The Co-Option Of The Liberty Movement, globalists and the leftist media have been, in a strange way, quietly cheering for Trump, but only as a tool for absorbing the liberty movement (what they still call the “Tea Party”). This glee is made rather evident in an article published by Bloomberg in August titled The Tea Party Meets Its Maker.

    There is a point I have been trying to make for most of the year that I think has been consistently missed by many in the liberty movement. That point being that the greatest danger to conservatives is NOT militant Leftists, but how we RESPOND to militant Leftists. That is to say, I believe the globalists are using the Left as a cattle prod to enrage conservatives and lure us into abandoning our principles in the name of defeating Marxists.

    Consider this; the argument among most liberty analysts has been that the numerous anti-Constitutional programs put in place by the Obama administration in the past eights years would eventually be used by the political Left and the globalists as weapons to subdue and destroy conservatives and patriot groups. While Obama certainly tested the waters of tyranny over and over again, up to and including using executive orders to assassinate American citizens without trial, it is clear that those extensive powers afforded to the White House are no longer in the hands of the left; they are in the hands of Trump.

    Obama even signed the “Countering Disinformation And Propaganda Act” into law AFTER Trump had already won the White House. Trump has now inherited this power as well, which seems to give government the authority to harass or even silence news sources they deem “fake news.” While many liberty activists cried foul and warned of a “coup” designed to shut down alternative news sites and thwart Trump’s inauguration, I warned that there was a much more dangerous scenario in play.

    What will conservatives do in the face of the leftist mob funded by globalists and growing ever more vicious? Well, what do the globalists expect us to do? I think they expect us to look at all the government powers we once admonished as unConstitutional and say “hey, maybe these laws and executive orders are not so bad after all…”

    I think the globalists are handing us the incredible temptation of far reaching bureaucratic power, and they expect us to abuse that power, as almost anyone would.

    As an alternative analyst I am privy to trends in the liberty movement and in conservative circles that might not be immediately obvious to casual readers. Already, I am witnessing calls among conservatives to abuse government power to defeat the Left. I have seen comments such as:

    “Trump should use the NDAA to imprison these leftists indefinitely…”

     

    “The only solution is to throw the leftists into FEMA camps…”

     

    “Trump needs to shut down the leftist media…”

     

    “Sometimes it is okay to bend the rules of the constitution if you have the right president…”

    And comments like this are popping up everywhere in liberty media boards. Now, I recognize that some of this talk is being posted by paid disinformation agents and provocateurs, but, I have heard regular conservatives and patriots, people who are long time proponents of the Constitution, echo similar sentiments.

    I often use the analogy of the “One Ring” from The Lord Of The Rings to describe big government power. I really can’t find a better fictional symbol. Anyone who comes into possession of the “one ring” is eventually corrupted by it. Many good people believe that its darker energy can be contained and directed for good purposes, but they, too, are ultimately undone by it. The only answer, the only solution, is to abandon the ring, or to destroy it.

    Overt government power is very much the same; it corrupts any person or group that comes in contact with it. Every group thinks that if only THEY were in possession of government that they would do things differently. This is a delusion. No person or group is benevolent enough to handle this responsibility, and this includes conservatives. Many groups would commit egregious and heinous crimes to take government for themselves, or keep it for themselves, all the while so many Saurons (globalists) laugh and smack their lips as the masses battle over numerous rings of power.

    As I have noted time and time again for the past several months, Trump is the perfect tool for scapegoating conservative movements for the economic crisis the elites have already engineered. But, this is only one part of the agenda. In the midst of chaos generated by financial calamity, the morals of an entire society can become "malleable".  The most important target of the globalists is not only conservatives, but the conservative philosophy. They don’t just want to annihilate conservatives today, they want to annihilate conservatives for all time.

    The globalists cannot accomplish this task without our help. They NEED us to adopt an attitude of moral relativism, much like the Left. They need us to turn into totalitarians. They need us to become the monster we claim we want to defeat. Only then can conservative principles be demonized for all time. Only then will history look back on us as a stain on the human record.

    This is the globalist’s long game.

    While Leftists are being encouraged to mutate into wild frothing packs of rabid dogs, conservatives will be encouraged either through temptation or manipulation to respond in kind. The Left’s propaganda train asserts that we are “fascists.” Obviously, we are the furthest thing from this. But, with enough violence and aggressive censorship on their part, we might end up saying “Okay, you want to see fascism, we’ll show you fascism!”

    The social justice cult has no idea what they are being led into. The globalists are going to throw them to the wolves, and WE are the wolves.

    It is important to note that the Left is also not the only instigator for conservatives to turn totalitarian. Islamic terrorism is always a perfect rationale for increased government intrusion in the name of safety. The worst part is, the threats from the Left and the threats from Islamic extremism are in most cases quite legitimate, and they seem to be working hand-in-hand more each day.

    The progressive interference with steps towards more rational immigration policies and their steady defense of Sharia Law leads many conservatives to see them as one in the same enemy.  No foreigner is entitled to citizenship in the U.S., but leftists live in a fantasy world of open borders.  The left's refusal to entertain reasonable and selective immigration will eventually push conservatives towards more drastic measures, which is the ultimate point.

    Very few Americans like Communists, and very few Americans like Muslim zealotry; the justification for totalitarian measures to disrupt such threats is relatively easy for many people.

    This is why I am going to make my next prediction of a major geopolitical event to close out this article — I believe there will be a large scale terrorist attack within the next three months, beyond the mob actions of the Left already in progress.

    It will either be similar in scope to 9/11, or, it will be a succession of many smaller attacks occurring over the course of a few days to a couple of weeks. I believe that the current dispute over border controls and immigration denial will come immediately into play. Trump will blame Leftists for obstructing his efforts for secure immigration. Leftists and the media will blame Trump for “radicalizing” Muslims with his immigration policies, or perhaps even accuse him of staging the attacks himself. Trump will begin taking extraordinary measures beyond the Constitution to ensure immigration denial and the thwarting of the Left, and conservatives will applaud him for it.

    Again, conservatives are being led by globalists into the temptations of power. The only way for us to fight back is to maintain our principles and refuse to support ANY government measure that is unConstitutional, even if it is to be used against our enemies. The only way that the heritage of liberty can be defeated is if the proponents and champions of liberty forsake it. We beat the globalists in the long run by standing by our ideals and fighting back within the bounds of the principles we hold dear. Dominance through government is never the answer.

  • Decade-High $100 Billion Of Corporate Loans Refinanced In January As Companies Prepare For Higher Rates

    Anyone who slipped into a coma 10 years ago and suddenly woke up today, may come to the erroneous conclusion that not much had happened in U.S. debt and equity markets over the past decade.  Like in 2007, equity markets seem to surge to all new highs with each passing day, corporate credit spreads have tightened to 10-year lows and leveraged loan refinancings are soaring as all the “money on the sidelines” just can’t seem to find a home fast enough. 

    As the Wall Street Journal noted today, the fear of rising interest rates, which have so far largely been offset by tightening spreads for corporate levered loan borrowers, has sparked a massive wave of corporate loan refinancings, including $100 billion worth of volume in January 2017 alone.  Moreover, per data from LevFin Insights, $222 billion, or nearly 25% of the entire leveraged loan market, has been refinanced since October.

    Rising interest-rate expectations are fueling the biggest corporate-refinancing boom in years.

     

    U.S. companies refinanced $100 billion of loans in January, the largest monthly total in at least a decade, according to data from S&P Global Inc. More than 110 low-rated companies, including software giant Dell Technologies Inc. and car-repair chain Service King Collision Repair Centers Inc., have refinanced loans since October, according to data from LevFin Insights LLC.

     

    Borrowers in recent months have saved more than $1 billion in annual interest costs by renegotiating terms with their lenders, according to a Wall Street Journal analysis of the data.

     

    Total repricings since the start of October amount to $222 billion, representing 24% of all outstanding leveraged loans, according to LevFin Insights. Firms negotiated an average interest reduction of 0.59 percentage point.

    Refinancings

     

    Of course, rising interest rates, which are feared to continue pushing higher, are sparking this latest refinancing bubble…

    3M LiBOR

     

    …as corporate borrowers have sought to offset increases in LIBOR rates with tighter spreads.

    Corp Spreads

     

    Of course, none of this madness would be possible without all that “money on the sidelines” just waiting for the next new issue from Goldman that will grant them a 5% allocation at a spread 75 bps lower than the initial pricing talk.

    The wave is being propelled by outsize investor demand for bank loans, floating-rate debt investments that are prized because they tend to perform well in rising-rate environments. The red-hot loan market has enabled many corporations to demand that lenders cut rates or face losing the business to a rival, a sign of how easy financing is enabling large firms to get advantageous terms in debt markets.

     

    Persuading lenders to cut the rate on Service King’s $609 million loan by 0.75 percentage point took just a few days. The new loan will save the company about $4.5 million in annual interest expense that can be used for acquisitions instead, said Chief Financial Officer Michelle Frymire.

     

    “There’s a lot of pent-up investor demand,” Ms. Frymire said. The Richardson, Texas, company has 309 auto repair shops in 23 states and is owned by private-equity firm Blackstone Group LP.

    But, at the end of the day, if you’re a pension or mutual fund manager you just have to keep buying because, you know, “animal spirits”…just ask Craig Russ of Eaton Vance.

    Investors have poured $17 billion into loan mutual funds since Sept. 1, with $7.6 billion coming in December alone, according to data from Lipper Inc. It is the biggest such inflow since 2013, during the “Taper Tantrum” when the Fed’s plan to reduce stimulus fueled a surge into loan funds.

     

    With few new loans to buy, fund managers who received new money from investors are scrambling to buy existing loans, pushing prices higher and spreads down. Companies and their investment bankers saw the opportunity to refinance and pounced.

     

    “Animal spirits seem to have taken over investor appetite and the markets,” said Craig Russ, co-manager of Eaton Vance Corp.’s $7.5 billion leveraged-loan mutual fund.

     

    While large banks still underwrite large corporate loans, they often sell the bulk of the debt to a mix of mutual funds, pensions, insurers, hedge funds and other institutional investors.

    In conclusion:

    EA

  • Most Government Workers Could Be Replaced By Robots, New Study Finds

    Submitted by Emily Zanotti via HeatSt.com,

    A study by a British think tank, Reform, says that 90% of British civil service workers have jobs so pointless, they could easily be replaced by robots, saving the government around $8 billion per year.

    The study, published this week, says that robots are “more efficient” at collecting data, processing paperwork, and doing the routine tasks that now fall to low-level government employees. Even nurses and doctors, who are government employees in the UK, could be relieved of some duties by mechanical assistants.

    There are “few complex roles” in civil service, it seems, that require a human being to handle.

    “Twenty percent of public-sector workers hold strategic, ‘cognitive’ roles,” Reform’s press release on the study says. “They will use data analytics to identify patterns—improving decision-making and allocating workers most efficiently.

     

    “The NHS, for example, can focus on the highest risk patients, reducing unnecessary hospital admissions. UK police and other emergency services are already using data to predict areas of greatest risk from burglary and fire.”

    The problem, Reform says, is that public sector employee unions have bloated the civil service ranks, forcing government agencies to keep on older employees, and mandating hiring quotas for new ones. The organizational chart looks like a circuit board—and there’s no incentive to streamline anything.

    Unfortunately for civil service workers, it seems the study is just the latest in a series of research  that won’t save their jobs. Oxford University and financial services provider Deloitte, both of whom comissioned their own studies concur with Reform‘s conclusions. The Oxford University study said that more than 850,000 public sector jobs could fall to robots over the course of the next decade.

    Reform suggests that government employees should probably look into opportunities presented by the “sharing economy,” like driving for Uber – at least until robots replace those, too.

  • Senate Letter Reveals Staggering Number Of Murders By Illegal Aliens With Previous Criminal Convictions

    A letter written by the Senate Judiciary Committee in June 2015 to DHS Secretary Jeh Johnson, Secretary of State John Kerry and Attorney General Loretta Lynch reveals news facts about the number and nature of crimes committed by illegal immigrants who had already been convicted of other crimes but were released back into the public either because their home country would not accept their deportation and/or because they exceeded a Supreme Court mandate prohibiting detention of deportable foreign nationals beyond six months. 

    According to the letter, published by the Miami Herald, statistics provided by Immigration and Customs Enforcement (ICE) officials confirm that 121 homicides were committed in the U.S. between 2010-2014 by illegal immigrants who had already been convicted of a crime but were released back into society due to limitations on their detention.  In addition, ICE confirmed that of the 36,007 criminal aliens released from custody in 2013, 1,000 of them had already been convicted of new crimes as of June 2015.

    “This disturbing fact follows ICE’s admission that, of the 36,007 criminal aliens it released from ICE custody in Fiscal Year 2013, 1,000 have been re-convicted of additional crimes in the short time since their release,” according to the letter, dated June 12, 2015.

     

    The Senate Judiciary Committee letter revealed that 121 immigrant convicts were charged with homicide following their release from ICE custody between 2010 and 2014. It also noted that in 2014, ICE released 2,457 immigrant convicts because of the Supreme Court ruling prohibiting detention of deportable foreign nationals beyond six months.

     

    Most of these immigrant convicts are nationals of 23 countries described by ICE as “recalcitrant” because they routinely refuse to take back deportables. The bulk of these immigrant convicts in 2014 — 1,183 — were from Cuba, according to the letter. The other “recalcitrant” countries include Afghanistan, Algeria, China, Iran, Iraq, Libya, Somalia and Zimbabwe, according to ICE.

     

    A committee spokeswoman did not provide additional information on the letter when contacted by el Nuevo Herald last week.

     

    But in response to the letter, Sarah Saldaña, then-director of ICE, stated that 33 of the 121 immigrant convicts accused of “homicide-related offenses” had been released on bond at the discretion of immigration courts. Another 24 were released because ICE was unable to obtain approval to deport them to their countries within the 180-day deadline set by the Supreme Court in 2001.

    Of course, throughout the campaign cycle Trump was very clear about his intentions to deport the ~2 million illegal aliens currently residing the country with criminal convictions on their records. 

     

    One weapon Trump has suggested he could wield to compel countries to take back their deportable nationals is halting the issuance of visas to visitors and immigrants from those nations.  While this has yet to happen, and would almost certainly result in additional legal challenges from the Left, it is certainly easy to imagine a scenario in which additional non-compliant countries could simply be added to his existing temporary immigration ban.

    In a speech in Phoenix during the campaign, Trump vowed to deport immigrant criminals regardless of whether their countries agreed to take them back.

    “There are at least 23 countries that refuse to take their people back after they’ve been ordered to leave the United States,” Trump said. “Including large numbers of violent criminals. They won’t take them back. So we say, ‘Okay, we’ll keep them.’ Not going to happen with me, not going to happen with me.”

    Of course, Trump’s appearances with the families of victims murdered at the hands of illegal immigrants was a common occurrence on the campaign trail.

    In his Phoenix immigration speech Aug. 31, Trump recalled the case of 21-year-old Sarah Root of Des Moines, Iowa, whose death in January 2016 was blamed on an undocumented immigrant who had been released after having been in custody despite being in the country illegally and having failed to show up in court for prior alleged crimes. Eswin Mejía, a Honduran, was charged in connection with Root’s death in a vehicle crash, was freed on bail and fled.

     

    Trump also cited the case of Grant Ronnebeck, a 21-year-old convenience store clerk from Mesa, Arizona, whose murder was also blamed on an undocumented immigrant who had been previously convicted of burglary and had been released from federal custody.

     

    Ronnebeck was killed allegedly over a pack of cigarettes in January 2015, and the murder was linked to Apolinar Altamirano, a Mexican national who was in deportation proceedings but who had been released on bond by an immigration court judge.

     

    A third case Trump mentioned was that of Kate Steinle, gunned down in San Francisco by an undocumented Mexican, Juan Francisco López Sánchez, who had been deported five times previously but had managed to cross the border again undetected.

     

    ICE officials have told Congress that they tried to prevent López Sánchez from bonding out of jail but failed to do so because authorities in San Francisco, a so-called “sanctuary city,” ignored an immigration detainer for the defendant.

    Not surprisingly, and despite the damning data provided by ICE officials, Obama’s former DHS Secretary Jeh Johnson told the Senate Judiciary Committee in April 2015 that he did not believe visa sanctions against recalcitrant countries was the right policy, saying “I don’t necessarily believe that we ought to suspend immigration, travel from any of these countries because of this particular issue.”

    Somehow we suspect the Trump administration disagrees with the former DHS Secretary on the seriousness of this “particular issue.”

    The full letter from the Senate Judiciary Committee can be read below:

  • The Silent Terror Of The FBI – Could The Fourth Reich Happen Here?

    Submitted by John Whitehead via The Rutherford Institute,

    “After five years of Hitler’s dictatorship, the Nazi police had won the FBI’s seal of approval.” – Historian Robert Gellately

     

    Adolf Hitler is alive and well in the United States, and he is fast rising to power.” – Paul Craig Roberts, former Assistant Secretary of the Treasury, on the danger posed by the FBI to our civil liberties

    Lately, there’s been a lot of rhetoric comparing Donald Trump to Adolf Hitler. The concern is that a Nazi-type regime may be rising in America.

    That process, however, began a long time ago.

    In fact, following the second World War, the U.S. government recruited Hitler’s employees, adopted his protocols, embraced his mindset about law and order, implemented his tactics in incremental steps, and began to lay the foundations for the rise of the Fourth Reich.

    Sounds far-fetched? Read on. It’s all documented.

    As historian Robert Gellately recounts, the Nazi police state was initially so admired for its efficiency and order by the world powers of the day that J. Edgar Hoover, then-head of the FBI, actually sent one of his right-hand men, Edmund Patrick Coffey, to Berlin in January 1938 at the invitation of Germany’s secret police—the Gestapo.

    The FBI was so impressed with the Nazi regime that, according to the New York Times, in the decades after World War II, the FBI, along with other government agencies, aggressively recruited at least a thousand Nazis, including some of Hitler’s highest henchmen.

    All told, thousands of Nazi collaborators—including the head of a Nazi concentration camp, among others—were given secret visas and brought to America by way of Project Paperclip. Subsequently, they were hired on as spies and informants, and then camouflaged to ensure that their true identities and ties to Hitler’s holocaust machine would remain unknown. All the while, thousands of Jewish refugees were refused entry visas to the U.S. on the grounds that it could threaten national security.

    Adding further insult to injury, American taxpayers have been paying to keep these ex-Nazis on the U.S. government’s payroll ever since. And in true Gestapo fashion, anyone who has dared to blow the whistle on the FBI’s illicit Nazi ties has found himself spied upon, intimidated, harassed and labeled a threat to national security.

    As if the government’s covert, taxpayer-funded employment of Nazis after World War II wasn’t bad enough, U.S. government agencies—the FBI, CIA and the military—have fully embraced many of the Nazi’s well-honed policing tactics, and have used them repeatedly against American citizens.

    Indeed, with every passing day, the United States government borrows yet another leaf from Nazi Germany’s playbook: Secret police. Secret courts. Secret government agencies. Surveillance. Censorship. Intimidation. Harassment. Torture. Brutality. Widespread corruption. Entrapment. Indoctrination. Indefinite detention.

    These are not tactics used by constitutional republics, where the rule of law and the rights of the citizenry reign supreme. Rather, they are the hallmarks of authoritarian regimes, where the only law that counts comes in the form of heavy-handed, unilateral dictates from a supreme ruler who uses a secret police to control the populace.

    That danger is now posed by the FBI, whose laundry list of crimes against the American people includes surveillance, disinformation, blackmail, entrapment, intimidation tactics, harassment and indoctrination, governmental overreach, abuse, misconduct, trespassing, enabling criminal activity, and damaging private property, and that’s just based on what we know.

    Whether the FBI is planting undercover agents in churches, synagogues and mosques; issuing fake emergency letters to gain access to Americans’ phone records; using intimidation tactics to silence Americans who are critical of the government; recruiting high school students to spy on and report fellow students who show signs of being future terrorists; or persuading impressionable individuals to plot acts of terror and then entrapping them, the overall impression of the nation’s secret police force is that of a well-dressed thug, flexing its muscles and doing the boss’ dirty work of ensuring compliance, keeping tabs on potential dissidents, and punishing those who dare to challenge the status quo.

    Whatever minimal restrictions initially kept the FBI’s surveillance activities within the bounds of the law have all but disappeared post-9/11. Since then, the FBI has been transformed into a mammoth federal policing and surveillance agency that largely operates as a power unto itself, beyond the reach of established laws, court rulings and legislative mandates.

    Consider the FBI’s far-reaching powers to surveil, detain, interrogate, investigate, prosecute, punish, police and generally act as a law unto themselves—much like their Nazi cousins, the Gestapo—and then try to convince yourself that the United States is still a constitutional republic.

    Just like the Gestapo, the FBI has vast resources, vast investigatory powers, and vast discretion to determine who is an enemy of the state.

    Today, the FBI employs more than 35,000 individuals and operates more than 56 field offices in major cities across the U.S., as well as 400 resident agencies in smaller towns, and more than 50 international offices. In addition to their “data campus,” which houses more than 96 million sets of fingerprints from across the United States and elsewhere, the FBI has also built a vast repository of “profiles of tens of thousands of Americans and legal residents who are not accused of any crime. What they have done is appear to be acting suspiciously to a town sheriff, a traffic cop or even a neighbor.” The FBI’s burgeoning databases on Americans are not only being added to and used by local police agencies, but are also being made available to employers for real-time background checks.

    All of this is made possible by the agency’s nearly unlimited resources (its minimum budget alone in fiscal year 2015 was $8.3 billion), the government’s vast arsenal of technology, the interconnectedness of government intelligence agencies, and information sharing through fusion centers—data collecting intelligence agencies spread throughout the country that constantly monitor communications (including those of American citizens), everything from internet activity and web searches to text messages, phone calls and emails.

    Much like the Gestapo spied on mail and phone calls, FBI agents have carte blanche access to the citizenry’s most personal information.

    Working through the U.S. Post Office, the FBI has access to every piece of mail that passes through the postal system: more than 160 billion pieces are scanned and recorded annually. Moreover, the agency’s National Security Letters, one of the many illicit powers authorized by the USA Patriot Act, allows the FBI to secretly demand that banks, phone companies, and other businesses provide them with customer information and not disclose those demands to the customer. An internal audit of the agency found that the FBI practice of issuing tens of thousands of NSLs every year for sensitive information such as phone and financial records, often in non-emergency cases, is riddled with widespread constitutional violations.

    Much like the Gestapo’s sophisticated surveillance programs, the FBI’s spying capabilities can delve into Americans’ most intimate details (and allow local police to do so, as well).

    In addition to technology (which is shared with police agencies) that allows them to listen in on phone calls, read emails and text messages, and monitor web activities, the FBI’s surveillance boasts an invasive collection of spy tools ranging from Stingray devices that can track the location of cell phones to Triggerfish devices which allow agents to eavesdrop on phone calls.  In one case, the FBI actually managed to remotely reprogram a “suspect’s” wireless internet card so that it would send “real-time cell-site location data to Verizon, which forwarded the data to the FBI.” Law enforcement agencies are also using social media tracking software to monitor Facebook, Twitter and Instagram posts. Moreover, secret FBI rules also allow agents to spy on journalists without significant judicial oversight.

    Much like the Gestapo’s ability to profile based on race and religion, and its assumption of guilt by association, the FBI’s approach to pre-crime allows it to profile Americans based on a broad range of characteristics including race and religion.

    The agency’s biometric database has grown to massive proportions, the largest in the world, encompassing everything from fingerprints, palm, face and iris scans to DNA, and is being increasingly shared between federal, state and local law enforcement agencies in an effort to target potential criminals long before they ever commit a crime. This is what’s known as pre-crime. Yet it’s not just your actions that will get you in trouble. In many cases, it’s also who you know—even minimally—and where your sympathies lie that could land you on a government watch list. Moreover, as the Intercept reports, despite anti-profiling prohibitions, the bureau “claims considerable latitude to use race, ethnicity, nationality, and religion in deciding which people and communities to investigate.”

    Much like the Gestapo’s power to render anyone an enemy of the state, the FBI has the power to label anyone a domestic terrorist.

    As part of the government’s so-called ongoing war on terror, the nation’s de facto secret police force has begun using the terms “anti-government,” “extremist” and “terrorist” interchangeably. Moreover, the government continues to add to its growing list of characteristics that can be used to identify an individual (especially anyone who disagrees with the government) as a potential domestic terrorist. For instance, you might be a domestic terrorist in the eyes of the FBI (and its network of snitches) if you:

    • express libertarian philosophies (statements, bumper stickers)
    • exhibit Second Amendment-oriented views (NRA or gun club membership)
    • read survivalist literature, including apocalyptic fictional books
    • show signs of self-sufficiency (stockpiling food, ammo, hand tools, medical supplies)
    • fear an economic collapse
    • buy gold and barter items
    • subscribe to religious views concerning the book of Revelation
    • voice fears about Big Brother or big government
    • expound about constitutional rights and civil liberties
    • believe in a New World Order conspiracy

    Much like the Gestapo infiltrated communities in order to spy on the German citizenry, the FBI routinely infiltrates political and religious groups, as well as businesses.

    As Cora Currier writes for the Intercept: “Using loopholes it has kept secret for years, the FBI can in certain circumstances bypass its own rules in order to send undercover agents or informants into political and religious organizations, as well as schools, clubs, and businesses…” The FBI has even been paying Geek Squad technicians at Best Buy to spy on customers’ computers without a warrant.

    Just as the Gestapo united and militarized Germany’s police forces into a national police force, America’s police forces have largely been federalized and turned into a national police force.

    In addition to government programs that provide the nation’s police forces with military equipment and training, the FBI also operates a National Academy that trains thousands of police chiefs every year and indoctrinates them into an agency mindset that advocates the use of surveillance technology and information sharing between local, state, federal, and international agencies.

    Just as the Gestapo’s secret files on political leaders were used to intimidate and coerce, the FBI’s files on anyone suspected of “anti-government” sentiment have been similarly abused.

    As countless documents make clear, the FBI has no qualms about using its extensive powers in order to blackmail politicians, spy on celebrities and high-ranking government officials, and intimidate and attempt to discredit dissidents of all stripes. For example, not only did the FBI follow Martin Luther King Jr. and bug his phones and hotel rooms, but agents also sent him anonymous letters urging him to commit suicide and pressured a Massachusetts college into dropping King as its commencement speaker.

    Just as the Gestapo carried out entrapment operations, the FBI has become a master in the art of entrapment.

    In the wake of the 9/11 terrorist attacks the FBI has not only targeted vulnerable individuals but has also lured or blackmailed them into fake terror plots while actually equipping them with the organization, money, weapons and motivation to carry out the plots—entrapment—and then jailing or deporting them for their so-called terrorist plotting. This is what the FBI characterizes as “forward leaning—preventative—prosecutions.” In addition to creating certain crimes in order to then “solve” them, the FBI also gives certain informants permission to break the law, “including everything from buying and selling illegal drugs to bribing government officials and plotting robberies,” in exchange for their cooperation on other fronts. USA Today estimates that agents have authorized criminals to engage in as many as 15 crimes a day. Some of these informants are getting paid astronomical sums: one particularly unsavory fellow, later arrested for attempting to run over a police officer, was actually paid $85,000 for his help laying the trap for an entrapment scheme.

    When and if a true history of the FBI is ever written, it will not only track the rise of the American police state but it will also chart the decline of freedom in America, in much the same way that the empowerment of Germany’s secret police tracked with the rise of the Nazi regime.

    How did the Gestapo become the terror of the Third Reich?

    It did so by creating a sophisticated surveillance and law enforcement system that relied for its success on the cooperation of the military, the police, the intelligence community, neighborhood watchdogs, government workers for the post office and railroads, ordinary civil servants, and a nation of snitches inclined to report “rumors, deviant behavior, or even just loose talk.”

    In other words, ordinary citizens working with government agents helped create the monster that became Nazi Germany. Writing for the New York Times, Barry Ewen paints a particularly chilling portrait of how an entire nation becomes complicit in its own downfall by looking the other way:

    In what may be his most provocative statement, [author Eric A.] Johnson says that ‘‘most Germans may not even have realized until very late in the war, if ever, that they were living in a vile dictatorship.’’ This is not to say that they were unaware of the Holocaust; Johnson demonstrates that millions of Germans must have known at least some of the truth. But, he concludes, ‘‘a tacit Faustian bargain was struck between the regime and the citizenry.’’ The government looked the other way when petty crimes were being committed. Ordinary Germans looked the other way when Jews were being rounded up and murdered; they abetted one of the greatest crimes of the 20th century not through active collaboration but through passivity, denial and indifference.

    Much like the German people, “we the people” have become passive, polarized, gullible, easily manipulated, and lacking in critical thinking skills.  Distracted by entertainment spectacles, politics and screen devices, we too are complicit, silent partners in creating a police state similar to the terror practiced by former regimes.

    Can the Fourth Reich happen here?

    As I point out in my book Battlefield America: The War on the American People, it’s already happening right under our noses.

  • China Drains CNY715 Billion In Liquidity After Fifth Day Without Reverse Repo

    What a difference three weeks makes. On January 18, heading into the Lunar New Year holidays, we reported that the PBOC had injected a record 1.04 trillion yuan into the liquidity-starved banking system in an attempt to avoid a liquidity crunch as telegraphed just days prior by dramatic surge in short-term repo rates.

    Since then, however, between the end of the holidays, and the stated Chinese intention to tighten the monetary system, things have changed drastically.

    First of all, last Friday, China announced an unexpected tightening of policy when it raised rates on 7, 14 and 28-day reverse repos by 10bps to 2.35%, 2.50% and 2.65% respectively. That was first increase in the 28-day contracts since 2015 and since 2013 for the other two tenors. As this was the first working day following the New Year holiday in China, it was a decent “statement of intent” by the PBoC.

    At the same time, as we explained on Sunday, in a parallel tightening eipsode, the PBOC also increased Standing Lending Facility rates on overnight/7-day/1-month tenors by 35bp/10bp/10bp (to 3.10%/3.35%/3.7%), sending Chinese government bond futures sliding as fears rose that China is actually serious about tightening this time.

    Then on Thursday morning, an article in China’s Securities Journal said that China may keep tightening monetary policy this year amid pressure from yuan rate stabilization, financial de-leveraging, curbs on real estate and faster inflation. In other words, China may have reached the phase where it admits it has a problem, and is ready to do something about it. What was notable is that the article hinted that while even more could be done, the economic basis and inflation situation don’t yet support China entering interest rate hike cycle.

    Translation: if inflation picks up more from here, the PBOC will use the shotgun approach and hike rates. For now however, the piece concluded that the central bank is focusing more on price tools, which means “an increase in open market rates may be considered guidance.”

    And sure enough, 20 days after the PBOC had injected a record CNY1+ trillion in liquidity, it is now draining it just as fast, and as the PBOC just reported, the Central Bank did not conduct any Reverse Repo open market operations for the fifth consecutive trading day “in order to maintain a stable level of liquidity in the interbank market”, the PBOC said in a statement on its website.

    With CNY150 billion of reverse repos maturing today, the PBOC’s lack of action had the effect of draining CNY150 billion from the market today.

    The PBOC also added that “while the central bank has started to gradually drain liquidity from the interbank market after the end of the Chinese New Year holiday, liquidity is still at an adequate level” repeating the explanation it used in the past three days.

    According to Market News, the market sees the lack of open market operations as a clear signal of tighter monetary policy. Furthermore, the consecutive stops of OMOs show PBOC’s bias for a prudent tilted to neutral monetary policy in a bid to prevent risks and reduce leverage ratio, said Ming Ming, chief analyst with CITIC Securities in a research note.

    In total, the PBOC has drained a total of CNY715 billion in liquidity so far this week, primarily as a result of maturing reverse repos which the central bank refuses to roll over. A total of CNY80 billion in reverse repos will mature later this week and the market will be watching the PBOC’s response closely. Should it perceive that the PBOC has withdrawn too much liquidity, another liquidity tantrum is inevitable.

  • What Is Trump's Approval Rating? It Depends On Who You Ask

    While we would never be the ones to question the integrity of “independent” pollsters, how could we given the amazing job they did predicting the outcome of the 2016 presidential election, we’re starting to grow a bit curious about the ever-widening gap in Trump’s approval ratings between the various polling institutions.

    For example, the latest Rasmussen daily tracking poll found that 53% of likely U.S. voters approve of President Trump’s job performance while 47% disapprove.

    Rasmussen

     

    Meanwhile, even the notorious “oversamplers” at Reuters found that Trump’s approval rating is just over 50%.

    Reuters

     

    That said, the vehemently impartial folks at ABC/WaPo recently drew a very different conclusion, finding that President Trump is basically the least popular candidate to take the White House in modern history, with a 40% approval rating… 

    ABC / Wapo Poll

     

    …while CNN came up with similar results finding that only 44% approve of President Trump.

    CNN

     

    And while we know what you’re thinking, we’re sure the divergent results from ABC/Wapo and CNN were in no way a disingenuous attempt to artificially manufacture a poor approval rating for President Trump, a candidate whose political views couldn’t be more divergent from their own.  After all, utilizing an aggressive 8-point sampling margin for Democrats, with only 23% of respondents identifying themselves as Republicans may call into question a pollster’s credibility…

    ABC Poll

     

    …which is probably why CNN decided to get smart by only showing a 4-point sampling advantage for Democrats while loading up their poll with independents instead...

    “A total of 1,002 adults were interviewed by telephone nationwide by live interviewers calling both landline and cell phones. Among the entire sample, 29% described themselves as Democrats, 25% described themselves as Republicans, and 45% described themselves as independents or members of another party.”

    Of course, as we’ve repeatedly pointed out, these sampling mixes couldn’t be further from reality.

    Polling

     

    In conclusion:

  • Iranian Oil Will Not Be Stopped By Trump

    Submitted by Gregory Brew via OilPrice.com,

    Despite new sanctions by the Trump Administration and an escalating war of words regarding its ballistic missile program, Iran is continuing to push ahead with plans to maintain oil production at around 3.8 million bpd, the level agreed upon at the November OPEC meeting last year. In order to do so, Iran will need to attract billions in new investment, as its current production is based on aging fields and crumbling infrastructure.

    To maintain the current production level while continuing to export and meet domestic demand, Iran will need at least $100 billion in new investment. New U.S. sanctions, which target 25 Iranian individuals and entities said to be associated with the country’s missile program, is being touted as an “initial step” in the administration’s plan to push back hard on Iran’s regional ambitions, with National Security Advisor Michael Flynn announcing last week that the U.S. was “putting Iran on notice.” The Iranian response to the U.S. rhetoric has been mostly dismissive, with one Iranian official characterizing the Trump Administration as “inexperienced.”

    The question is how these new sanctions or future U.S. actions against Iran may inhibit the country’s recovering oil and gas industry. The announcement of the new sanctions caused a slight tremor in prices, which was offset by inventory reports and reviving U.S. output. If tensions between the U.S. and Iran were to escalate, it would place upward pressure on prices.

    Iran is set to announce a round of tenders in mid-February. Originally set for January, the tenders were delayed several weeks, in part due to disagreements within the Iranian government (which oversees the National Iranian Oil Company, or NIOC) over how best to attract foreign investment. Debates over new oil contracts raged all last summer, as the question of inviting more foreign companies into Iran is beset with political significance in a country still considerably isolated from international capital, as well as one that has a long history of distrusting foreign oil companies.

    According to Reuters, the first round of tenders has been repeatedly delayed, while major companies have made only hesitant inroads into Iran. Shell signed a provisional deal in December to develop three large oil and gas fields, but has yet to act on it. French company Total agreed in principle to a $2 billion deal to develop the South Pars natural gas field, with a 50.1 percent stake in the project

    The new round of U.S. sanctions, though they are limited in nature, are acting to deter U.S. companies from seeking new contracts. Deputy oil minister Amirhossein Zamaninia has welcomed interest from U.S. companies, but has warned that as long as the primary sanctions remain, “U.S. firms cannot play any role in Iran’s oil and gas industry.”

    Zamainnia has expressed hope that President Trump, as a “non-conventional politician,” will seek to revise U.S.-Iranian relations and seek business deals, which could potentially serve the U.S. economy. Yet Trump’s hard stance on Iran thus far, and the imposition of new sanctions, would make that appear unlikely. The Iranian press claims the new sanctions are isolating the U.S., rather than Iran, which is still free to pursue deals with European companies. “Iran has placed no limitations on American companies, but based on their own laws they are not allowed to attend oil tenders in Iran," Zamaninia told the press.

    Without U.S. companies participating, Iran could probably attract the investment it needs in the short-term. The tenders to be offered in February will include twenty-nine companies, most of them Chinese or East Asian, though Total and Shell have both been permitted to participate. BP was encouraged in January to bid once contracts became available, though the company has not said one way or the other whether it will participate.

    Iran remains primarily interested in attracting European capital. This makes sense, both from an economic and political perspective (and with the U.S. sanctions and new administration, politics will matter just as much as economics). Iran wants to start exporting in large quantities to Europe again, and last month it dispatched the first major tanker shipments to a European port in five years. Should U.S. antagonism towards Iran increase, to the point that President Trump considers imposing new sanctions or even backing out of the July 2015 nuclear deal, it would place no restraint on European countries like Germany, Great Britain and France, who were all parties to the deal.

    Germany company BASF, along with two other German petrochemical firms, has expressed an interest in investing as much as $12 billion in Iran, according to Iranian press sources. Total, for its part, has said that it is still ready to go through with its plan, now worth $4.8 billion, to develop South Pars.

    It should be noted that a lot of the enthusiasm being generated about possible investments in Iran are coming from Iran-affiliated news sources. It may take some time to see if the confidence being projected around Iran’s ability to attract ample investment accurately reflects industry confidence in the country’s ability to work with foreign companies.

    Nevertheless, should the February tenders be a success, and should Iran overcome its own political divisions regarding attracting foreign investment, there’s a strong chance the country will continue to develop its untapped oil and gas fields and continue the on-going recovery of its domestic energy industry, regardless of punitive actions taken by the United States.

  • Poll Finds Trump Administration Seen As More Truthful Than News Media

    An Emerson College poll found that in the early days of the Trump administration, the nation remains almost evenly split on Donald Trump’s performance as President, with 48% of registered voters approving of the job Trump is doing, versus 47% who disapprove. The variance falls largely along party lines: Republicans approve of Trump  89%/5%, while Democrats disapprove of the President by a margin of 81% to 17%. What is keeping Trump’s from passing the 50% threshold in the poll is his standing among independents, who disapprove of him 52%/42%.

    Yet despite the initial confusion about Trump’s approval, a more interesting observations from the same poll is that according to voters, the Trump administration was viewed as vastly more trustworthy than the news media. The Trump administration is considered truthful by 49% of voters, to 48%  of voters who consider it untruthful. Meanwhile, the news media is considered untruthful by a  53% – majority of voters, to only 39% who find them truthful (a 14 – point gap).

    The partisan split on this topic is clear: 89% of Republicans find the Trump administration truthful, versus 77% of Democrats who find the administration untruthful. Conversely, 69% of Democrats find the news media truthful, while a whopping 91% of Republicans consider them untruthful, which may explain the origin of the “liberal media” moniker. Meanwhile, independents consider both untruthful  – the Trump administration by a margin of 42%/52% and the news media by a  margin of 45%/47%.

    A recent Gallup poll on the public’s trust in media revealed an even more disturbing picture: before the election, a paltry 32% of Americans trusted the fourth estate, with only 14% of Republicans.

    The national Emerson College poll was conducted February 5-6 under. The sample consisted of 617 registered voters, and has a margin of error of +/- 3.9%. The full poll can be read here.

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Today’s News 8th February 2017

  • The Left Hates You. Act Accordingly.

    Submitted by Kurt Schlichter via Townhall.com,

    They hate you.

    Leftists don’t merely disagree with you. They don’t merely feel you are misguided. They don’t think you are merely wrong. They hate you. They want you enslaved and obedient, if not dead. Once you get that, everything that is happening now will make sense. And you will understand what you need to be ready to do.

    You are normal, and therefore a heretic. You refuse to bow to their idols, to subscribe to their twisted catechisms, to praise their false gods. This is unforgivable. You must burn.

    Crazy talk? Just ask them. Go ahead. Go on social media. Find a leftist – it’s easy. Just say something positive about America or Jesus and they’ll come swarming like locusts. Engage them and very quickly they will drop their masks and tell you what they really think. I know. I keep a rapidly expanding file of Twitter leftist death wish screenshots.

    They will tell you that Christians are idiots and vets are scum.

    That normals are subhumans whose role is to labor as serfs to subsidize the progressive elite and its clients.

    That you should die to make way for the New Progressive Man/Woman/Other.

    Understand that when they call Donald Trump “illegitimate,” what they are really saying is that our desire to govern ourselves is illegitimate. Their beef isn’t with him – it’s with us, the normal people who dared rise up and demand their right to participate in the rule of this country and this culture.

    They hate you, because by defying them you have prevented them from living up to the dictates of their false religion. Our rebelliousness has denied them the state of grace they seek, exercising their divine right to dictate every aspect of our puny lives. Their sick faith gives meaning to these secular weirdos, giving them something that fills their empty lives with a messianic fervor to go out and conquer and convert the heathens.

    And the heathens are us.

    Oh, there are different leftist sects. There are the social justice warriors who have manufactured a bizarre mythology and scripture of oppression, privilege, and intersectionality. Instead of robes, they dress up as genitals and kill babies as a blasphemous sacrament. Then there are the pagan weather religion oddballs convinced that the end is near and that we must repent by turning in our SUVs. Of course, the “we” is really “us” – high priests of the global warming cult like Leonardo DiCaprio will still jet around the world with supermodels while we do the ritual sacrificing of our modern comforts. Then there are the ones who simply worship themselves, the elitists who believe that all wisdom and morality has been invested in them merely because they went to the right college, think the right thoughts, and sneer at anyone living between I-5 and I-95.

    But all the leftist sects agree – they have found the revealed truth, and imposing it upon the benighted normals like us is so transcendently important that they are relieved of any moral limitations. They are ISIS, except with hashtags instead of AKs, committed to the establishment of a leftist caliphate.

    You wonder why the left is now justifying violence? Because they think that helps them right now. Today it’s suddenly OK to punch a “Nazi.” But the punchline is that anyone who opposes them is a “Nazi.”

    You wonder why they ignore the rule of law, why they could switch on a dime from screaming at Trump for refusing to preemptively legitimize a Hillary win and then scream that he is illegitimate the moment she lost? Because their only principle is what helps the left win today. That’s why the media gleefully, happily lies every single day about every single thing it reports. Objectivity? When that stopped being a useful thing, it stopped being a thing at all.

    They are fanatics, and by not surrendering, by not kneeling, and by not obeying, you have committed an unpardonable sin. You have defied the Left, and you must be broken. They will take your job, slander your name, even beat or kill you – whatever it takes to break you and terrify others by making you an example. Your defiance cannot stand; they cannot allow this whole Trump/GOP majority thing to get out of control. They must crush this rebellion of the normal, and absolutely nothing is off the table.

    We’ve seen them burn UC Berkeley and how the police controlled by the leftist state government of California stood by and watched as Americans were beaten by the mob. Why? Because the government of the State of California approves of the violence. Do you think it’s a coincidence that California is doing everything it can to disarm its normals?

    The Left won’t say it out loud – at least not yet – but make no mistake. If violence is what it takes for the Left to prevail, then violence we will have. You saw it, and you were meant to. Berkeley was a message about the price of dissent where leftist hold sway. And they seek to hold sway everywhere

    How to we respond?

    The first step is to end the denial. Open your eyes. See what is happening. Don’t allow yourself to be deluded by false nostalgia for a past period of cultural peace that existed only because, at that time, the Left was winning. They hate you. Look at Twitter. Look at Facebook. Try and tell yourself that leftists are just nice people who disagree with you on a few policy details. Stop fooling yourself.

    Understand that this must get much worse before it can get better. We may wish to stop the cultural/political struggle, but they can’t stop. Their religion tells them we are greedy, racist, sexist, homophobe morons who hate science and love Hitler. How could they tolerate us? How could they ever allow us power?

    They can’t. Their sick ideology and false theology requires that we be enslaved or exterminated – we can’t be tolerated, and we certainly can’t be allowed to hold the reins of power. I hoped that my novel People’s Republic, about what lies at the bottom of this blood-soaked slippery slope, would be rendered moot by the GOP’s victory in November. I was wrong. The Left has redoubled its efforts.

    So the only outcome is that one side wins and the other loses. There’s no truce to be had, no possibility of a tie. And the frightening thing is that the Left is so foolish, so stuck in its bubble that it has no understanding that it can only push so far before the people with all the guns and all the training push back. That’s the problem with kids who were raised on participation trophies and who never got into a fistfight – they don’t consider the possibility that they will lose, and lose hard.

    We must ensure they do. Understand your enemy. Understand that the Left will exploit your principles and morals to make you disarm yourself – figuratively and literally. Don’t play their game; don’t fall for their manufactured outrages. Never concede their lies, never take their side against the people defending your liberty. Most of all, accept the truth that if we let them win we will spend the rest of our lives on our backs with a giant Birkenstock pressed into our collective face.

    They hate us. And however they come at us, we need to be prepared to fight.

  • Fake News for Fake People in an Engineered Fake Culture

    America really is the land of the dreams.  Dreams, take many forms; hallucinations, nightmares, delusions, bad trips.

    Fake News is really descriptive; how about Fake culture, fake people, fake life.  Is America real?  You wouldn’t think there are people living here if you walk down most streets, all you see is cars, the occasional dog walkers, and the radiant glow of the TV screen.  Just forget it all!

    You know, nothing captures the fake culture better than music – music is the backbone of mainstream American culture (unfortunately) – in other cultures the backbone can be science, socialization, or in primal societies, dancing around a fire at night wearing masks and costumes.

    There’s no better characterization of fake news than the famous “Dirty Laundry” by Don Henly.

    I make my living off the evening news

    Just give me something-something I can use

    People love it when you lose,

    They love dirty laundry

    Well, I coulda been an actor, but I wound up here

    I just have to look good, I don’t have to be clear

    Come and whisper in my ear

    Give us dirty laundry

    We got the bubble-headed-bleach-blond

    Who comes on at five

    She can tell you ’bout the plane crash with a gleam in her eye

    It’s interesting when people die

    Give us dirty laundry

    Can we film the operation?

    Is the head dead yet?

    You know, the boys in the newsroom got a running bet

    Get the widow on the set!

    We need dirty laundry

    You don’t really need to find out what’s going on

    You don’t really want to know just how far it’s gone

    Just leave well enough alone

    Eat your dirty laundry

    Kick ’em when they’re up

    Kick ’em when they’re down

    Kick ’em when they’re stiff

    Kick ’em all around

    Dirty little secrets

    Dirty little lies

    We got our dirty little fingers in everybody’s pie

    We love to cut you down to size

    We love dirty laundry

    We can do “The Innuendo”

    We can dance and sing

    When it’s said and done we haven’t told you a thing

    We all know that Kraft is king

    Give us dirty laundry!

    American culture has been bought and sold to the Corporation generations ago.  This recent meme about Fake News really captures the ‘reality moment’ America is having, and isn’t it fitting, a ‘reality TV star’ is President of the United States of America.  “Reality” TV is the same ironic oxi-moron metaphor as Fake News – Reality TV – isn’t real.  On the surface, it means – it’s not a scripted ‘program’ but the hidden innuendo – is that it’s REAL, as in REAL LIFE, which IT’S NOT!

    Fake News is for Fake people (being from Boca Raton, FL author can attest there really is such a thing as a ‘fake’ person!) 

    But, what is real anyway?  

    fs

    People are real.  Objects are real.  

    Money is not real.  Ideas are not real.  Concepts, are abstractions.

    So there you go – we’ve taken you down the rabbit hole far enough.  If you want to know what’s at the end of the hole, pay, and you will see!

  • And The Oscar Goes To… Chuck Schumer

    It appears President Trump was correct… “fake tears”? You decide…


    Necessary… Or Evil?

    We wonder if Schumer will be the star of the next Heineken commercial?

  • Sean Hannity Goes Nuclear on GOP Obstructionists for Not Acting on Trump’s Agenda

    On his radio show this afternoon, Sean Hannity chimped out and called out republican shills who’ve been obstructing President Trump’s agenda by twiddling their thumbs and not writing bills to fund infrastructure projects, tax cuts and healthcare reform.

    Essentially, Trump is at the mercy of a very corrupt and globalist shilling GOP — led by a man (Paul Ryan) who is as vacuous as his democratic counterparts.

    Hannity promised to call them out, one by one, and to make their phones ring non-stop if they didn’t get off their asses and start working for the American people.

    Epic takedown.

     

     

    Content originally generated at iBankCoin.com

  • Senate Votes To Gag Elizabeth Warren After Anti-Sessions Outburst

    Not The Onion. Following a scathing speech against Trump's nominee for Attorney General, Senate Majority leader Mitch McConnell said Senator Elizabeth Warren had "impugned the motives and conduct of our colleague from Alabama," violating the so-called 'Rule 19'. By a vote of 49-43, Senator Warren was then barred from speaking on the floor until Senator Sessions nomination debate is complete (likely tomorrow evening).

    Sen. Steve Daines (R-Mont.), who was presiding over the the Senate during the Massachusetts Democrat's speech – who at times was repeating words being said to him by GOP Senate floor staff – initially interrupted Warren to warn her that she was on the brink of violating the rule.

    As The Hill reports, the drama on the Senate floor comes after McConnell interrupted Warren's speech accusing her of breaking the upper chamber's guidelines.

    “The senator has impugned the motives and conduct of our colleague from Alabama,” McConnell said from the Senate floor.

     

    “I call the senator to order under the provisions of Rule 19.”

     

    Under the Senate’s “Rule 19,” senators are not allowed to “directly or indirectly, by any form of words impute to another Senator or to other Senators any conduct or motive unworthy or unbecoming a Senator."

    Warren offered a blistering speech against Sessions's nomination, arguing he wouldn’t stand up to Trump’s “campaign of bigotry.”

    “He made derogatory and racist comments that should have no place in our justice system,” she said.

     

    “To put Sen. Sessions in charge of the Department of Justice is an insult to African-Americans.”

     

    Warren quoted a 1986 speech from the late Sen. Ted Kennedy (D-Mass.) who referred to Sessions as a “throwback to a shameful era” and a “disgrace” to the Justice Department.

    McConnell defended the decision, noting Warren had been warned.

    "Sen. Warren was giving a lengthy speech. She had appeared to violate the rule. She was warned. She was given an explanation," he said after the vote. "Nevertheless, she persisted."

     

     

    McConnell also specifically pointed to Warren quoting a letter from the late Coretta Scott King, civil rights activist and wife of Martin Luther King Jr., as evidence that she had broken the rules.Coretta Scott King wrote in 1986, during Sessions's failed confirmation hearing for a federal judgeship, that he “had used the awesome power of his office to chill the free exercise of the vote by black citizens" as a U.S. attorney in Alabama. When Warren said she was "surprised" by McConnell's actions and asked to continue, the Republican objected and was backed up by Daines, effectively ending Warren's speech. 

    Warren rejected McConnell's move, tweeting to her millions of followers that

    "I will not be silent while the Republicans rubber stamp an AG who will never stand up to the @POTUS when he breaks the law."

    Of course, Democrats did what they do best in response – unleashed a social media frenzy of hurt fellings capped by the hashtag #LetLizSpeak.

    But Senator Chuck Schumer (D-N.Y.) – the Senate's top Democrat – had the last word… "If the average American heard someone read a letter from Coretta Scott King … they would not be offended, It seems to me that we could use Rule 19 almost every day on the floor of the Senate. This is selective enforcement."

     

  • Army Preps For Urban Warfare In MegaCities: "Mass Migration, Disaster, And Inner-City Turmoil"

    Submitted by Mac Slavo via SHTFPlan.com,

    There will be war in the streets of America. Things have been engineered that way.

    The scenarios are many, the issues are complex. The current anger from the left, who are violently protesting against President Trump, is just one aspect of it.

    But the Pentagon and the U.S. national security structure is increasingly looking towards the shifting demographics around the globe – people have moved from rural areas, and shifted into cities. Where ever conflict stirs, there will be a need for military and SWAT response to the call. Entire cities will be locked down; door to door sweeps will often have violent ends.

    Baghdad could be brought home to the streets of America, and the military already knows it.

    The powers that be are deeply concerned about the unfolding situations with migrants, illegal immigrants, potential terrorists, political factions, violent protests, arson and riots.

    Increasingly, they are training for and expecting a homegrown conflict that will call for them to restore order in a major cities – and even hunt down suspects block to block, like in the Boston Marathon bombing incident, while making some significant infringement of our civil liberties.

    During the past several years, there have been reports about unannounced urban warfare drills in major U.S. cities, sometimes in coordination with major events; there have also been military training scenarios that have maintained a consistent theme of civil unrest, economic breakdown and widespread riots.

    As Intellihub reported:

    For years the alternative media has warned about the US military possibly being used against the American people in a time of economic collapse or any sort of martial law scenario.

    Drills such as Vigilant Guard 2010 have brought widespread attention to the fact that portions of our own military are training to take on crowds of American citizens demanding food and Constitutional rights in a time of crisis.

    Now, a new release by the website Public Intelligence, once again confirms that as recently as February and March of 2012, US troops at Joint Base Lewis-McChord in Washington were conducting training scenarios for a civil disturbance domestic quick reaction force.

    A series of photos of the drills shows US troops with crowd control riot shields on the opposite side of actors portraying what can only be described as American citizens.

    What do the elite know that we don’t?

    Now, a major military scholar is calling for the creation of “megacities combat units” – a proposal that is a major and drastic departure from warfare of the past, which has been designed away from cities. Now, military and paramilitary units, as well as local law enforcement, much engage the population itself – with all the unpredictability afforded by a real life, complex situation filled with combatants, non-combatants and friendlies behind any and all doors, etc.

    With a heightened focus on terrorism and reigning in undocumented immigrants, there will be a tendency, if we are not careful, for a heightened militarized and police state atmosphere to arise – both at home, and in everyplace that they take the fight.

    Major John Spencer, a former Ranger Instructor and scholar at West Point’s Modern War Institute called for an armed unit ready for megacities deployment in an op-ed:

    Every year, more and more of the world’s population moves into cities. The number of megacities is growing exponentially. Both of these global patterns and their inevitable consequences for military operations are well documented. Yet we still do not have units that are even remotely prepared to operate in megacities. If we want to find success on the urban battlefields the US Army will inevitably find itself fighting on in the future, that needs to change.

     

    Throughout history, military forces either sought to avoid or simply had no need to engage in urban combat. Most military doctrine, and the strategic theory it is built upon, encourages land forces to bypass, lay siege to, or—if required—isolate and slowly clear cities from the outside in. The great armies of the world have historically fought for cities rather than in cities, a distinction with a significant difference. In cases where military forces had no choice but to operate within cities, the environment, almost without exception, proved very costly in both military and civilian casualties. Today, many armies have accepted that global population growth and urbanization trends will increasingly force military operations into crowded cities, and military forces must therefore be capable of conducting the full range of operations in large, dense urban areas.

     

    Army Chief of Staff Gen. Mark Milley recently remarked that the Army “has been designed, manned, trained and equipped for the last 241 years to operate primarily in rural areas.” But that is about to change. Milley continued:

     

    […]

     

    The conclusions of the SSG research are clear: megacities are unavoidable, they are potentially the most challenging environment the Army has ever faced, and the Army is unprepared to operate in them.

     

    […]

     

    One ongoing military study of megacities is the NATO Urbanization Project. […] In the project’s most recent experiment, the NATO team conducted a wargame to determine the capabilities needed to achieve the goals of three likely missions in 2035: response to mass migration, natural disaster, and inner-city turmoil. Within these missions, the wargame specified that a brigade conduct three operations in a megacity—joint forcible entry, major combat, and subsequent stability operations—without unacceptable levels of military or civilian casualties.

     

    […]

     

    Of course, urban warfare is not exclusively a future phenomenon. Much has been learned from urban battles in recent history: the Siege of Sarajevo (1992–95); the Battle of Mogadishu (1993); Russian operations in Grozny (1994–95 and 1999–2000); US operations in Baghdad (2003) and Fallujah (2004); Lebanese operations in Nahr al-Bared, Lebanon (2007); and the Second Battle of Donetsk (2014–15). But the broad lessons of these cases have yet to truly inform Army training for urban combat, which for most units consists mainly of tactical training (e.g., room clearing drills with four-man teams). The Army would be much better served by the creation of an entire unit dedicated to preparing to operate in dense urban environments, particularly megacities.

    Any way you slice it, the military and the national security infrastructure are watching for cracks in the system.

    People are at their wits end, and many are on the edge of poverty – and for many, it just won’t take much more to set them loose, and let riots erupt. Whether the system wants those to spread, or wants to suppress and contain them, they know they are coming.

    Population pressures, and clashing groups within growing city centers are creating more problems, and compounding old ones.

    If the economic stability of a given region were to give way, nearly every megacity would spiral out of control and descend into absolute madness – whether or this continent or any other.

    via Nicholas West:

     The following Pentagon video was featured by The Intercept and portrays the chilling atmosphere presented by sheer numbers and those who would enter such environments in the pursuit of order.
     
    Drills such as “Unified Quest” run yearly by the U.S. Army took a sharper turn in 2014 toward addressing the problem of combat in megacities – defined as cities with more than 10 million people, of which there already are nearly 25 and projected to total near 40 by the year 2025. The Pentagon’s own solicitation early last year called “Thunderstorm Spiral” was a request for “help from technological innovators to take on the future of warfare.” This appeared to indicate that in addition to boots on the ground, an additional pervasive centralized intelligence apparatus would be needed to properly plan for troop movements through such dense but vast environments that also would be made up of networks underground.

    Rather than trying to guess what specific crisis may spill over into violence, or bring things to a stand still in traffic or electronic commerce, just consider the piling pressure that is growing in the techno hubs and swelling urban population centers.

    New York, Boston, Los Angeles, Chicago, Houston and dozens of enormous cities around the world are all completely vulnerable. Depending upon the political situation, unrest, violence or whatever else could spread across the entire Eastern half of the U.S., and the entire country could face collapse as it has never before known it. It is only a question of timing and circumstance.

    Preppers should take all this into account. Modern life may make a connection to the city unavoidable prior to the collapse, but being insufficiently away from major urban centers is definitely a liability in times of crisis. Even outlying neighbors can be subject to looting, natural disaster, grid shutdown, riots, and many other situations. Make arrangements to shelter away from the city, and make sure you can get there safely and quickly when something goes down.

    Do not rely on the services or goods of these cities, and get out while you still can. There are some very major crises brewing right now. They are preparing; you should, too.

    h/t Nicholas West, Activist Post

  • Goldman Stunned By Collapse In Gasoline Demand: "This Would Require A US Recession"

    While energy traders remain focused on weekly changes in crude supply and demand, manifesting in shifts in inventory of which today’s API  data, which showed the second biggest inventory build in history, was a breathtaking example of how OPEC’s “production cut” is clearly not working, a much more troubling datapoint was revealed by the Energy Information Administration last week when it reported implied gasoline demand.

    To be sure, surging gasoline supply and inventories are hardly surprising or new: they remain a byproduct of the unprecedented global crude inventories leftover from two years of failed OPEC policy which resulted in a historic glut. Last January, overall crude runs were up 500,000 bpd as refiners shifted away from diesel and other products to gasoline to chase more attractive margins amid a mild winter and sluggish diesel demand. The move led to an overbuild of gasoline stocks that lingered into the summer, punishing margins when they should have been at their strongest. This January, crude runs are at historic levels, up by roughly 300,000 bpd over last year.

    So yes, both gasoline stocks and supply remains at extremely high levels, but what set off alarm bells is not supply, but demand: the EIA last week reported that the 4-week average of gasoline supplied – or implied gasoline demand – in the United States was 8.2 million barrels per day, the lowest since February 2012. And, as Reuters adds, U.S. refiners are now facing the prospects of weakening gasoline demand for the first time in five years.

     

    Unlike excess supply, which may have numerous factors, when it comes to a plunge in end product demand the implication can be
    only one: the US consumer is very ill, especially when considering that gasoline use has grown every year since 2012, despite fears that demand has topped out amid the growth of fuel efficient cars, urbanization and a graying population.

    Upon learning the data, the industry’s immediate concern was about refiners and what it means for already sagging margins: U.S. gasoline demand is closely watched by traders since it accounts for roughly 10 percent of global consumption. U.S. refiners amassed large inventories that punished margins last year, but record gasoline demand and robust exports helped provided a firewall against further slippage. Now the industry faces the prospects of higher crude prices following global production cuts and fresh federal data that suggests their gasoline demand safety net may be eroding.

    “It’s tough to base conclusions solely on the weekly data, which can be off significantly,” said Mark Broadbent, a refinery analyst with Wood Mackenzie. “If the demand is low as it the data shows, then it’s a going to be real problem for refiners.”

    But it could be a far bigger problem in what it means for the broader economy.

    * * *

    Enter Goldman which cuts right to the point: “A 6% fall in US demand would require a US recession

    As Goldman analyst Damien Courvalin notes, “implied demand data points to US gasoline demand in January declining 460 kb/d or 5.2% year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted.”

    Goldman then adds that “to achieve the 5.9% decline suggested by the weekly data, our model requires PCE to contract 6%, in other words, a recession.”


    So is the gasoline demand data accurate, and is a recession quietly gripping over the US, even as most other indicators are calmly flashing green?

    Here Goldman refuses to believe the official data, instead reverting to its own model, which “adjusts” the data, to goalseek the decline to appear more manageable.

    Given that the December PCE printed 2.8% growth, in line with its
    performance throughout 2016, we find such a sudden collapse unlikely… our revised model for gasoline demand, which regresses year-on-year change in demand on analogous growth in PCE, pump prices, efficiency, number of public holidays and base effect, points to a 30 kb/d or 0.3% decline. Alternatively, given our economists’ forecast for PCE to grow 2.6% in 1Q17, such a decline would require a yoy efficiency gain of almost 20% vs. the maximum historical gain of 8%. Finally, the potential reduction in demand on account of the Presidential Inauguration on 20 January is offset by one less weekend day vs. the same period in January 2016.

    Goldman then calculates what it believes is the accurate collapse in implied gasoline demand, instead of the 460k b/d reported by the EIA:

    Our analysis identifies weekly yield and exports as systematically deviating from their final values and such biases suggest that demand could be revised higher by 190 kb/d. The EIA’s real-time export data still includes estimates and we see potential for the recent shifts in the Mexican gasoline market to exacerbate the overstatement of US exports by an additional 185 kb/d given (1) lower PEMEX refinery turnarounds, and seasonally lower demand exacerbated by the January 16% hike in prices. Adjusting for these lower exports points to US gasoline demand declining only 85 kb/d yoy in January, in line with our macro model.

    Next, Goldman pulls the oldest trick in the book and suggests that it is not implied demand that is plunging, but supply that is soaring and is simply not being captured by the government:

    we view the larger than seasonal ytd builds in US gasoline stocks as driven by transient supply factors rather than persistent demand issues. In the case of Mexico, we expect that at current set prices, gasoline demand will decline by 25 kb/d yoy in 2017, with demand falling by 75 kb/d if prices gradually reached global prices this year.

    In conclusion, Goldman chooses to ignore the data, and to base its conclusion on its own fudged data:

    Looking forward, we reiterate our outlook for strong global demand growth in 2017 and view the recent US gasoline builds as reflective of transient regional shifts in gasoline supply instead. Given our outlook for strong consumer spending in 2017, we believe that US gasoline demand growth will remain resilient this year at 60 kb/d, albeit below last year’s 150 kb/d growth because of higher prices.  From a global perspective, these declines remain modest, especially compared to the 510 kb/d 2016 demand growth from the 40 countries we track.

    So is Goldman right implying the EIA gasoline demand data is wrong, or is Goldman once again incorrect – as it has so frequently been over the past year – which would mean that, as the bank itself admits, the US consumer, and economy, are in the throes of a deep recession? We hope to get a partial answer tomorrow, when the DOE reports the latest weekly inventory data.

  • House Republican Introduces Bill To Abolish Dept. Of Education On Same Day DeVos Confirmed To Run It

    In a slight bit of irony, a Republican Representative from the state of Kentucky, Thomas Massie, introduced H.R. 899, a bill written to abolish the Department of Education in it’s entirety, on the same day that Vice President Pence cast the unprecedented, tie-breaking vote to confirm that department’s new Secretary, Betsy DeVos

    Apparently Massie is “in to the whole brevity thing” as the entire bill consists of a single sentence:

    “The Department of Education shall terminate on December 31, 2018.”

    We wonder how many legal hours were billed by expensive D.C. attorneys in the drafting this legislation?

    Massie

     

    Massie provided a little more insight in a press release that included comments from some of the bill’s seven other Republicans sponsors, including: House Oversight Committee Chairman Jason Chaffetz (Utah) and Reps. Justin Amash (Mich.), Andy Biggs (Ariz.), Matt Gaetz (Fla.), Jody Hice (Ga.), Walter Jones (N.C.) and Raúl Labrador (Idaho).

    Department of Education shall terminate on December 3On the day of Betsy DeVos’ scheduled Senate confirmation for Secretary of Education, Massie said, “Neither Congress nor the President, through his appointees, has the constitutional authority to dictate how and what our children must learn.”

     

    Massie added, “Unelected bureaucrats in Washington, D.C. should not be in charge of our children’s intellectual and moral development. States and local communities are best positioned to shape curricula that meet the needs of their students. Schools should be accountable. Parents have the right to choose the most appropriate educational opportunity for their children, including home school, public school, or private school.”

     

    “For years, I have advocated returning education policy to where it belongs – the state and local level,” said Rep. Walter Jones, an original co-sponsor.  “D.C. bureaucrats cannot begin to understand the needs of schools and its students on an individual basis. It is time that we get the feds out of the classroom, and terminate the Department of Education.”

     

    “I’ve always been a proponent of empowering parents, teachers and local school boards who best know our children and their needs,” said Rep. Raul Labrador, another original co-sponsor. “Eliminating the U.S. Department of Education is the most important step we in Congress can take in returning decision making to the local level.”

     

    “Education of our students should lie primarily with parents, teachers, and state and local officials who know how to meet their individual needs best,” said freshman Rep. Andy Biggs. “Since its inception, the Department of Education has grown into an unrecognizable federal beast, and its policies have helped foster Common Core across the country. It is time the one-size-fits-all approach by the federal government is ended and authority is returned to the local level.”

    Well, this is awkward…the only thing that would be more awkward would be if the person taking over the Department had previously been the one to call for it’s abolishment…oh wait, that happened.

  • Authoritarians At The Gate: How One High School Is Ripping Its Community Apart

    We strongly advise you to put down all sharp objects before reading the following…

    Submitted by Mark Glennon via WirePoints.com,

    Not since the Vietnam War have I seen as much strife and personal hostility within an otherwise friendly community.

    Thank the administration of New Trier High School in north suburban Chicago. This story is about the madness on college campuses now being crammed down into a public high school. More importantly, it’s about an angry brawl now growing rapidly.

    Oblivious to how identity politics have divided the country, the school is holding an attendance-mandatory All-School Seminar Day with the stated goal of “understanding today’s struggle for racial civil rights.”

    That sounds fine, but the problem is that it serves no such goal. The agenda is brazenly and unquestionably one-sided, divisive, political and radically left. Understanding civil rights, as New Trier sees it, doesn’t mean challenging students to sort through competing ideas. It means force-fed dogma.

    Results were entirely predictable. Conservative and moderate parents, including me, erupted over what we see as propaganda masquerading as education cloaked in the language of togetherness. We’ve publicly made a simple request: Add balance to the program by including topics and speakers to expose students to a fair range of ideas.

    Balance, that’s it. If the school is unwilling to add that balance, then the seminar should be cancelled or, at a minimum, attendance should be made optional. Those feeling that way put up a website linked here and have launched a petition drive linked here.

    Reaction to the request for balance was also predictable. Program supporters took to social media saying critics want to censor out discussion about race, don’t care about civil rights, are bad parents for trying to shield their children and, of course, that we’re racist.

    Sure we’re racist – as program supporters see things. Systemic, invisible racism is the core theme of the program. As one workshop description puts it, “Most systemic racism is invisible…often to both ‘sides’…until you know it’s there. Once you know it’s there, you can’t stop seeing it.” Our racism is so clear, in other words, that it should be taught as fact and not one of many viewpoints.

    Hostility is growing much more intense and personal. Before we get to that, some background:

    The School District

    New Trier High School is often ranked among the best in the country. It covers very prosperous suburbs north of Chicago and is overwhelmingly white. The township was traditionally conservative and Republican but is now solidly liberal and Democratic, based on the last election cycle and polls I’ve seen.

    New Trier High School’s main campus

    The Seminar

    Let’s look at some samples of the workshops.

    • One of the invited speakers is a rapper named John the Author. Here’s a segment from his work:

    Divide and conquer, white supremacy the silent monster
    I see you sneaking in the corner trying to have some karma
    We ain’t looking to know your honor, No your honor we (?) problem
    The resolution is an economic revolution,All in the name of retribution, you ready? Let’s do it,They integrated then infiltrated through immigration
    The richest folk in our neighborhood ain’t even our neighbors
    They take the dollar back across town, don’t you dare tell me to calm down
    (?) mister doghouse,We want it all now, it’s time to push ‘em all out—I’m ready to start now

    •  “A People’s History of Chicago” will look at race “in the tradition of Howard Zinn.” Zinn wrote A People’s History of America, about which black, conservative economist Thomas Sowell wrote,

    It speaks volumes about our schools and colleges that far-left radical Howard Zinn’s pretentiously titled book, “A People’s History of the United States,” is widely used across the country. It is one indictment, complaint, and distortion after another. Anyone who relies on this twisted version of American history would have no idea why millions of people from around the world are trying, sometimes desperately, to move to this country. The one virtue of Zinn’s book is that it helps you identify unmistakably which teachers are using their classrooms as propaganda centers.

    • Another segment is “Spent: A simulation to see how long you can survive on minimum wage.” Any bets they won’t be simulating how long you can survive on no wage, which countless economists argue is the result for some from minimum wage laws?

    New Trier didn’t let the topic for the seminar, racial civil rights, stop them from throwing in a couple other progressive favorites:

    • In one segment, “SOARS’ creator, Scheherazade, discusses the role arts can play in creating a national movement to end sexual violence.”
    • Another segment on the Equal Rights Amendment will ask, “Why hasn’t it been ratified? Do we even need it anymore? Let’s talk about it!”

    It doesn’t help that some presentations are just plain silly:

    • There’s “Disney and Racial Stereotypes: Watch classic Disney animated films and discuss how these films influence childhood development of racial identities.”
    • Another says, “Come to the Northfield Library and read picture books to a group of children (ages 3-5). The picture books will focus on themes of embracing diversity, accepting others and oneself, and social justice.”
    • Then there’s “Racist Memorabilia Through the Ages.”
    • My personal favorite is “Microaggressions: Not So Small.” Maybe it should be subtitled “Tolerance for oxymorons!”

    The rest of agenda for the day is posted on links here and here. You’ll find only four or five out of the hundred or so that would seem to present even a moderate perspective. Read the whole agenda and you’ll see that this summary written by its critics is valid:

    • The Seminar claims: “Identity” is defined by race. Period. It is fixed and determinative. (The term  “racial,” “racist,” “bias,” and “systemic racism” suffuse the panel descriptions, together appearing over 80 times. Meanwhile, in a Seminar Day devoted to, “Understanding Today’s Struggle for Racial Civil Rights,”  a working definition of the term “civil rights” is not offered.)
    • The Seminar claims: People of the same race think and feel the same way about most or all things.
    • The Seminar claims:  Disparities between races are de facto evidence of “systemic racism.” Not, for instance, government policies that confine poor children to failing inner city schools, devastate black families, and encourage crime and dependence.
    • The Seminar claims: “Systemic racism” should be the root of all discussions.

    The “Tolerant” Strike Back at the “Haters”

    Things really hit the fan when program critics put up their own site that allows incoming comments.  Here are a few of the emails received. Senders included their names with their emails, unafraid to say these things to their neighbors, though I’ve deleted names here:

    • “Go fuck yourselves. Honestly, what you are trying to do is pathetic. ‘Diversity programs don’t work’? What’s your alternative, segregation?” That’s from a New Trier grad who says she didn’t understand race until she went to college at [a private, elite liberal arts school whose name I’ll withhold]:
    • From a New Trier Parent: “The district would not need to spend money on this day if the majority of parents, like yourselves, were not racial assholes.”
    • From a New Trier student: “Get your fucking KKK looking asses back to your house and shut up.”

    I guess comments like that are quite reasonable if you accept the central teaching of the seminar, which is that we’re all racists. Plenty more like that from hatred’s enemies can be found on this link. I certainly would not be surprised if equally nasty things are being sent by some critics of the seminar to its defenders, but that’s really the point: Is this seminar promoting understanding and rational discussion?

    The School’s Response

    New Trier’s administration has been mostly silent, except for release recently of this FAQ and and some short comments to the press.

    First, the school’s Superintendent defends the program by saying, “I have had well over 300 phone calls, emails, and letters of support saying ‘Don’t change it, it looks fabulous,'” she said. “The direct communication we’ve had has been far more in support than in opposition. In fact, I’ve never seen this kind of outpouring of support on an issue in my life as an educator.”

    We pay her $419,000 and God-knows-what pension to set educational content by counting popularity beans?  Would she exclude the liberal voices (which are properly included) if she were in some school district in the South where those views might be overwhelmingly unpopular? She offers no reason for refusing to add other perspectives.

    And her method of counting is faulty because of another horrible problem, as to which she’s seemingly blind: Critics of the program are stifled by fear of the controversy and retribution, so she’s not hearing from them. We’ve heard from any number of program critics who won’t dare say or do anything. One active member of our opposition, who has a business in the community, asked us to be extremely careful not to mention either her name or business, fearing the consequences. Some even fear retribution by very progressive teachers against their kids.

    New Trier’s Superintendent also didn’t mention that, for a similar program last year, about 40% of New Trier kids did not attend.

    Those kids may be smarter than the adults on this. While some are vocally on one side or another, plenty see through it. I asked one how he thinks his fellow students view the program. He thought just under half shrug it off as “more SJW [social justice warrior] nonsense.” He added that he thought many of the liberals who like the program think it’s unbalanced.

    In the FAQ, the school emphasizes that the program is not political. Oh, please. It’s straight out of the playbook used by countless Democrats in the last election cycle. It’s about as “not political” as the poster on the right, which went up in the school on Inauguration Day. You decide if that, and the seminar, are political.

    Illegal?

    Politicking in schools has legal limits. New Trier also has a written policy requiring that discussion of controversial topics “present a balanced view.” I don’t know whether New Trier crossed the legal line, but a separate group is researching that now and will file a lawsuit if they conclude it has.

    Cost

    Operating costs per day when school is in session is slightly over $533,000, according to responses in a FOIA request from New Trier. The school’s FAQ adds that the seminar has an additional budget of $30,000.

    At a recent New Trier school board meeting, in defending the program, an Assistant Superintendent of Student Services said the preparation was a “huge effort” and “exhausting.”

    *  *  *

    It would be easy to rattle off a list of topics that would make New Trier’s seminar day more balanced and genuinely educational. Moderates and conservatives might not agree on that list, but this controversy could easily have been avoided with even a lazy attempt. I’ll suggest just one topic that would have helped, the virtue of which should now be evident to all:

    How identity politics have ripped America apart and undermined the quest for racial harmony.

    UPDATED 2/6/17 to increase the compensation paid to the New Trier Superintendant from $315,000 to $419,000. For further information on compensation and political nature of the rest of the school’s administration, see this article.

    *Mark Glennon is founder of Wirepoints. Opinions expressed are his own.

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Today’s News 7th February 2017

  • Reality Check: "Immigration Can Never Be An Effective Way To Deal With The Suffering People Of The World"

    Submitted by Mac Slavo via SHTFPlan.com,

    The most oft cited reason by opponents of President Trump’s immigration policies for why America should open its borders to the millions of impoverished and persecuted individuals around the world often center around humanitarian reasons. As a rich country with plenty of land mass, we should be able to take in anyone and everyone who may be in need, right?

    While that notion, like Marx-Engels’ ideas for taking from those who have the ability and giving to those who need, may seem great on paper, successfully implementing such policies in the real world is starkly different.

    According to Census Bureau statistics, some 1.3 million foreign-born individuals legally immigrated to the United States in 2014. That figure doesn’t include the nearly one million immigrants that enter the country illegally each year. Those who support open border immigration have said that we need to take in even more people.

    But according to journalist Roy Beck, taking in one million people per year makes almost no difference in the grand scheme of things because for every million we bring into the United States, another 80 million people yearly are born into countries with extreme levels of poverty, violence or war. According to Beck, even opening our borders to five million more people per year would do nothing to stem the the real problems.

    In what is one of the most viewed immigration policy videos on the internet from Numbers USA, Beck ingeniously utilizes gumballs to demonstrate why open borders simply will not work. As well, he provides a seemingly novel solution that has for decades fallen on deaf ears:

    We never get ahead of what’s happening in these countries… Don’t you see? Immigration can never be an effective or significant way to deal with the suffering people of the world… they have to be helped where they live…

     

    99.9% of them will never be able to immigrate to a rich country… there is no hope for that… they have to bloom where they’re planted… the only place that 99.9% of these people can be helped is where they live… let’s help them there.

    In short: taking in millions of immigrants doesn’t even make a dent.

    So for those utilizing immigration as justification for violent protests and kinetic civil war, or for those who follow such narratives blindly based strictly on emotions that are devoid of any rational thought, we encourage you to consider the reality of bringing in millions of immigrants from impoverished countries.

    And don’t just consider the non-effect of such policies as they relate to the global humanitarian situation, but consider the implications this has on America’s resources, as well as our citizens, who will be burdened with heavy taxation to cover the costs.

    Even if we went by the most radical proposals in Washington, which are to actually double our immigration to two million year… which would totally overwhelm our physical, natural and social infrastructures, we couldn’t even make a visible difference.

  • Once Feared, The "Tiger Cubs" Have Become Wall Street's Prey

    Things are rapidly changing for the hedge fund world, and not just in terms of chronically underperforming the S&P, which as the following chart from Goldman demonstrates, they have on 10 of the past 14 years, leading to relentless redemptions…

    … but also in terms of crushing once pristine, seemingly untouchable reputations. Case in point: famed stock picker Julian Robertson and his Tiger Cub”proteges have ruled the Wall Street jungle for decades. After a down 2016, their reign is being challenged.

    As the WSJ reports, for the year, hedge-fund losses at Tiger Global Management LLC were roughly $900 million from a 15.3% loss. Lee Ainslie’s $11 billion Maverick Capital Ltd. was down more than 10% in its flagship fund. Andreas Halvorsen’s $30 billion Viking Global Investors LP and Stephen Mandel Jr.’s Lone Pine Capital LLC were down 4% and 2% respectively in their main funds, while Coatue Management LLC was up 2%. They all badly underperformed the broader market which returned 12%, and is not only actively managed by central banks, but does not request “2 and 20” to jump aboard for the ride, nor does it have minimum capital requirements.

    These “Tiger Cubs,” a generation of hedge-fund firms founded by traders who once worked for Mr. Robertson at his Tiger Management, are among the wave of stock hedge funds that fared poorly in 2016.

    The MSCI AC World index gained 8.5% for last year excluding December, but equities hedge funds captured just 20% of that return, according to Morgan Stanley. That relative return was the second worst since the 2008 financial crisis.

    The chronic bleeding should not come as a surprise to regular readers: ever since 2010 we warned that in the “new paranorma”, where fundamentals have zero impact on asset prices, and only central bank balance sheets matter, those who rely on convential financial metrics to help them invest or, worse, actively short in hopes of a stock – or market – crash, will be lost. Sure enough, those most dependent on fundamentals, or “bottom-up” stock pickers like the Tiger Cubs, were among the hardest hit. These types of managers make their investment decisions by talking to management teams and poring over corporate filings, among other research.

    Sadly, almost none of tha matters in a world of pervasively cheap credit which permits zombie companies to continue their existence indefinitely, regardless of growth, balance sheet, or cash fow constraints.

    This is how the WSJ explains the death of fundamental analysis-based investing.

    last year’s markets were difficult for Tiger Cubs and other bottom-up investors because companies often didn’t rise or fall on their individual fundamentals. Instead, entire sectors of the market traded in lockstep, such as when energy companies rallied during the first half and when financial stocks surged after the presidential election of Donald Trump on expectations of economic growth. Stocks that traditionally were more expensive and had strong growth prospects also sold off, another development that surprised some of these managers. Those stocks had driven funds’ gains last year.

    Thank the pervasive shift to passive investing and ETFs that have made thousands of stocks trade as one; also thank HFTs whose only goal these days is to stop out investors as “max pain” levels, and finally thank central banks that the market hasn’t made any sense in years.

    Still, some refuse to give up the faith: “It’s too early to say that fundamental stock picking is dead; it’s hard to envision a world with only robots and passive investors,” said Greg Dowling of Cincinnati-based Fund Evaluation Group, which advises on roughly $60 billion of client money. But “opportunities may be more episodic.”

    Robertson, who declined to comment through a spokesman, started Tiger in 1980, and the firm went on to become one of the most successful private investment funds in the world, managing more than $22 billion at its peak. He still claims among the best long-term track records in the investment world, at about 25% a year. It all ended in 2000 when the firm returned client money after losses and investor defections.

    In retrospect, it is far better that Julian is not active in today’s market, which is a farcical, grotesque version of what he was familiar with in his heyday. Instead, Tiger has become a “seeder” which backs smaller hedge funds, while Robertson’s former employees collectively manage more than $100 billion in some of the industry’s biggest funds. Alas, they also frequently show up in the same trades, a result some of them ascribe to their shared investment philosophy. The resulting hedge fund hotels usually end up in flames once someone yells “fire” and a stampede for the illiquid exists begins.

    There is some hope in the new years. Since the election, some traders have predicted the environment for stock picking would improve, as a result of a plunge in cross-equity correlations and a surge in dispersion. Trump’s plan for deficit spending, tough talk on trade and taxes and lighter regulation for banks, pharmaceutical companies and other industries should also mean increased volatility (if not yet). They say that volatility, plus the waning of central banks’ global bond-buying programs, could break the quiet markets traders have complained about in recent years. Some faint glimmers of hope: Coatue, Maverick, Tiger Global and Viking gained in January, with Tiger Global up 5.5%. All those gains may evaporate overnight following another Amazon, Netflix or Valeant implosion.

    So the “Tiger Cubs” are taking steps to lock in profits.

    Mandel of Lone Pine has become much more focused on whether the positions that the $28 billion firm holds are included in the holdings of ETFs. Lone Pine began collecting data on these issues more systematically last year. That did not help the bloodletting however, and investors redeemed 10% of their money from Lone Pine last year, a higher percentage than in past years.

    Viking hired from Goldman Sachs Group Inc.Samer Takriti, “an experienced risk quant and Ph.D.,” to help the firm increase its awareness of forces that can affect its portfolio, Viking said in its year-end letter.

    Meanwhile, Maverick, which rolled out a quant effort in 2006 to inform its investment process, is doubling down on losing bets from last year.

    “The large majority of investments that were costly will prove to be mistakes of timing rather than judgment,” Mr. Ainslie wrote in his year-end letter dated Jan. 17. Which, of course, is what everyone who throws good money after bad says, hoping for a rebound.

    Will 2017 prove to be “different this time” for the hedge fund world in general, and the vaunted Tiger Cubs in particular? Check in in just under 11, soon to be very volatile months for the answer.

  • 5 Signs We're Going To War

    Submitted by Mac Slavo via SHTFPlan.com,

    Is it possible that not everything is as it seems?

    While the majority of America is being distracted by shiny things and manipulated into civil unrest over identity politics, Melissa Dykes of The Daily Sheeple warns that an unprecedented push for war is underway.

    It’s pretty clear that we’re being taken to war… A plan implemented by George W. Bush after 9/11… continued under Obama… and now kicked up a notch by our new President, Donald Trump. 

    Watch:

  • ALERT: Largest US Forex Broker FXCM Shut Down and Permanently Banned from NFA

    It comes as no surprise to many, that the US biggest and baddest Forex broker, FXCM, has been shut down by regulators, and permanently banned from future membership, including the firm itself and several APs, including Dror “Drew” Niv, its founder, says the NFA’s website.  We talk about this a lot in our book Splitting Pennies- for those of you who want to understand more about what’s going on here – pickup a copy on Amazon.

    FXCM simply could not run an honest business.  It’s important for those not in FX to understand that, just because FXCM is a fraud, it doesn’t mean that FX is a fraud.  Simply, that FX was a fertile ground for ponzi scammers, criminals, banksters, and the lowest level of white collar criminals.  WHY is that you ask?  Because FX is so greatly misunderstood, it’s possible for those with slightly higher IQ’s than the average investing public to pull the wool over the eyes of the retail customer, and in FXCM’s case – the regulators too.  Well, thanks to the NFA for bringing this case to a close, I’m sure all the victims who have lost money due to FXCMs petty scams and tricks will be comforted to hear the news that at least for our lifetime, they will not be able to continue their games.  

    And, because of the lack of understanding – legitimate more high brow entities simply don’t want to touch it, and especially retail, it’s like getting their hands dirty.  FXCM has shown the world how NOT to run an FX business.  FXCM’s collapse is expected, by those in the know.  But the good news, at least for customers, your accounts will be safely transferred to Gain Capital.

    Here’s a snapshot of the key info from the complaint and decision filed by the NFA:

    Here’s how FXCM’s petty scam worked.  So, around the time of 2006 – 2008 the dealing desk model of trading against customers was getting old.  Too many complaints, and too much competition.  Finally, FXCM settled a lawsuit for something a genius lawyer labelled ‘assymetric price slippage’ which is high paid lawyer lingo for screwing the customer.  The only thing assymetric about the slippage was the ass, that is, customers always took it in.  You think that this is tongue in cheek humor, but this is how FXCM ran their business.  The scam sham company they setup to trick regulators they sarcastically named “Effex” a full phonetic spelling of FX.  If FXCM was really professional they could have resorted to naming it something regal, such as The Sapiano Organization or Wellington Capital Group, LP.  – the name use “Effex” shows how petty and sloppy FXCM’s management is.  I mean, some people on Wall St. have that sense of humor.  But, customers don’t think it’s so funny when they’re losing money on positive trades.  FX is difficult enough – and the fact that FXCM would resort to petty tricks like reversing positive trades in your account weeks after the profit was booked, it made for many angry customers.  Yes, they did that.  And worse, much worse.  

    Anyway, so at some point FXCM knew they couldn’t perpetuate their dealing desk operations (trading against the customer) at least in plain sight, which they were.  So what they did, they created a model that was truely, STP, or sending orders directly to the banks.  However, what they did – in agreement with the banks, FXCM’s order flow was ‘tagged’ electronically, and sent straight into the new fancy dealing machine that was now a super robot on steroids, waiting to take a look at your order and hold it, change it, reject it, slip it – all in the name of another company – NOT FXCM (this is really important to understand how this scam works).  So, FXCM could state, that they were not trading against the customer.  But they were sending their orders mostly to a firm that did trade against the orders, “Effex” – and this company was not only owned and controlled by FXCM, it was in their office, run by an ex-employee, on FXCM’s computer network, using the same IT.   To see a legal perspective of how FXCM’s .. excuse me.. “Effex” dealing operations worked, take a look at this statement from the complaint:

     

    “Hold Timer” is the key here.  Traders that use FXCM’s “Trading Station” platform know the various messages when you go to buy, such as ‘please wait’ and ‘order processing’ and so on.  What’s happening during that time, they are waiting for a number of things to happen; the market to move in their favor (and in this case, they’ll fill your order at the worst possible price, like the moment you clicked) – or another customer to place the opposite order, where they could capture a huge spread, or for them to receive a huge discounted order on the wholesale market, and fill your order at a slipped price (but extremely profitable for FXCM).  It’s true – this is a money making machine!  But, like the Casinos, it was FXCM getting rich, not the customer.

    The full complaint makes for great reading for those who want to understand – from a compliance and legal perspective – how the inner workings of a dealing desk broker work.  Note several key points that 1) FXCM was not a dealing desk broker (no broker will admit to using this model, they are all STP.. yeah right)  2) FXCM had their head up their rear so far they didn’t have an exit plan – they thought they were above scrutiny, because NFA was in their pocket.  Well, maybe they were – maybe this is all because of Trump!  Did I write that, or it just materialized on the screen – …

    In any event, traders should at least say “Thank You” to the NFA for finally bringing down this huge petty scam, that we can start to rebuild from the rubble, and build a real FX business, based on profitable FX alpha generating strategies, sophistocated liquidity algorithms that can manage risk in a complex market, and computing power.  

    To contrast that statement, FXCM had an employee policy, to hire good sounding NYU grads that didn’t know about finance and were good on the phones.  FXCM invested zero in R&D.  Their IT was horrendous – except of course, their dealing software, which they invested millions in.

    Thank you to all the participants of this case, to the NFA, to Trump for creating a pro-business environment, thank you to the clients who started the class-action against FXCM that led to the ass-slippage case; now let’s create a REAL FX market!

    To learn more about the inner workings of FX and how to survive, checkout FC Trading Academy.  To read a good book on the topic of FX – checkout Splitting Pennies – Understanding Forex.

  • Virginia University Publishes "LGBTQQIAAPP Terminology Guide" To Help Snowflakes Determine Their Gender

    The Virginia Commonwealth University’s Office of Multicultural Affairs has decided to publish a very helpful LBGTQQIAAPP Terminology Guide to assist their confused snowflakes with the very complicated task of determining their own gender.  While the guide may seem fairly thorough, VCU notes that gender “language is constantly evolving, and these definitions are not by any means comprehensive” before warning that “terms of self-identification should not be used to label others without their consent.”

    Luckily, the terminology guide even has some very easy to understand illustrations to help students debunk the lifelong, evil myth that gender is somehow binary…

    LGBTQIA

     

    Here are some of the definitions that we found particularly helpful and we sincerely hope that our readers will take this opportunity to read, learn and reflect on their lives of “Cis Privilege.”  And for those of you still living in the dark ages, Cisgendered refers to the 99.7% of the population where “a person’s gender identity, gender expression, and biological sex” all miraculously align.

    Biological Sex/ Natal Sex/ Birth Sex/ Sex: The medical term used for the identification of male, female, or intersex sex i.e. chromosomes, gonads, and/or genitalia

     

    Cisgender/ Cis/ Gender Normative/ Gender Straight: a person who has a normative gender presentation, when a person’s gender identity, gender expression, and biological sex align. A person who is not transgender.

     

    Cisgender Privilege/ Cis privilege: The societal assumption and norm that all people are cisgender. There are basic civil rights and social privileges that a cisgendered person automatically receives that are systematically denied to transgender persons, simply because of their gender identity/ gender presentation

     

    Demisexual: a person who is not immediately sexually attracted to other people. A person who’s sexual attraction to another person develops after developing a relationship (not necessarily romantic). Often considered within the asexuality spectrum

     

    Gender Confirmation surgery: any surgery to make a person’s outward appearance more closely align with their gender rather than biological sex, also known as gender reassignment surgery, many have transitioned to Gender Confirmation Surgery as it utilizes more positive language.

     

    Heterosexual Privilege/Heteronormativity: The societal assumption and norm that all people are heterosexual. There are basic civil rights and social privileges that a heterosexual person automatically receives that are systematically denied to queer persons, simply because of their sexual orientation.

    Of course, while VCU asserts that there are “basic civil rights and social privileges” afforded to “cisgendered” people that are constantly denied other people based on their “gender identity/ gender presentation”, the university fails to define exactly which privileges to which they are referring.

    LGBTQIA

     

    For those of you looking for even more enlightenment on this very important topic plaguing roughly 0.3% of the population, please see the complete LBGTQQIAAPP Terminology Guide below:

  • Debt-pocalypse Beckons As US Consumer Bankruptcies Do Something They Haven't Done In 7 Years

    Submitted by Michael Snyder via The Economic Collapse blog,

    When debt grows much faster than GDP for an extended period of time, it is inevitable that a good portion of that debt will start to go bad at some point.  We witnessed a perfect example of this in 2008, and now it is starting to happen again.  Commercial bankruptcies have been rising on a year-over-year basis since late 2015, and this is something that I have written about previously, but now consumer bankruptcies are also increasing.  In fact, we have just witnessed U.S. consumer bankruptcies do something that they haven’t done in nearly 7 years.  The following comes from Wolf Richter

    US bankruptcy filings by consumers rose 5.4% in January, compared to January last year, to 52,421 according to the American Bankruptcy Institute. In December, they’d already risen 4.5% from a year earlier. This was the first time that consumer bankruptcies increased back-to-back since 2010.

     

     

    However, business bankruptcies began to surge in November 2015 and continued surging on a year-over-year basis in 2016, to reach a full-year total of 37,823 filings, up 26% from the prior year and the highest since 2014.

    Of course consumer bankruptcies are still much lower than they were during the last financial crisis, but what this could mean is that we have reached a turning point.

    For years, the Federal Reserve has been encouraging reckless borrowing and spending by pushing interest rates to ultra-low levels.  Unfortunately, this created an absolutely enormous debt bubble, and now that debt bubble is beginning to burst.  Here is more from Wolf Richter

    The dizzying borrowing by consumers and businesses that the Fed with its ultra-low interest rates and in its infinite wisdom has purposefully encouraged to fuel economic growth, if any, and to inflate asset prices, has caused debt to pile up. That debt is now eating up cash flows needed for other things, and this is causing pressures, just when interest rates have begun to rise, which will make refinancing this debt more expensive and, for a rising number of consumers and businesses, impossible. And so, the legacy of this binge will haunt the economy – and creditors – for years to come.

    Despite all of the economic optimism that is out there right now, the truth is that U.S. consumers are tapped out.

    If the U.S. economy truly was doing great, major retailers would not be closing hundreds of stores.  Sears, Macy’s and a whole host of other big retailers are closing stores because those stores are losing money.  It truly is a “retail apocalypse“, and this trend is not going to turn around until U.S. consumers start to become healthier financially.

    We also see signs of trouble in the auto sales numbers.  Compared to 2016, sales were way down in January this year

    Compared to January last year, car sales collapsed for all three US automakers, and the largest Japanese automakers didn’t do much better:

    • GM -21.1%
    • Ford -17.5%
    • Fiat Chrysler -35.8%
    • Toyota -19.9%
    • Honda -10.7%
    • Nissan -9.0%

    For all automakers combined, car sales sagged 12.2% from a year ago.

    A lot of attention is given to our 20 trillion dollar national debt, and rightly so, but a similar amount of attention should be paid to the fact that U.S. households are collectively more than 12 trillion dollars in debt.

    About two-thirds of the nation is essentially living paycheck to paycheck.  Most families really struggle to pay the bills from month to month, and all it would take is a major event such as a job loss or a significant illness to plunge them into financial oblivion.

    In America today we are told that the secret to success is a college education, but most young Americans have to go deep into debt to afford such an education.

    As a result, most college graduates start out life in the “real world” with a mountain of debt.  And since many of them never find the “good jobs” that they were promised, repayment of that debt becomes a very big issue.  In fact, the Wall Street Journal has discovered that student loan repayment rates are much worse than we were being told…

    Last Friday, the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers.

     

    When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country.

     

    The new analysis shows that at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years.

    If you do find yourself deep in debt, a lot of families have found success by following a plan that was pioneered by author Dave Ramsey.  His “Debt Snowball Plan” really works, but you have to be committed to it.

    Getting out of debt can be tremendously freeing.  So many people spend so many sleepless nights consumed by financial stress, but it doesn’t have to be that way.

    Most of us have had to go into debt for some reason or another, and not all debt is bad debt.  For example, very few of us would be able to own a home without getting a mortgage, and usually mortgages come with very low interest rates these days.

    But other forms of debt (such as credit card debt or payday loans) can be financially crippling.  When it comes to eliminating debt, it is often a really good idea to start with the most toxic forms of debt first.

    It has been said that the borrower is the servant of the lender, and you don’t want to spend the best years of your life making somebody else rich.

    Whether economic conditions turn out to be good or bad in 2017, the truth is that each one of us should be trying to do what we can to get out of debt.

    Unfortunately, a lot of people never seem to learn from the past, and I have a feeling that both consumer and commercial bankruptcies will continue to rise throughout the rest of this year.

  • Google Emerges As Financial Sponsor Behind Tech Giants' Anti-Trump Crusade

    Earlier today, we explained why billionaire Democrat, and Clinton supporter, George Soros is the likely source of funding behind the rapidly spreading  – and costly – Trump “Muslim Ban” lawsuits.

    Moments ago, we found the other “source of funds” missing link in the ongoing anti-Trump executive order campaign. As Bloomberg reports, the company footing bill for the legal brief signed by more than 120 mostly tech companies that oppose President Donald Trump’s executive order on immigration, is none other than the Company which offered Hillary Clinton its “strategic plan” to help Democrats win the election, and track voters, and which hired former Clinton Foundation CEO, Eric Braverman: Google (technically, its parent company Alphabet).

    Eventually, the funding – which should be a nominal matter for most of the tech giants who are on a crusade to keep cheap H1-B workers – may end up being distributed: other companies have offered to fund a share of the fee, Bloomberg writes, and Alphabet, which coordinated the effort, plans to accept the offers. However, for now  it’s only Alphabet who is paying Washington, D.C.-based law firm Mayer Brown LLP to handle the friend-of-the-court brief.

    The rest of the story is familiar, as per our earlier report, only instead of only 97 companies, the list has since grown to 128.

    The tech companies emphasized the economic and social contribution made by immigrants in their arguments filed Sunday in the U.S. Court of Appeals in San Francisco. The companies support a lawsuit by the states of Washington and Minnesota seeking to stop Trump’s executive order. Apple Inc., Airbnb Inc., Facebook Inc., Microsoft Corp., Tesla Inc. Intel Corp., Lyft Inc., Netflix Inc., Snap Inc. and Uber Technologies Inc. are among the technology companies that participated. Businesses beyond the tech industry who signed on include Levi Strauss & Co. and yogurt maker Chobani.

    “Immigrants make many of the Nation’s greatest discoveries, and create some of the country’s most innovative and iconic companies,” the brief states. “America has long recognized the importance of protecting ourselves against those who would do us harm. But it has done so while maintaining our fundamental commitment to welcoming immigrants—through increased background checks and other controls on people seeking to enter our country.”

    So far Trump has been uncharacteristically quiet in his interaction with the rebellious tech giants, whom he invted one month ago to the Trump Tower as president-elect to lay the ground rules for interaction. Frankly, it would be a surprise, if he let the growing rumble of Silicon Valley discontent continue without at least opining about it on twitter at least once. For now, however, Trump is more focused on making the choice for America clear: either you are with my executive order, or if there is a terrorist attack, blame the judicial system as he once again tweeted just moments ago.

  • Furious California Leaders Slam "Cruel, Unconstitutional" Trump Over Threat To Pull Federal Money

    In a narrative more befitting of kindergarten, and certainly not grown adults (politicans are exempt), one day after from Trump warned he would defund California if the state passed a bill to make itself a de facto “sanctuary state”, saying the state was “out of control”, furious state leaders have responded that, drumroll, they are not “out of control.”

    Hoping to make their case stron, state politicans pointed at their balanced budget and high jobs numbers in the latest dustup between the populist Republican and the progressive state. Quoted by Reuters, the state’s top Democrats called Trump “cruel” and his proposals unconstitutional, after the businessman-turned-politician threatened to withhold federal funding from the most populous U.S. state if lawmakers passed a bill protecting undocumented immigrants. “President Trump’s threat to weaponize federal funding is not only unconstitutional but emblematic of the cruelty he seeks to impose on our most vulnerable communities,” state Senate Pro Tem Kevin de Leon, a Democrat from Los Angeles, said in a statement on Monday.

    The latest war of words between Trump and Democratic leaders in California, where voters chose his opponent, Hillary Clinton, two-to-one in November’s election, began Sunday, in an interview between Trump and Fox News host Bill O’Reilly. During the interview, O’Reilly asked Trump about a bill in the state legislature, authored by de Leon, to ban law enforcement agencies in the state from cooperating with immigration officials in most circumstances. Cities who have enacted similar bans are known as sanctuary cities, and de Leon’s bill, if passed and signed into law by Democratic Governor Jerry Brown, would effectively extend such rules to the entire state.

    “I think it’s ridiculous. Sanctuary cities, as you know, I’m very much opposed to sanctuary cities. They breed crime, there’s a lot of problems,” Trump said.

    “If we have to, we’ll defund,” Trump said in an interview with Fox News host Bill O’Reilly before the Super Bowl. “We give tremendous amounts of money to California, California in many ways is out of control, as you know.”

    Trump told O’Reilly that he didn’t want to defund a state or a city and would like to give them “the money they need to properly operate.” But the president added that “if they’re going to have sanctuary cities, we may have to do that. Certainly that would be a weapon.”

    California’s mostly democratic leadership was not amused. State Assembly Speaker Anthony Rendon, an L.A.-area Democrat, said the state has the most manufacturing jobs in the nation, and produces a quarter of the country’s food. “If this is what Donald Trump thinks is ‘out of control,’ I’d suggest other states should be more like us,” Rendon said.

    Sunday’s shot across the bow of Sacramento followed a similar threat last weak, when Trump threatened to withhold federal funding from the University of California at Berkeley, where violent rioting led to the cancellation of a speech by famous “alt-right” winger Milo Yiannopoulos.

    Experts have said it would be difficult for the President to withhold funds from either the university or the state. Court rulings have limited the power of the president to punish states by withholding funds, and most appropriations come from the Congress and not the executive branch. Then again, this is Trump we are talking about, and while it may ultimately indeed prove impossible, should this particular animosity between Trump and the state continue, Trump will certainly try…

    Ultimately, California’s fate may be in its own hands, and in its own territory.

    As a reminder, a proposal for California to break away from the United States has been submitted to the Secretary of State’s Office in the state capital. If it qualifies, it could trigger a vote on whether the most populous US state should become a separate nation. The group behind the proposal, Yes California Independence Campaign, was cleared on Thursday by Californian Secretary of State Alex Padilla to begin the bid to collect some 600,000 voter signatures required to put the ambitious plan on the ballot, AP reported.

    The initiative would ask voters to repeal part of the state constitution that declares California an “inseparable part of the United States of America.” Being a US state is “no longer serving California’s best interests,” the movement claims.

    “Not only is California forced to subsidize this massive military budget with our taxes, but Californians are sent off to fight in wars that often do more to perpetuate terrorism than to abate it. The only reason terrorists might want to attack us is because we are part of the United States and are guilty by association. Not being a part of that country will make California a less likely target of retaliation by its enemies,” the campaign argues, among other things.

    “America already hates California, and America votes on emotions,” Marcus Evans, vice-president of Yes California told to the Los Angeles Times. “I think we’d have the votes today if we held it,” he added.

    Since California must submit the valid voter signatures by July 25 to qualify for the November 2018 ballot, it is shaping up to be an especially volatile summer.

  • Which Assets Are Most Likely To Survive The "System Reset"?

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    Your skills, knowledge and and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not.

    Longtime correspondent C.A. recently asked a question every American household should be asking: which assets are most likely to survive the "system re-set" that is now inevitable? It's a question of great import because not all assets are equal in terms of survivability in crisis, when the rules change without advance notice.

    If you doubt the inevitability of a system implosion/re-set, please read Is America In A Bubble (And Can It Ever Return To "Normal")? This brief essay presents charts that reveal a sobering economic reality: America is now dependent on multiple asset bubbles never popping–something history suggests is not possible.

    It isn't just a financial re-set that's inevitable–it's a political and social re-set as well. For more on why this is so, please consult my short book Why Our Status Quo Failed and Is Beyond Reform.

    The charts below describe the key dynamics driving a system re-set. Earned income (wages) as a share of GDP has been falling for decades: this means labor is receiving a diminishing share of economic growth. Since costs and debt continue rising while incomes are declining or stagnating, this asymmetry eventually leads to insolvency.

    The "fix" for insolvency has been higher debt and debt-based spending–in essence, borrowing from future income to fund more consumption today. But each unit of new debt is generating less economic activity/growth. This is called diminishing returns: eventually the costs of servicing the additional debt exceed the increasingly trivial gains.

    What happens when the bubbles pop, despite massive central bank/state interventions? The entire socio-political/financial system goes through a "system re-set" in which all the fantasy-based valuations, political denials, false promises and fraudulent claims collapse in a heap.

    In a crisis, the privileged Elites will change the rules in a desperate attempt to expropriate the income and wealth of the bottom 99.5% to preserve their own power.

    The trick is to do so in ways that won't spark an immediate political insurrection.

    We can better understand their policy choices by asking: What's easy to expropriate, what's difficult to expropriate?

    Those assets that are easy to expropriate will be expropriated first. Those that are difficult to expropriate are far less likely to be grabbed, due to the high costs of expropriation and the high risks of sparking a political insurrection.

    History suggests the privileged Elites will pursue two basic strategies to expropriate the income and wealth of non-elites:

    1. They will expropriate what is easy to expropriate: financial assets in centralized institutions the state controls: banks, brokerage accounts, insurance policies, etc.

    2. They will use the time-honored "stealth expropriation" methods: inflation and taxes.

    Any "money" held in a centrally controlled institution can be expropriated overnight. The rules will change without warning, so there will be no opportunity to escape the system.

    Direct expropriation takes many forms. Your funds could be "bailed-in" (transferred to the bank). Large currency bills could be declared worthless. IRA and 401K accounts could be transferred into government bonds, to "protect the account owners from risky investments." (Naturally, any expropriation will be presented as "for your own good.")

    Or a new currency could be issued that strips away 90% of the purchasing power of the old currency. It could be a New Dollar, an SDR global currency, or a state-issued cryptocurrency. The point is to strip away 90% of the wealth held in the old currency.

    Indirect "stealth" expropriation has several forms: slow currency devaluation, also known as inflation, or higher taxes and junk fees (not called taxes, but you receive no additional value for the higher fees).

    The end result of these policies is you may receive the $2,000 monthly pension you were promised, but after inflation, currency devaluation and taxes, your real purchasing power is $100 in today's currency.

    So what's difficult to expropriate? I present some answers in my books An Unconventional Guide to Investing in Troubled Times and Get a Job, Build a Real Career and Defy a Bewildering Economy.

    It's impossible to expropriate one's skills, experience and social capital. These are intangible forms of capital and so they cannot be confiscated like gold, currency, land, etc.

    Land and homes are difficult to expropriate for two reasons: private property is the backbone of capitalism and democracy, and the state confiscating private property would very likely spark a political insurrection that would diminish or threaten the power and wealth of the privileged Elites.

    Secondly, it's very costly for the state to maintain the productive output of real property it has confiscated. Guards must be posted, sabotage repaired, and the immense difficulties of coercing a rebellious populace to continue working what they once owned for the benefit of the state and its privileged Elites must be solved and paid for.

    The state can expropriate farms, orchards and workshops for back taxes (or some similar extra-legal methodology), but how do you force people to work these properties productively?

    As a general rule, whatever the super-wealthy own will be protected from expropriation. Private real property is the foundation of the Elites' wealth, and while the land of debt-serfs may well be confiscated for back taxes (the wealthy will buy exemptions from rising taxes), those who own land and buildings free and clear constitute a political force to be reckoned with.

    As I discuss in my book Resistance, Revolution, Liberation: A Model for Positive Change, there's one other asset the state and its ruling Elites cannot expropriate: community.

    The state will also have difficulty confiscating assets that are outside its reach. This explains the propularity of owning assets in other nations, and the debate over cryptocurrencies: will states be able to confiscate all cryptocurrencie at will, or is that technically unfeasible?

    The main takeaway is this: your skills, knowledge and and social capital will emerge unscathed on the other side of the re-set wormhole. Land and real property you own free and clear (no debt) is likely to remain in your possession, as long as you can pay soaring taxes/junk fees during the crisis phase. Your financial assets held in centrally controlled institutions will not make it through unscathed; they are simply too easy for central authorities to expropriate.

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Today’s News 6th February 2017

  • Paul Craig Roberts Rages "The Leftwing Has Placed Itself In The Trash Can Of History"

    Authored by Paul Craig Roberts,

    At a time when the Western world desperately needs alternative voices to the neoliberals, the neoconservatives, the presstitutes and the Trump de-regulationists, there are none. The Western leftwing has gone insane.

    The voices being raised against Trump, who does need voices raised against him, are so hypocritical as to reflect less on Trump than on those with raised voices.

    Sharon Kelly McBride, speaking for Human Rights First, sent me an email saying that Trump stands on the wrong side of “America’s ideals” by his prohibition of Muslim immigrants into the US.

    My question to McBride is:

    Where were you and Human Rights First when the Bush/Cheney/Obama regime was murdering, maiming, orphaning, widowing, and displacing millions of Muslims in seven countries over the course of 4 presidential terms?

    Why is it OK to slaughter millions of peoples, destroy their homes and villages, wreck their cities as long as it is not Donald Trump who is doing it?

    Where does Human Rights First get off. Just another fake website, or is McBride seizing the opportunity to prostitute Human Rights First in hopes of donations from the DNC, the Soros’ NGOs, the Isreal Lobby, and the ruling One Percent?

    Money speaks, and alternative voices need money in order to speak.

    As so many Americans are indifferent to the quality of information that they get, many alternative voices are thrown back to relying on whatever money is available. Generally, it is the money of disinformation, of information that controls the explanations in ways that favor and enhance the ruling oligarchy. Is this the position in which McBride has placed Human Rights First?

    Turn now to Truthout. This website says that Trump is demonizing Muslims by denying them immigration into the US.

    Where has Truthout been for the past 16 years? Did Truthout not notice that the George W. Bush regime said “We have to kill them (Muslims) over there before they (Muslims) come over here.”

     

    Did Truthout not notice that Obama continued the policy of “killing them (Muslims) over there”?

    How insane, how corrupt, does Truthout have to be to say that it is Trump who is demonizing Muslims?

    Trump has not said that he wants to “kill them over there.” He has said that if the masses of peoples we have dislocated and whose families we have murdered want to come here, they might wish to exact revenge. Having made Muslims our enemies, it makes no sense to admit vast numbers of them.

    According to Bush and Obama, we are supposed “to kill them over there,” not bring them “over here” where they can kill us as a payback for the murder machine we have run against them.

    This is common sense. Yet, the deranged left says it is “racism.”

    What happens to a country when the alternative voice is even more stupid and corrupt than the government’s voice?

  • Media Turning On Itself: USAToday's Wolff Slams CNN's Stelter As "Ridiculous, Self-Righteous Figure"

    Amid the ever-increasing virtue-signaling fanaticism of the mainstream media in their incessant anti-Trump (so-called 'fact-checking') propaganda, it appears the infighting has begun. As The Hill reports, USA Today and Hollywood Reporter columnist Michael Wolff slammed CNN's Brian Stelter on his media affairs program Sunday, telling the host he was becoming "quite a ridiculous figure."

    With mainstream media credibility at record lows, The Hill points out that Wolff accused Stelter, in a recent Newsweek column, of delivering "a pious sermon about [Donald] Trump’s perfidiousness and nursing personal grudges."

    The 31-year-old "Reliable Sources" host asked Wolff if his style or substance was wrong in attempting to "fact-check the president."

    And then the fireworks began…

    "I think it is, and I mean this with truly no disrespect, but I think you can border on being sort of quite a ridiculous figure. It is not a good look, to repeatedly and self-righteously defend your own self-interest. The media should not be the story every week."

     

    "Every week in this religious sense, you make it the story," Wolff added. "We are not the story."

     

    "Isn't there room for one hour a week on CNN for this?" Stelter asked.

     

    "Listen, I love your show, but I wish every weekend you did not turn to the camera and lecture America about the virtues of the media and everyone trying to attack it. The media will be fine," Wolff  replied.

     

    "The media doesn't need defending?" Stelter followed.

     

    "The media doesn't need defending by the media," Wolff responded. "The New York Times front page looks like it's 1938 in Germany every day."

     

    "No it does not. Give me a break," retorted Stelter.

    Enjoy…

  • It's Time To Start Worrying About China Again

    One year ago, S&P futures would tumble the second a flashing red headline noted that things involving China, the Yuan, or the PBOC were not playing out as expected. One year later, the market has forgotten it ever cared about the world’s biggest debt bubble.

    However, the time may have come to once again start worrying about China.

    With China coming back from its week-long holidays last Friday, a very important event took place under the radar, and was largely missed by the broader investing public masked by the relentless noise out of Washington and the January payrolls report: China has resumed tightening. For those who missed it, here is a recap of what we said first thing on Friday:

    “this morning China announced an unexpected tightening of policy when it raised rates on 7, 14 and 28-day reverse repos by 10bps to 2.35%, 2.50% and 2.65% respectively. That’s the first increase in the 28-day contracts since 2015 and since 2013 for the other two tenors. Keep in mind that this is the first working day following the New Year holiday in China, so it seems to be a decent statement of intent by the PBoC.

     

    Additionally, the SLF rate was increased to 3.1 percent from 2.75 percent. The implicit tightening sent Chinese stocks lower, with the Shanghai Composite closing down 0.6%, and accelerating the selloff in Chinese 10Y government futures.

    While China’s first effective tightening in two years largely slipped between the market’s cracks, the press is starting to pay attention (“China’s central bank raised key interest rates in the money marketFriday, reinforcing a shift toward tightening monetary policy aimed atdeflating asset bubbles and reducing long-term financial risk.” MarketWatch, Feb 3; “China’s surprise increase in interest rates on medium-term loansweighed on bond prices. …Some traders were clearly rattled by China’s first-ever increase in interest rates for its medium-term lending facility (MLF) loans, which was seen as signaling that short-term funding costswill move higher eventually as authorities try to cool an explosive increase in debt.” Reuters, Jan 25).

    To be sure, Friday’s explicit tightening followed several similar implicit actions by the government, which has been flashing warnings it would tighten and/or engage in deleveraging to slow down China’s stupendous ascent toward 300% debt/GDP, including a sharp slowdown in government spending which has collapsed from 20% one year ago to only 8% Y/Y at the end of 2016, the first slowdown in home price acceleration in 19 consecutive months following Beijing eagerness to pop China’s housing bubble, the recent hike in auto sales taxes from 5% to 7.5%, and so on.

    China’s sudden tightening move, which according to many will end the single biggest catalyst for the global reflation/growth story of 2016, namely China’s dramatic debt-fueled growth impulse which in turn then spilled over to the rest of the world, has already been dubbed as “The Most Important Unnoticed Global Event” by the likes of Cornerstone.

    * * *

    And since China’s push to tighten financial is really that important, here again courtesy of Goldman, is a full recap of what happened, why it matters, and a breakdown of all the key Chinese acronyms to keep an eye on in the coming days as the PBOC is very likely to continue expanding its tightening bias into other monetary conduits.

    PBOC raised interest rates on key monetary operations, further reinforcing tightening bias

    On Friday, PBOC increased interest rates on OMOs (open market operations) by 10bp and on SLF (standing lending facility) by 10-35bp–shortly following the rise in interest rates on MLF (medium-term lending facility) less than two weeks ago. We believe that the PBOC will retain its tightening bias in the near term as the underlying financial-leverage and macroeconomic arguments for tightened monetary policy have largely remained.

    Main points:

    Daily OMOs have been a key PBOC tool to manage interbank liquidity conditions.

    The central bank on Friday increased the interest rates on reverse repo OMOs (liquidity injections) of 7/14/28-day tenors by 10bp (to 2.35%/2.50%/2.65%). The last time the PBOC raised OMO rates was more than two years ago in 2014.

    The PBOC also increased SLF rates on overnight/7-day/1-month tenors by 35bp/10bp/10bp (to 3.10%/3.35%/3.7%).

    SLF is collateralized lending by the PBOC to financial institutions which request funding (see Appendix table for key PBOC toolkit). SLF usage has been relatively small (e.g., in January, the turnover and outstanding balance of SLF were well below RMB 100bn, while those of OMOs were about 20 times larger at roughly RMB 2tn). But given that SLF is likely tapped only when the interbank funding conditions are particularly tight, the SLF rate increase should still matter for the marginal funding cost in the system. The asymmetrically large increase in the overnight SLF rate will likely be an encouragement for financial institutions to lengthen the maturity of their interbank funding (we estimate that small commercial banks’ interbank repo borrowing has an average maturity of only about 2 days).

    Media reports also suggest that the PBOC has increased SLF rates further by 100bp for those banks that fail Macro-prudential Assessment (MPA) requirements. This has not been confirmed by the PBOC, however. As background, the PBOC set up MPA at the beginning of 2016 through which the central bank may fine-tune each individual bank’s required reserve ratio (RRR) on a quarterly basis depending on its performance based on several prudential metrics (see here for further official details of MPA).

    The underlying financial-leverage and macroeconomic arguments for tightened monetary policy have largely remained. We continue to expect that the PBOC’s tightening bias will remain unless either i) there is a clearer deleveraging in the interbank funding market, and/or ii) economic activity slows materially.

    Appendix table: OMOs and SLF play different roles in PBOC’s policy toolkit

    PBOC toolkit

  • Trump To Push On With Voter Fraud Probe, Puts Mike Pence In Charge

    As if trying to prove MSNBC, which last week reported that “Trump’s campaign against imaginary voter fraud quietly fades“, wrong President Trump announced during an interview with Bill O’Reilly on Sunday that he would put Vice President Mike Pence in charge of a commission to probe what he believes was voter fraud in last November’s election, and which he says helped Hillary Clinton win the popular vote.

    “I’m going to set up a commission to be headed by Vice President Mike Pence and we’re going to look at it very, very carefully,” Trump told Fox News’s Bill O’Reilly.

    “Many people have come out and said I’m right, you know that,” Trump said. “Look, Bill, we can be babies, but you take a look at the registration, you have illegals, you have dead people you have this, it’s really a bad situation, it’s really bad,” he said.

    Previously, the Washington Post reported that Pence pledged to GOP lawmakers at the annual Republican retreat in Philadelphia that the administration would initiate a “full evaluation” of voting rolls nationwide.

    Trump’s plans for a “major investigation” into what he claims were fraudulent votes by as many as 3 million to 5 million illegal immigrants may not get too far without congressional funding, which may be an issue because already Senate Majority Leader Mitch McConnell (R-Ky.) has said he doesn’t want to spend federal funds on the investigation and leave it to state authorities. But Trump on Sunday stuck to his claim of massive voter fraud, which even Republicans on Capitol Hill have questioned while The New York Times has openly dismissed as an outright “lie.”

    Of course, many of Trump’s “ludicrous” statements have been discounted in the past, only to eventually be proven right.

    Trump said there is evidence of votes being attributed to dead people and of people voting in different states in the same election. He may be referring to the various Project Veritas videos which captured precisely that.

    Meanwhile, McConnell and other GOP leaders agree there is voter fraud but not on the scale claimed by Trump. “There is no evidence that it occurred in such a significant number that would have changed the presidential election,” he said on CNN’s “State of the Union” Sunday morning.

    That said, we eagerly look forward to the findings of the “Pence voter fraud commission.”

  • Why Is The New York Times Lying About Trump?

    Submitted by Scott McConnell via The Strategic Culture Foundation,

    Even amidst a cacophony of nearly nonstop media fusillades against President Trump, the New York Times’ charge has stood out. After months of stories presenting Donald Trump as a sexual predator, business fraudster, puppet of Vladimir Putin, tax dodger, walking emolument disaster and whatever else it can dream up, the New York Times called Trump a liar in a prominent headline—proclaiming “Meeting with Top Lawmakers, Trump Repeats an Election Lie.”

    Speaking in a closed door meeting with congressional leaders, Trump had apparently claimed that he would have won the popular vote were it not for the votes of millions of noncitizens. After escalating this bit of semi-private braggadocio into “a lie,” the Times justified itself three days later, explaining somberly that it had not made the charge lightly, but that it “ultimately chose more muscular terminology” instead of terms as “baseless” or “bogus” because, as editor Dean Baquet stated, Trump had made a similar assertion months ago in a tweet. “We should be letting people know in no uncertain terms that it’s untrue.” Times opinion columnists, who—with the notable exception of Ross Douthat—have for a year seemed to write about little else than how despicable Trump is, followed up, rolling around passionately with the L word. “Our president is a pathological liar. Say it. Write it. Never become inured to it,” wrote Charles Blow, in one instance among many.

    Of course President Trump doesn’t know how many people voted illegally, but, in a country where millions of undocumented immigrants are commonly accorded driver’s licenses, access to public benefits and other accoutrements of civic normalcy, and after President Obama gave a pre-election interview to Hispanic media in which he seemed, in lawyerly fashion, to minimize the legal consequences of voting illegally, all while urging higher turnout, it’s difficult to believe the number is nugatory.

    It clearly galls the new president that he lost the popular vote. So he repeats random speculations about voter fraud (though Rep. Steve King’s assessment of the extent of illegal voting strikes me as meriting serious examination) and inflates them. He does much the same thing in the even less essential question of the size of Trump’s inaugural crowd (plainly smaller than Obama’s in 2008). He does it in extolling the excellence of his very good golf courses. If one speculated about why Trump bothers, one might surmise that he thinks his supporters expect—and deserve—some pushback against a media determined, from the outset, to paint, as far as possible, his presidency as partially or wholly illegitimate.

    In other words, Trump did what politicians do routinely: take more credit than they deserve, make an unsubstantiated claim, stretch the truth. Trump probably does it a little more. And New York Times editors conclude that instead of being a so-what issue, or fodder for a Saturday Night Live skit, it should be elevated into a “lie” to serve as the “not my president” talking point of the week, until it is replaced by a new one. (It was replaced by Trump’s doubling down on a previous Obama order pausing admissions of refugees from certain Muslim-majority countries, a policy that went virtually unnoticed when Obama did it in 2011.) The increasingly interlocking alliance between the establishment media and the protest left is a new phenomenon, one that hasn’t been seen in America since the radical 1960s.

    When does a politician’s unsubstantiated statement merit being labeled a “lie”? The line between political misrepresentation and lying is not always a bright one. When, in 1988, Bob Dole accused George H. W. Bush of “lying about his record” (after taking a pounding from Bush’s attack ads in New Hampshire), the remark was taken as evidence of Dole’s hot temper, not Bush’s lack of veracity. When an official gives deliberately false or misleading testimony under oath before Congress, it is commonly deemed more serious, and if discovered has serious legal consequences. If the question is generally murky, one thing is clear: a casual and unsubstantiated political boast gets turned from a “so what” into a “lie” when the paper publishing it has fully internalized its role as part of the opposition.

    Yet one might have thought that, given its recent history, the Times would be more careful about making such claims. Twice in recent memory, the Times has felt the need to publicly acknowledge its failings to readers about matters regarding its journalistic mission, that is, about presenting a true picture of the world. The most recent (and more benign) came five days after the election, when in a letter to subscribers, publisher Arthur Sulzberger Jr. and executive editor Dean Baquet, vowed to “rededicate ourselves” to honest reporting, “striving always to understand and reflect all political perspectives and life experiences in the stories we bring to you.” It was a tacit admission that the Times had failed in its horserace reporting, which up until Election Day had emphasized stories like the frazzled and unprofessional nature of the Trump effort, in contrast to the finely honed Hillary ground game and the surging anti-Trump Latino vote. On election eve, Times “data-driven” estimates had placed Hillary’s chances of victory at 84 percent, but a Times reader would have been hard put to explain how there could be any doubt about the outcome at all, so missing were respectable arguments for Trump from the paper’s pages. The final pileup came on the morning after, when the headline acknowledging Trump’s victory seemed to parody the solipsism of the paper’s editors. “Democrats, Students, and Foreign Allies Face the Reality of the Trump Presidency.” The editors could not bring themselves to acknowledge that the nation’s voters had opted for fundamental change and upended an election scenario long assumed inevitable by bicoastal elites.

    In the interceding two months, some flashes of the Times’ pledges to cover the Trump phenomenon with more objectivity were apparent: one report on women who voted for Trump allowed them to speak in their own words, as did a recent story on voters who backed Trump’s immigration restrictions. But emphasis on “the lie” illustrates that in its present incarnation the Times is not going to reform itself. The paper’s reporters, editors and columnists—with a handful of exceptions—harbor a visceral hatred for Donald Trump and feel it their higher calling to act on their hate in everything they put in the paper. When it comes to Trump’s ties to Russia, the paper has acted upon the thinnest of evidence to lodge the most sweeping of claims against Trump. Is it lying, or just engaging in reckless hyperbole?

    However biased the Times’ Trump coverage, the consequences were mild compared to the paper’s record in the run-up to the Iraq War. In the year prior to the invasion of Iraq, the Times published numerous front-page “scoops” based primarily on fake facts leaked to its reporters from Iraqi defectors whose goal was to spur an invasion of Iraq. Judith Miller wrote several stories promoting disinformation from the notorious fabricator Ahmed Chalabi and others in his network; so, too, did the Times give credulous play to the most alarming (and incorrect) administration interpretations of Saddam’s effort to procure aluminum tubes. As some media analysts have pointed out, numerous voices in the intelligence and nonproliferation world doubted the claims reported in the Times scoops, and tried to warn the paper. The Times customarily ignored them, or buried skeptical voices in small paragraphs deep inside the paper.

    A year after the invasion, after no “weapons of mass destruction” had turned up, the Times acknowledged in an editor’s note that its coverage was “not as rigorous as it should have been.” It explained that “editors at several levels who should have been challenging reporters and pressing for more skepticism” failed to do so. In short, the Times had printed a great deal of what might fairly be called “fake news.”

    Unlike many political untruths, the Times’ false Iraq coverage was enormously consequential. As perhaps the principal voice of the liberal establishment, it played a critical role in persuading the leading Democrats to go along with the hawks in the Bush administration while marginalizing those who challenged the administration’s war plans. The results are all too tragically evident. The conflagration pushed by the Times has left the Middle East in havoc fourteen years later. Millions of people have been killed or displaced, vast refugee flows that threaten to destabilize close allies have been unleashed, hundreds of thousands of American veterans have been left permanently disabled. Given that its own lack of truthful reporting had an immeasurable and tragic real-life impact on the lives of tens of millions, one might have hoped the Times would be more circumspect about how it characterized Trump’s transparent and inconsequential boasts about the size of his Inauguration Day crowd or the degree of voter fraud. And if the president’s concerns about voter fraud are indeed baseless, it would be logical for the Times to support voter-identification measures that would render them moot.

    The bottom line is that if the Times is determined to create a new standard for what constitutes lying by a president, then the newspaper cannot exempt itself from that standard either. The Times, in other words, has been repeatedly lying for months about Trump and for years about other matters. Is that really a path that a paper that purports to contain “all the news fit to print” really wants to embark upon? Apparently so.

  • Extreme Vetting, But Not For Banks

    Authored by Matt Taibbi, originally posted at RollingStone.com,

    Donald Trump, the man who positioned himself as the common man's shield against Wall Street, signed a series of orders today calling for reviews or rollbacks of financial regulations. He did so after meeting with some friendly helpers.

    Here's how CNBC described the crowd of Wall Street CEOs Trump received, before he ordered a review of both the Dodd-Frank Act and the fiduciary rule requiring investment advisors to act in their clients' interests:

    "Trump also will meet at the White House with leading CEOs, including JPMorgan's Jamie Dimon, Blackstone's Steve Schwarzman, and BlackRock's Larry Fink."

    Leading the way for this assortment of populist heroes will be former Goldman honcho Gary Cohn, now Trump's chief economic advisor.

    Dimon, Schwarzman, Fink and Cohn collectively represent a rogues' gallery of the creeps most responsible for the 2008 crash. It would be hard to put together a group of people less sympathetic to the non-wealthy.

    Trump's approach to Wall Street is in sharp contrast to his tough-talking stances on terrorism. He talks a big game when slamming the door on penniless refugees, but curls up like a beach weakling around guys who have more money than he does.

    The two primary disasters in American history this century (if we're not counting Trump's election) have been 9/11 and the 2008 financial crisis, which cost 8.7 million people their jobs and may have destroyed as much as 45 percent of the world's wealth.

    The response to 9/11 we know: major military actions all over the world, plus a radical reshaping of our legal structure, with voters embracing warrantless surveillance, a suspension of habeas corpus, even torture.

    But the crisis response? Basically, we gave trillions of dollars to bail out the very actors who caused the mess. Now, with Trump's election, we've triumphantly put those same actors back in charge of non-policing themselves.

    In between, we passed a few weak-sauce rules designed to scale back some of the worst excesses. Those rules presumably will be tossed aside now.

    Trump's "extreme vetting" plan for immigrants and refugees is based upon a safety argument – i.e., that the smallest chance of a disaster justifies the most extreme measures. Infamously this week, administration spokesdunce Kellyanne Conway resorted to citing a disaster that never even happened – the "Bowling Green Massacre" – as a justification for the crazy visa policy.

    This makes Trump's embrace of the Mortgage Crash Dream Team as his advisory panel for how to make Wall Street run more smoothly all the more preposterous.

    The crisis was caused by the financial equivalent of open borders. Virtually no one was monitoring risk levels or credit worthiness at the world's biggest companies.

    The watchdogs who are supposed to be making sure the morons on Wall Street don't blow up the planet all failed: the compliance people within private companies, the so-called self-regulating organizations like the NYSE, and finally the government agencies like the OCC and the OTS.

    These companies are now so enormous that they can't keep track of their own positions. Also, in sharp contrast to the propaganda about what brainy people they all are, many of them lack even the most basic understanding of the potential consequences of deals they might be making.

    The leadership of AIG, for instance, basically had no clue how its derivatives portfolio worked, despite the fact that they had $79 billion worth of exposure. Similarly, then-CEO Chuck Prince of Citigroup told the Financial Crisis Inquiry Commission that a $40 billion mortgage position "would not in any way have excited my attention." Both companies ended up needing massive bailouts.

    Not only can they not keep track of their own books, they already blow off regulators whenever they get the chance. Take JPMorgan Chase's "London Whale" episode, in which some $6.2 billion in losses in one portfolio accumulated practically overnight. In that case, Dimon simply refused to give the federal regulators routine, required reports as to what was going on with his bank's positions, probably because he himself had no idea how big the hole was at the time.

    "Mr. Dimon said it was his decision whether to send the reports to the OCC," a regulator later told the Senate.

     

    This is the same Jamie Dimon about whom Trump said today, "There's nobody better to tell me about Dodd-Frank than Jamie Dimon, so thank you, Jamie."

    The enduring lesson of the financial crisis is that in markets as complex as this one, the most extreme danger is in opacity. The big problem is that these egomaniacal Wall Street titans want markets as opaque as possible.

    This is why they want to get rid of the fiduciary rule, because they don't think it's anyone's business if they choose to bet against their clients (as Cohn's Goldman famously did), or overcharge them, or otherwise screw them.

    They don't want to have to submit to even the most basic capital requirements, or be classified a systemically important company, or have to keep their depository businesses separate from their gambling businesses, or have to have a plan for dissolution if they melt down, or really deal with any intrusions at all.

    Trump – a man who doesn't want you to see what's going on underneath his hair, let alone in his books – naturally sympathizes with Wall Street's efforts to keep the markets opaque. The obvious conclusion is that these orders will eventually lead us back to ballooning risk, overheated markets (the NYSE is already soaring) and speculative bubbles.

    If we're very lucky, it won't crash soon. But can we at least put an end to the "drain the swamp" nonsense?

  • Visualizing The Shifting Income Distribution Of American Jobs

    When we talk about the money that the “average” American worker makes, we are usually referencing a “median” or “mean” income statistic. While this number can be useful in many different contexts, Visual Capitalist's Jeff Desjardins notes that it can also be extremely limiting. The reality is that there’s a very wide range of incomes out there, even within a particular type of industry. Some people can barely make ends meet, and others make millions of dollars more.

    To view income distribution through a wider lens, data visualization expert Nathan Yau has created an interactive chart that breaks down millions of data points into just 50 dots per industry. The dots are visualized on a scale from $0 to $200k+ and binned in $5,000 increments. Data is also adjusted for inflation.

    INCOME DISTRIBUTION BY INDUSTRY IN 1960

    Here’s a snapshot showing what income distribution looked like 57 years ago for a variety of broad industries:

    Generally speaking, many of the ranges are on the lower side of things and tend to have data points clustered around the “middle” of each distribution.

    INCOME DISTRIBUTION BY INDUSTRY IN 2014

    Fast forward to 2014, and nearly every income bracket has expanded out.

    In many of these professions, workers are now making more money – this is good news for the economy.

    The downside? There are two problems: (1) Higher inequality, and (2) Many of the new jobs created recently are on the lower end of the income spectrum.

    As you can see, top earning lawyers, engineers, or managers are able to climb up towards the tops of their brackets. A lucky few are able to make $200k+, which is far more than the vast majority of the workforce.

    However, workers in other industries like food preparation or healthcare support are not so lucky. Unfortunately, in these sectors, making a middle-class income is very difficult – and many people are bringing in less than $25k per year. Yet, it is in these types of sectors that we’ve seen the majority of “new jobs” appear over recent years.

    It makes it difficult for society to solve the income inequality problem when this is the case.

     

  • America's Relief Valve – Football And Orwell's 'Two Minutes Hate'

    Submitted by Eric Peters via EricPetersAutos.com,

    Strong passions can erupt in unpredictable ways.

    The government understands this – and desires that strong passions be diverted in a harmless – to the government – way.

    Enter the cultivated, culturally and socially enforced obsession with organized, mass spectacle sports.

    Fuuhhhhhtttttball especially but also the others.

    These games – a new one to keep people busy almost every day, year-round –  are not so much “bread and circuses,” as they are often called. They are the vivification of the fictional Two Minutes’ Hate in Orwell’s 1984. A means by which the passions – the frustrations and anger of men in particular – are diverted and dissipated.

    In order that they aren’t directed at anything important. 

    Such as the ever-increasing control exercised over men by the state.

    In red giant stage America, the average man has little meaningful control over his life. He does as he’s told – from driving the speed limit to paying “his” taxes. In the land of individuality, collectivism and conformity is the rule.

    He must Submit and Obey. He must never raise his voice to question authority.

    This stifling of independent action, punishment of deviation from any official orthodoxy and relentless suppression of independent judgment and self-reliance… this systematic thwarting of a normal man’s inclination to be a man. . .  well, the pressure builds.

    The movie, Falling Down, captured this brilliantly. Unfortunately for Michael Douglas’ character, he wasn’t interested in “the game.”

    The demand that men submit and obey is also hammered into today’s boys – usually by women.

    Orwell got one thing wrong. It is not Big Brother.

    It is Big Sister.

     

    Everywhere, there are short-haired, pants-suited termagants vested with power; the sort who in a better time would have been spinster librarians and generally harmless. Today they infect bureaucracies such as EPA and DOJ and many others besides.

    We encounter them at the doctor’s office and DMV.

    The beetle-like little men that Orwell described abound, too. But they tyranny of our times is not a masculine tyranny such as Stalin’s. Note that in the Soviet Union, people were still largely free to partake of petty vices such as booze and cigarettes. Soviet power didn’t limit the size of sodas or force people to wear seat belts. It enforced political conformity only.

    Maybe that’s why fuhhhhhhttttttball was never a big deal in the Soviet Union.

    America’s tyranny is the tyranny of the elementary school marm over grown up men.

     

    These days, a man can’t even paint his own house without first begging permission from the local Gertrud Schlotz-Klink. . . and if he doesn’t cut his grass when ordered or erects a shed unapproved…

    Threatening letters.

    Then a lien or some other encumbrance. Eventually, the thug scrum will come. So he learns to do what he’s told.

    The rage boils but silently; it must have an outlet.

    Enter the game.

    He is empowered! On Sunday, he can be bellow like a rutting Cape Buffalo as his team takes the field. He basks in the reflected glory of their victory. He merges with the crowd, it overtakes him. Becomes him.

    He is a member of the community of men once more.

    Garish flappy pennants festoon his vehicles.

    This, of course, being not only allowed but encouraged by the government.

    And when “we” lose the game, our cuckolded American sports worshipper is demoralized and dejected – sometimes, for days on end. He feels great disappointment.

    He is angry.

    But in a way utterly harmless to the government.

    He seethes, he yells, he shakes his fist . . . at the enemy team on the screen.

    Never at the true enemy. . .  .

    Axiom: The more hopeless a society is, the more under the thumb of the government-corporate nexus, the greater the adulation of professional sports teams and the deification of athletes. It is a kind of sweaty lottery – a means of dangling desperate hopes before hopeless people who might become dangerous if it ever occurred to them that there is no hope for them.

    But hey – did you see that tackle?

    The most loathsome dog torturing thug, outright rapists and murderers… beloved and forgiven, so long as they can run and throw or catch.

    Always “the game.” Tonight’s. Yesterday’s. Tomorrow’s. An endless obsession with irrelevance.

    Enstupidation accelerates.

     

    It has been said that religion is the opiate of the masses. But religions center on values – and so, upon philosophy.

    In other words, on things that matter.

    The game does not matter.

    All the natural, healthy emotions – including most especially anger – are adroitly redirected. Instead of being furious about constantly being required to disprove his alleged guilt, about having to submit to random, probable cause-free searches and such like by an increasingly tyrannical state, about being micromanaged and taxed and never, ever left in peace . . . the gelded, stoop-shouldered creature sitting in front of his TeeVeee is apopletic  about that “bad call,” that the “we” weren’t able to convert on third and long.

    He is a fan – truly, in the actual derivation of that word. A fanatic  – about things properly the concern of children and the feeble minded.

    Just what’s needed, from a certain point of view.

     

  • Has Trump – Who Ran On an Anti-War Platform – Already Sold Out to the Warmongers … Or Is He Just Playing for Leverage?

    Conservative Patrick Buchanan – who endorsed Trump for president – writes:

    High among the reasons that many supported Trump was his understanding that George W. Bush blundered horribly in launching an unprovoked and unnecessary war on Iraq.

    ***

    Unlike the other candidates, Trump seemed to recognize this.

    Trump's anti-war, anti-interventionist statements appealed to many Americans.  Indeed, quite a few Sanders supporters switched to Trump (or stayed home on election day) because of Trump's anti-war promises … and Clinton's record as a warmonger.

    Buchanan expresses disappointment that Trump is already saber-rattling:

    It was thought he would disengage us from these wars, not rattle a saber at an Iran that is three times the size of Iraq and has as its primary weapons supplier and partner Vladimir Putin’s Russia.

    Former long-time Congressman Ron Paul notes that Trump has already engaged in bombings in Yemen:

    Andrew Spannaus notes:

    The early Trump administration has sent mixed signals regarding relations with Russia. Trump’s initial comments indicated that the U.S. would seek a diplomatic deal to reduce tensions around Ukraine, including by potentially recognizing the pro-Russian referendum in Crimea, in exchange for a broader deal with Russia involving cooperation against terrorism or nuclear arms reduction. However, Trump’s United Nations Ambassador Nikki Haley on Thursday vowed to continue sanctions against Russia until it surrendered Crimea.

    Brandon Turbeville says, "The new boss is now starting to look extremely similar to the old boss."  Turbeville also points out that Trump appears to be mucking about in Syria.

    And since Trump took the helm, war with China is looking increasingly likely.

    So it's starting to look like – despite his promises of being an anti-war non-interventionist – Trump will be a warmonger.

    I hope I'm wrong … and that Trump is just playing the unpredictable madman to gain negotiating leverage with foreign powers.

    Conservative Michael Rivero – a smart guy – notes:

    I too am alarmed by Trump's rhetoric.

     

    But there are two factors to consider.

     

    The first is that Trump is still trying to win Senate confirmation for his nominees, and Trump and the Nominees may be saying what they know the Warmongers in the Senate (like McCain and Graham) want to hear. What Trump does after the confirmations will be telling.

     

    Second, if you read Trump's book, "The Art of the Deal", he writes that the opening bid in any negotiation should be very aggressive, far beyond reasonable, then let the counterparty negotiate back to what you actually wanted in the first place. That tactic served him well in business and he may well be using it here with Russia, China, and Iran.

     

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Today’s News 5th February 2017

  • "Is Trump About To Cause Another Crisis?": 2008 Could Be Eclipsed As Bank Restrictions Eliminated

    Submitted by Mac Slavo via SHTFPlan.com,

    Beware of what may be coming next. We already know the establishment has a plan to blame President Trump for the next financial crisis, and now there are moves being made that will support that narrative.

    After the 2008 fiasco, a spotlight on Wall Street misbehavior and some weak, but better-than-nothing regulations were put on the industry in the hopes of preventing another string of bank failures and crippling economic disasters.

    But as the system teeters on edge and prepares to endure the backlash of increased rates at the Fed, Trump is also taking off the shackles that have been put in place by the Dodd-Frank Act which instituted certain protections for consumers, including a requirement that pensioners don’t have their nest egg devoured, etc.

    For the tens of millions of baby boomer retirees and aging pensioners, the social security net is all they’ve got to count on, apart from a few debt-saddled kids who have hardly been able to save a dime under eight years of Obama.

    The 2008 economic crisis penalized everyone with an entire cycle of wage freezes, job starvation and crushing dependence upon government programs for assistance. Wall Street, and the banker class at large were spared from blame or reparations to a society that was robbed blind. Instead, eight years of quantitative easing sent a tidal wave of easy money to the financial sector that created a gorge of asset buy-up from the top – especially in housing, where soaring rates are forcing single households to become renters instead of mortgage debt-slave owners once again.

    The election of President Trump created optimism about our collective financial prospects – with seemingly tangible promises of bringing home jobs and returning to American Greatness™. But the banksters also cheered his election; stock markets shot upwards in celebration. Key positions in the White House were offered to Goldman Sachs men and others of their ilk.

    Now, President Trump has issued an executive order that has Wall Street once again self-congratulating for backing the right man. The order is expected to gut protections that currently require financial products sellers

    As the London Independent reports:

    Donald Trump is expected to order a review of the Dodd-Frank Act, which was implemented in the aftermath of the 2008 financial crisis to prevent a repeat of the worst financial crash since the Great Depression.

     

    […] council has the right to break up banks that it thinks could pose a systemic risk to the global financial order. It also has the ability to demand that banks hold higher reserves, or cash buffers, to minimise a squeeze. Separately, the Dodd-Frank Act also created the Consumer Financial Protection Bureau, to oversee consumer financial products, such as mortgages.

     

    A key part of the Act is the Volcker Rule, which restricts the way that banks are allowed to invest and places restrictions on speculative trading. It also restricts banks from engaging in so-called proprietary trading, or trading for the firm’s direct gain, instead of on behalf of a client.

     

    So in effect, the rule is designed to separate the investment and commercial businesses of banks.

    It seems clear enough that this move benefits many of those at the top of the pyramid, but a Bloomberg report directly quoting from senior leadership on Wall Street, and now inside the Trump Administration, makes crystal clear that the intentions are quite self-interested:

    Chief executives including Goldman Sachs Group Inc.’s Lloyd Blankfein and JPMorgan Chase & Co.’s Jamie Dimon have been pushing for changes for years, arguing that the industry has been too constrained by the system put in place by the 2010 Dodd-Frank Act. After Trump focused on limiting trade and immigration during his first two weeks in office — policies opposed by many in the financial industry — the president’s stroke of a pen unleashes a process to undo many of the rules they find most irksome.

     

    “We’re going to attack all aspects of Dodd-Frank,” Gary Cohn, director of the White House National Economic Council, said Friday in an interview with Bloomberg Television. “We are going to engage the House, we’re going to engage the Senate. They are equally interested in reforming some of the regulatory processes as well. We can do quite a bit without them, but the more help we get from Congress the better off we’re all going to be.”

    Not necessarily the brightest news for the people.

    Though it isn’t immediately obvious that this change in the rules would cause immediate trouble, there is reason for concern. If the limitations – inadequate as they were – are lifted off the banks, specifically with investing in commercial banking and with pensions, things could once again take a turn for the worse.

    If the same reckless behavior is repeated, it could not only bring the system to a halt, and crash the stock market, but it could potentially wipe out the holdings of those who need it most – pensioners.

    Meanwhile, defaults and the burden of a debt-supercycle are also threatening to topple the system. One way or another, the next era will have to handle enormous risk of total economic crisis.

    As the Independent notes:

    Does this mean we’re at risk of facing another financial crisis? Some economists have even been bold enough to say that getting rid of Dodd-Frank could indeed pave the way for another crisis.

     

    What makes matters a lot worse, is that many experts believe that global financial systems and economies are more vulnerable now than they were ahead of the last financial crisis. So if we do suffer another major crash, the damage has the potential to be a lot more grave.

     

    Central banks around the world have already slashed interest rates to record lows leaving them with limited ammunition to do more to stimulate economic growth. Government debt has also sky rocketed over the decade since the last crisis.

    Whatever comes next, there is a toxic cycle that is waiting to crash down upon us with a tsunami of financial misfortune.

    Federal Reserve policies in the wake of the last crisis set up the American people for a very bad fall. Economic vibrancy among the middle class and general population has been sucked dry, and they will be ill prepared to handle a new crunch in credit and possible hyper inflationary/deflationary crisis.

    Trump’s pro-business, pro-American policies may help if they are instituted correctly, but enabling the financial sector to once again prey upon people and fuel the rise-and-collapse of a massive series of bubbles and a derivatives WMD is not a healthy option.

    The stage has been set for a nightmare that we must pray never comes.

  • "Davos Man Is Dead" – Trump's EU Ambassador Slams Out Of Touch Elites

    As prominent MEPs are slamming US President Donald Trump's choice for ambassador to Brussels, RT’s Afshin Rattansi sat down with Ted Malloch for his personal views on the matter.

    RT: The EU parliament is somehow trying to veto your appointment as the next ambassador to the European Union. What is your reaction?

    Ted MallochThey must not have got the notice that Donald Trump won the American election. Of course, ambassadors are chosen by their home countries to represent those countries and those national interests in foreign capitals, in this case, in Brussels.

    RT: Is it symptomatic of the fact that European politicians don’t really understand their power relations with Washington?

    TM: I think there is some sense of that. But there is also an inkling, particularly in some leftist political circles in Europe, to wish Trump away or to think that in four years they might have Obama back or basically to call me things like ‘malevolent’  which actually requires a theory of ‘good and evil,’ which they don’t have.

    RT: How out of touch are elites continuing to be in European capitals and the MSM when it comes to Trump?

    TMI don’t think it is just Europe. It is certainly the case around the world. The Davos Man is dead. We had the Davos World Economic Forum the other week and of course they had a lot of has-beens there. The keynote speakers were all people who were leaving office, for example, US Secretary of State John Kerry. Xi Jinping was their poster boy for globalization, and in effect, China has been a beneficiary of globalization. The 300 million jobs that were created in China was a significant economic fact, but lots of those jobs were taken out of the hallowed places of Western Europe and Middle America.

    RT: In the diplomatic world, Britain’s ambassador to Washington, Sir Kim Darroch, believes that “Trump inexperience will be able to be exploited by the UK.” Wise for Britain to have a diplomat there that thinks like that? 

    TM: Good luck. Of course, facetiously, Donald Trump suggested that someone else be the ambassador to the UK, obviously that didn’t come to fruition and wasn’t going to happen. Everyone underestimated Donald Trump this entire past year and a half. Seventeen political candidates and Republican primaries, Hillary Clinton, the most experienced, seasoned pro in American politics – what happened to all of them?

     

  • Gorsuch May Not Shift The Balance Of Power On The Supreme Court As Much As You Think

    Submitted by Michael Snyder via The Economic Collapse blog,

    On Tuesday, President Trump announced that he would nominate Neil Gorsuch to fill the open seat on the U.S. Supreme Court.  Gorsuch currently serves on the 10th U.S. Circuit Court of Appeals in Denver, and he was confirmed unanimously by the Senate when he was appointed to that position by President George W. Bush in 2006.  Gorsuch appears to have some strong similarities to Antonin Scalia, and many conservatives are hoping that when Gorsuch fills Scalia’s seat that it will represent a shift in the balance of power on the Supreme Court.  Because for almost a year, the court has been operating with only eight justices.  Four of them were nominated by Republican presidents and four of them were nominated by Democrats, and so many Republicans are anticipating that there will now be a Supreme Court majority for conservatives.

    Unfortunately, things are not that simple, because a couple of the “conservative” justices are not actually very conservative at all.

    For example, it is important to remember that Scalia was still on the court when the Supreme Court decision that forced all 50 states to legalize gay marriage was decided.  Justice Anthony Kennedy joined the four liberal justices in a majority opinion that Scalia harshly criticized.  So with Gorsuch on the court, that case would still have been decided the exact same way.

    Sadly, even though Kennedy was nominated by Ronald Reagan, he has turned out to be quite liberal.  In the past, not nearly enough scrutiny was given to justices that were nominated by Republican presidents, and a few of them have turned out to be total disasters.

    And let us also remember that Scalia was still on the court when the big Obamacare case was decided.  Chief Justice John Roberts joined the four liberal justices in a decision that was perhaps one of the most bizarre in the modern history of the U.S. Supreme Court.

    For some reason, Justice Roberts was determined to preserve Obamacare, and if you read what he wrote it is some of the most twisted legal reasoning that I have ever come across.

    As someone that was once part of the legal world, let me let you in on a little secret.  Most judges simply do whatever they feel like doing, and then they will try to find a way to justify their decisions.  So if you ever find yourself in court, you should pray that you will get a judge that is sympathetic to your cause.

    Fortunately, Gorsuch appears to be one of the rare breed of judges that actually cares what the U.S. Constitution and our laws have to say.  In that respect, he is very much like Scalia

    Gorsuch is seen by analysts as a jurist similar to Scalia, who died on Feb. 13, 2016. Scalia, praised by Gorsuch as “a lion of the law,” was known not only for his hard-line conservatism but for interpreting the U.S. Constitution based on what he considered its original meaning, and laws as written by legislators. Like Scalia, Gorsuch is known for sharp writing skills.

     

    “It is the role of judges to apply, not alter, the work of the people’s representatives,” Gorsuch said on Tuesday at the White House event announcing the nomination in remarks that echoed Scalia’s views.

    One of the most high profile cases that Gorsuch was involved with came in 2013.  That was the famous “Hobby Lobby case”, and it represented a key turning point in the fight for religious freedom.  The following comes from CNN

    In 2013, he joined in an opinion by the full Court of Appeals holding that federal law prohibited the Department of Health and Human Services from requiring closely-held, for-profit secular corporations to provide contraceptive coverage as part of their employer-sponsored health insurance plans.

     

    And although a narrowly divided 5-4 Supreme Court would endorse that view (and affirm the 10th Circuit) the following year, Gorsuch wrote that he would have gone even further, and allowed not just the corporations, but the individual owners, to challenge the mandate.

    Donald Trump said that he wanted a conservative judge in the mold of Scalia, but I think that he was also looking for someone that he could get through the Senate.

    And considering the fact that Gorsuch was confirmed unanimously by the Senate in 2006 will make it quite difficult for Democrats to block him now.  Gorsuch has tremendous academic and professional credentials, and he will probably have a smoother road to confirmation than someone like appeals court judge William Pryor would

    Trump may have favored Gorsuch for the job in hopes of a smoother confirmation process than for other potential candidates such as appeals court judge William Pryor, who has called the 1973 Supreme Court ruling legalizing abortion “the worst abomination of constitutional law in our history.”

    But Pryor is still reportedly on the short list for the next spot on the Supreme Court that opens up, and by then the rancor in the Senate may have died down.

    If Gorsuch is confirmed, what will this mean for some of the most important moral issues of our time?

    As for abortion, even if Gorsuch is confirmed I do not believe that the votes are there to overturn Roe v. Wade.  But if Trump is able to nominate a couple more Supreme Court justices that could change.

    But even if Roe v. Wade is overturned, it would not suddenly make abortion illegal.  Instead, all 50 states would then be free to make their own laws regarding abortion, and a solid majority of the states would continue to keep it legal.

    The analysis is similar when we look at gay marriage.  If the Supreme Court decision legalizing gay marriage in all 50 states was overturned, each state would get to decide whether gay marriage should be legal or not for their own citizens.  And just like with abortion, it is likely that only a limited number of states would end up banning gay marriage.

    So the nomination of Neil Gorsuch to the Supreme Court appears to be a positive step, but it does not mean that we are going to see dramatic change when it comes to issues such as abortion or gay marriage any time soon.

    But at least Gorsuch can help stop the relentless march of the progressive agenda through our court system.  So in the end we may not make that much progress for right now, but at least the liberals won’t either.

  • TEPCO Admits Fukushima Radiation Levels Reach Record Highs As Hole In Reactor Discovered

    With just 3 years left until the 2020 Olympics, Japan is likely desperate to reassure the world's athletes that all is well, but an admission from TEPCO – the Fukushima nuclear plant operator – that they discovered a hole at least one square meter in size beneath the reactor's pressure vessel, and lethal record-high radiation levels have been detected, will not likely reassure anyone.

    Radiation levels of up to 530 Sieverts per hour were detected inside an inactive Reactor 2 at the Fukushima Daiichi nuclear complex damaged during the 2011 earthquake and tsunami catastrophe, Japanese media reported on Thursday citing the plant operator, Tokyo Electric Power Company (TEPCO). A dose of about 8 Sieverts is considered incurable and fatal.

    As RT reports, a hole of no less than one square meter in size has also been discovered beneath the reactor's pressure vessel, TEPCO said. According to researchers, the apparent opening in the metal grating of one of three reactors that had melted down in 2011, is believed to be have been caused by melted nuclear fuel that fell through the vessel.

    The iron scaffolding has a melting point of 1500 degrees, TEPCO said, explaining that there is a possibility the fuel debris has fallen onto it and burnt the hole. Such fuel debris have been discovered on equipment at the bottom of the pressure vessel just above the hole, it added.

     

    The latest findings were released after a recent camera probe inside the reactor, TEPCO said. Using a remote-controlled camera fitted on a long pipe, scientists managed to get images of hard-to-reach places where residual nuclear material remained. The substance there is so toxic that even specially-made robots designed to probe the underwater depths beneath the power plant have previously crumbled and shut down.

     

    However, TEPCO still plans to launch further more detailed assessments at the damaged nuclear facility with the help of self-propelled robots.

    TEPCO confirmed a black lump in the space beneath the pressure vessel. There is a possibility of nuclear fuel melting down (fuel debris). If it is fuel debris, it will be the first time that fuel melted down will be taken after the Fukushima Daiichi nuclear accident.

  • The Market Wizard's Wizard – An Interview With Jack Schwager

    Submitted by Erico Matias Tavares via Sinclair & Co.,

    Mr. Schwager is a recognized industry expert in futures and hedge funds and the author of a number of widely acclaimed financial books. He is one of the founders of FundSeeder, a platform designed to find undiscovered trading talent worldwide and connect unknown successful traders with sources of investment capital. Previously, Mr. Schwager was a partner in the Fortune Group (2001-2010), a London-based hedge fund advisory firm. His prior experience also includes 22 years as Director of Futures research for some of Wall Street’s leading firms, most recently Prudential Securities.

    Mr. Schwager has written extensively on the futures industry and great traders in all financial markets. He is perhaps best known for his best-selling series of interviews with the greatest hedge fund managers of the last three decades: Market Wizards (1989, 2012), The New Market Wizards (1992), Stock Market Wizards (2001), Hedge Fund Market Wizards (2012), and The Little Book of Market Wizards (2014). His other books include Market Sense and Nonsense (2012), a compendium of investment misconceptions, and the three-volume series, Schwager on Futures, consisting of Fundamental Analysis (1995), Technical Analysis (1996), and Managed Trading (1996). He is also the author of Getting Started in Technical Analysis (1999), part of John Wiley’s popular Getting Started series.

    E Tavares: Jack it is a pleasure and an honor to be speaking with you today. You are a reference, even sort of like a guru for us in the futures / commodities industry. Throughout your work – and we read much of it – you seem to have a slight preference for trading futures over stocks and bonds. Is that right, and if so why?

    J Schwager: That’s absolutely true. First of all, I got into the industry as a commodities analyst. There were no financial futures, which now dominate the markets, in those days. Two years as an analyst then 22 years as director of futures research for several firms, with several years designing trading systems along the way. Much of that continues in different shapes and forms, so the bulk of my professional career has been in futures. That’s the primary reason for me.

    The stock trading that I do has been sporadic. It’s very different from my futures trading, which basically consists of trades with stops to control risk. In stocks I will be much more contrarian, looking to buy things when they have been out of favor, at low or pummeled prices. Not because I know much about the underlying fundamentals, just that it’s a type of business where I believe the long-term downside is very limited irrespective of the technical/price chart patterns, and there is much more upside than downside.

    For example, in late 2008 I had no idea when the whole collapse in the equity markets would end but it seemed to be the classic panic. So I looked to buy very long-term out of the money LEAPS (call options) in things that were totally crushed, like FXI (China ETF) or XME (Metals & Mining ETF). They were trading so low that it was unlikely they would lose much more value from there. I did not have any stops even if the whole thing went to zero so it is quite a different way of trading from futures.

    In fact it’s a complete 180 degrees different. For me futures is more like trading and stocks is more contrarian, long-term investing…

    ET: … like value investing?

    JS: Sort of, although I don’t do all the related fundamental work. That’s not my forte. But I look at things like prices hitting fifteen, twenty years lows, it’s a pure panic, commodities will not go out of favor, China and India will continue to grow, and so forth. So it makes sense to buy now and put it away for a few years. And if it goes to zero it goes to zero.

    If XME goes from 50 to 12, it can go anywhere but I figure that at 12 it probably will not go much lower, but not because I have done any fundamental work.

    ET: You just published a new edition of A Complete Guide to the Futures Market, which we can’t recommend enough. The first edition came out in 1984 and was already considered to be a seminal book on the subject. What prompted you to write a second edition more than thirty years later? Is it because the markets have fundamentally changed and as such the materials needed an update?

    JS: No, the catalyst was the publisher! They bugged me throughout the 1990s to do an update and I finally balked once they threatened to get somebody else to do it. Once I got started I ended up turning it into three volumes and 1800 pages.

    Then they wanted another update but just in a single volume. I finally agreed but at that point started working with a co-author that I respect a great deal, and just went over his revisions. The original 1984 book was still relevant; in fact without wanting to sound immodest it was very good. I thought I did a good job the first time around. However, today nobody is going to read a book that is over 30 years old. I thought it was a shame to let it go by the wayside when ninety percent of it was still pertinent and the rest could be easily updated.

    There were no real meaningful changes to the first edition other than market updates, expansions in some topics and contractions in others. There were no analytical approaches that I thought were wrong now. Actually, hardly anything of substance needed to change.

    So the book was still pertinent, it just needed to be revised and updated and a new edition was necessary to bring it to the attention of a new readership.

    ET: Picking up on the analytics point, markets do evolve over time right? As such systems need to adapt. Perhaps a good example might be the famed Turtles system, which supposedly produced many millionaires almost a generation ago, but seems to be much less applicable today. Do these market changes prompt you to revise your techniques from time to time?

    JS: That’s absolutely true but in the original book, while I did not cover the Turtle system per se, I did talk about broader trend following systems which are still applicable today. Back in the 1970s and 1980s these systems used to work extremely well but as more and more people started to use them they lost their efficacy, like anything else.

    However, my approach in the whole book was not to say “this works absolutely”. Instead, I explained why a system worked. If you are going to do systems development you need to strictly avoid hindsight otherwise the results will be meaningless. All of that is still pertinent today. The systems I presented then worked, but I chose them primarily for illustration purposes.

    When you get down to the particulars, like the exact signals, you are quite right – these tend to change over time. You have to be willing to adapt as a result. What doesn’t change is the appropriate methodology for developing, testing and implementing systems. What also remains true is the types of inputs that you might use. Yes, markets change but the broad principles and methodologies to me did not seem like they needed a lot of change.

    That’s on the technical side. It’s really the fundamental approaches that changed the most because markets tend to go through these structural changes and such fundamental models can quickly lose their efficacy.

    ET: Related to that, perhaps as an effort to keep traders aligned with the evolution of the market one of the sections of your book covers the development of systems for futures trading, an area that attracts a lot of interest these days, since most people now have access to enough computing power and market data to do all sorts of analyses.

    However, when retail traders go into the market they are up against hyper sophisticated funds which most likely have examined all profitable combinations ahead of everyone else. Some can even execute trades much faster. So how can those retail traders have any chance of competing successfully in the market, meaning being consistently profitable over time? Are there areas like picking longer timeframes, higher risk tolerance and so forth that can give them an edge over the big players?

    JS: You are probably talking about a sophisticated retail trader, someone who has experience and know what they are doing, meaning having an edge and a methodology with good risk management. In other words, someone who has a reason to be trading which in my opinion excludes the majority of people, who don’t have any of that. They are better off not trading at all.

    In that sense, how does such a trader compete against the super firms with not only tremendous computing power but also teams of PhDs? You can’t beat the likes of Renaissance and DE Shaw at their own game. They are using super sophisticated and effective quant strategies. You can’t do it that way.

    But the retail trader may have an approach that works. There are so many different possibilities and combinations that people can still come up with something that works. This is very possible although much more difficult compared to the 1980s for instance, let alone the 1970s.

    The other distinction I would make is between systematic and discretionary trading. It is probably more difficult for a retail trader to excel using a systematic approach but I think a large percentage of them would fall under the category of discretionary. That’s where I think there still is quite a bit of room to be profitable with reasonable risk control.

    Let’s say that a trader is making discretionary decisions based on charts. You can program some patterns, like a breakout or even a more complicated head & shoulders formation, test a mechanical approach based on that and you will probably come up with something that is not that great. However, the human mind is actually extremely good at finding patterns, to the point where certain people who have a particular skill in noticing them – especially at the subconscious level through intuition – are able to use them as a signal that would otherwise be missed in a pure mechanical system.

    In that sense, as an example, it’s not that the market is forming a flag pattern, but rather that it is forming that pattern in a broader context with some other chart features that improves your edge. Then you go in with a stop to control your risk, and you can very much compete against the big funds with that approach.

    Also, the retail trader has one big advantage over the big funds and that is size. It is a lot easier to trade and put in stops when you are trading small size as opposed to when you are trading billions or even hundreds of millions of dollars.

    ET: What about timeframes? It seems longer is better for the smaller investor.

    JS: Not necessarily. That depends on the individual methodology of each trader. However, if you are thinking in terms of conventional things like trend following, then you are correct.

    I think I had in the original edition of the book, but is certainly there in the current edition, the concept that longer trends are more reliable. In other words, longer term crossovers perform better than shorter term ones. And there’s a very good reason for that: they are very difficult to trade. Markets tend to punish traders who employ easier approaches and reward those willing to suffer some pain.

    The idea is that yes, when you use a long term approach it is true that you are getting in much later on a trend and you also surrender a much larger portion of open profits when you are right – and not many people are willing to go there since both are painful things. However, it is also true that shorter term systems give you so many back and forth whipsaws – and you can test this empirically over time like I did – that on balance you are worse off. Those whipsaws more than offset the larger gains from getting in earlier and the smaller surrender of profits from getting out earlier.

    In that sense trading over a longer horizon has more efficacy, but emotionally it is a very difficult thing to do.

    ET: In the book you describe in detail various trading approaches, including technical and fundamental. And while expressing some preference for the former you suggest that it is up to traders to find what works for them. This is a crucial point that is often forgotten.

    JS: When I give talks about trading and lessons from Market Wizards one of the foremost points I make, maybe the first point about what you should do, is the need to find an approach that works for you. That’s going to be different for everybody. So many people don’t realize that. They try to chase the best methodology or learn from somebody else.

    It’s like you can have the most expensive suit but if it’s from someone who is not your size you will not look good in it. It’s much better to have a cheaper suit that fits you. It’s the same thing with trading. You can’t make someone else’s trading methodology work for you. Everybody has their own skills, preferences, biases, emotional strengths and weaknesses and all those traits suggest having a different approach for each person.

    This is matter of trial and error and being conscious of what seems to work, what you are comfortable with, what you believe and so forth. Some people should use just technical, other just fundamentals and others a combination of the two. I can’t really tell anybody what would work for them – that's a question only they can answer.

    ET: What really moves the markets in your opinion? Some people say it’s just a random walk, a coin flip, and so impossible to make money since it is very hard to figure out if the next flip will be heads or tails. Others say there is a hidden structure, at least during certain time periods, and with enough education and determination you might be able to figure it out. Who is right?

    JS: If the random walkers are correct, all market participants are wasting their time because you can only make money if you are lucky. It also means that I wrote four Market Wizard books about a bunch of very lucky people. There are many reasons as to why there is something else at play. In fact, I wrote a whole chapter on this in another book, Market Sense and Nonsense, debunking the random walk theory.

    Now, the markets behave like they are random or have a lot of randomness to them. That part is true. But what is generally wrong about the random walk theory is that, first of all, the idea that everything is discounted and fully reflected in the price at all times, and therefore nobody can make money, is demonstrably false.

    I’ll give you a recent example, in addition to the many I outlined in that chapter. It’s one of my favorites and it’s from a recent talk by Richard Thaler, the renowned behavioral economist. There is a closed end fund with the ticker CUBA (like the Caribbean island), which like most closed end funds usually trades at a 15-20% discount to the value of the basket of securities that compose it. And then in one day all of the sudden it skyrocketed up to a 70% PREMIUM. What could have happened?

    Well, President Obama had just given a speech that he would normalize relations with Cuba. Now, CUBA did not hold any Cuban securities for two reasons: 1) there were no Cuban companies to invest in; and 2) even if there were it would have been illegal to do so. It did hold some South American companies, but nothing directly in Cuba!

    So you had this huge change in one day in the price of the fund when none of its securities were directly affected by the catalyst causing the price surge. And of course a couple of days later the price went back to the prior levels.

    There are so many other examples. Take the internet bubble. You have this sixfold share price rise in one and a half years then back to the original prices in one and half years. But there were no major news developments that satisfactorily explained the moves in either direction. During the advance, there was a market euphoria and a buying-at-any-price mentality because people were afraid of missing the bull market. Then the music stopped and everybody is looking for a chair and there are no more chairs around. Once the buying fever broke, prices collapsed because the gains were never justified in the first place.

    And the random walk theory is wrong because it misses a tremendously essential component of the markets and that is human emotion. It does not play a major role all the time, but when it does it can cause massive dislocations.

    However, it doesn’t mean it’s simple. The irony is that while I believe the efficient market hypothesis is wrong, it is still very difficult to beat the markets. In early 1999 you could have said that the market was experiencing a bubble and that one should go short, and you would have been absolutely right. But when the market finally topped out in March 2000, you could have gone bust by then. So you can have markets be non-random and yet be very difficult to beat. And that is what fools many people into believing that they are random.

    It’s also a fault in logic. The converse of a true statement is not necessarily true. You can say that because markets are random they are difficult to beat. However, the converse – markets are difficult to beat and therefore the markets are random – is a flaw in logic. It is true that all polar bears are white mammals, but not all white mammals are polar bears.

    ET: Over the years you have interviewed the best in the business, the Market Wizards. These guys are truly amazing but there is one question that has always intrigued us, appreciating how hard it is to make it in the markets, as you just described. How can you truly distinguish luck from excellence, since both play such a significant role in speculation?

    For example, statistically speaking it is very unlikely to have twenty flips that all come out heads, but with enough people flipping coins there will be a very small group who will do it. Without this perspective you could get the erroneous idea that they really know how to produce heads. How can you distinguish those lucky flippers from investors who happened to be profitable over, say, twenty years? In other words, couldn’t the Market Wizards be more a product of chance than a particular trading approach, especially as markets continuously change?

    JS: Yes, in most cases it is very difficult to figure that out. Just because someone has done well for ten years or even twenty years doesn’t guarantee that they weren’t just lucky over that period.

    If you have 1024 people flipping 10 coins, on average, you can expect one of them to toss 10 heads. However, even if you had every person on earth flip 200 coins instead of ten, what are the odds that one of them will get 195 heads? That’s going to be infinitesimal small. 

    I’ll give you an example. The first fund of Edward Thorp ran for 19 years, with only three losing months during all that time, and all of them less than a 1% loss. The gains were much larger than the few losses that occurred. Using a binomial loss-win distribution to gauge the probability of his performance is actually very conservative because his wins were much larger. But even with that conservative approach, the probability of achieving Thorp’s record is actually significantly less than the probability of randomly picking the same atom twice out of the mass of the Earth.

    So there are people out there who have records that are so lopsided, so preposterously skewed towards winning, that evidence of skill is very strong. DNA evidence probabilities are in the order of a few billion to one, but here we are talking about extraordinarily greater odds. So track records such as Thorp’s would be impossible if there were not non-randomness in the markets. 

    ET: That is very interesting. And actually very relevant for your FundSeeder venture, since we believe the goal is to find the best trading talent out there that would have otherwise remained hidden, correct?

    JS: Yes, although you need a long track record to demonstrate that irrefutable evidence of skill. However, while finding people who can deliver superior return-to-risk – our key measure of performance, as opposed to just returns – based on a daily basis (which is statistically far more significant than the conventional use of monthly data) may not guarantee that they are skilled you will have some assurances that this is a person who more likely than not has skill. It doesn’t prove it though. For that you need a very long track record.

    ET: Yes, but at the same time we are reminded of how past results don’t guarantee future results. This means that if you pick a trader based on a great performance over the last, say, 5 years, even if you use the most refined risk-adjusted returns measurements all that can easily change on a dime going forward.

    So how can you navigate through all this and reach a solid, informed decision on trading performance? Or, rather than results, are traits like consistency, a good trading plan, risk management and so forth the key differentiator for you?

    JS: That cliché remains absolutely true. But there are a couple of elements to it.

    If you are talking about strategies that correlate to sectors, indexes or hedge fund style, a good past performance in the past can actually be an indication of potential poor performance in the future. In my book Market Sense and Nonsense, I empirically showed that for these strategies investing in the worst performers over the past 1, 3, and 5 years actually does better than investing in the best.

    So not only do I agree with the contention that past superior performance does not necessarily imply superior future performance, the relationship is often inverse. My qualification here is that it depends on the strategy. Those strategies that correlate significantly with sectors, indexes, or specific hedge fund styles can become overbought and oversold as we talked about earlier, hence the tendency for a reversal in performance.

    However, I want to separate this situation from a trader who is uncorrelated to any index, sector or hedge fund style. For that type of trader superior return/risk performance could indicate trading skill as opposed to reflecting a portfolio in a sector of strategy style that has become overbought. While even then you can’t say that past performance is predictive, if you are going to look for good traders, it certainly makes more sense to focus on those who have been successful. There is no rationale for assuming a trader who has not done well in the past will suddenly start doing well. 

    So you might as well focus your research on those who have demonstrated that ability. Then, as you suggest, you have to evaluate other things more carefully, like why they have done well, what their edge is. For example, someone with a great risk-adjusted return might have employed a strategy of selling way out-of-the money puts on equities since late 2008. That strategy would have produced great return/risk performance, almost like a money machine, but the trouble is that type of strategy also embeds a large tail risk. So even though the track record of this strategy would show low volatility, there would be the risk of catastrophic losses if there were another abrupt market selloff as in 2008 or 2000.

    So you have to take into account exposure to event risk. Ironically, many strategies with low volatility are the most susceptible to event risk. For these strategies you can have low volatility, low volatility, low volatility… and then all of the sudden extraordinarily high volatility.

    If there was no adverse event in the track record, you can end up with very misleading conclusions if you don’t account for this. I only look at risk-adjusted returns to select from a larger universe and then I take a deeper look into the associated strategies. 

    ET: Finally, there’s this somewhat inspirational belief that if you do well in the industry at some point you can trade for a living – from your mansion at the beach sipping daiquiris. You have met so many people over the years. Do you know any smaller investors that live exclusively from market speculation, or is this just a mirage used to suck people into the markets?

    JS: Sure. I’ll just provide one example because he is a friend. Peter Brandt started trading some forty years ago, starting at Commodities Corp, a firm that hired proprietary traders back then. He then left after some years and ended up trading his own account for the rest of his career. Not managing other people’s money but living off his trading income, making money consistently over the years.

    That’s the trader you just described. He doesn’t use any powerful computers. He’s just an experienced chart analyst with good risk management discipline. He hasn’t won every single year although he has been profitable most of the years. He has lived his entire life like that.

    ET: One major drawback regarding that lifestyle is that not having a steady income stream on the side could really affect your psychology because your heightened emotions might get in the way. The pressure to make money can really throw you off track.

    JS: That’s a great point. I have never put myself in a situation where my livelihood depends exclusively on trading. I trade sporadically. Sometimes I trade, sometimes I don’t. I have never entertained any thought of trading for a living. It is more of a hobby than anything else. But I believe that if I tried doing it for a living I would fail because I couldn’t handle the emotion of your living expenses coming out of trading. So it does require a special kind of person to be able to do that and only a small percentage of people can do that.

    If I had enough money to live comfortably for the rest of my life then I might be able to do it. But if I had a cushion that would only last two or three years, I’m pretty sure my emotions would eventually sabotage me. So that would not be a good idea. This is actually a very important point.

    ET: Thank you very much for sharing your insights. It sure has helped us and we’re sure many, many other people over the years. All the best to you

    JS: Thank you.

     

  • How The IRS Can Empty Your Bank Account Without Warning

    Having just filed his 2016 taxes, a Zero Hedge reader submits the following bizarre story.

    On January 20, the reader filed his Federal tax return using Tim Geithner’s favorite TurboTax software, which the IRS formally accepted three days later, on January 24. One week later, on January 31, the IRS made an automatic deposit into the reader’s bank account, who then used the refund to pay down his credit card debt the very next day.

    This is when things turned bizarre, because as our readers writes, just two days later, without warning, on orders of the IRS his bank empties out the bank account handing over its contents to the IRS: 

    the IRS emptied our bank account February 3, 2017 for erroneous refund with no notice! (please see attached letter).

     

    The only other thing I could think of was that TurboTax did not work correctly and calculated to large of a refund but the letter from the IRS stated it was a “processing error at the Internal Revenue Service”. The refund we received was the same as what TurboTax calculated. I researched the IRS manual about erroneous refunds and could not find anything referring to a “R17” code as stated in the letter.

     

    Called them. Our return was fine. The amount of refund was fine. Not an identity theft problem. Error on their side. According to the person I spoke with they are doing this to a large block of filers. They seemed hesitant to give more info.

    He then adds that “in our phone conversation they told me that the return was fine and the refund amount was correct, it was not an over refund issue but some kind of IRS internal error and they would reissue the same refund after receiving the money back. It makes absolutely no sense to me but this is what I was told.”

    So, as our reader summarizes, “no outstanding taxes. Never been audited. Always file on time. Not a small business, just a normal employee W2, not a structuring issue. Only typical deductions and student loan interest. Scrambling to cancel auto payments and trying to figure out how we will pay mortgage and any payment that will not accept credit card.

    His question, “how can this be legal with no notice?” is not simply rhetorical. To be sure, the IRS has virtually unlimited rights over individual fund flows and stock, among which to:

    • File a tax lien against you;
    • Levy your bank account;
    • Garnish your wages;
    • Close down your business;
    • Seize and sell your home;
    • Assess you personally for corporate employment taxes;
    • Put you in a monthly installment payment arrangement that is too high;
    • Contact your banker, neighbors, friends and business relationships concerning your tax liabilities;
    • Go after third party transferees of your assets.

    … but all of the above are only permitted in the course of “due process”, when an individual taxpayer has been found in violation of US tax laws.

    In this case the IRS counterparty was in no way at fault, and was merely the lucky recipient of a clerical IRS error, in the IRS’ own words, without any justification or validation. That the IRS would then have full liberty to indirectly enter the account with no warning, and take out whatever funds it deemed appropriate – again, with no explanation of just what the “error” was – is sufficiently disturbing, and is why the person who this happened to would like to know if it has happened to other ZH readers and if so, does he have any legal rights in this particular case.

    The redacted IRS notice sent to the readers’ bank, in this case the ASCU, is below:

  • BuzzFeed Sued For Defamation Over Trump Dossier 'Fake News'

    BuzzFeed (as well as editor in chief Ben Smith and former British spy Christopher Steele) faces a new lawsuit over its publication of an unverified dossier of claims against President Trump and others, McClatchy reported Friday evening. In response to the lawsuit, Politico reports that BuzzFeed issued an apology on Friday evening (presumably admitting to publishing ‘fake news’).

    McClatchy reports XBT Holdings, a tech firm with Russian ties named in the document, is suing over the January 10 publication of what the suit calls “libelous, unverified and untrue allegations.”

    The dossier, which includes uncorroborated allegations about Trump, claims the Cyprus-based XBT, which is owned by Russian tech magnate Aleksej Gubarev, “had been using botnets and porn traffic to transmit viruses, plant bugs, steal data and conduct ‘altering operations’ against the Democratic Party leadership” in 2016.

    In response to the lawsuit, Politico notes that BuzzFeed on Friday evening issued an apology and said that it had redacted Gubarev’s name, and the names of his companies, from the dossier.

    “We have redacted Mr. Gubarev’s name from the published dossier, and apologize for including it,” BuzzFeed spokesman Matt Mittenthal told POLITICO in a statement.

    CNN Money and McClatchy were the first news organizations to report on the existence of the lawsuit against BuzzFeed. (You can read Gubarev’s full defamation complaint against Buzzfeed here.)

    “Although Buzzfeed and Mr. Smith claim that they had the dossier in their possession for weeks prior to its publication, and despite their claims that they had four reporters working near full-time on attempting to verify the claims made in the dossier, prior to publishing the Defamatory Article and the dossier, neither Buzzfeed nor Mr. Smith contacted the Plaintiffs to determine if the allegations made against them had any basis in fact,” the complaint states.

     

    “After the dossier’s publication numerous journalists (more than 30) contacted Mr. Gubarev with some even arranging to travel to Cyprus to discuss the publication with Mr. Gubarev. During this time, and up to the present day, neither Buzzfeed nor Mr. Smith contacted the Plaintiffs to determine if the allegations made against them had any basis in fact.”

    The complaint also states that Gubarev is not a public figure and that the publication of the dossier has ruined his reputation.

    “Plaintiff Aleksej Gubarev, who is married with three young children is not, in any way, shape, or form, a public figure,” the complaint states.

     

    “As a result of Buzzfeed and Mr. Smith’s reckless publication of defamatory materials, he has found his personal and professional reputation in tatters. His wife has found herself a target of online harassment and the family’s personal security has been compromised.”

    Although BuzzFeed did not redact Gubarev’s name when it first published the dossier, it did redact the names of a few other people mentioned in the dossier.

    The lawsuit, filed in London and Fort Lauderdale, Florida, seeks unspecified damages, according to The Hill, and says BuzzFeed’s story has been viewed nearly 6 millions times.

  • Trump Files Appeal Challenging Judge's Block Of Travel Ban

    Following angry tweets all day from President Trump, the U.S. Justice Department filed notice Saturday evening of a formal notice of appeal of a Seattle judge’s temporary restraining order which put the administration's immigration order on hold. The notice followed a statement by the DHS to comply with Friday night’s court ruling by reverting to immigration procedures in place before the Jan. 27 executive order on immigration, and by the State Department to reverse the provisional revocation of about 60,000 visas.

    “The opinion of this so-called judge, which essentially takes law-enforcement away from our country, is ridiculous and will be overturned!” the president told his 23.6 million followers after U.S. District Judge James Robart in Seattle lifted the ban on all refugees and on visa holders from the seven countries. He later wondered “what is our country coming to when a judge can halt a Homeland Security travel ban.”

    The administration said it was taking the case to the U.S. court of appeals based in San Francisco, hours after it was promised by the White House. Ironically, as Bloomberg notes, that court is considered far more liberal than most other federal appellate courts, which means that after this action, the next move will be an almost certain escalation to the Supreme Court.

    Robart’s comprehensive ruling eclipsed a Trump administration win earlier on Friday, when a federal judge in Boston refused to extend a temporary ruling blocking enforcement at that city’s airport of the ban on immigrants from seven countries. “Why aren’t the lawyers looking at and using the Federal Court decision in Boston, which is at conflict with ridiculous lift ban decision?” Trump said on Twitter.

    The DOJ appeal faces an uphill battle: “The Washington suit is so much more broad than anything else we’ve seen because it goes into the economic interests of the parties — that’s a very big development,” Hoffman said of a likely appeal by the federal government. “Appeals of temporary orders occur only in very, very extraordinary measures. I doubt it would be successful.” The reason why Robart was so quick with his decision is because he had the support of some of America's largest tech companies.

    Washington Attorney General Bob Ferguson said the effects on his state included economic consequences for employers based there, including Microsoft Corp., Starbucks Corp. and Amazon.com Inc. Bellevue, Washington-based Expedia Inc. had about 1,000 customers with flight reservations in or out of the U.S. from the seven countries, he said.  Meanwhile, DOJ lawyer Michelle Bennett, arguing at Friday’s hearing, said the president was acting within the authority granted him by Congress and there was no financial harm to the states. The judge disagreed.

    Unless the appeals court blocks the lower court order, it will remain in place while the judge considers a request to permanently invalidate the president’s order, Ferguson said that hearing will probably occur within a month.

    Echoing criticism of Trump's action from within the Democratic party and progressive human rights groups, David Miliband, president and chief executive officer of the International Rescue Committee, said Robart’s ruling demonstrated that Trump’s executive order wasn’t adequately thought out. “There is every right for the administration to review and build on existing arrangements,” Miliband said in an e-mailed statement from the refugee assistance group. “There is no excuse for tearing up carefully developed procedures that have kept America safe.”

    Ironically, the appeal hit just minutes after Trump tweeted:

    The appeal made official what the Trump White House had promised on Friday night.

    As AJC reports, the official notice of appeal was a barebones legal document filed by the Trump Administration.

    PLEASE TAKE NOTICE that the defendants Donald Trump, in his official capacity as President of the United States; United States Department of Homeland Security; John F. Kelly, in his official capacity as Secretary of the Department of Homeland Security; Rex W. Tillerson, in his official capacity as Secretary of State; and the United States of America hereby appeal to the United States Court of Appeals for the Ninth Circuit from the February 3, 2017 Order (ECF No. 52) enjoining and restraining enforcement of portions of the January 27, 2017 Executive Order on Protecting the Nation from Foreign Terrorist Entry into the United States.

    This legal fight will now shift to the Ninth Circuit Court of Appeals – an appellate court with a long legal history that shades to the liberal side, guaranteeing weeks of increasingly more angry Trump tweets, before Trump ultimately ends up at the Supreme Court.

  • "Dear Leftist, You Need To Take A Closer Look At The Real 'Refugees' Before You Denounce 'Vetting'"

    Submitted by Duane via Free Market Shooter blog,

    Plenty of mainstream media outlets have been critical of the Trump executive orders regarding immigration and “vetting” of refugees.  There are too many to list, but I will use an excerpt from a U.S. News article to drive the general point home:

    When the United States accepts refugees from countries with a significant Muslim population, we undermine the anti-American hatred that underlies Islamic State group recruitment. Closing America’s door to Syrian refugees, therefore, is not only a heartless hiccup in our nation’s history, it also validates Islamic State group propaganda, advances the group’s agenda and drives refugees back into the arms of dangerous terrorists. By turning away Syrian refugees, Trump is plunging America into a national security nightmare.

    The “fact-check” website Snopes (which has previously been outed as being heavily liberal-biased, being run by a “failed liberal blogger”) also gets in on the act, saying that Syrian kids aren’t holding guns, instead labeling them as “Pakistani”:

    The above-displayed photograph, however, was not taken in Syria and does not show refugees. The claim that the children are orphans is also baseless, as well as the claim that the children are holding real guns.

     

    The photograph was taken in July 2014 on Al-Quds (Jerusalem Day) in Pakistan. The description accompanying the photo on Alamy states that the children are “Pakistani Shiite Muslims” and are holding toy guns during a protest.

    If there is one thing Snopes is correct about, it is that Pakistani refugees also need to be intensely vetted, and should be on the list of countries, possibly above others Trump listed.  However, Snopes is mostly doing this to dispute the notion that refugees could be dangerous.  Which, given the information that is out there, is willfully ignorant at best, outright malicious at worst.

    Take a closer look at the children from the opening image, in the below video:

    Without question, they would just strike you as “cute children” who deserved a country of their own if you took away the guns and put them in a TV promo looking for donations.

    But, Express makes it appear as though these are just “hopeless” children who are playing with toy guns, and that Western nations denying refugees entry into our nations are just awful.  Do they realize just how easy it would be for one of these children posing with real guns and real ISIS training to slip in with the kids who deserve a place?

    I can already feel the next quote coming: “Those kids in Express’s slideshow were playing with toy guns, and even if the kids in the above video have real guns, they have no real training, and would never shoot anyone!”

    Well… when I said the MSM and the many immigration protesters were either willfully ignorant or outright malicious, I really meant it.

    The below video is so graphic, I was hesitant to post it.  But Free Market Shooter is not a “safe space,” and if you are looking for one, you’re in the wrong place.  I will however provide one last warning – if you are squeamish, easily disturbed, or just plain scared of the truth, DO NOT WATCH THIS VIDEO, BECAUSE IT IS EXTREMELY GRAPHIC.  A description is provided below the video, if you cannot watch. 

     

    For those who did not watch, the video showed armed ISIS-trained children clearing a house methodically and professionally, just like a team of commandos, and executing ISIS detainees within the house.  Funker530 originally provided the video, and their commentary is below:

    Take a good look at the world today. We have children in the streets of the United States throwing a temper tantrum because they believe that the politicians have failed. Maybe they have. They have failed them by allowing them to believe that they live in a world of sunshine and rainbows.

     

    Politics completely aside, this video is a snap back to reality. This is the real world that we live in today as a species. Grown men are training children, some as young as six, to move through a house in a tactical fashion with live ammunition, having them kill actual living human beings. To put the cherry on the cupcake, they are recording it with some serious production value, and then uploading it to the internet to show the world that their children are ready to die for their cause. I don’t see you marching for women and children’s rights in Syria.

     

    While you whine and complain about social issues that are a moot point in our society, women and children are being raped and murdered around the world by maniacs. Take a look outside of your own safe space, and realize that the world can’t be the Utopian place you want. It isn’t possible, it is never going to happen.

     

    This is why.

    If you think this is all just a big production, you clearly have not watched the video.  Children are actually delivering kill shots on real live people.  This is not The Matrix – this is the real world, and it will never cease to shock and disturb you.

    So, think long and hard next time you see that cute refugee kid in the video, and ask yourself – is it possible that this child is actually a trained killer?  Whether its man, woman or child, is there any real way to know if someone coming from a war zone is just an innocent, or a seriously dangerous individual?

    For the record I’m not certain if Trump has all the answers to the “refugee” question, and whether or not his immigration actions will actually be effective or not.  I also realize that these actions are likely harming some innocent individuals who truly mean no harm.  Certainly, he can’t just wave a magic wand and make the country’s immigration problems go away overnight, especially given how difficult it is to know exactly who is trying to enter into and/or emigrate to the USA on a daily basis.

    However, Trump is clearly aware that the world is a bad place, and is trying to do something to protect and safeguard this country from a very cruel world that very much means to do our citizens harm.  At least he is not sticking his head in the sand and being naive or willfully ignorant about the truth, like our MSM outlets are doing every day when they denounce him just for trying something his predecessor didn’t.

    If the protesters took the MSM blinders off, and saw the world for what it really is, would they really be so opposed to Trump’s actions?

     

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Today’s News 4th February 2017

  • Boston Judge Unblocks Trump Travel Ban, Asks "Where Does It Say Muslim Countries?"

    Update: It appears President Trump is pleased with the judge's decision…

    *  *  *

     

    As we detailed earlier, in a blow to every mainstream media news outlet (and likely hurting a lot of feelings), President Donald Trump’s ban on immigrants from seven Muslim-majority countries will take effect in Boston on Sunday after a federal judge refused to extend a temporary ruling blocking its enforcement.

    As Bloomberg reports, the decision by U.S. District Judge Nathaniel Gorton on Friday dealt a setback to rights advocates who argued that blocking people from seven nations in the Middle East was unconstitutional. Gorton was weighing whether to extend a seven-day order blocking parts of Trump’s Executive Order.

    The case, filed by the American Civil Liberties Union on behalf of several affected immigrants, is one of several that followed Trump’s Jan 27 order, which roiled global travel by barring entry to the U.S. of citizens of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. Individuals, organizations, politicians and some states called it unconstitutional religious discrimination against Muslims.

    As GMA News Onine reports, U.S. District Judge Nathaniel Gorton on Friday asked Matthew Segal, an attorney with the American Civil Liberties Union (ACLU) representing the plaintiffs in the Boston case.

    "Where does it say Muslim countries?"

    Segal replied…

    "If your honor's question is, 'Does the word 'Muslim' make a profound presence in this executive order?,' my answer is that it doesn't,But the president described what he was going to do as a Muslim ban and then he proceeded to carry it out."

    Gorton shot back,

    "Am I to take the words of an executive at any point before or after election as a part of that executive order?"

    Judge Gorton on Friday asked U.S. Justice Department lawyer Joshua Press how the seven countries had been selected.

    Press responded that the list had come from a law passed in 2015 and amended early last year requiring that citizens of the seven countries apply for visas to enter the United States, "out of concern about the refugees that were coming, mainly from Syria at that time and terrorist events that were occurring in Europe."

    As we noted previously, only 12.5% of the world's Muslims live in the seven countries on Trump's immigration ban list…

     

    Which left the judge to decide (as the full docket explains here),

    “The language in Section 5 of the EO is neutral with respect to religion,

     

    "The provisions of Section 5, however, could be invoked to give preferred refugee status to a Muslim individual in a country that is predominately Christian. Nothing in Section 5 compels a finding that Christians are preferred to any other group.”

    Gorton wrote there is a rational reason for the Trump administration’s policies. The federal Immigration and Naturalization Act gives the president broad power over immigration.

    “The order provides a reasonably conceivable state of facts (which concerns national security and) that could provide a rational basis for the classification,” he wrote. “Accordingly, this Court declines to encroach upon the “delicate policy judgment” inherent in immigration decisions.”

     

    ORDER

     

    For the forgoing reasons, the Court declines to impose any injunctive relief and will not renew the temporary restraining order that was entered on January 29, 2017 (Docket No. 6).

    Full Order below:

  • Exposing The Left's War Against Ordinary Americans

    Authored by Paul Craig Roberts,

    The Saker is a level-headed person. I take it seriously when he spells out the threat to Trump’s presidency presented by the paradoxical alliance of the ruling oligarchs with what purports to be the “liberal/progressive/left.”

    It is amazing that the “liberal/progressive/left” are aligned with war and not with peace and are aligned with the OnePercent against the working class, whom they despise as “Trump deplorables.”

    The Saker believes that Trump is under serious threat of being overthrown and that he must strike first or go down. 

    As my readers are highly intelligent, I am not surprised that some of them have arrived at the same conclusion as The Saker. Here is what one had to say:

    I am totally astounded by the madness – even at formerly reasonable left – liberal websites. Alternet is one big hysteria factory. Although Counterpunch has had good articles by Mike Whitney, you (I presume, since I read your articles on your website), Diana Johnstone and a few others, I can’t believe how they’ve jumped in, too. I’ve been reading CP since the beginning of the newsletter in the 90s. Until this year, they were (after yours) my go-to website when I turned the computer on. I can’t believe they have a new article titled “Beyond Resistance – Defeating Trump’s Burgeoning Dictatorship”. And another: “Democracy in Exile and the Curse of Totalitarianism”. And another: “Muslim Bans, White Supremacy and Fascism in Our Time”. Patrick Cockburn has an article titled: “Trump’s Muslim Ban Will Only Spark More Terrorist Attacks”. Even the World Socialist Website has gone bananas.

     

    Almost all of the German left-mainstream sites have gone insane. On the one hand, it seems like almost every protest group, in the end, has a source of money from Soros. On the other, it seems like 40% of the population must have been put through an MK-Ultra program. How could such mass hysteria otherwise be produced?

    This is the level of argument with which protesters oppose Trump’s presidency:

    Readers share my amazement that there are large numbers of people so stupid as to think that a ban on Muslim immigrants is far worse than murdering Muslims in seven countries for fifteen years. Bush and Obama conducted genocide against Muslims over the course of four presidential terms, and no protesters sought their impeachment for what are most certainly war crimes and crimes against humanity. But Trump’s perfectly legal immigration action is alleged to be grounds for impeachment!

    The protesters are completely nonsensical, so much so that it must be an orchestration. As the protesting websites, if not all of the protesters in the streets, accept the 9/11 storyline and the hoax “war on terror” that the storyline justifies, it follows logically that Muslims, already “terrorists” by definition (just ask the neoconservatives and Israel), fleeing their death and destruction by Washington might harbor thoughts of harm to Americans. Considering the ruling storyline, to let them in would be irresponsible.

    But not to the protesters. It wasn’t the killing of their families and destruction of their homes and countries that might make Muslims into terrorists. It is banning them from entry as refugees that turns them into terrorists!

    Try to imagine the absurdity of political leadership in the US and Europe during the 21st century. Western governments inflicted so much death and destruction that they created millions of Muslim refugees in order to accept as immigrants peoples who might harbor thoughts of revenge.

    Are we to conclude that there is no such thing in the US and Europe as a liberal/progressive/left, only Soros-funded protesters for hire, as in the orchestrated Maiden protests in Kiev and today in Macedonia and Hungary?

    Correct or not, this is the conclusion of many.

    Illegitimate protests discredit all protests.

    Could we be witnessing the ruling oligarchy using its pawns to discredit in advance valid protests at the time when they move to reassert their control?

    An astute citizen of Hungary sees similarity between the protests against Trump in the US and the Soros-orchestrated protests against the government of Hungary:

    Dear Dr. Roberts,

     

    Being the citizen of Hungary, a country heavily infested by Soros-financed NGO’s, and with a government that is openly anti-Soros, it breaks my heart to see the USA in a situation very much like what we have had to put up with since 2010, the year when Viktor Orban won a two-thirds majority, which he won again in 2014. Today, there is one piece of experience that is, I think, crucial for us, Hungarians, to share with the USA. It is this: nothing is sacred or too dear for Soros, his NGO’s and associates of all stripes in their fight for power. This has been a concept quite hard to come to terms with for many of us in Hungary. They will sacrifice the country, the future, the people, they will sacrifice anything, just to (re-)gain power. As I follow news from the USA, I see photos of crowds that appear to be filled with hatred. They are like the (fortunately quite diminished) crowds paraded around by the Hungarian opposition parties, who like to call themselves “democratic” as opposed to the government elected to office by the people, which they refer to as “fascist, nazi, anti-democratic, anti-semitic” etc.

     

    These crowds are the embodiment of hypocrisy. Chanting slogans of “love”, they act out of pure hatred, for power, and refuse to be reasoned with. They refuse to consider facts. They call themselves liberals, but act against liberty through exercising total intolerance. I assume that the people who voted for President Trump are patriotic. If my assumption is correct, this also means that it will take quite some time, until the reality sinks in that Soros, his NGO’s and allies will trample down, unhesitatingly, the nation and the empire that they seek to rule unchallenged. This is because they do not rule for the people. They need the power to be in the position to exploit the nation and the empire, for their own benefit. This is not an easy thought to come to terms with for a patriot. The sooner the US electorate understands this, the more resistant it can become against the propaganda campaign and high visibility demonstrations so happily covered by the mainstream media. It is important to keep in mind that the room to maneuver President Trump has is directly proportionate to the popular supporthe enjoys, at any given time.

     

    Dr. Roberts, thank you for all your valuable work invested into making the world a better – and safer – place, for the benefit of all Mankind.

     

    Kind regards, Anita

  • Berkeley Antifa Attacker Unmasked As UC Employee? CNN and Young Turks Lookin’ So Dumb

    Today, propagandists on the left attempted to change the narrative over the violent “Antifa” riots, suggesting that Trump supporters were secretly behind the group’s spate of violent terrorist acts since the election:

    Of course, the ultra-liberal, Armenian Holocaust denyingTalcumX hiring, “better than you” elitists – also known as “The Young Turks,” started furiously parroting these Alisnsky tactics to cast doubt on just who keeps co-opting student protests and turning them violent…

     And Thursday night, The Young Turks Ana Kasparian – a horrible human being, introduced the question of just who IS this Antifa?

    ana1

    Don’t worry Ana – Twitter user Pave Darker (@PaveDarker) has your back, hack.

    In a nutshell: A violent Antifa attacker bragged about beating up a Trump supporter over Twitter. In that user’s profile, @PaveDarker found a link to the attacker’s Facebook account with his real name [Note: This man is a suspect – name withheld from this post pending official investigation]:

     

    pave1a

    guy3a

    Witness journalism in action Ana:

    pave2abc

    Mmmm hmm:

    guy1b

    Deeper we go:

    guyav

    And this $69,824K/year Antifa rebel appears to be a “Digital Comm Spec 4” at Berkeley:

    craa

    hahaha

    15min

    The authorities have been notified, and the UC Employee is thought to be in New York right now. Developing…

    tellme

    Content originally generated at iBankCoin.com * Follow on Twitter @ZeroPointNow

  • World Leaders "Stunned" By Trump's Bluntness

    As President Trump drops tape (and tweet) bombs left, right, and center; often saying exactly what he is thinking, it appears the world’s leaders (and establishmentarians) are “shocked” at his inconvenient truthiness. As Tim Bale, politics professor at Queen Mary University of London, said, reflecting on Brexit concerns,

    “…our reliance on the United States, in normal times, wouldn’t worry too many people… But Donald Trump doesn’t seem to be a normal president.”

    Which seemed to sum things up nicely.

    From Australia to Iran, and from Germany to Russia, no one is safe from President Donald Trump’s blunt, win-the-deal approach to diplomacy. As The Wall Street Journal reports, his style has U.S. adversaries and some allies struggling to assess its impact for their countries and puzzling over how to react if they land in the new American leader’s crosshairs next.

    “The troubling thing for allies is this kind of hard-edged, transactional approach, where longstanding relationships and all that shared history and shared military sacrifices going back to World War I just doesn’t seem to count for anything,” said Andrew Shearer, who served as national-security adviser to two Australian prime ministers.

     

    “Every deal is a struggle between a winner and a loser,” he said of Mr. Trump’s style. “That approach might work in business, but as someone who’s been around foreign policy for a long time, I just don’t see how it’s going to work internationally.”

     

     

    “In the short run everyone is trying to get a handle on the new administration,” Mr. Haass said. “But in the medium and long run, whether governments like or loathe what they’re seeing, I believe what every government will do is essentially rethink its relationship with the United States.”

     

     

    “Worrying declarations by the new American administration all make our future highly unpredictable,” European Council President Donald Tusk, who represents the governments of the EU’s 28 member states, wrote in a letter to EU leaders this week. He stressed the need to maintain a united Europe “whether we are talking to Russia, China, the U.S., or Turkey.”

     

    “We had hoped for a more nuanced, sophisticated version of Trump after inauguration,” said a senior European diplomat. “Alas, that was not to be.”

    Trump has often remarked he prefers to be unpredictable and it seems that is exactly his approach, and Richard Haass, the chairman of the Council on Foreign Relations, said Mr. Trump has introduced uncertainty into the role the U.S. plays in the world.


    Furthermore, Mr. Haass said, the new president has shown an openness to upending the foreign policy status quo. “He doesn’t feel confined by what he inherited,” he said.

  • "The Center Didn't Hold"

    Submitted by Howard Kunstler via Kunstler.com,

    The Purpose of Decadence and the Pleasures of Coercion

    I guess you’ve noticed by now that the center didn’t hold. Instead of a secure platform for political premises like tradition, precedent, rationality, and cultural norms, you see a fiery maw of sheer emotion between the camps of the so-called Left and the so-called Right.

    I say so-called because the campus Left and the Trump Right have escaped the categorical corrals they formerly occupied. And they may have left their customary official parties stranded and dying too. It may be fatuous to say whether that is a good or bad thing; it just is, for the moment. They are two halves of a polity so broken and so far apart that it is also hard to see how they might ever come back together into a consensus about how a society might operate successfully.

    Not having a consensus — some substantial overlap between circles of perspective — it’s not surprising that America can’t construct a coherent view of what is happening, or make a plan for what to do about it. Mainly what’s happening is the running down of fossil fuel based techno-industrial economies, and the main symptom is falling standards of living, with fading prospects for future happiness and security.

    As I’ve said before, our economic picture is basically untenable due to the falling energy-return-on-investment of the crucial oil supply (shout-out to Steve St. Angelo). At the high point of 1920s oil production the ratio was around 100-1. The shale oil “miracle” is good for about 5-1. The aggregate of all oil these days is under 30-1. Below that number, you’ve got to shed some activities in our complex economy (or they just get too expensive to support) — things like high-paying labor jobs, medical care, tourism, college, commuting, heating 2500 square foot homes…). Oddly the way it’s actually working out is that America is simply shedding its whole middle class and all its accustomed habits and luxuries. At least that’s how it adds up in effect. Naturally, that produces a lot of bad feeling.

    President Trump is unlikely to be able to fix that essential problem, unless he can pilot the whole political-economy into a glide-path leading toward neo-medievalism — what I call the World Made By Hand. Trump’s call for restoring the factory economy of 1962 is a low-percentage prospect. Instead, he’ll be saddled with the collateral damage caused by the dishonest effort of his recent predecessors to borrow from the future to pay for the way we live now — that is, racking up debt. This mighty debt-load, never before seen in history, and the accounting fraud that enables it, has helped produce all kinds of distortions, perversities, and fragilities in our money system (finance and banking) which can easily slip into collapse if a crucial prop fails here or there, and that is exactly what I think will happen under Trump. It will not be his fault, but he’ll get blamed for it. And when it happens, he won’t be able to give his attention to anything but that.

    In the meantime, society shows all the symptoms of this literal economic disease in the political and cultural fissures of the day. The political Right failed in its role as prudent conservator of values, resources, and practical custom; the political Left has taken refuge in sentimental fantasy, using the semantic ploys of the graduate school seminars to pretend that reality is whatever they wish it to be. Uncomfortable with the age-old tensions of sexuality? Then pretend that you can opt out of the dynamics of biology by declaring yourself “non-binary,” a term with a pleasing science-y flavor. Tensions gone? Not really. You’ve only made them worse as, for instance, expressed in “non-binary” suicide rates. The perversities of transsexual triumphalism are related directly to the falsehoods of Federal Reserve trans-monetarist triumphalism, and all parties are subject to the matrix of racketeering that has taken the place of plain dealing in goods, money, and ideas in this society — especially ideas grounded in reality.

    Societies may not exactly be organisms with intentions, but they move in a particular direction because they are emergent phenomena. That is, they are self-organizing according to the circumstances and forces they are subject to at a certain time and place in history. Decadence is specifically the decay of social and cultural boundaries, a process that is manifestly accelerating now. Both sides of the political spectrum are acting out this dynamic, with the vacuum in the middle sucking vitality out of each side. The Left has become a kind of pagan religion of sacred victims and victimhood, collecting sacred injuries and martyrs. Its dark secret, though, is that these sacred things are only straw-dogs and wicker-men. The real animating motive for the Left these days is simply the pleasure of coercion, of exercising the power to punish their adversaries and watch them suffer.

    The Trump Right also enjoys the writhings and sufferings of its adversaries, squashed bug style, as it goes forth in the quixotic battle to bring back 1962 at all costs. Both the Left and the right show not a little sadism in their methods. In the background of these histrionics, the great groaning machine of Modernity lurches toward collapse — not the end-of-the-world as many foolishly imagine, but the end of a phase of history when things that used to work, don’t. At a certain point, we’ll have to try other ways of being with each other on this planet, and then for a while things will come together again.

  • 400,000 Fewer Americans Enrolled In Obamacare For 2017

    Despite The Democrats decrying the Trump administration for its efforts to repeal and replace President Obama's Affordable Care Act, it seems around 400,000 fewer Americans decided for themselves that Obamacare wasn't for them in 2017.

    As Axios reports, Obamacare enrollment for this year appears to have ended slightly down from last year, according to enrollment numbers released this afternoon by the Centers for Medicare and Medicaid Services.

    The agency said about 9.2 million people signed up in the 39 states that use the federal HealthCare.gov website by Jan. 31.

     

    While that's not a total enrollment figure, 9.6 million people signed up through that website at the end of last year's open enrollment.

    It's the first indication that the Trump administration's opposition to the law, and its decision to pull TV advertising, may have had an impact, since the pace of enrollment had been ahead of last year's until mid-January.

    For context:

    • New customers in 2017: 3 million
    • New customers in 2016: 4 million

    Just before the numbers were released, an HHS spokesman from the Trump team released a statement declaring that "Obamacare has failed the American people, with one broken promise after another."

    “As noted in the report today from [the Centers for Medicare and Medicaid Services], premiums in the ACA marketplace have increased 25 percent while the number of insurers has declined 28 percent over the past year,” he added.

     

    “We look forward to providing relief to those who are being harmed by the status quo and pursuing patient-centered solutions that will work for the American people.”

    As The Hill adds, The Trump administration did not release enrollment numbers for all 50 states, so it is not clear how the nationwide signup numbers compare to the Obama administration’s target of 13.8 million signups across all 50 states. The administration said it would release more information on nationwide enrollment in March.

    Democrats pointed to a drop-off in signups at the end of the enrollment period as evidence that the Trump administration's cancelation of ads hurt sign-ups.

    • Federal marketplace signups, Jan. 15-31, 2017: 376,260
    • Federal marketplace signups, Jan. 24-31, 2016: 686,708

    So what the Democrats are saying is that without spending millions to advertize the benefits of Obamacare – after years of discussion and explanation – notably fewer people are interested in it, or believe they need it (or are willing to spend money on it).

  • Judge Blocks Trump Travel Ban Nationwide; White House Vows To Challenge "Outrageous Order"

    Update: Moments ago, the White House issued a statement saying the DOJ would, as expected, challenge the federal court’s ruling that halted travel ban “at the earliest possible time” and will file an emergency stay of Robart’s “outrageous order.”

    Expect angry Trump tweets to follow.

    * * *

    Following a brief moment of ‘success’ for the Trump administration as a Boston judge ruled Trump’s immigration policy was not a Muslim ban, a Bush-appointed federal judge in Seattle, who said the states of Washington and Minnesota can sue claiming their residents were harmed by the ban, granted a nationwide temporary restraining order blocking Trump’s immigration ban.

    District Judge James Robart ruled the executive order would be stopped nationwide effective immediately: his ruling was the most comprehensive legal rebuke of Trump’s Jan. 27 executive order prohibiting immigrants from Iran, Iraq, Syria and four other nations from entering the U.S. for 90 days. Judges in Brooklyn, New York, Los Angeles and Alexandria, Virginia, had previouslyissued orders that are less sweeping.

    Washington Attorney General Bob Ferguson was delighted with the decision: “The Constitution prevailed today,” Ferguson said in a statement after the ruling.

    “It is not the loudest voice that prevails on the Constitution,” Ferguson continued speaking outside the courthouse. “We are a nation of laws, not even the president can violate the Constitution. It’s our president’s duty to honor this ruling and I’ll make sure he does,” Ferguson added hopefully.

    Good luck with that.

    In his ruling, Robart said that “the state has met its burden in demonstrating immediate and irreparable injury” while Fergsuon added that “Judge Robart’s decision, effective immediately, effective now, puts a halt to President Trump’s unconstitutional and unlawful executive order. It puts a stop to it immediately, nationwide.” The court order, effective immediately, will remain in place until the judge considers a motion – probably within a month – to permanently invalidate the president’s order, Ferguson said.

    Ferguson, a Democrat, filed the lawsuit three days after Trump signed the executive order. The suit argued that the travel ban targets Muslims and violates constitutional rights of immigrants and their families. 

    In his request for the order, according to Bloomberg, Ferguson had said the effects on the state included economic consequences for employers based there, including Microsoft Corp., Starbucks Corp. and Amazon.com Inc. Expedia Inc., based in Bellevue, Washington, had about 1,000 customers with flight reservations in or out of the U.S. from the seven countries, he said. Minnesota, like Washington, cited the effect of the ban on students at its colleges and universities, as well as health care centers including the Mayo Clinic. The state’s 5.4 million residents included 30,000 immigrants from the affected countries, it said in the lawsuit.

    According to The Hill, in a phone interview with CNN Friday evening, Ferguson said he “expected win, lose or draw” that the case would move “fairly quickly through, up to the Ninth Circuit” Court of Appeals — “just because of the magnitude of the executive order.”

    And hinting that the Supreme Court showdown we suggested previously now appears inevitable, Ferguson added that he is “prepared for this case to go all the way to the Supreme Court whichever way the Ninth Circuit Court of appeals goes,” he said, anticipating a challenge to Robart’s ruling. “It’s a case of that magnitude, it’s a case that frankly I think will ultimately end up before the U.S. Supreme Court, so that would not surprise me one way or the other.”

    Ferguson’s ruling was on the basis that states had already suffered harm from the travel ban. He also said the lawsuit challenging the legality of the order has a good chance of succeeding. Lawyers for the government had argued the states lacked standing to sue, according to the Seattle Times, and that the order was within Trump’s executive powers.

    That said, it is likely that like last Saturday’s Brooklyn decision, that this ruling oo is being blown out of proportion: to wit, a Department of Homeland Security official told NBC News that “the judge’s order will have no immediate practical effect” adding that “all previously issued visas from the seven affected countries were canceled by last week’s executive order” meaning all travelers would have to reapply.

    Furthermore, the Trump administration could seek a stay of the Seattle judge’s order.

    The decision came on a day that attorneys from four states were in courts challenging Trump’s executive order. Trump’s administration justified the action on national security grounds, but opponents labeled it an unconstitutional order targeting people based on religious beliefs – which the Boston judge has since ruled invalid.

    Also on Friday, Hawaii’s Doug Chin became the sixth state attorney general to sue or support lawsuits seeking to block Trump’s order.

    At this rate, it now appears almost certain that the Trump executive order showdown will conclude in the Supreme Court… where the tie breaking Justice will be the just appointed by Trump, Neil Gorsuch. Which is why one can see why Trump may feel confident about the outcome of the case.

    * * *

    The case is State of Washington v. Trump, 17-cv-00141, U.S. District Court, Western District of Washington (Seattle). The Boston case is Loughghalam v. Trump, 17-cv-10154, U.S. District Court, Massachusetts (Boston). The text of the full Temporary Restraining Order is below.

     

  • This Is How Russia & The United States Are Cooperating In Syria

    Submitted by Federico Pieraccini via The Strategic Culture Foundation,

    Since Donald Trump became President of the United States, we have been witnessing some interesting developments in Syria. We have only fragmentary and seemingly unconnected information at this time, but, as one puts the pieces of the puzzle together, it appears likely that some kind of deeper level of coordination between the US and Russia exists. While it cannot be said with certainty, Trump and Putin have probably agreed to cooperate in the fight against Daesh in Syria without making it publicly known. These represent only intentions, especially after the misunderstanding in recent days about joint strikes between Moscow and Washington against Daesh in Syria.

    The following list is intended to facilitate an understanding of a tentative hypothesis that posits secret coordination between the US and Russia.

    Let us start with some points concerning recent months.

    1. Russia has fought terrorism in Syria for nearly two years, repeatedly requesting the US to cooperate in this effort, at least in terms of sharing sensitive information on intelligence.

     

    2. Trump, during the election campaign, always said he would be willing to work with Moscow to fight terrorism in Syria, focusing on Daesh as the number one priority.

     

    3. Once becoming president, Trump reiterated this position without backtracking, as many had anticipated.

     

    4. Over the past ten days (21st23rd and 31st January 2017) the Russian Federation has conducted at least two aviation missions involving as many as six Tu-22M3 strategic bombers over the village of Deir ez-Zor, representing an important display of firepower.

     

    5. The Russian Ministry of Defense (MOD) reported that they targeted structures and facilities used for making weapons in addition to the command centers and arms depots of Daesh.

     

    6. The areas around Deir ez-Zor have been under Daesh control for a very long time.

    Now let us look at some recent but rather obscure events that have never been fully clarified.

    7. The most cryptic news coming out of Syria usually involves areas around Deir ez-Zor and Palmyra, which has included the cowardly bombing by the international coalition of the Syrian Army on September 17, 2016, and also in recent weeks, as well as the extraordinary crossing of hundreds of Daesh members from Mosul to Deir ez-Zor that did not provoke any air intervention from the international coalition.

     

    8. Given the above, it is likely that the American deep state (CIA and State Department) is in contact with Daesh, coordinating the repeated attacks on the Syrian state.

    Some considerations on the Russian operations in Syria, in addition to the earlier observations.

    9. From experience, thanks to the story of the heroic sacrifice of Alexander Prokhorenko, we know that Russian aviation relies on Russian special forces (acting as spotters) for bombings in such locations as Palmyra and Deir ez-Zor, relying on such soldiers to identify and confirm targets on the ground that are often disguised as civilian structures (e.g., weapons-manufacturing plants and arms depots). But we also know how dangerous and difficult it is for spotters to infiltrate such areas.

     

    10. Russian strategic bombers have employed «dumb» bombs that do not require laser-guided targeting systems. Evidently Russians have been confident in their ordnance hitting their targets.

     

    11. Given points (1), (6), (9), (10) and the repeated attacks in recent days of strategic bombers, it is evident that the Russian ministry of defence has acquired new, previously unknown intelligence information regarding ground targets in the area of ??Deir ez-Zor that was. Moscow has been requesting from Washington the sharing of intelligence information for years now. The Obama administration has consistently refused to cooperate. Trump has always offered the opposite.

    In addition, a note on recent news of joint efforts between the American and the Russian air forces in Syria.

    12. The episode involving the joint bombing conducted by the Russians and Americans (but denied by sources in the international coalition) has taken on a particular significance when Trump's spokesman, Sean Spicer, declined to comment on the story, perhaps indicating possible differences of opinion between the Trump administration and members of the US-led international coalition.

    Finally, two logical deductions, consistent with those reported previously.

    13. It is very likely that Moscow received from American sources, thanks to the points (7) and (8), the coordinates of Daesh in Deir ez-Zor. This would also explain the issues covered (4), (9) and (10).

     

    14. The Russian MOD has not released information on how they acquired the information that led to the bombing of the past days.

    Conclusions.

    In summary, we can draw a picture of events in recent days in Syria, assuming a hidden coordination between Moscow and Washington.

    We know, for example, that Trump does not intend to overthrow the Assad government. With no need for ground troops (AKA terrorists), the newly established administration does not intend to finance or arm «moderate rebels», as was repeatedly stated by the new president in the election campaign.

    Equally likely is that as a result of the US-Russian joint mission in Syria against Daesh, confirmed by the Russian Ministry of Defence and repeated by RT and not denied by Spicer (12), the US deep state (especially the Republican Party, the mainstream media and intelligence communities at high levels) has strongly protested against this, maintaining the traditional hostility towards Moscow.

    It is therefore likely that the Trump administration has gone from active support (joint missions) to hidden coordination with Moscow to avoid further friction with some of the components of the so-called ‘deep state'.

    To confirm this hypothesis, strategic bombers have struck with unguided bombs targets that were previously unknown, probably thanks to newly acquired intelligence (otherwise it is not clear why these targets would have not been previously engaged in such missions given the critical situation in Deir ez-Zor for the Syrian Arab Army).

    Regarding paragraphs (6), (7) and (8), it is easy to understand why it is likely that this kind of information is in the possession of Washington. This is also one of the reasons why the previous administration has consistently refused to cooperate with Moscow. The American deep state has deep, hidden links with terrorism in Syria, and the US intelligence community has every intention of maintaining these secrets.

    In conclusion, the call scheduled between Trump and Putin on Saturday, January 28 is another indication of an agreement that is currently developing without much publicity to combat terrorism in Syria. Keeping an eye on the situation in Syria and the talks between the US and Russia over the coming days, it will become easier to evaluate the accuracy of this tentative hypothesis.

  • Meet The New, "Safe" Synthetic CDO's That Could Spell Disaster For The European Banking System

    So what do you do if you’re a European banking regulator faced with the task of maintaining a safe, sustainable financial system amid a concerning growth in bank leverage.  Well, if you said sell down risk assets then you’re just being silly or completely ignoring your implicit obligation to engineer higher banking profitability at all costs.

    If we can get serious for a moment, like in the early 2000’s, when all else fails you turn to synthetic CDO’s which, courtesy of some magical, if completely incomprehensible, math, slashes the risk of bank balance sheets while having a negligible impact on profitability.  It’s called the Synthetic Collateralized Loan Obligation and it’s all the rage in Europe.

    Here’s how it works:

    In a synthetic securitisation a bank buys credit protection on a portfolio of loans from an investor. This means that when a loan in the portfolio defaults, the investor reimburses the bank for the losses incurred on loans in that portfolio up to a maximum, which is the amount invested. This amount therefore provides credit protection for a slice of the portfolio, which is often called the ‘first loss tranche’. The size of this tranche is typically chosen in a way to cover at least the expected losses on the portfolio as well as a share of unexpected losses. The bank usually retains the rest of the risk, which is called the ‘senior tranche’.

     

    Before closing, the bank and the investor agree on the terms of the transaction, such as the amount the investor is at risk for, the duration of the contract and the loans that are eligible for inclusion in the portfolio. Choosing which loans are eligible can be on a disclosed basis, where the investor knows the exact names of the borrowers of these loans, or on a blind pool basis, where the investor does not know the identities of the borrowers. In the latter case the loans are chosen based on criteria, such as the type of loans, sector, geography, credit risk, et cetera.

     

    The term ‘synthetic’ comes from the fact that, unlike in a true sale transaction, the loans being securitised are not sold by the bank but are referenced, which means they remain on the bank’s balance sheet. This way, the bank reduces the credit risk on the securitised loans and remains in charge of managing the loans and the lending relationship with their client itself. Synthetic securitisations are often used for hedging the credit risk on loans that cannot easily be sold.

    As Bloomberg points out, from the regulator’s perspective the logic is that these deals are usually fully funded, with investors posting the full amount that they’re on the hook to cover should a lot of a bank’s loans go bust. They’re not highly leveraged wagers similar to the pre-crisis synthetic collateralized debt obligations, which were backed by who knows what and sold to whomever.

    Of course, the problem with that perspective is that it views the risk profile of the synthetic CLO in a bubble and completely ignores all other possible second derivative implications. 

    One such second derivative implication can by linked back to the primary demand for these structures, hedge funds. 

    CDO

     

    Per the graphic above, hedge funds are all too willing to post the collateral required to backstop losses on a bank’s loan portfolio but only if they can juice their returns somehow.  So how do they do that?  Well, they borrow money from banks, of course.  Yes, you read that correctly, banks are lending money to hedge funds which use that leverage to backstop losses on the bank’s loan portfolio…effectively the bank is issuing loans to backstop loans.

    We vaguely remember similar shenanigans occurring roughly 10 years ago when most of wall street’s modern day titans were still watching Power Rangers in their PJs…as we recall, in the end, it didn’t work out well.

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Today’s News 3rd February 2017

  • Irreversible Damage – The U.S. Economy Cannot Be Repaired

    Submitted by Brandon Smith via Alt-Market.com,

    As I outlined in my article 'The False Economic Narrative Will Die In 2017', the mainstream media has been carefully crafting the propaganda meme that the Trump administration is inheriting a global economy in “ascension,” when in fact, the opposite is true. Trump enters office at a time of longstanding decline and will likely witness severe and accelerated decline over the course of the next year. The signs are already present, and this fits exactly with the basis for my prediction of the Trump election win – conservative movements are indeed being set up as scapegoats for a global economic crisis that international financiers actually created.

    Plus, it doesn’t help that Trump keeps boasting about the farcical Dow hitting record highs after his entry into the White House. Talk about the perfect setup…

    With the speed at which Trump is issuing executive orders, my concern is that people’s heads will be spinning so fast they will start to assume an appearance of economic progress. Here is the issue — some problems simply cannot be fixed, at least not in a top down fashion. Some disasters cannot be prevented. Sometimes, a crisis has to run its course before a nation or society or economy can return to stability. This is invariably true of the underlying crisis within the U.S. economy.

    It is imperative that liberty activists and conservatives avoid false hope in fiscal recovery and remain vigilant and prepared for a breakdown within the system. Despite the sudden political sea change with Trump and the Republican party in majority control of the D.C. apparatus, there is nothing that can be done through government to ease fiscal tensions at this time. Here are some of the primary reasons why:

    Government Does Not Create Wealth

    Government is a wealth-devouring machine. The bigger the government, the more adept it is at snatching capital and misallocating it. Such a system is inherently unequipped to repair an economy in a stagflationary spiral.

    I’m hearing a whole lot of talk lately on all the jobs that will be created through Trump’s infrastructure spending plans, which reminds me of the desperation at the onset of the Great Depression and the efforts by Herbert Hoover to reignite the U.S. economy through a series of public works programs. Reality does not support a successful outcome for this endeavor.

    First off, Trump’s ideas for infrastructure spending to kick start a U.S. recovery are not new. The Obama administration and Congress passed the largest transportation spending bill in more than a decade in 2015 and pushed for a similar strategy to what is now being suggested by Trump. I should point out though that like Herbert Hoover, Obama’s efforts in this area were essentially fruitless. Obama was the first president since Hoover to see “official” annual U.S. GDP growth drop below 3 percent for the entirety of his presidency, with GDP in 2016 dropping to a dismal 1.6 percent.

    Though projects like the Hoover Dam were epic in scope and electrifying to the public imagination during the Depression, they did little to fuel the overall long-term prospects of the American economy. This is because government is incapable of creating wealth; it can only steal wealth from the citizenry through taxation to pay debts conjured out of thin air, or, it can strike a devil’s bargain with central banks to print its way to fake prosperity.

    Some might argue that Trump is more likely to redirect funds from poorly conceived Obama-era programs instead of increasing taxes or printing, but this does not change the bigger picture. Redirected funds are still taxpayer funds, and those funds would be far better spent if they were returned to taxpayers rather than wasted in a vain effort to increase GDP by a percentage point. Beyond this, the number of jobs generated through the process will be a drop in the bucket compared to the 100 million plus people no longer employed within the U.S. at this time.

    Bottom line? Though new roads and a wall on the southern border are winners for many conservatives, infrastructure spending is a non-solution in preventing a long-term fiscal disaster.

    Interdependency Is Hard To Break

    Another prospect for raising funds to pay for job generating public works projects is the use of tariffs on foreign imports. Specifically, imports of goods from countries which have maintained unfair trade advantages through global agreements like NAFTA, CAFTA or the China Trade Bill. This is obviously a practical concept and it was always the intention of the founding father post-revolution for government to generate most of its funding through taxation of foreign imports and interstate commerce, rather than taxation of the hard earned incomes of the citizenry. However, the idea is not without consequences.

    Unfortunately, globalists have spent the better part of a half-century ensuring that individual nations are completely financially dependent on one another. The U.S. is at the very CENTER of this interdependency with our currency as the world reserve standard. In order to change the nature of the inderdependent system, we have to change the nature of our participation within that system. This means, in order to assert large tariffs on countries like China (which Trump has suggested), America would have to be willing to sacrifice the main advantage it enjoys within the interdependent model — we would have to sacrifice the dollar’s world reserve status.

    Keep in mind, this is likely to be done for us in an aggressive manner by nations like China. China’s considerable dollar and treasury bond holds can be liquidated, and despite claims by mainstream shills, this WILL in fact have destructive effects on the U.S. economy.

    Also keep in mind that with higher tariffs come higher prices on the shelf. The majority of goods consumed by Americans come from outside the country. Higher tariffs only work to our advantage when we have a manufacturing base capable of producing the goods we need at prices we can afford. The American manufacturing base within our own nation is essentially nonexistent compared to the Great Depression. In order to levy tariffs we would need a level of production support we simply do not have.

    The point is, an unprecedented change in America's production dynamic would have to happen so that we do not face heavy fiscal consequences for the use of tariffs as an economic weapon.

    Manufacturing Takes Time To Rebuild

    Much excitement has been garnered by reports that certain U.S. corporations will be bringing some manufacturing back within our borders over the course of Trump’s first term as president. And certainly this is something that needs to happen. We should have never outsourced our manufacturing capability in the first place. But, is this too little too late? I believe so.

    I remember back in 2008/2009 mainstream economists were applauding the Federal Reserve’s bailout efforts and the call for quantitative easing, because, they argued, this would diminish the dollar’s value on the global market, which would make American goods less expensive, and by extension inspire a manufacturing renaissance. Of course, this never happened, which only adds to the mountain of evidence proving that most mainstream economists are intellectual idiots.

    It is important that we do not fall into the same false-hope trap in 2017. While Trump may or may not handle matters more aggressively, there is only so much that can be accomplished through politics. Rebuilding a manufacturing base after decades of outsourcing takes time. Many years, in fact. Factories have to be commissioned, money has to change many hands, wages have to be scouted for the best possible labor per-dollar spent and people have to be trained from the very ground up in how to produce goods again. In many cases, the skill sets required to maintain functioning factories in the U.S. (from engineers to machinists to assembly line labor to the people who know how to manage it all) just don’t exist anymore.  All we have left are millions of retail and food service workers forming mobs to demand $15 an hour, which is simply not going to encourage a return to manufacturing.

    Beyond this, at least in the short term, America will have a much stronger dollar on the global market, rather than a weaker dollar, due to the fact that the Federal Reserve has initiated a renewed series of interest rate increases just as Trump entered office.  While the mainstream theorizes that the Fed will turn "dovish" and back away from rate hikes, I think this is a rather naive notion.  It serves the elites far better to create a battle between Trump and the Fed – therefore, I see no reason for the Fed to back away from its rate hike process.  Trump will demand a weaker dollar, the Fed won't give it to him, and ultimately, the global economy will start to see the dollar as a risky venture and dump it as the world reserve; which is what the globalist have wanted all along so that they can introduce the SDR as a bridge to a new world currency.

    With a "strong" dollar (relative to other indexes) there is even LESS incentive for foreign nations to buy our goods now than there was after the credit crisis in 2008. If the dollar loses world reserve status (as I believe it will during Trump’s first term), then at that point we will have a swiftly falling currency — but too swift to fuel a manufacturing reboot.

    Is there even enough internal wealth to support the rise of manufacturing within the U.S. for a period of time necessary for our economy to rebalance?  If there is I’m not seeing it.  We are a nation mired in debt.  So much so that even selling off our natural resources would not erase the problem.

    Ultimately, the shift away from being tied to a globalized system towards a self-contained producer nation with a citizenry wealthy enough to sustain that production in light of limited exports to foreign buyers is a shift that requires incredible foresight, precision and ample time. It is not something that can be ramrodded into existence through force or by government decree. In fact, the act of trying to force the change haphazardly will only agitate an economy already on the verge of calamity.

    Solutions Start With The Citizenry, Not Washington

    I understand that conservatives in particular want to “make America great again,” and I fully agree with that goal. But, someone has to point out the inconsistencies in the current strategy and recognize that the situation is beyond repair. To make America great again would require decentralized efforts to maximize production and self reliance at a local level, not centralized federal tinkering with the economy. The globalists have been far too thorough in their programs of interdependency. The only way out now is for the system to crash and for the right people to be in place to rebuild.

    Sadly, not only will a crash result in great tragedy for many Americans, but it is also an outcome the globalists prefer. They believe that THEY will be the men in the right place at the right time to rebuild the system in an even more centralized fashion. They hope to sacrifice the old world order to inspire the social desperation needed to convince the masses of the need for a “new world order.” Again, this crash cannot be avoided, it can only be mitigated. We can prepare and become self sufficient. We can fight to ensure that the globalists are not in a position to rebuild the system in their image once the dust settles. But, we should not place too much expectation that the Trump administration will be able to solve any of our economic problems, if that is even their intent.  The solution remains in our hands, not in the hands of the White House.

  • Payrolls Preview: Expect An Upside Surprise (Thanks To The Weather)

    Despite ADP's blowout print this week, consensus January payrolls is 175k (somewhat below the 6- and 12-month averages), but Goldman Sachs expects a higher 200k print thanks to a combination of lower-than-usual year-end layoffs, favorable weather effects, and further improvement in labor market indicators.

    Notably, Bloomberg Intelligence explains that over the past decade, consensus has tended to overestimate the January payrolls gain, but it appears to have corrected this bias over the past five years — a period in which the average miss has been less than 5k. As such, the current consensus forecast implies a significantly weaker outcome than was suggested by the latest ADP employment survey, which showed a 246k increase in private payrolls.

    The seasonal adjustment of the payroll data turns sharply negative in January, as recurring winter layoffs commence in a range of sectors. In recent years, the seasonal adjustment factor for January has averaged near -3036k. (In other words, employers typically layoff 3 million workers in January.)

    Furthermore, as Goldman notes, the report will also be accompanied by the annual benchmark revision to the establishment survey as well as the annual introduction of new population controls in the household survey.

    Overall Goldman forecasts that nonfarm payroll employment increased 200k in January, after an increase of 156k in December and 204k in November. Labor market indicators generally strengthened last month, with a drop in jobless claims between the survey periods to four-decade-lows and further improvement in the employment components of many service-sector and manufacturing surveys. The key labor market subcomponent of the consumer confidence report also rose to levels close to cycle highs. We also expect two temporary factors to boost January employment growth relative to surrounding months, specifically a weather-related rebound (on the order of 20-40k) and lower-than-usual year-end layoffs in the retail sector. On the negative side, we expect some pullback in transportation and warehousing payrolls following elevated growth in December, itself likely related to the secular shift toward online holiday sales.

    Factors arguing for a stronger report:

    • Weather rebound from December. Our analysis of NOAA (National Oceanic and Atmospheric Administration) weather station data suggests that unusually high snowfall during the December payroll survey period may have reduced job growth by roughly 20-40k. As shown in the left panel of Exhibit 1, snowfall in early January was much more in line with seasonal norms, suggesting scope for a weather-related rebound. Updating this analysis to incorporate regional granularity from the December state and local employment survey bolsters the case for January improvement, in our view. In addition to a 3k drop in the weather-sensitive construction category, the softness in overall December payrolls was particularly pronounced in the East North Central and Pacific regions, two parts of the country where snowfall was above seasonal norms during the week of December 17th. More specifically, in the right panel of Exhibit 1 we show that below-trend December payroll growth occurred in several states that also exhibited unusually high snowfall (in the weeks relevant for December payroll growth). Michigan, Illinois, Wisconsin, and Indiana stand out as four relatively large states where payrolls may have been depressed by weather in December.

    Exhibit 1: Weather Likely to Boost January Payrolls Relative to December

    Source: Source: National Centers for Environmental Information, National Oceanic and Atmospheric Administration, Department of Labor, Goldman Sachs Global Investment Research

    • Jobless claims and retail layoffs. Initial claims for unemployment insurance benefits moved lower, averaging a four-decade-low 248k during the four weeks between the December and January payroll survey periods. While seasonally adjustment difficulties likely account for much of the drop, we believe some of the decline reflects underlying labor market improvement and relatively fewer January retail layoffs – both of which would suggest scope for a rebound in January payrolls growth.
    • ADP. The payroll processing firm ADP reported a 246k rise in private payroll employment in January, up from +151k in December and well above expectations of +168k. In past research, we have found that large surprises in the ADP report tend to be predictive of the subsequent nonfarm payroll surprise. Additionally, we believe the above-trend growth in ADP construction employment (+25k) provides evidence for a rebound in weather-sensitive payrolls categories.

    • Manufacturing sector surveys. The employment components of manufacturing surveys generally improved in December, with most now in expansionary territory. The ISM manufacturing employment component rose to a 30-month high (+3.3pt to 56.1), and the Philly Fed (+9.2pt to +12.8), Dallas Fed (+9.5pt to +6.1), Richmond Fed (+9pt to +8), and Empire State (+10.5pt to -1.7) employment indices also improved. On the negative side, the Kansas City Fed (-2pt to +6) employment component softened, and the Chicago PMI employment index declined into contractionary territory. Manufacturing payroll employment rose 17k in December, its first increase in five months.
    • Service sector surveys. Most of the employment components of service sector surveys improved or remained at encouraging levels in January. The Philly Fed non-manufacturing employment index rose to a 1-year high (+2.8pt to +19.5) and the New York Fed index increased to an 18-month high (+4.5pt to +16.9, SA by GS). Meanwhile, the Richmond Fed (-4pt to +8.0) and Dallas Fed (-2.1pt to +4.8) measures pulled back modestly to levels still consistent with expansion. The ISM non-manufacturing survey will be released tomorrow, though the December employment index of 52.7 was consistent with moderate growth in service-sector jobs. Service sector payroll employment increased 132k in December and has increased 167k on average over the last six months.
    • Job availability. The Conference Board’s Help Wanted Online (HWOL) report showed an increase in online job postings for a second consecutive month in January, though their total job ad count remains 9.5% lower on a year-over-year basis (vs. -8.8% in December and -14.9% in November). We place a limited weight on this indicator at the moment in light of research by Fed economists, which suggests the HWOL ad count has been depressed by higher prices for online job ads.

    Arguing for a weaker report:

    • Transportation jobs. Transportation and warehousing payrolls have seen elevated growth in December in recent years followed by softer growth or outright declines the next month, a phenomenon that may be driven by a secular shift toward online holiday sales. This winter seems to be exhibiting the same pattern, as transportation payrolls increased at an above-trend pace of +15k in December. With the holidays now behind us, we expect tomorrow’s report to show restrained growth or a modest decline in this category.
    • Early-month storms in the South. Despite fairly unremarkable snowfall on a national basis during early January, one counterargument against the case for a weather-related rebound is the early-month snowstorms in the South, a region less accustomed to severe winter weather. While admittedly a risk, we would note that these storms generally occurred the Friday and Saturday before the survey week, and our analysis of snow cover – the depth of snow recorded by weather stations on a given day – indicates that most of the snow accumulation had melted by the Monday or Tuesday of the survey week (see Exhibit 2). Accordingly, we believe the negative payrolls impact of these storms is likely to be fairly modest, though storm-related absences could exert some downward pressure on hours worked (for employees with multi-week pay periods).

    Exhibit 2: Most of the Snow Accumulated in the Southern Winter Storms Had Melted by the Monday and Tuesday of the Payroll Survey Week

    Source: Source: National Centers for Environmental Information, National Oceanic and Atmospheric Administration, Goldman Sachs Global Investment Research

    • Seasonals. Since 2010, January payroll growth has surprised negatively relative to consensus in five of the seven instances, with an average miss of -18k. While this may suggest some downside risk at the margin, we would note that severe winter weather was likely a factor in some of these observations (2010 and 2011, for example).

    Neutral factors:

    • Federal Hiring Freeze. The new administration’s announced hiring freeze for Federal works took place on January 23rd, over a week after the January payrolls survey period had ended. As a result, we do not expect any negative impact on the January employment report. In fact, we see some possibility of a positive impact if, for example, some federal departments anticipated the hiring freeze and front-loaded employment growth accordingly. That being said, we doubt we will observe evidence of a material impact in the aggregate data.
    • Job cuts. Announced layoffs reported by Challenger, Gray & Christmas after our seasonal adjustment declined by 5k to 36k in January, though the level of announced layoffs remains moderately above the October lows.

    *  *  *

    We believe that the unemployment rate is likely to fall one-tenth to 4.6% (from 4.716% unrounded) – which would mark a return to the cycle low – driven by reduced year-end retail layoffs and our expectation of broader labor market improvement in January. We forecast average hourly earnings to rise 0.3% month over month and 2.8% year over year, reflecting firming labor markets and state-level minimum wage hikes. Our estimate incorporates a boost of 10 basis points from minimum wage hikes, which affected 19 states and increased the effective national minimum wage by about $0.25 (to $8.50 per hour).

    Tomorrow’s employment report will be accompanied by the annual benchmark revision to the establishment survey as well as the annual introduction of new population controls in the household survey. In September, the BLS released a preliminary estimate of the establishment survey revision, which suggested a downward adjustment of 150k to the level of March 2016 employment (or -12.5k per month from April 2015 to March 2016). This preliminary estimate appears broadly consistent with the trends in the Quarterly Census of Employment and Wages, from which the benchmark revision is primarily derived. We would note that the composition of September’s preliminary estimates was somewhat unfavorable, with a larger downward revision expected in private payrolls (-224k) – concentrated in professional services (-133k) and retail trade (-120k) – offset by an expected upward revision to the level of government employment (+74k).

    As a reminder the entire world is long stocks, short vol, and short bonds, so any surprise tomorrow that would upset The Fed's carefully choreographed 3-rate-hikes plan could spook a very one-sided ship.

    But if that fails Buy The Fucking Payrolls Dip no matter what…

  • Will "Big Data" Make A Centrally Planned Economy Possible?

    Submitted by Xiong Yue via The Mises Institute,

    Many of us were once convinced that idea of the centrally-planned economy, both in theory and in practice, had been completely buried. Most economists today would argue that the planned economy doesn't work, and in the last two decades of the twentieth century, almost all the planned economies shifted toward market economics.

    However, with the development of new technologies such as cloud computing, big data, and artificial intelligence, some people are starting to believe that – with the help of powerful new technologies – we can finally achieve a planned economy.

    In a recent speech, Jack Ma, one of China's most famous entrepreneurs and Founder and Chairman of Board of Alibaba Group, has expressed his optimism for the future recovery of the planned economy. He declares:

    Over the past 100 years, we have always felt that the market economy is excellent, but in my opinion, in the next three decades will be a significant change, the planned economy will become increasingly large. Because we have access to all kinds of data, we may be able to find the invisible hand of the market. … [I]n the age of data, it is like we have an X-ray machine and a CT machine for the world economy, so 30 years later there will be a new theory [on planned economy] out.

    Well, as a grand, romantic dream of the humankind — although the planned economy has failed several times in its operation in the real world — I am not surprised to know that it is still quite attractive to social elites such as Jack Ma.

    It is true, to some extent, that with the development of technologies, central planners now can obtain more data and information, and their ability to analyze these data and the information is greatly enhanced as well. Moreover, in the foreseeable future, those skills will be further enhanced. Ma believes a planned economy can be achieved in the future precisely because of his companies, Taobao and Alipay, are ubiquitous in the areas of e-commerce and payment in China and therefore can collect an enormous amount of consumption data. To Jack Ma himself and other "technical socialists," such data could be the cornerstone of the operation of the planned economy.

    However, if we look at this more closely, we realize these data are mere:

    (1) data based on real deals of the past, which can not be used to predict the consumer preferences in the future; or

     

    (2) data obtained using questionnaires, which can not reflect the real demonstrated preferences of customers.

    In either case, with the dazzling new technologies, what central planners can get is still a guess of the real world, a beautiful mirage.

    Besides, those who consider the problem of socialism as merely a problem of information failed to understand that the core problem of socialism lies in the absence of prices in a centrally-planned economy. The role of prices in the market economy is unique because money prices offer an indispensable tool in economic calculation. As Mises writes in Human Action,

    One cannot add up values or valuations. One can add up prices expressed in terms of money, but not scales of preference.

    With prices as a guide, entrepreneurs can potentially pursue profits by examining differences in the market prices of production factors and the expected prices of the final products. He or she can then organize production accordingly.

    Therefore, even if we have some excellent data already, without this market-price mechanism, neither the economic calculation nor the efficient allocation of resources is possible; the planned economy is therefore not feasible. Because rationally planning or resource allocation requires the ability to calculate economically, such calculations need the prices which can be determined only in the market by the real-world exchange of owners of private property in the first place. Since the planned economy requires state and collective control of resources — and thus no tallow for these necessary voluntary exchanges between owners — it cannot rationally plan the operation of the modern economic system.

    As a result, it's theoretically impossible for a planned economy to determine the prices needed for economic calculation. The cutting-edge technologies may help Jack Ma to optimize his strategies in his private enterprises in a relatively capitalist society. However, for a modern economy, as long as there are no prices available on which to base economic calculation, the failure of a planned economy is inevitable. As Joseph Salerno writes in his postscript to “Economic Calculation in the Socialist Commonwealth”:

    [I]n the absence of competitively determined money prices for the factors of production, possession of literally all the knowledge in the world would not enable an individual to allocate productive resources economically within the social division of labor.

     

  • Spot The Intervention (Bank Of Japan Edition)

    We warned earlier “the market would test the BoJ,” and sure enough Kuroda and his ‘lost boys’ answered the market’s question by intervening aggressively (offering to buy an unlimited amount of bonds) to rescue what was a rapidly escalating collapse in Japanese government bonds.

    As Bloomberg reports, The Bank of Japan offered to buy an unlimited amount of bonds at a fixed rate in an unscheduled operation to reassert control over surging yields. The yen and yield for 10-year debt fell.

    The central bank will buy five-to-10 year securities from the secondary market, it said in a statement Friday. It’s offering to buy the benchmark 10-year notes at 0.110 percent, it said.

     

    The move comes after an earlier attempt Friday morning to cap yields by expanding bond purchases in a regular operation failed. 

     

    Governor Haruhiko Kuroda on Tuesday recommitted to his strategy to hold 10-year debt yield at around zero percent even as accelerating inflation and an improving outlook for some of the world’s biggest economies push up bond yields globally.

    The reaction is self-evident…

     

    And USDJPY spiked…

     

    It would appear Governor Kuroda has shown his hand one too many times (after November’s first operation – which failed to garner any bids).

  • Canadian Mint Worker Sentenced To 30 Months For Smuggling $140,000 Of Gold In His Rectum

    In September we reported that an employee of the Royal Canadian Mint smuggled C$180,000 (USD $140,000) in gold from the fortress-like facility, evading multiple levels of detection with a time-honoured prison trick: hiding the precious metal up his butt.

    Having been found guilty in November ("wait, what gold coins, where?"), 35-year-old Leston Lawrence was sentenced to 30 months in prison today, by a judge whose name was 'Doody'.

    As we detailed previously, a suspicious bank teller raised the alarm in 2015. Lawrence sold 18 gold pucks — each a circular 7.4-ounce nugget worth about $6,800 — to an Ottawa Gold Buyers store between Nov. 27, 2014, and March 12, 2015, according to court records obtained by the Toronto Sun. Three observations tipped off the bank teller: Lawrence was a mint employee, he had an unusual number of deposits and he frequently requested overseas transactions.

    Furthermore, as the OC reports, the case is "an illuminating look at security measures inside the Mint, the building on Sussex Drive that produces hundreds of millions of gold coins annually for the federal Crown corporation." Or rather lack thereof.

     

    The defense was not happy: “Appalling,” was the conclusion of defence lawyer Gary Barnes, who described the Crown’s case as an underwhelming collection of circumstantial evidence. “This is the Royal Canadian Mint, your Honour, and one would think they should have the highest security measures imaginable,” Barnes said in his closing submission. “And here the gold is left sitting around in open buckets.”

     

    He is right, and perhaps anyone who keeps their gold at the mint may want to reconsider the venue of storage.

     

    Court was further told that, on multiple occasions, Lawrence took small circular chunks of gold – or “pucks” – to Ottawa Gold Buyers in the Westgate Shopping Centre on Carling Avenue. Typically, the pucks weighed about 210 grams, or 7.4 ounces, for which he was given cheques in the $6,800 range, depending on fluctuating gold prices, court heard. He then deposited the cheques at the Royal Bank in the same mall.

     

    One day a teller became suspicious at the size and number of Ottawa Gold Buyers cheques being deposited and Lawrence’s request to wire money out of the country. She then noticed on his account profile that he worked at the Mint. The first red flag was up. Bank security was alerted, then the RCMP, which began to investigate. Eventually, a search warrant was obtained and four Mint-style pucks were found in Lawrence’s safety deposit box, court heard.

     

    Records revealed 18 pucks had been sold between Nov. 27, 2014 and March 12, 2015. Together with dozens of gold coins that were redeemed, the total value of the suspected theft was conservatively estimated at C$179,015.

     

    That said, the defence countered with a couple of important points. The Crown was not able to prove conclusively that the gold in Lawrence’s possession actually came from inside the Mint. It had no markings nor, apparently, had any gold been reported missing internally. The Crown was able to show the pucks precisely fit the Mint’s custom “dipping spoon” made in-house — not available commercially — that is used to scoop molten gold during the production process.

     

    Still, one question remained unanswered at the trial: how did the gold get out of the Mint?

     

    The court was told Lawrence set off the metal detector at an exit from the “secure area” with more frequency than any other employee — save those with metal medical implants. When that happened, the procedure was to do a manual search with a hand-held wand, a search that he always passed. (It was not uncommon for employees to set off the detector, court heard.)

     

     

    Investigators also found a container of vaseline in his locker and the trial was presented with the prospect that a puck could be concealed in an anal cavity and not be detected by the wand. In preparation for these proceedings, in fact, a security employee actually tested the idea, Barnes said.

     

    As a result, prosecutors alleged that Lawrence smuggled out gold nuggets inside his rectum.

    And now, almost 2 years later, as AP reports, the former Royal Canadian Mint employee who stole 22 cookie-sized pieces of refined gold by hiding them in his rectum has been sentenced to 30 months in prison.

     

    Thirty-five-year-old Leston Lawrence was found guilty last November of stealing the pieces from the mint and selling 17 of them through Ottawa Gold Buyers.

     

    Ontario Court judge Peter Doody on Thursday sentenced Lawrence and ordered him to pay a fine of US$145,900 (CA$190,000).

     

    Doody says the stolen gold was worth US$127,116.11 (CA$165,451.14) which Lawrence sent abroad to build a house in Jamaica and buy a boat in Florida, among other transactions.

     

    Court testimony indicated that Lawrence was involved in purifying recently procured gold and sometimes worked alone, out of sight of security cameras.

    The Royal Canadian Mint has announced intentions to improve their security in the wake of the crime:

    "upgrades to our facility's security checkpoint and screening process; upgrades to our camera system to high definition which provides real-time monitoring capability in all areas of the mint; and working closely with CATSA [Canadian Air Transport Security Authority] to establish more robust scanning training of our employees."

     

    "The mint is one of the most secure facilities in Canada and we are confident that we have the right security measures in place to effectively operate our business,"

    The mint did not comment as to whether or not employees will now face rectal-cavity searches.

    Maybe those cryptocurrency types are right – hording gold is a pain in the ass.

  • #GrabYourWallet Wins! Nordstrom Cuts Ties with Ivanka Trump's Clothing Line

    Because they believe Trump to be the second or third coming of Hitler (if you recall, Bush was Hitler too), the folks over at Grab Your Wallet have pursued anyone who did business with the Trump family — as a form of political persecution to punish those even remotely affiliated with the Trump brand. Look, they even went through the trouble of slapping a rudimentary spreadsheet together, so that fellow minded snowflakes might protest with their, err, wallets.

    To that end, it appears they’re activism worked. Nordstrom has announced they’re officially cutting ties with the Ivanka brand — citing poor sales as the reason for the ‘de-stocking.’
     

    “Each year we cut about 10% [of brands carried] and refresh our assortment with about the same amount,” a Nordstrom spokesperson told Business Insider. “In this case, based on the brand’s performance we’ve decided not to buy it for this season.”

     
    The founders of Grab Your Wallet, Shannon Coulter and Sue Atencio (they met on Twitter), are quite pleased with this news. Coulter said, “I am absolutely thrilled, and I know the vast majority of Grab Your Wallet participants will be as well.”

    Indeed.

    The cucked Coulter has bee meticulously tracking the availability of Ivanka’s brand, wherever it’s sold. The fashion website ‘Racked‘ chronicled Coulter’s journey in an article published this evening — to celebrate the apex of Coulter’s success — the rueful malevolence towards another human being for the sole purpose of making another person suffer.

    This could very well be some lag time before its spring inventory. But Coulter has been keeping track of the number of Ivanka Trump items the 116-year-old Seattle-based retailer is selling on its site, and the merchandise has been on a decline: From December 2 to December 27th, the number dropped from 71 products to 48. As of January 11th, Nordstrom was selling 43 products, but by January 29th, it was down to 26, according to Coulter’s calculation. (The Macy’s site, on the other hand, has 90 items listed, all with deep discounts.)
     
    As of today, February 2nd, Nordstrom is down to four items. On the Ivanka Trump website, the items from outfits posted four days ago that link out to Nordstrom are no longer available on the site.
     
    That said, stores are still selling the label; a Racked editor who visited a Nordstrom location in White Plains, New York, last Sunday confirms there were plenty of Ivanka Trump shoes in store.
     
    The #GrabYourWallet was started by Coulter and Sue Atencio, a woman she met on Twitter. The duo felt hesitant to shop at retailers that carried Trump family-related products, and when they spoke about it on Twitter, they were met with tons of similar feelings. They started a Google spreadsheet, and the list has since been moved to its own website, GrabYourWallet.org.
     
    The boycott list now includes many major department stores, including Macy’s, Neiman Marcus, Bloomingdale’s, and Lord & Taylor, as well as HSN, Century 21, Overstock.com, and DSW. Each retailer is listed with an explanation as to why it’s being boycotted.
     
    “What this boycott means to me is that companies that I love, like Nordstrom and Amazon, are making money from the Donald Trump campaign, which to me is synonymous with hate and divisiveness so I can’t, in good faith, shop there anymore,” Coulter told Racked back in November. “People aren’t boycotting them to punish them or ruin any businesses. They want to support these companies but can’t do so in good conscience.”
     
    The Ivanka Trump line was included in the boycott, Coulter added, because “she made her father palatable to many young female voters, and her being on the campaign trail, and returning to campaign with him after the Trump tapes, has as much to do with her ambitions as it has to do with her father’s.” (Ivanka formally left her namesake label earlier last month, after her husband, Jared Kushner, took the position of senior White House adviser.)
     
    If Nordstrom is, indeed, dropping the Ivanka Trump label, it won’t be the only retailer to heed to the boycott. In November, Shoes.com told Coulter via Twitter it was dropping the line. There will likely be backlash-to-the-backlash, as evident when L.L. Bean was boycotted by anti-Trump shoppers, then Trump encouraged his fans to buy L.L. Bean as a result.
     
    But this would be a big win for #GrabYourWallet. Coulter says that on January 21st, participants voted that Nordstrom was the most boycott-able company on the list; based off a poll that had 249 participants, Nordstrom was ranked number one, Coulter says, because “that’s the store they’d most like to be able to shop again.”

    The tolerant left.
     
    All is not doom and gloom for Ivanka, however.  According to G3’s 2016 annual statement,  ticker $GIII,  the manufacturer and distributor of Ivanka’s clothing line, the brand is doing quite well — enjoying a $29.4m bump in sales to $100m.
     

    “Initially, when her father started to run for President, I wondered if there’d be a negative or positive effect,” said Sammy Aaron, vice chairman of G-iii, who oversees the Ivanka Trump brand at the company as well as being CEO of its Calvin Klein division. “We’ve really seen very little effect.”
     

    Source: Forbes
    That it’s already seeing revenues of $100 million a year is impressive. “You have designers who do less than that,” Stone said. By way of comparison, sales of Mary-Kate Olsen and Ashley Olsen’s high-end line The Row are reportedly closer to $50 million — itself a high estimate, per an insider. And while some celebrities have little involvement in their licensed brand beyond the approval process, Ivanka Trump is hands-on.
     
    Ivanka is “very involved on a weekly basis” in all stages of the design process, said Aaron, who described her as “one of the most impressive young women” he’s ever met.
     
    “She’s super sensitive to things with her name on it,” he said. “She’s not one of these names just looking for revenues. She’s an assertive person who has definitive taste and a definitive opinion.”

     
    It sounds like Ivanka will survive the scourge of the Twitterati army of Grab Your Wallet miscreants.

     

    Content originally generated at iBankCoin.com

  • What Google Trends Reveal About The State Of America's Torn Society

    By Nicholas Colas of Convergex

    E Pluribus Google (Trends)

    If you want to know what’s really on the minds of the American population since the Election, just look at Google search trends.  For example, did the Dow hitting 20,000 last week spark a lot of interest in the stock market or that venerable measure?  Not really – searches for “Stock market” and “Dow Jones” are the same now as last year at this time.  What DID force public attention on those terms was (you guessed it) the US Election. That event increased searches by +400%, as investors wondered about the effects of President Trump’s surprise win on capital markets.  Equities have, if course, done well since then.  But… won’t all the protests against the new President serve to dampen his effectiveness?  Maybe not.  Google searches for “Protest Trump” are already a running at a fraction of their volumes immediately post-Election, although searches for general “Protest” are still equal to levels from the week of November 7th.  Also in this note: Google search trends related to the US labor market, asking for a raise (the right way), and how to move to Canada.

    * * *

    “If Donald Trump wins, I will move to Canada!”  That was a popular refrain in some circles just before the US Election last November.  Searches on Google for “Move to Canada” were up 20-fold over the week of November 7th, supporting the notion that some citizens were exploring the possibility leaving the US.  A deeper look at the data, courtesy of Google Trends (www.google.com/trends) gives us some more information about this topic:

    • The “Move to Canada” trend was short lived. By late November 2016, searches for that phrase had returned to their typical pre-election run rate.
    • Interest among Americans in moving north tends to run along Presidential election cycles, with bumps in November 2004, 2008, 2012. This cycle was, however, the largest surge of interest in the last 12 years (essentially Google Trend’s entire historical record).
    • The US citizens typically (i.e. not just around elections) most interested in moving to Canada are not left leaning bi-coastal hipsters; rather, they are simply people who live in US states that border Canada. Currently, the people of Montana, Idaho, Alaska and Washington punch “Move to Canada” into Google more than all other US states.
    • As an aside, “Move to Mexico” is nowhere near as popular among American Google users as “Move to Canada”. Over the past year, for example, searches for the latter outnumber the former by three or four to one.

    So have those Americans who searched for new homes in Canada decided to stay and protest the new administration as members of the loyal opposition?  Perhaps…  Here is some Google Trend data on that topic:

    • Google searches for “Protest Trump” spiked around the Election, as one would expect. To give some sense of scale, however, search volumes on Google for “Starbucks” were 3x higher than “Protest Trump” and those for ‘iPhone” were 10x higher during the week of 11/7/2016. That’s not to minimize the scale of social discontent, but merely to put it in context with some common searches.
    • “Protest Trump” searches had another peak around the Inauguration, but volumes there were less than half those from Election week.  For the most recent week, searches for that term are only 32% of those from November.
    • The 5 states that most commonly search for “Protest Trump”: Washington, Vermont, DC, New York, and Rhode Island.  As far as cities go, the top 5 are Portland (OR), Seattle, New York, San Francisco and Los Angeles.
    • Make the search term more generic – just “Protest” – and a different story emerges. Here, search volumes peaked just last week.  There was a bump around the Election, of course, Google users are looking to “Protest” now just as much as last November.
    • The states with the largest interest in “Protest” are: North Dakota (likely pipeline related), Washington, Vermont, DC and South Dakota (also pipeline).  By city, Oakland, Portland, Seattle, Minneapolis and San Francisco make up the top 5.
    • Why worry about protests?  It is all part of our “Trump on, Trump off” market construct.  As long as equity markets believe President Trump will be able to execute on his plans for lower business/individual taxes, infrastructure spending and regulatory reform, we have a good chance of seeing higher equity prices.  But if large public protests develop, perhaps capital markets will lose some of that conviction.  We don’t have enough experience with a President Trump to know how that dynamic plays out over time, but it is worth watching now.

    How about the recent news that the Dow had finally hit 20,000?  Did that spark broad interest in the stock market or the Dow Jones Industrial Average?  The answer:

    • American public interest in searches for the “Stock market” and “Dow Jones” has picked up since 2015 by almost 30% as compared to 2012-2014. A piece of this is the incremental interest when market volatility hits (August 2015 and November 2016 are the best examples).
    • That said, breaching the 20,000 mark did nothing for Google search volumes for either term. This may not be “The most hated rally of all time”, as much of the 2009-2016 move was called, but it may well be “the most ignored rally of all time”.

    You can also use Google Trends to analyze the US labor market.  Five points on that topic:

    • Don’t worry too much about wage inflation. Google users are no more likely to be researching how to ask their boss for more money now versus a year ago.  We used “Ask for a raise” and “get a raise” search phrases to assess levels of general popular interest.
    • And even if they do ask, related Google searches tell us they may not be going about it correctly. Consider that “How to ask for a raise email” and “via email” are popular variants of “ask for a raise”.
    • When you look to see which US states have an above-average number of Google users intent on negotiating for more money at work, the answer is not surprising: New York, California, Illinois and Texas. The only city that shows up on the Google data as statistically significant: New York.  Bottom line: wages may see pressure where large urban areas with predominately college-educated workers dominate the local economy, but not for the country as a whole.
    • Getting a new job is a common New Year’s resolution, and this January saw a record number of Google users actually search for “New job” the week of January 1. This could lead to more changes in the US labor force this year if workers actually follow through on their goal of landing a new position.
    • Searches for “Find a job” and “get a job” are lower in 2016 than 2012, but largely similar to 2015. That’s surprising, given that the official government data shows a decline in unemployment from 6.3% in Q1 2015 to just 4.7% in Q4 2016. After all, if there are fewer people unemployed, why wouldn’t search counts decline modestly as well?

    To sum up: Google Trends tell us that there isn’t enough attention focused on the US stock market to be worried that we are in a “Bubble”.   That’s the good news.  On the other side of the coin, there’s a lot of attention sloshing around elsewhere.  As long as markets stay focused on the potential upsides of a Trump administration, the stealth rally can continue.  Inevitably, however, there will be some lapses.  We haven’t seen one yet; I am sure we will.

  • Reddit Bans Three Alt-Right Forums As Users Blast "Leftist Intolerance"

    In what will undoubtedly be viewed as just another attempt to censor dissenting, conservative political views, Reddit has banned three major ‘alt-right’ subreddits, /r/altright, /r/rightyfriends and /r/alternativeright, this evening for allegedly breaching the company’s content policy restricting the sharing of personal, private information.  The so-called ‘Alt-right’ group had roughly 16,000 followers and grew in popularity last summer along with the rise of Donald Trump’s political campaign.

    While Reddit hasn’t yet issued a formal statement on the ban, the following comments were offered up to The Daily Beast:

    “Reddit is the proud home to some of the most authentic conversations online,” a statement provided to The Daily Beast by the company read. “We strive to be a welcoming, open platform for all by trusting our users to maintain an environment that cultivates genuine conversation and adheres to our content policy.”

     

    “We are very clear in our site terms of service that posting of personal information can get users banned from Reddit and we ask our communities not to post content that harasses or invites harassment. We have banned r/altright due to repeated violations of the terms of our content policy. There is no single solution to these issues and we are actively engaging with the Reddit community to improve everyone’s experience.”

    Reddit Ban

     

    A senior moderator of the atlright subreddit, who referred to himself as Bill Simpson, told The Daily Beast that the forum was “banned without notification or justification” and insisted that moderators “enforced stricter standards of behavior than reddit requires.”

    “So much for leftist tolerance. Our moderator team enforced stricter standards of behavior than reddit requires, and our users were very prompt at reporting violations so we could ban violators and delete posts and comments that broke the rules,” he added.

     

    Additionally, Simpson claimed that the subreddit was banned because of its recent “record monthly traffic.”

     

    “It’s clear that Reddit banned us because we were becoming very popular and spreading inconvenient truths about who’s ruining our country and robbing our children of a future,” Simpson said.

    The announcement of the ban came just days after Reddit founder Alexis Ohanian penned an open letter trashing Trump’s immigration ban, calling it “not only potentially unconstitutional, but deeply un-American.”

    After two weeks abroad, I was looking forward to returning to the U.S. this weekend, but as I got off the plane at LAX on Sunday, I wasn’t sure what country I was coming back to.

     

    President Trump’s recent executive order is not only potentially unconstitutional, but deeply un-American. We are a nation of immigrants, after all. In the tech world, we often talk about a startup’s “unfair advantage” that allows it to beat competitors. Welcoming immigrants and refugees has been our country’s unfair advantage, and coming from an immigrant family has been mine as an entrepreneur.

    Of course, all of this comes after Reddit CEO, Steve Huffman, admitted two months ago to editing individual posts made by Trump supporters that were critical of him.  Per the apology below, Huffman edited posts to redirect criticism away from him and onto the moderators of the “r/the_donald” thread.  

    Reddit

     

    Free speech is a wonderful thing, provided it conforms to the prevailing political views of Silicon Valley’s elitist tech billionaires.

  • The Uncanny Similarities Between President Trump And FDR

    Submitted by Jeff Brown via The Saker,

    Trump and Roosevelt: two peas in a pod?

    For the record, I voted for Donald Trump. Not that I was in love with the guy. It was really a matter of default. On the Oklahoma state ballot, I had the choice of Hillary “Crimes Against Humanity + Here Comes World War III” Clinton, the Libertarian candidate Gary Johnson and Mr. Trump. I chose Trump, a populist, sometimes demagogue and buffoon, but a real outsider who might shake the establishment up.

    It is still early, but no one can say that the first two weeks of Trump’s administration have been boring or predictable. He loudly called the outgoing CIA director, John Brennan, a liar and said that the agency’s Russia dossier was all fake news. John F. Kennedy said just as much in private and paid the ultimate price for his honesty. Trump has apparently kept on his own private security services, since getting elected, to avoid the same fate as JFK.

    President Trump canceled the Transpacific Partnership (TPP), which was bad for everybody involved, except the transnational corporations who bribed, extorted and blackmailed some Pac Rim countries into signing on. But even America’s corporate owned Senate and Congress were resisting. Why? Because a signatory country gives up its national sovereignty to a corporate picked “international arbitration commission”.

    Under the TPP, any company can take any country’s laws to this “unbiased” group of corporate jocks and claim that they are an “infringement on trade”. Think GMOs, agricultural chemicals, cultural and religious laws, subsidies to promote national industries and infrastructure; media and internet regulations; medicine and social security; environmental, worker and civilian safety laws, taxation, and on and on. Once this unelected, corporate board rules against any and all national laws, then the signatory country’s legislature is required to abolish those law and regulations, in the name of “free trade”.

    So, Mr. Trump, thank you cancelling this Orwellian, plutocratic, corporatocracy. I can assure you, Baba Beijing wants nothing to do with it. China’s leaders want to govern and help their people, not be tyrannized and humiliated by faceless transnational corporations.

    I watched Trump’s inauguration day speech. I also watched Trump’s press conference, with small and medium sized business owners, and in both cases, I was amazed at the similarities between him and President Franklin Delano Roosevelt (1933-1945).

    The first observation that really struck me is how much Trump genuinely cares about “the little guy”. It’s not phony. He really does want to help the people in America who have been disenfranchised from having a voice in their destiny, something that has been building up for quite a long time. FDR was just as sincere about helping all the millions of hungry, homeless and jobless Americans, during the Great Depression. The US had to wait eight years after the Great Financial Crash of 2008, also known as the Great Middle Class Gang Bang, for populist Trump to ride to the rescue.

    Both presidents came from wealthy backgrounds, with the proverbial silver spoon in their mouths. FDR’s family made its fortune via the organized crime opium cartel in China, 1839-1949. Trump’s father was a big construction, slum lord and real estate tycoon in New York City. He was investigated on numerous occasions for illegal business practices. You don’t succeed in these Big Apple business sectors and not be in the good graces of the Mafia.

    Using his patrician family’s name, FDR worked his way up to the top of the American political system, to eventually become president. Donald Trump used his father’s wealth and connections to work his way up the corporate and media ladder, to eventually occupy the White House.

    Both men are “rich, fat and happy”, to use the expression, and do not have to make all the sacrifices and take all the risks to run the United States, but both have their principles, ideas and visions for the future (For simplicity, I will use the present tense to compare both presidents, even though they lived generations apart).

    Both men want to put Americans back to work again and reignite the country’s industrial potential.

    Both men are disgusted with the usurious, rapacious, private Federal Reserve banking system. FDR complained bitterly about the Fed in his private writings and only obliquely so, in public. Trump is more vocal and seems less intimidated by the elite banking families, Rothschild, Rockefeller, Morgan, Carnegie & Co., the real owners of the United States and Europe. JFK was circumventing the Fed, by having the Treasury Department mint “silver certificate” bills outside the purvey of the Fed banks, another reason he lived a very short life. With his purported private security forces keeping him safe from the CIA, maybe Trump feels just as safe from the agency’s historical deep state partners, the aforementioned oil bankers.

    Both men have a strong vision for what ails the country. For FDR, it was the New Deal. For Trump, it is “Put Americans First”.

    Both men are despised by the elites. Both men are proud of it too. FDR famously said he welcomed the hatred of Wall Street. Trump has repeatedly threatened and is starting to act on his promise to “drain the swamp in Washington”.

    Both men take the choice of Supreme Court justices very seriously and both have a chance to really change the political leanings on the bench. For FDR, it was to make the Supreme Court more liberal. For Trump, it will be to make it more socially conservative. Both believe their choices will be for the betterment of the citizens.

    Both men know how relate to their constituencies, the man and woman on the street, the little guy and gal, Joe and Jane Sixpack. FDR ruled the radio waves with his famous “fireside chats”, bucking up the populace to work hard, stay positive and look forward to better times. Trump is a brilliant manager of the media and does not hesitate to take his populist message to his base, via social media, such as Twitter and Facebook. As a result, both presidents’ voters love them and are not hesitant to let everybody know this fact.

    Conversely, both presidents have a big chunk of the electorate who despise them. For Trump, it is the wealthy elites and liberals. For FDR, it was these same elites, but the other group was middle America’s conservative and Christian block. So in essence, FDR and Trump have kept the wrath and indignation of the ruling Princes of Power, but have switched sides on Main Street, making a very interesting dynamic, for sure.

    Both men talk about keeping America safe from external enemies. FDR ended up getting the US into World War II, ostensibly to do just that. The jury is still out on how aggressive Trump will be in dropping bombs and drones on thousands of innocent Muslims across the planet, in the name of fighting “Islamic terrorism”.

    As a result of getting into World War II, FDR greatly increased the size and technology of the US military. Trump says he too, wants to greatly expand the military budget, and make it “unbeatable”.

    Both presidents believe in Keynesian deficit spending, to boost the economy. FDR greatly expanded government programs to help the downtrodden, as well as turn the US into a war economy, with World War II. Trump wants to spend lavishly on the military and dramatically lower business taxes, just like a country at war, while going into even deeper debt than the already official $20 trillion void Americans are on the hook for.

    Both FDR and Trump want to work with Russia. Roosevelt and Soviet leader Josef Stalin had a good working relationship together. Trump is signaling his desire to work on the positive side of the ledger, with Russian President Vladimir Putin.

    In part due to his family’s historical role of “working” in China (in fact, selling illegal drugs), FDR had a fancy for this country. In his own way, he strived to make China a part of the postwar Western world order, but with all the historical colonialist, imperialist baggage in tow, he was doomed to fail. This is why a guy by the name of Mao Zedong came along with a better idea for his people. Trump has been all over the place with China, saying he wants to “cut a deal” with President Xi Jinping, while raising tariffs 45% across the board, but mixing in Taiwan and threatening to upturn the “One China Policy”, which if pushed to the extreme, could cause World War III. Here’s to hoping that Trump takes a fancy to the People’s Republic, like Roosevelt, but without all the “Great Game” imperial megalomania and cupidity.

    These amazing corollaries between Presidents Franklin Delano Roosevelt and Donald Trump will surely grow, as Trump’s presidency takes root. It’s going to be an interesting next four to eight years, indeed. And dare I say, like my grandparents did during the 1930s, that it’s a time for hope?

    http://chinarising.puntopress.com/wp-content/uploads/2017/02/Trump-and-Roosevelt.jpg

    Soul brothers in a parallel universe…

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Today’s News 2nd February 2017

  • Is Trump Being Sabotaged By The Pentagon?

    Authored by Paul Craig Roberts,

    President Trump says he wants the US to have better relations with Russia and to halt military operations against Muslim countries. But he is being undermined by the Pentagon.

    The commander of US forces in Europe, General Ben Hodges, has lined up tanks on Poland’s border with Russia and fired salvos that the general says are a message to Russia, not a training exercise.

    How is Trump going to normalize relations with Russia when the commander of US forces in Europe is threatening Russia with words and deeds?

    The Pentagon has also sent armored vehicles to “moderate rebels” in Syria, according to Penagon spokesman Col. John Dorrian. Unable to prevent Russia and Syria from winning the war against ISIS, the Pentagon is busy at work derailing the peace negotiations.

    The military/security complex is using its puppets-on-a-string in the House and Senate to generate renewed conflict with Iran and to continue threats against China.

    Clearly, Trump is not in control of the most important part of his agenda—peace with the thermo-nuclear powers and cessation of interference in the affairs of other countries.

    Trump cannot simultaneously make peace with Russia and make war on Iran and China. The Russian government is not stupid. It will not sell out China and Iran for a deal with the West. Iran is a buffer against jihadism spilling into Muslim populations in the Russian Federation. China is Russia’s most important military and economic strategic ally against a renewal of US hostility toward Russia by Trump’s successor, assuming Trump succeeds in reducing US/Russian tensions. The neoconservatives with their agenda of US world hegemony and their alliance with the military-security complex will outlast the Trump administration.

    Moreover, China is rising, while the corrupt and dehumanized West is failing. A deal with the West is worth nothing. Countries that make deals with the West are exposed to financial and political exploitation. They become vassals. There are no exceptions.

    Russia’s desire to be part of the West is perplexing. Russia should build its security on relations with China and Asia, and let the West, desirous of participating in this success, come to Russia to ask for a deal.

    Why be a supplicant when you can be the decider?

  • Here Are The Countries Where Millennials Will Struggle The Most To Support Retirees

    The United States is a demographic time bomb, plain and simple.  Over the next 30 years, the U.S. economy will face an unrelenting demographic transition as ~75 million baby boomers exit the highest wage earning years of their life and start to draw down what little retirement savings they’ve managed to tuck away while wreaking havoc on the public “safety net” ponzi schemes, like Social Security, that will almost certainly be insolvent in a decade.

    Per the U.S. Census Bureau, over the next 30 years, the number of people in the U.S. over the age of 65 is expected to double while those 85 and up will triple.  Needless to say, the overall population growth of the United States is a fraction of that which means that millennials are about to get crushed by their parents….so it’s probably a good thing they already live in mom and dad’s basement.

    US Population

     

    But, since misery loves company, we figured we would take this opportunity to highlight Bloomberg’s “Sunset Index” which tracks the number of working age people per retiree, by country and confirms that the United States is far from alone in their pending demographic crisis. 

    Baby Boomers


    While France and Singapore are currently the worst off with only 2.2 workers per retiree, the map below highlights just how pervasive the aging population crisis is around the globe. 

    The world’s working-age population is shrinking faster than expected, leaving fewer people to support a growing number of seniors, according to the Bloomberg Sunset Index.

     

    As seniors increasingly outnumber people still in the workforce, pressures rise on investment pools, medical systems and funds to build economies for future generations.

     

    “The demographics cannot be ignored, but there are solutions,” said Suzanne Kunkel, director of the Scripps Gerontology Center at Miami University in Oxford, Ohio. “Those solutions need to be cultural, political, economic. There is no magic answer. The reality is China will deal with it differently than Italy.”

     

    Asia could be facing the toughest choices in allocating resources. The Asia Pacific Risk Center estimates the region’s elderly population will rise 71 percent by 2030, compared with 55 percent in North America and 31 percent in Europe.

    Baby Boomers

     

    Of course, the financial burdens placed on young people around the world as a result of aging populations is highly dependent upon the extent of social services that have been promised and just how poorly funded those ponzi schemes are..which doesn’t bode well for the United States.

    “There are other-than-alarmist views about population aging,” said David Ekerdt, director of the Gerontology Center at the University of Kansas. “Advanced economies face rather different challenges depending on the social provisions they have promised and the declines in fertility that have occurred in these nations.”

     

    The U.S., for example, has “very high health-care costs for all citizens,” he said. “I would also say, politically, that it’s a large leap to assume that social spending, if reduced for one group, would be applied to another group.”

    Baby Boomers


    But, not to worry, we’re sure that markets are adequately discounting these long-term demographic risks that are almost certain to lay waste to the global economy over the next two decades.

    S&P

  • Chicago Violence "Totally Out Of Control" In January; City On Pace For Most Homicides In 2 Decades

    Submitted by Joseph Jankowski via Planet Free Will

    Chicago is starting the year 2017 much like it did 2016: plagued with violence.

    The number of shootings in the month of January nearly duplicated the tally from the start of last year, which was the bloodiest year in Chicago in more than two decades.

    According to Chicago police, January ended with 51 murders, one more than last year.  Per HeyJackAss!, here is how the daily murder totals trended over the past month:

    Chicago Murders

    From ABC 7 Chicago:

    Police recorded 51 murders across the city last month, one more than January 2016, the department said. Although, the department said in a release last year that 51 people were murdered in Chicago in January 2016

     

    Three police districts on the city’s South and West sides – the Englewood, Harrison and Austin districts – accounted for about half of the city’s murders last month.

     

    Police counted 234 shooting incidents – eight fewer than in January 2016 – with 299 victims, an increase of eight compared to the same period last year.

     

    The Deering District, which was one of the city’s top three districts for murders in 2016, saw a 50 percent reduction in murders last month compared to January 2016, police said. The department said 59 of the city’s 77 neighborhoods either remained flat or saw a reduction in murders last month compared to last January.

     

    Officers recovered more than 600 guns last month, an increase of more than 60 percent over January 2016, police said. The department also noted that gun arrests overall have more than doubled compared to January 2016.

     

    Chicago Murders

     

    At a meeting with members of the African American community on Wednesday, President Donald Trump said that if Chicago officials don’t take steps to curb the violence, “we’re going to solve the problem for them.”

    “Because we’re going to have to do something… What’s happening in Chicago should not be happening in this country,” Trump said.

    Trump called the violence in Chicago “totally out of control.”

    Darrell Scott, an Ohio pastor who campaigned for Trump and who was present at the Wednesday meeting, said that he was talking to members of “top gangs” in Chicago who wanted to sit down and discuss how to lower the body count inside the city.  Per CBS Chicago 2:

    “They reached out to me, because they’re associating me with you. They respect you. They believe in what you’re doing, and they want to have a sit-down about lowering that body count. So in a couple weeks, I’m going into Chicago,” Scott said. “I said we’ve got to lower that body count. We don’t want to talk about anything else; get that body count down, and they agreed that the principals that can do it – these are guys straight from the streets, no politicians, straight street guys – but they’re going to commit that if they lower that body count, we’ll come in and we’ll do some social programs.”

    “It’s a great idea,” Trump said about a possible meeting involving gang leaders and social programs.

     

    On January 24, President Trump tweeted that if Chicago is unable to stop the “horrible carnage” going on, he would be willing to “send in the feds.”

     

    Chicago saw a huge surge in violence in 2016: 762 murders, 3,550 shooting incidents, and 4,331 shooting victims, according to police.

    Chicago Murders

  • In Other (Disturbing) News…

    Shock… horror…

     

    Source: MichalePRamirez.com

  • A Time For Caution

    Submitted by Paul Brodsky via Macro-Allocation.com,

    In Contrarianism in 2017 we cited the following macro dynamics that keep us cautious on equities, bullish on Treasuries and gold, and negative on credit:

    • already steamy global equity market valuations
    • already over-leveraged global balance sheets
    • already old and aging global demographics
    • already nervous US trade partners with alternative options for trade
    • already hostile reactions from potentially belligerent foreign trade partners seeking to replace US global market share

    Below, we explore each of these dynamics in depth.

    Equity Valuations

    Given the current macroeconomic and geopolitical setup (discussed below), the highest nominal and risk-adjusted returns in 2017 and into the foreseeable future will be captured through value investing.

    The maps above and below, calculated by StarCapital, show the respective ranges of non-cyclically-adjusted and cyclically-adjusted P/E multiples across equity markets at the end of 2016.

    Generally, the largest and most mature equity markets have the most extended P/Es (Graph 1). When those P/Es are cyclically adjusted (Graph 2), fewer equity markets appear to have steamy valuations. (CAPE valuations shown in Graph 2 are P/Es adjusted for the moving average of ten years of inflation-adjusted earnings.) Nominal P/Es strip out past economic trends, such as output growth and inflation, while Cyclically-Adjusted Price Earnings assumes future economic growth will look much like the past.

    When CAPEs are significantly higher than P/Es it implies to us that businesses need faster economic growth than is available now to support equity prices. Notably, this is the case in the US and Japan. The performance of equity markets in economies where past output growth and inflation have been higher than they are today, such as Brazil and Australia, tend to look more reasonable when cyclically-adjusted. China appears relatively cheap in nominal terms and less-cheap in CAPE terms. Comparing these metrics is important because it highlights the need to have a strong macro and geopolitical opinion prior to allocating capital.

    What if the future does not look like the past, specifically what if global GDP is lower and global inflation is higher? In such a scenario, we think the soundness of balance sheets – not revenues and earnings – would determine the relative performance of equity markets and the winners within them. The map below shows Price-to-Book ratios of global equity markets.

    Using this metric, markets such as Russia, China and Brazil seem to be priced most reasonably. All things equal, the implication is that equity markets in some large emerging economies (and Japan) are priced best for a slowing global economy, all things equal.

    Of course, all things are not equal. Geopolitics and FX exchange rates will play a significant role in equity performance given changes in global output and inflation. Since output and inflation are the primary drivers of geopolitics and exchange rates, developing a macroeconomic view of the world prior to allocating to world equity markets is critical.

    It is also interesting to review valuation metrics across industries on a worldwide basis. We developed the table below from valuation data gathered by StarCapital:

    A snapshot of valuations tells us little about the prospects for and industry, and different valuation metrics are more relevant than others depending on the industry. However, the good work provided by StarCapital not only shows that equities are fully valued on a worldwide basis, but also sets a baseline to compare specific geographies and businesses to global valuations. This should come in handy when macro and geopolitical events do not go according to consensus expectations.

    Global Leverage

    Monetary leverage is technically the quantity of bank assets in relation to the quantity of base money.1 Central banks are only obligated to create enough base money (through QE) to reserve bank assets. Since bank assets are technically created through the bank loan process, the majority of bank assets, which include deposits (i.e., money), is effectively credit extended by central banks.

    Graph 4 shows the history of US dollar leverage. (Were the graph to go back to 1970, there would be virtually no leverage, as bank assets were effectively backed by gold.) As we can see, the Fed’s bank reserve creation beginning with QE in 2009 began to de-leverage the US banking, which stands at about a 4:1 ratio presently. We can assume that the onset of another recession would be treated by the Fed in the same way – a reversion to QE that further de-leverages the banking system. The limit of Fed QE that creates bank reserves is another $12 trillion. Reliable monetary leverage data across the world is difficult to come by, but we believe US dollars are among the least levered of all major currencies.

    It is critical to understand that central bank responses to economic adversity – adversity that threatens the value of collateral supporting bank asset values – are devoted to saving its primary constituency, the banking system. There is no formal obligation to support the value of non-bank credit.

    Economic leverage includes bank assets plus credit extended outright by bondholders and other, less formal creditors. The great majority of economic leverage is not technically the obligation of central banks because it is credit extended and debt held outside the banking system. This includes sovereign and provincial debt, household consumer, mortgage and school loan debt, and corporate debt.

    US dollar leverage, when calculated by formal debt obligations versus base money, stands at over 15:1. (Even if we were to use formal debt obligations over deposits, leverage would still be about 5:1.) This leverage level gets closer to capturing the practical burden of outstanding debt. The burden comes in the form of debt service and eventual repayment.

    To be clear, there is no need to repay debt as long as central banks have unlimited balance sheets; they can legally purchase all outstanding debt denominated in the currency they issue. In fact, throughout this long leveraging phase of the current super-leveraging cycle, aggregate debt has never been reduced, and indeed is growing at a parabolic pace as the cycle ages. To make matters even more threatening, there are obligations that are not captured in Graph 5 – off-balance sheet obligations such as unfunded entitlement obligations that analysts suggest place total dollar-denominated debt at well over $100 trillion (current dollars). This would bring the total US economic leverage ratio to over 25:1.

    Finally, as it relates to defining the level of systemic leverage, debt is almost always issued at interest, meaning that for every dollar of debt issued it takes more money to repay it, depending upon its duration and the interest rate attached to it. The magnitude of all this dollar-denominated debt is not out of context with debt denominated in other currencies. As the graphs clearly illustrate, there is nowhere near enough money – formal or otherwise – to cover leverage levels across bank and non-bank balance sheets.

    The bottom line is that credit – which is ultimately a claim on base money (not assets that collateralize debt) – is the mother of all bubbles, perhaps the biggest worldwide bubble ever. This is truly not hyperbole. The 17th century tulip craze in Holland, for example, in which 12 acres of land was exchanged for one Semper Augustus bulb, ultimately led to a crash in the price of assets and a debasement of guilders. Other currencies, however, were not nearly as affected. Today, all currencies are leveraged and ultimately tied only to the US dollar, the hegemonic global currency. As with all bubbles, the current currency bubble can only be remedied by either debt deflation, currency inflation, or both.

    So then what should investors expect? Does there have to be an event that triggers a decline in confidence of global currencies or the dollar? We do not think so. At some point, money needed to service and repay debt should crowd out money available to pay for needs and wants. Where is that point?

    There is no way to know for sure, however, the graph below shows worldwide credit in relation to private sector output through 2015. The continually rising ratio broke downward in 2000 when it exceeded 130% and again in 2006 and 2009 when it approached 130%. We assume the ratio is above that level now, especially since private sectors in the US, China, Europe and other economies continue to add debt amid slowing output growth rates. The idea that debt-funded government spending will support overall output growth is the latest hope among the growth-at-all-costs crowd. As it relates to this discussion, such a pursuit would be pointless if it does not extinguish private sector debt.

    Finally, the graph below shows “what’s different this time”. In 1971, banks were able to begin expanding their balance sheets in relation to their economies once the global monetary system went off a fixed-rate of exchange to gold and political economists setting central bank credit policies were able to keep a perpetually accommodative lending environment.

    The bottom line is that in the current global monetary regime money is a political concept without boundaries. (What could possibly go wrong…?)

    Aging Demographics

    In 1981, when the global economy was just about to embark on the leveraging phase of the super-leverage cycle, the average baby boomer in the US was 27 years-old. Today, the average baby boomer is 60. The same demographic shift holds true, more or less, across the largest advanced and advancing economies. In 1981, household debt levels were also much lower, and so household balance sheet were leverage-able. Interest rates off which bank loans and mortgages are priced were around 15%. Total mortgage debt was less than $1 trillion in the US.

    As interest rates began to decline in 1982, young, aspirational baby boomers began to borrow to buy homes (which also allowed them to invest in risk assets). The technology-led growth in the mortgage backed securities market and the secular decline in interest rates further allowed them to continually refinance their debt and upsize their homes. Home mortgages in the US peaked at about $10.7 trillion in 2008, and has since declined by about a $1 trillion over the last eight years (see Graph 8 below).

    The demand for risk assets at current prices, including homes and equity, is declining rapidly among the largest holders of them. This trend should accelerate in the coming years as baby boomers across all large economies get older, re-imagine their aspirations, and reduce consumption. The critical point is that while it is possible that past and current consumption of older populations will be replaced by their children, it is not possible for parents to pass down their assets at current values. Why? Because those assets are encumbered with debt that must be either extinguished or assigned (and taxed) upon death. There will be a growing supply of risk assets relative to new borrowings that would fund purchases of them.

    Finally, it is well-known that 2.1 children per woman is the neutral fertility rate at which the global population neither grows nor contracts. As Graph 9 shows, world fertility rates are right at this level and fertility rates of women in high income economies are currently below it. So, it seems unlikely that consumer demand for goods and services can be sustained at current prices. Asset values that depend on demand and output growth derived from population growth should become stressed.

    Trade

    World trade rose significantly following the opening of China and the Russian bloc. Trade began to moderate as infrastructure and costs of production in emerging economies began to mature. Trade is once again more economic, more a function of debt-driven supply feeding debt-driven demand.

    Meanwhile, consumers in importing economies ran up debts and became less able to provide sufficient demand for exporters. The net effect has been declining trade volumes, which used to grow at double the rate of GDP growth. Now, global trade struggles to grow at all.

    Trade data released for November 2016 popped higher unexpectedly. (Graph 13 above only runs through October 2016.) This suggests that the reversal of the significant decline in the price of oil from mid-2014 through 2015 might now be pushing trade volume higher. If so, increasing trade volume from more oil exports should not be considered beneficial, as higher oil prices provides a further economic headwind.

    As trade channels matured, exporters managed the exchange value of their currencies lower to make their goods and services cheaper to consumers in importing economies. This made the dollar appear stronger.

    A very long term graph of the dollar (below) puts everything in perspective and implies much, in our view. The story it tells is a global economy struggling to grow organically and a monetary exchange system struggling to survive.

    The graph begins in 1973 when the current flexible exchange rate monetary system officially began. The new regime centered on the US dollar as the global hegemonic currency rather than the dollar’s convertibility to gold at a fixed exchange rate, which had been the Bretton Woods model since 1945. The dollar’s exchange rate vis-à-vis other global currencies fell from 1973 through 1978, most likely due to the need to increase the supply of dollars to satisfy global trade. The dollar then began a long march higher, not peaking until 1985. This dollar strength fed on itself, and was likely due in large part to high interest rates and increasing demand for US Treasuries, which had risen meaningfully in 1980, and US equities, which had begun what would become a thirty year bull market.

    The early 1980s experience showed that managing economies and trade in a flexible exchange rate system could work. US policy makers would maintain the exchange value of the dollar in a reasonably narrow range vs. the currencies of its trade partners, and in return it would be able to greatly influence global pricing of goods and services and offer its enormous consumer base for world consumption. The US economy, meanwhile, would benefit from importing capital to its financial markets.

    The dollar declined from 1985 to 1995, but not so much as to threaten the viability of the regime. During this period, the US ran up significant budget deficits, which reduced the dollar’s relative attractiveness. This deficit spending coincided with lower income taxes and domestic incentives to invest. Significant capital was formed in the US and around the free world. US and NATO armaments were expanded and stockpiled. The flexible exchange rate monetary system had been used to outspend and open formerly closed and belligerent cold war economies that were not part of the regime, like China and Russia.

    The dollar then strengthened from 1995 through early 2002, peaking near its long-term mid-range. No doubt dollar strength was influenced greatly by the substantial increase in equity prices that attracted global capital. The dollar again began to decline as the US and its allies went to war.

    The war on terror remains a very difficult thing to analyze, perhaps because it is ostensibly not driven by economics. Anything contrary to the narrative centering on religious zealotry is considered a conspiracy theory. We accept that, but will argue the source of radical Islamic terror is economic just the same. There are two simple reasons for our skepticism.

    First, economically content societies do not tend to produce broad religious fundamentalism that includes a culture of suicide. Second, an outright revolt from OPEC in the 1970s helped define the current finance-based monetary system. The system gave crude exporters the ability to exchange their natural resources for value in the form of a stable dollar and dollar- sterling- and then euro-denominated financial assets. Islamic societies abiding by Sharia law without natural resources to exchange were left out in the cold. The finance/leverage/inflation-based post-Bretton Woods monetary system impoverished them.

    The dollar declined from 2002 to 2011 as America extended its deficit spending and the euro, sterling and gold provided reasonable alternative stores of value. It again found strength in 2011, and continues strong today. Why is the dollar’s exchange value vis-à-vis other currencies gaining now? We think it is more a function of other economies’ and currencies’ relative weakness. Simply, the prospects are dimmer for maintaining further balance sheet leveraging and economic growth in Europe, China, Japan, the UK and other major economies than they are in America. As Graph 16 shows, the US dollar index is experiencing lower highs and lower lows. This suggests a system in decline.

    We have argued the current monetary regime is in its evanescence, and that the Fed is trying to raise rates to attract global wealth to dollars and dollar-denominated assets as global leverage, demand and output growth declines. If we are right, then we should not expect other economies to sit by idly.

    Global Reaction

    The final macro dynamic we discuss is the geopolitical challenge to US dominance over the post-Bretton Woods monetary system, NATO, and global trade. This is comprised of a complex range of issues that we cannot (and are not qualified to) fully explore; however we will touch on a few major issues that may be interesting to investors.

    We begin with Donald Trump. His victory implies a near-majority of Americans recognized the domestic economy was not serving them. They were angry and sentimental and to them it was a desperate act.

    Donald Duck would have defeated Hillary Clinton if he squawked about overturning globalization, which she helped create. It was inevitable that the effects of globalization would lead to revolt within the empire. Mr. Trump’s ultimate message was to scorch the power structure – Washington and media – and to replace it with something that better served, respected and reflected Americans. He is unlikely to satisfy his backers sufficiently for reasons discussed above.

    Mr. Trump can have an economic impact on the margin. Better trade deals enforced by a stronger military and tougher immigration laws passed on the back of insensitive rhetoric have one thing in common: they evoke the promise of less economic efficiency, which in turn promises to benefit low wage American workers. It is unlikely to work. The World Wide Web, cheap labor, super-ag businesses, cheap energy and real time logistics are here to stay and available to all across the world…unless the political dimension erects barriers.

    The natural tendency of economies is price deflation, and so it has become the tacit mission of politicians in advanced, highly leveraged economies to somehow create inflation that supports domestic debt service. This has to be executed through their central banks, which is tricky in Europe. Reviving comparatively high cost labor in advanced economies is even trickier. Protectionist trade policies, flipping off the Internet or starting a war with a major global trader could work in varying degrees, but only temporarily. Pesky economic incentives always win in the end, unless the war brings new resources, which seems highly unlikely in today’s world where resources are shared at the right price.

    We believe foreign policy under Trump will be mostly practical and reactive.

    Europe is where we see the greatest chance for political upset. The growing sense of aimlessness among indebted and increasingly superfluous labor does not seem to be an American phenomenon. It may explain Brexit and the rising popularity of truly far right politicians in Western Europe like Geert Wilders in Holland and Marine Le Pen in France. A win by one or both would further threaten the euro.

    Should an irritated Recep Tayyit Erdo?an open Turkey’s borders and resume the diaspora of hundreds of thousands of Middle East emigrants (more unnecessary labor), Western Europe could take a right turn. Such an unlikely scenario a few months ago is becoming more likely, as Le Pen’s opposition is becoming embroiled in scandal and Great Britain is not releasing funds promised to Erdo?an.

    A semi-reasonable scenario that gives Turkey so much power to alter Western European politics is a decent segue to Russia. Former Soviet bloc Eastern European countries may be annexed by Russia in the coming years. Encroaching on a NATO member without a military response, as Russia did in Ukraine, opens the door for an expansion of Russia’s borders. The Trump administration is signaling that deal making takes precedence over hard lines in the sand. We look for Putin and Trump to reach an understanding, potentially giving a pass to Russia to expand its western front in return for help in Syria and other parts of the Middle East.

    We see Russia’s geopolitical role in the world as modified cold war realpolitik, which is to say not much different from America’s under Donald Trump. We expect a gradual thaw between Russia and the West made possible by a less hysterical reaction function among western policy makers and media.

    Geopolitically, we do not see China playing a major disruptive role. It should continue to expand its influence in areas where there is no international push-back, like mineral rich Africa. The one exception will be the South China Sea, where it will continue to build outposts. It should also continue to let North Korea build and show-off its nuclear arsenal, keeping that card in the hole to be brought out only when it has a big “ask” (e.g., “let us control all shipping lanes in the South China Sea and we will annex and de-militarize North Korea”). A dealmaker in the White House with a penchant for greatness would give way.

    China has shown great dexterity over the last twenty years adapting politically to the post-Bretton Woods global monetary system. After all, it is a socialized system perpetuated and overseen by the state. Its cornerstone is fiat money, which is money proclaimed to have value by governments and in which taxes may be exclusively paid. China has benefitted greatly by embracing the idea of boundless credit, running up debts to expand its infrastructure and fund current output growth.

    The Peoples Bank of China stands ready – like the Fed and the ECB – to expand its opaque balance sheet to purchase public and private sector debt without recrimination or audit. We do not think China will be labeled a “currency manipulator” in a Trump administration. It is a hollow threat from the West, especially in times when the yuan would otherwise cheapen in FX markets. Branding China a manipulator would open up a Pandora’s Box that would not serve the geopolitical interests of established monetary boards. Beyond tough talk, we expect the Trump administration to accept the slow broadening of the band China uses to fix exchange rates.

  • Fascists Shut Down Milo Event at Berkeley

    Breitbart columnist, Milo Yiannopoulos, was supposed to give a speech at ultra left wing University at California Berkley — but was shut down by the AntiFA (anti-fascist) weirdos — who, rather ironically, act exactly like fascists by shutting down free speech of anyone they disagree with. It’s worth noting, AntiFA has been at the vanguard of the anti-Trump protests, making them — literally — anti-democratic.

    Milo just released this statement, letting people know he was evacuated and that he was safe.

    Here are some of the domestic terrorists at Berkeley.

     

     

     

     

    Content originally generated at iBankCoin.com

  • Global Bond Markets – Skydiving Without a Parachute

     

    After almost 10 years of unprecedented accommodative
    monetary policy both in the US and abroad, the fixed-income markets are trading
    at lofty levels never before seen in history. 
    Let that sink in for a moment.  Never
    before.  Not during world wars, not
    during global depressions, never.

     

    If you think this is a case of scare mongering or me doing
    my best Chicken Little imitation, it’s not.  One third of global fixed-income bonds were recently trading
    at a negative yields!  The global bond
    market has never been in a more perilous position, and I am surprised that
    there are so few publications ringing the alarm bells.  We are reminded on a daily basis of such
    trivial risks that have no bearing on our everyday.  But it’s tough to understand why there is such
    limited press highlighting such glaring risks.  This is especially alarming since we lived
    through a fixed-income debacle in 2008 and know how devastating it was for
    those unprepared.

     

    The world is fully invested and on the same side of this one-trick
    global bond market trade.  The hysterical
    purchases that drove bond yields so low by governments, sovereign wealth funds,
    banks, insurance companies and hedge funds seem to have abated and sales have just
    begun.  Who becomes the marginal buyer of
    global bonds at these inflated prices?  The
    world has become accustomed to bond selloffs getting backstopped by global
    central banks.  This parachute of low
    funding and outright government bond purchases that investors had relied upon as
    protection from losses is largely behind us.

     

    The Fed has begun a rate rise cycle which will include
    allowing purchased bonds to roll off and not be replaced as they mature.  It appears other central banks are planning on
    winding down their quantitative easing programs as well.  Banks have largely finished hundreds of
    billions in regulatory mandated bond purchases.  Sovereign wealth funds and pension funds are
    selling bonds to dip into needed cash for spending.  Governments that have amassed trillions in
    bond portfolios as a result of managed currency programs are shrinking these
    portfolios as well. And hedge funds that have recently grown assets into the
    hundreds of billions, investing in these overvalued bonds, trying to convert 1%
    yields into 7% plus returns with the use of leverage, are starting to see
    redemptions.  One could always hope for a
    negative shock such as a recession to bring out the marginal buyers at these
    prices.  But there are no signs of a
    recession on the horizon nor would that be a guarantee of buyers entering the
    market at these levels.

     

    Limited global bond buyers outnumbered by new issue bond
    sellers should lead to higher bond yields going forward.  If there was a trigger that encouraged the over
    100 trillion bond market to start selling, prices could adjust lower
    rapidly.  And there are many triggers on
    the horizon. With housing prices increasing over 5% annually, health care
    prices expected to rise steeply, global food costs rising at the fastest pace
    in years and wage pressures just beginning to percolate, inflation is poised to
    surprise to the upside. Fiscal spending (or at least promises of such from our
    Presidential candidates) is expected to increase, leading to higher growth
    rates and reducing the allure of bonds.  And
    recently announced redemptions from large hedge funds who are typically
    leveraged and long the bond market will lead to pressure on bond prices.  We will see if these hedge funds’
    outperformance was the result of those magical algorithms or just good old-fashioned
    leverage in a market that was trending straight up.  Most importantly, removal of accommodation
    from monetary policy will deflate assets that are greatly inflated.

     

    But how overvalued could bonds possibly be?  It’s been years since bonds have had any
    losses and most traders and portfolio managers have never experienced a bear
    market in bonds.  When any market moves
    in only one direction for almost a decade to such lofty levels, there is not
    much preparation for a market reversal.  Anyone
    positioned for a market reversal over the past 10 years has long since been
    blown out of their trades, fired or worse.  There is a reason why betting on normalized yields
    in the bond market has been called the “widow maker” trade.  Today’s perception that bonds are a safe
    investment is a mirage.  The bond market
    has roughly doubled in size in the last 10 years and any selling could be
    catastrophic.  Bond yields are much lower
    and prices higher than during the onset of the 2008 bond market debacle.  This is a benchmark for overvalued bond prices
    and what to expect from a resulting market correction.  If that’s not enough to get you to take pause,
    let’s look at a real life example.  Longer
    dated bond yields historically average around 2% to 3% above inflation.  Given today’s level of inflation, longer dated
    bonds should yield closer to 5% instead of the current 2%.  If long bonds normalize up to that 5% yield
    level any time soon, the resulting price drop would equate to market losses of
    40% or more!

     

    Now you know bond prices are in the outer stratosphere.  You’ve been warned of the risks if you have
    been counting on a monetary policy parachute to give you a safe landing.  The central banks have started to take the
    parachutes out of the planes.  Beware if
    you plan on skydiving.

     

     

    Michael Carino is the CEO of Greenwich Endeavors, a
    financial service firm, and has been a fixed-income fund manager and owner for
    more than 20 years.

  • Dollar Dumps Most In 30 Years As Trump Raises Doubt Over "Strong Dollar Policy"

    The US dollar is having its worst start to a year in decades…

     

    As the Trump Administration is breaking from a long-standing, bipartisan policy of supporting a strong dollar, the greenback has fallen against its peers by 2.7%, the worst start to a year since 1987, after Ronald Reagan engineered a decline in the dollar to combat a flood of Japanese imports.

    Finally, remember, nothing lasts forever…

    Source: The Burning Platform

    As we noted previously, history did not end with the Cold War and, as Mark Twain put it, whilst history doesn’t repeat it often rhymes. As Alexander, Rome and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet…

     

    The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.

    "The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. "The solution to this is to replace the national currency with a global currency."

  • 'Unrest' Is The Only Growth Industry Left

    Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

    Benoît Hamon won the run-off for the presidential nomination of the Socialist party in France last weekend. The party that still, lest we forget, runs the country; current president François Hollande is a Socialist, even if only in name, but he did win the previous election. Hamon ran on a platform of shortening the workweek from 35 to 32 hours, legalizing cannabis and ‘easing’ the country into a universal basic income of €750/month per capita. He’s way left of Hollande, who has a hilariously low approval rating of 4%.

    Hamon doesn’t appear to have much chance of winning the presidency in the two voting rounds taking place on April 23 and May 7, but we all know how reliable election predictions are these days, and in that regard France is as volatile as the next country. With conservative runaway favorite François Fillon accused of having paid his wife $1 million for doing nothing and Marine Le Pen, already desperately short on funds, targeted by the EU over money, who knows what and who will decide the election? Hamon may simply be the only one left standing on the day after the vote.

    I bring up Hamon, about whom I know very little, not least because he was more or less a late minute addition to the field that was supposed to have been an easy win for his former boss Manuel Valls, I bring up Hamon because he confirms something I’ve been talking about for a while. That is, the fact that ‘leftist France’ chooses to go even more left than expected, goes a way towards proving my ‘theory’ that voters in many if not most western countries will move away from their respective political centers, and towards extremes.

    This is an inevitable consequence of traditional, less extreme, politicians and parties having all become clustered together in shapeless and colorless blobs in the center, both in the US and in most European countries, combined with the fact that all of their policies -especially economic ones- have spectacularly failed vast amounts of people (or voters, if you will).

    The failure of their policies has been hidden from sight by interest rates squashed like bugs, ballooning central bank balance sheets, real estate bubbles, fabricated economic data, and fantasy stories in their media that seem(ed) to affirm the ‘recovery’ tales, but they all ‘forgot’ to -eventually- line up reality with the fantasies. They never made 99% of people actually more comfortable. The entire politics-economics-media deus ex machina has failed because it was/is based on lies and fake news, meant to hide economic reality (i.e. negative growth), and this will have grave consequences.

    People have started noticing this despite the official and media-promoted data. And they’re not going to “un-notice”. Not only don’t people -once they find out- like having been lied to for years, they dislike worsening living conditions even more. And that’s all they get; the only people who get it better are the rich, because without that the machinery can’t continue pumping up the ‘official’ numbers.

    And what do you get? People complain about Trump. And they focus on one of his -seemingly- crazy ideas: temporarily closing US borders to refugees from nations with large Muslim populations. Which is a fine thing to resist, because yes, it’s a pretty silly idea, but why haven’t they paid similar attention to how they’ve been lied to for years on both the economy and on Syria, on how Obama became the Drone King and how many innocent people lost their lives because of that?!

    To how favorite all-American gal Hillary screwed up Northern Africa when she declared We Came We Saw He Died and the death of Libya’s Gaddafi, who gave his country the highest living standards in the region, free education and free health care, but was murdered by Hillary’s US troops, co-created the chaos that led to so many people wanting to flee their homelands in the first place?

    Why is that? Why are there protests when people are halted at an American border crossing but not when American and British and French and Australian forces blow the very same people’s homes to smithereens? Could that have something to do with where the protesters get their information? With how much they know about what’s happening in the world before it reaches their doorsteps?

    Yes, people are suffering, and it’s very unfair what’s happening to many caught in the Trump Ban, but does anyone really believe that that’s where it started, that this is the first time (or even a unique time) that protest is warranted, or more so? And if not, why is it happening? Because people only notice stuff when it hits them in the face, I would presume, but who among the protesters would volunteer to agree they live their lives with blinders on? Not many, I would venture. So why do we see what we do? Where were you when Obama ordered yet another child, a family, which hadn’t yet made it to a US airport but might as well have, to be collateral damage?

    I get why you’re protesting the Trump ban, but I don’t get why that’s your prime focus. I am guessing that most of the protesters would not have voted Trump in the first place, and would have been much happier -to put it mildly- for Hillary to be president right now. But if you would have paid attention in history class, you would know that it was Hillary who brought the refugees to your welcome mats to begin with.

    Take it a step further, like to the January 21 women’s march, and you would realize that the vast majority of the refugees would have much preferred to stay where they grew up, where the women in their families, their sisters and aunts and daughters used to live. Most of whom are gone now, they’re either dead or diaspora-ed to Jordan, Turkey, Alberta, Sweden, Greece. All on account of Obama and his crew. Who of course blamed it on Assad and Putin. “I killed 1000 children, but I had to because those guys are so dangerous….”

    This generation of refugees, of the huddled masses that the Statue of Liberty is supposed to teach you about, didn’t come to America because it’s the promised land; they came because America turned their homeland into a giant pile of rubble surrounded by garbage heaps and minefields. I don’t know if you’ve ever seen pictures of Aleppo before it was destroyed, but I dare you to tell me there is even one existing American city today that’s more beautiful than Aleppo was before Americans and their allies reduced it to dust. Here you go. This is Aleppo before America got involved in Syria:

    There’s very little left of that beautiful city, with its highly educated people and their lovely happy children. And none of that has anything at all to do with Donald Trump! I don’t want to give you pics of what Aleppo looks like now. I want you to remember how lovely it was before ‘we’ moved in, years go. Sure, what you hear and see in the west is that Assad and Putin are the bad guys in this story. But now that the US/EU supported ‘rebels’ are gone, dozens of schools are reopening, and medical centers, hospitals. Who are the bad guys now?

    And yeah, Trump is an elephant, and elephants are always awkward and they’re messy and they tend to kick things over and when they make mistakes those tend to be huge, but how much valuable china does the US really have left anyway? Isn’t it all perhaps just a sliver off target, the demos, the outrage and indignation? Is the idea that your army can destroy people’s living environments with impunity without you protesting in anything approaching a serious way, and that then you get to demand, through protest, that those same people are allowed entry into your country? That’s way too late to do the right thing.

    I started out making the point that as our politico-economic systems are failing, voters will move away from the center that devised and promoted those systems, and that this will happen in many countries. The US could have had Bernie Sanders as president, but the remaining powers in the center made that impossible. Likewise, many European countries will see a move towards either further left or further right.

    Since the former is mostly dormant at best, while the latter has long been preparing for just such a moment, many nations will follow the American example and elect a right wing figurehead. This will cause a lot of chaos, but that’s not necessarily a bad thing. People need to wake up and become active. The recent US demonstrations may be a first sign of that, even though they look largely out of focus. More than anything else, people need a mirror, they need to acknowledge that because they’ve been in a state of mindless self-centered slumber for so long, they have work to do now.

    And that work needs to consist of more than yelling at the top of your lungs that Trump and Le Pen and Wilders are such terribly bad people. For one thing because that will only help them, for another because they were not the people who put you to sleep or were supporting mindless slaughter in faraway nations or were making up ‘official’ numbers as your economies were dumped into handbaskets on their way to hell. So ask yourselves, why did you believe what Obama was saying, or Merkel, or Cameron, Sarkozy, Rutte, you name them, while you could have known they were just making it all up, if only you had paid attention?

    Why? What happened? Why did the term ‘fake news’ only recently become a hot potato, even though you’ve been bombarded with fake and false news for years? Is it because you were/are so eager to believe that your economy is recovering that any evidence to the contrary didn’t stand a chance? If so, do realize that for many people that was not true; it’s why they voted for the people you now so despise. Is it perhaps also because you’re so eager to believe your ‘leaders’ do the right thing that you completely miss out on the fact that they’re not? And whose fault is that?

    In yet another angle, people claim that the planet’s in great peril because Trump doesn’t ‘believe’ in climate change. But it’s not Trump’s who’s the danger when it comes to climate change, you are, because you’re foolish enough to believe that things like last year’s infinitely bally-hood Paris Agreement (CON21) will actually ‘save’ something. That belief is more dangerous than a flat-out denial, because it lulls people into sleep, while denial keeps them awake.

    It’s the idea that there’s still time to rescue the planet that’s dangerous, because it’s the perfect excuse to keep on doing what you were doing without having to feel too much guilt or remorse. You’re not going to save a single species with your electric car or whatever next green fad there is, the only way to do that is through drastic changes to your society and your own behavior.

    That’s not only true with respect to the climate, it’s just as valid with respect to the refugees on your doorstep. If you want to rescue them, and those who will come after them, the only thing that makes any difference is making sure the bombing stops, that the US and European war machines are silenced. If you don’t do that, none of these protests are of any use. So sure, yeah, by all means, protest, but make sure you protest the real issues, not just a symptom.

    That doesn’t mean you should shut the door in the face of these frail forms fainting at the door, that’s just insane, but it does mean that after welcoming your guests, you will also have to make sure what brought them there must stop. If you stop killing and maiming these people, and help rebuild Aleppo and a thousand other places, they won’t need to come to your door anymore.

    As for the political field, unrest will continue and grow because the end of economic growth means the end of centralization, and our entire world, politically, economically, what have you, is based on these two things. Today, unrest is the only growth industry left. And it’s not going away anytime soon. It’s a new day, a new dawn, it’s just that unfortunately this is not going to be a pretty one.

    Still, none of it is unexpected. The Automatic Earth has been saying for years, and with us quite a few others, that this was and is inevitable. Of course there are those who say that we cried wolf, but we’ll take that risk any day. Saw a nice very short video of Mike Maloney saying in 2011 that Obama would have to double US debt between 2008 and 2016 just to keep the entire system from starting to collapse, running to stand still, Alice, Red Queen and all. And guess what?

    There’s the recovery as it’s been sold to you. It’s all been borrowed, to the last penny. Will Donald Trump double US debt once again? Will the EU countries do the same? How about Japan and China? And to think that federal debt isn’t even the worst threat, personal debt is, and so many of us carry so much of that, and try to pass off our mortgaged homes as assets, not debt. An increasingly desperate game on all fronts.

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Today’s News 1st February 2017

  • Rule By Brute Force: The True Nature Of Government

    Submitted by John Whitehead via The Rutherford Institute,

    “We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.”

     

    -Ayn Rand

    The torch has been passed to a new president.

    All of the imperial powers amassed by Barack Obama and George W. Bushto kill American citizens without due process, to detain suspects indefinitely, to strip Americans of their citizenship rights, to carry out mass surveillance on Americans without probable cause, to suspend laws during wartime, to disregard laws with which he might disagree, to conduct secret wars and convene secret courts, to sanction torture, to sidestep the legislatures and courts with executive orders and signing statements, to direct the military to operate beyond the reach of the law, to act as a dictator and a tyrant, above the law and beyond any real accountability – have been inherited by Donald Trump.

    Whatever kind of president Trump chooses to be, he now has the power to completely alter the landscape of this country for good or for ill.

    He has this power because every successive occupant of the Oval Office has been allowed to expand the reach and power of the presidency through the use of executive orders, decrees, memorandums, proclamations, national security directives and legislative signing statements that can be activated by any sitting president.

    Those of us who saw this eventuality coming have been warning for years about the growing danger of the Executive Branch with its presidential toolbox of terror that could be used—and abused—by future presidents.

    The groundwork, we warned, was being laid for a new kind of government where it won’t matter if you’re innocent or guilty, whether you’re a threat to the nation or even if you’re a citizen. What will matter is what the president—or whoever happens to be occupying the Oval Office at the time—thinks. And if he or she thinks you’re a threat to the nation and should be locked up, then you’ll be locked up with no access to the protections our Constitution provides. In effect, you will disappear.

    Our warnings went largely unheeded.

    First, we sounded the alarm over George W. Bush’s attempts to gut the Constitution, suspend habeas corpus, carry out warrantless surveillance on Americans, and generally undermine the Fourth Amendment, but the Republicans didn’t want to listen because Bush was a Republican.

    Then we sounded the alarm over Barack Obama’s prosecution of whistleblowers, targeted drone killings, assassinations of American citizens, mass surveillance, and militarization of the police, but the Democrats didn’t want to listen because Obama was a Democrat and he talked a really good game.

    It well may be that by the time Americans­—Republicans and Democrats alike—stop playing partisan games and start putting some safeguards in place, it will be too late.

    Already, Donald Trump has indicated that he will pick up where his predecessors left off: he will continue to wage war, he will continue to federalize the police, and he will operate as if the Constitution does not apply to him.

    Still, as tempting as it may be, don’t blame Donald Trump for what is to come.

    If this nation eventually locks down… If Americans are rounded up and detained based on the color of their skin, their religious beliefs, or their political views… If law-and-order takes precedence over constitutional principles…

    If martial law is eventually declared… If we find that there really is nowhere to run and nowhere to hide from the surveillance state’s prying eyes and ears… And if our constitutional republic finally plunges headlong over the cliff and leaves us in the iron grip of totalitarianism…

    Please, resist the urge to lay all the blame at Trump’s feet.

    After all, President Trump didn’t create the police state.

    He merely inherited it.

    Frankly, there’s more than enough blame to go around.

    So blame Obama. Blame Bush. Blame Bill Clinton.

    Blame the Republicans and Democrats who justified every power grab, every expansion of presidential powers, and every attack on the Constitution as long as it was a member of their own party leading the charge.

    Blame Congress for being a weak, inept body that spends more time running for office and pandering to the interests of the monied elite than representing the citizenry.

    Blame the courts for caring more about order than justice, and for failing to hold government officials accountable to the rule of law.

    Blame Corporate America for taking control of the government and calling the shots behind the scenes.

    Most of all, blame the American people for not having objected louder, sooner and more vehemently when Barack Obama, George W. Bush and their predecessors laid the groundwork for this state of tyranny.

    But wait, you say.

    Americans are mobilizing. They are engaged. They are actively expressing their discontent with the government. They are demanding change. They are marching in the streets, picketing, protesting and engaging in acts of civil disobedience.

    This is a good development, right? Isn’t this what we’ve been calling on Americans to do for so long: stand up and push back and say “enough is enough”?

    Perhaps you’re right.

    Perhaps Americans have finally had enough. At least, some Americans have finally had enough.

    That is to say, some Americans have finally had enough of certain government practices that are illegal, immoral and inhumane.

    Although, to be quite fair, it might be more accurate to state that some Americans have finally had enough of certain government practices that are illegal, immoral and inhumane provided that the ruling political party responsible for those actions is not their own.

    Yes, that sounds about right. Except that it’s all wrong.

    We still haven’t learned a thing.

    Imagine: after more than eight years in which Americans remained largely silent while the United States military (directed by the Obama Administration) bombed parts of the Middle East to smithereens—dropping nearly three bombs an hour, and left a trail of innocent civilian deaths in its wake—suddenly, Americans are outraged by programs introduced by the Trump Administration that could discriminate against Muslim refugees. Never mind that we’ve been killing those same refugees for close to a decade.

    Certainly, there was little outcry when the U.S. military under Obama carried out an air strike against a Doctors Without Borders hospital in Afghanistan. Doctors, patients—including children—and staff members were killed or wounded. There were also no protests when the Obama Administration targeted Anwar al-Awlaki, an American citizen in Yemen, for assassination by drone strike. The man was killed without ever having been charged with a crime. Two weeks later, Obama—the recipient of a Nobel Peace Prize—authorized another drone strike that killed al-Awlaki’s 16-year-old son, Abdulrahman, also an American citizen.

    Most recently, picking up where President Obama left off, President Trump personally authorized a commando raid on a compound in Yemen suspected of harboring Al Qaeda officials. Among those killed were “at least eight women and seven children, ages 3 to 13,” including Nora, the 8-year-old sister of the teenager killed by Obama years before.

    Likewise, while most Americans failed to show much opposition to the government’s disregard for Americans’ bodily integrity, shrugging their collective shoulders dismissively over reports of their fellow citizens being subjected Americans to roadside strip searches, virtual strip searches, cavity searches and other equally denigrating acts, hundreds of thousands mobilized to protest policies that could be advanced by the Trump administration that might demean or deny equal rights to individuals based on their gender or orientation or take away their reproductive planning choices. Similarly, while tens of thousands have gathered annually for a March for Life to oppose abortion, many of those same marchers seem to have no qualms about the government’s practice of shooting unarmed citizens and executing innocent ones.

    This begs the question: what are Americans really protesting? Is it politics or principle?

    Or is it just Trump?

    For instance, in the midst of the uproar over Trump’s appointment of Steven Bannon to the National Security Council, his detractors have accused Bannon of being a propagandist  nationalist, and a white supremacist. Yet not one objection has been raised about the fact that the National Security Council authorizes secret, legal, targeted killings of American citizens (and others) without due process, a practice frequently employed by Obama.

    The message coming across loud and clear: it’s fine for the government to carry out secret, targeted assassinations of American citizens without due process as long as the individuals advising the president aren’t Neo-Nazis.

    Of course, this national hypocrisy goes both ways.

    Conveniently, many of the same individuals who raised concerns over Obama’s “lawless” use of executive orders to sidestep Congress have defended Trump’s executive orders as “taking us back to the Constitution.” And those who sounded the alarm over the dangers of the American police state have gone curiously silent in the face of Trump’s pledge to put an end to “the dangerous anti-police atmosphere in America.”

    We can’t have it both ways.

    As long as we continue to put our politics ahead of our principles—moral, legal and constitutional—“we the people” will lose.

    And you know who will keep winning by playing on our prejudices, capitalizing on our fears, deepening our distrust of our fellow citizens, and dividing us into polarized, warring camps incapable of finding consensus on the one true menace that is an immediate threat to all of our freedoms? The U.S. government.

    In her essay on “The Nature of Government,” Ayn Rand explains that the only “proper” purpose of a government is the protection of individual rights. She continues: “The source of the government’s authority is ‘the consent of the governed.’ This means that the government is not the ruler, but the servant or agent of the citizens; it means that the government as such has no rights except the rights delegated to it by the citizens for a specific purpose.”

    When we lose sight of this true purpose of government—to protect our rights—and fail to keep the government in its place as our servant, we allow the government to overstep its bounds and become a tyrant that rules by brute force.

    As Rand explains:

    Instead of being a protector of man’s rights, the government is becoming their most dangerous violator; instead of guarding freedom, the government is establishing slavery; instead of protecting men from the initiators of physical force, the government is initiating physical force and coercion in any manner and issue it pleases; instead of serving as the instrument of objectivity in human relationships, the government is creating a deadly, subterranean reign of uncertainty and fear, by means of nonobjective laws whose interpretation is left to the arbitrary decisions of random bureaucrats; instead of protecting men from injury by whim, the government is arrogating to itself the power of unlimited whim—so that we are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.

    Rule by brute force.

    That’s about as good a description as you’ll find for the sorry state of our republic.

    SWAT teams crashing through doors. Militarized police shooting unarmed citizens. Traffic cops tasering old men and pregnant women for not complying fast enough with an order. Resource officers shackling children for acting like children. Citizens being jailed for growing vegetable gardens in their front yards and holding prayer services in their backyards. Drivers having their cash seized under the pretext that they might have done something wrong.

    The list of abuses being perpetrated against the American people by their government is growing rapidly.

    We are approaching critical mass.

    As I make clear in my book Battlefield America: The War on the American People, it may already be too late to save our republic. We have passed the point of easy fixes. When the government and its agents no longer respect the rule of law—the Constitution—or believe that it applies to them, then the very contract on which this relationship is based becomes invalid.

    So what is the answer?

    Look to the past if you want to understand the future.

    Too often, we look to the past to understand how tyrants come to power: the rise and fall of the Roman Empire; Hitler’s transformation of Germany into a Nazi state; the witch hunt tactics of the McCarthy Era.

    Yet the past—especially our own American history—also teaches us valuable lessons about the quest for freedom. Here’s Rand again:

    A free society—like any other human product—cannot be achieved by random means, by mere wishing or by the leaders’ “good intentions.” A complex legal system, based on objectively valid principles, is required to make a society free and to keep it free-a system that does not depend on the motives, the moral character or the intentions of any given official, a system that leaves no opportunity, no legal loophole for the development of tyranny. The American system of checks and balances was just such an achievement. And although certain contradictions in the Constitution did leave a loophole for the growth of statism, the incomparable achievement was the concept of a constitution as a means of limiting and restricting the power of the government. Today, when a concerted effort is made to obliterate this point, it cannot be repeated too often that the Constitution is a limitation on the government, not on private individuals—that it does not prescribe the conduct of private individuals, only the conduct of the government—that it is not a charter for government power, but a charter of the citizens’ protection against the government.

    You want to save America? Then stop thinking like Republicans and Democrats and start acting like Americans.

    The only thing that will save us now is a concerted, collective commitment to the Constitution’s principles of limited government, a system of checks and balances, and a recognition that they—the president, Congress, the courts, the military, the police, the technocrats and plutocrats and bureaucrats—work for us.

  • The History Of Money (In One Simple Infographic)

    Today’s infographic from Mint.com highlights the history of money, including the many monetary experiments that have taken place since ancient times…

     

    Courtesy of: Visual Capitalist

    As VisualCapitalist's Jeff Desjardins notes, some innovations have stood the test of time – precious metals, for example, have been used for thousands of years. Paper money and banknotes are also widespread in use, after first being turned to in China in 806 after a copper shortage prevented the minting of new coins.

    Other experiments didn’t have much staying power. The adoption of strange currencies such as squirrel pelts, cowry shells, or parmesan cheese are only remembered for their peculiarity.

    Further, other attempts to stabilize the monetary system were abandoned early as well. The original U.S. gold standard lasted just 54 years, after FDR ditched it during the Great Depression. The Bretton Woods version (gold-exchange standard) lasted even shorter, abandoned after being in place for 26 years when Nixon ended all convertibility between the U.S. dollar and gold in 1971.

    THE NEWEST CHAPTER IN OUR MONETARY HISTORY

    Although the infographic ends with the introduction of cryptocurrency in 2009, it should be noted that the newest chapter in the history of money is taking place right before our eyes.

    The “War on Cash” has been accelerating in recent years, as governments and central banks have called for the elimination of high denomination banknotes. While these anti-cash motions have also been made in many Western countries, the most vivid example of the demonetization is currently happening in India.

    In November 2016, Indian Prime Minister Narendra Modi demonetized 500 and 1000 rupee notes, eliminating 86% of the country’s notes overnight. While Indians could theoretically exchange 500 and 1,000 rupee notes for higher denominations, it was only up to a limit of 4,000 rupees per person. Sums above that had to be routed through a bank account in a country where only 50% of Indians have such access.

    There have been at least 112 reported deaths associated with this demonetization – including suicides and the passing of elderly people waiting in bank queues for days to exchange money. India’s largest organization of manufacturers, the All India Manufacturers Organization, also estimates in a report that micro-small scale industries suffered 35% jobs losses and a 50% dip in revenue in the first 34 days since demonetization.

    While demonetization in India is off to a rough start, some believe it can still be ultimately successful in the long-term. Regardless, the “War on Cash” still has incredible global momentum – and the end result – however it turns out – will likely form another important chapter in the history of money.

  • FATCA Needs To Go, But Unfortunately, The FATCA "Refugees" Are Never Coming Back

    Submitted by Duane via Free Market Shooter blog,

    GotNews posted an article yesterday about a “refugee problem” America has, referring to approximately 20,000 Americans who have renounced their citizenship under Obama’s leadership, and suggesting America “repatriate” said citizens:

    America has a refugee problem. Not the Syrian refugees. No, not the Afghan ones. No, not even the Cuban refugees. I’m talking about the born-and-raised American citizens who got fed up, gave up their U.S. citizenship, and escaped Obama’s America while they still could.

     

    Yes, that’s right: nearly 20,000 American citizens left Obama’s America and forfeited their American citizenship while Obama was President.

     

    Nearly 20,000 U.S. citizens voluntarily gave up their rights to vote, run for office, and the freedom to pursue “life, liberty, and the pursuit of happiness”, while Obama was in office.

     

    We shouldn’t be allowing anyone from the violent and dangerous Middle East, including so-called “refugees”, into the United States right now. The only refugees who should be entering the United States are the American refugees who fled Obama’s America. Not only do we have that duty to our fellow Americans, but they pose no threat to us like Middle Eastern “refugees” do.

    What was missing from the article?  Discussion of the Obama-sponsored law that caused many citizens (mostly expats) to renounce their citizenship: FATCA (Foreign Account Tax Compliance Act).

    FATCA has been beaten to death by other sources, but surprisingly, very few people are aware of what it does.  The whole purpose of the law was to “crack down” on overseas tax evasion.  Simon Black of Sovereign Man did an excellent job of summarizing the net effect:

    Deep within its bowels fell the Foreign Account Tax Compliance Act, or FATCA for short. It was a sort of ‘law within a law’, and one of the dumbest in US history.

     

    FATCA effectively commanded every single bank on the planet to enter into an information-sharing agreement with the IRS.

     

    (Well, not so much ‘information sharing’. More like ‘information giving’. Because the US government doesn’t share anything with anyone.)

     

    It all started based on a phony assumption that millions of Americans were hiding trillions of dollars in secret offshore accounts. And given how broke the US government is, they wanted every penny they were entitled to.

     

    So the plan was to turn every bank in the world into a global spy network.

     

    Any bank that didn’t comply was threatened with a crippling 30% withholding tax on every dollar that went in, out, and through the Land of the Free.

    In a nutshell, if you are an American expat living abroad, you just had to jump through thousands of hurdles to prove to the IRS that you aren’t evading any taxes, report all this information correctly, and within a confusing legal framework that leaves even the best accountants stumped, often triggering audits for “violation” of FATCA, even if it was not violated at all.

    Unsurprisingly, since the law was enacted, the amount of expatriates who renounce their citizenship has risen exponentially:

    FATCA forces any American opening a bank account overseas to be in compliance with the law, by having the IRS punish foreign nations that do not comply Because of FATCA, the majority of foreign banks quickly turned to outright refusal of US clients.  Good luck finding one that doesn’t charge a ridiculous litany of fees.

    Obviously, you need to live abroad to renounce your citizenship.  But who is doing the renouncing?  For the most part, permanent expats who have no intention of ever moving back.  Eduardo Saverin, the Facebook co-founder whose story was on full display in the movie The Social Network, is the biggest name of the group.  However, billionaires like Saverin aren’t most people.  A more pertinent real-world example is Rachel Heller:

    This state of affairs comes about because the US bases its taxation system on citizenship, unlike the rest of the world, where taxation is residence-based. In other words, while I live in the Netherlands, pay taxes in the Netherlands, and receive services in return for my taxes from the Netherlands, I was also expected to pay in the US, despite the fact that I received no services for my tax dollars.

     

    The Foreign Account Tax Compliance Act (FATCA), passed in 2010 and in effect since 2014, was intended to catch “tax cheats”: billionaires living in the US who send their money abroad to hide it from the IRS. The problem is that people like me, who have moved abroad for jobs or for love, are persecuted as a consequence of that effort.

     

    This does not mean that I was trying to avoid paying my “fair share,” the misleading phrase often used by politicians and repeated by the press. Because of a treaty between the US and the Netherlands (and many other countries), I only had to pay US taxes if my income was higher than about $100,000, which, as a teacher, it will never be. Instead, I pay where I live. I am in the 42 percent tax bracket here in the Netherlands, and my husband’s income puts him in the 52 percent bracket. That is much higher than it would be in the US, so I cannot be accused of avoiding taxes. If I wanted to do that, the Netherlands would be the last place I would live.

     

    Nevertheless, I had to fill out US tax forms every year, plus extra forms to claim my foreign tax exemption, all to prove that I in fact do not owe any US taxes.

     

    I repeat: I love the US. But I had to fill out lengthy forms (or rather, I spent almost a thousand euros a year to pay an accountant to do them for me), exposing my and my husband’s accounts to US government scrutiny, and I risked losing the ability to do the sort of banking that any middle-class American would normally take for granted.

    Yes, it is true, the majority of US expats are willing to give up their citizenship.  It’s not because they aren’t American.  It’s because by not living in America, FATCA has effectively rendered them second-class citizens. 

    The USA is one of only two countries in the world that has this system of taxation.  The other is Eritrea, which levies a simple 2% flat tax on its citizens who live abroad.  And still, the media, and even the UN have weighed on Eritrea’s simple regime, calling it “authoritarian”:

    Nearly every country in the world bases its tax system on residency rather than citizenship. If you’re an Italian citizen, and you leave Italy to live and work in Dubai, you don’t have to pay taxes on the income you earn abroad to the Italian government.

     

    But Eritrea levies a 2% flat tax on its citizens who live abroad. If you’re an Eritrean citizen, you have to pay taxes to the Eritrean government, no matter where you live and work.

     

    The media has condemned this as “extortion” and a “repressive” measure by an “authoritarian” government.

     

    The UN has even weighed in. In Resolution 2023, the UN Security Council condemned Eritrea for “using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals.”

    FATCA is far more onerous, costly, and authoritarian than anything Eritrea does.  But don’t hold your breath expecting the UN to condemn what the USA is doing to its own citizens.

    Rachel Heller went into detail on how difficult the renunciation process is in her above linked article, but even after months and months of interviews, the USA piles on a $2,350 “renunciation fee” and an exit tax on your net worth, in addition to a “doxxing” of your name and personal details in a Federal register, done to “name and shame” you for renouncing your citizenship.

    It is sad that Americans have been forced to renounce their citizenship to comply with the onerous restrictions on their rights as a result of the Obama administration’s FATCA law.  But they didn’t give up their citizenship because they all of a sudden became un-American; no, they did it because of a law that has turned living and/or working abroad into an expensive, onerous, bureaucratic nightmare for the ordinary American citizen.  Repealing FATCA should be almost as high on Trump’s list as repealing Obamacare, but unfortunately for the citizens living abroad, a repeal of this law is not likely anytime soon, as Trump seems quite preoccupied with other affairs at the moment.

    What is even more sad, however, is that these citizens who have renounced will not be coming back, or re-applying for citizenship anytime soon.  Most were already living abroad permanently, and had no interest in ever moving back.  Because of FATCA and the IRS, and nothing else, they will no longer enjoy the protections of afforded to them when they were born.  FATCA and its ridiculous system has ensnared law-abiding American expats into a constant battle with the IRS, all over the day-to-day activities all citizens engage in.

    Regrettably, no new legislation can change that fact, undo all of the damage FATCA has already caused, or magically bring back the citizenship rights of those who have chosen to give it up, solely to avoid FATCA’s unjust burden.

  • This Won't End Well – China Skyscraper Edition

    China has been on a skyscraper-building boom for years, but, we suspect, 2016 may have seen the mal-investment boom jump the shark.

    As Goldman Sachs illustrates in the following chart, China was head, shoulders, knees, and toes above the aggregate of the rest of the world in terms of skyscraper completions in 2016…

    Could record-setting skyscrapers signal economic over-expansion and a misallocation of capital?

    EWN Interactive, a subscription service focused on technical analysis, thinks so. The following infographic follows the “Skyscraper Curse” through six different market tops and subsequent crashes over the past century.

    It is gigantic in size, so please click here or the below image to access the legible version:

    Courtesy of: Visual Capitalist

    EWM Interactive sums up the infographic with these words:

    In the market, extreme optimism results in price bubbles. One of the real-life manifestations of extremely positive social mood is the construction of enormous buildings. Market tops and skyscrapers often seem to emerge simultaneously, because both phenomena are the result of the illusion of infinite prosperity.

     

    But extreme psychological conditions do not last very long. That is the reason why record-breaking buildings, whose construction starts during a market bubble, are often completed after the bubble’s collapse.

    *  *  *

    In January we noted a perfect example of the smoke-and-mirror-ness of China's credit-fueled expansion, as a 27-storey high-rise building which was completed on November 15th 2015 was just demolished, "having been left unused for too long."

    And just this week, another illustration of Keynesian perfection as China created, then destroyed 19 massive structures, to make room for an even bigger skyscraper. The epic explosion that took place in Wuhan, the capital city of Hubei province, leveled 19 seven to 12-story structures in a controlled demolition, the South China Morning Post newspaper reported, citing local media. The city authorities are planning to demolish at least 32 buildings to make way for a new business center that will reportedly feature a 707-meter tall skyscraper, which is to be one of the tallest buildings in the world.

    *  *  *

    The silver-lining – now workers can clean up the mess, dig a bigger hole… and fill that in – all in the name of Keynesian "growth."

  • The Other 'Ban' That Was Quietly Announced Last Week

    Submitted by Simon Black via SovereignMan.com,

    Most of the world is in an uproar right now over the travel ban that Donald Trump hastily imposed late last week on citizens of seven predominantly Muslim countries.

    But there was another ban that was quietly proposed last week, and this one has far wider implications: a ban on cash.

    The European Union’s primary executive authority, known as the European Commission, issued a “Road Map” last week to initiate continent-wide legislation against cash.

    There are already a number of anti-cash legislative measures that have been passed in individual European member states.

    In France, for example, it’s illegal to make purchases of more than 1,000 euros in cash.

    And any cash deposit or withdrawal to/from a French bank account exceeding 10,000 euros within a single month must be reported to the authorities.

    Italy banned cash payments above 1,000 euros back in 2011; Spain has banned cash payments in excess of 2,500 euros.

    And the European Central Bank announced last year that it would stop production of 500-euro notes, which will eventually phase them out altogether.

    But apparently these disparate rules don’t go far enough.

    According to the Commission, the presence of cash controls in some EU countries, coupled with the lack of cash controls in other EU countries, creates loopholes for criminals and terrorists.

    So that’s why the European Commission is now working to standardize a ban on cash, or at least implement severe restrictions and reporting, across the entire EU.

    The Commission’s roadmap indicates that forthcoming legislation, likely to be enacted next year.

    This is happening. And it may serve as the perfect case study for the rest of the world.

    A growing bandwagon of academics and policy makers in other countries, including the United States, UK, Australia, etc. has been calling for prohibitions against cash.

    It’s always the same song: cash is a tool for criminals and terrorists.

    Harvard economist Ken Rogoff is a leading voice in the War on Cash; his new book The Curse of Cash claims that physical currency makes the world less safe.

    Rogoff further states “all that cash” is being used for “tax evasion, corruption, terrorism, the drug trade, human trafficking. . .”

    Wow. Sounds pretty grim.

    Apparently pulling out a $5 bill to tip your valet makes you a member of ISIS now.

    Of course, this is total nonsense.

    A recent Gallup poll from last year shows that a healthy 24% of Americans still use cash to make all or most of their purchases, compared to the other options like debit cards, credit cards, checks, bank transfers, PayPal, etc.

    And the Federal Reserve Bank of San Francisco released a ton of data late last year showing that:

    • 52% of grocery purchases, along with personal care products, are made in cash
    • 62% of purchases up to $10 are made in cash
    • But even at much higher amounts over $100, nearly 1 in 5 purchases are still made using physical cash

    This doesn’t sound life nefarious criminal activity to me.

    It seems that perfectly normal, law-abiding citizens still use cash on a regular basis.

    But that doesn’t seem to matter.

    A bunch of university professors who have probably never been within 1,000 miles of ISIS think that a ban on cash would make us all safer from terrorists.

    You probably recall the horrible Christmas attack in Berlin last month in which a Tunisian man drove a truck through a crowded pedestrian mall, killing 12 people.

    Well, the attacker was found with 1,000 euros in cash.

    The logic, therefore, is to ban cash.

    I’m sure he was also found wearing pants. Perhaps we should ban those too.

    This idea that criminals and terrorists only deal in bricks of cash is a pathetic fantasy regurgitated by the serially uninformed.

    I learned this first hand, years ago, when I was an intelligence officer in the Middle East: criminals and terrorists don’t need to rely on cash.

    The 9/11 attackers spent months living in the United States, and they routinely used bank accounts, credit cards, and traveler’s checks to finance themselves.

    And both criminal organizations and terrorist networks have access to a multitude of funding options from legitimate businesses and charities, along with access to a highly developed internal system of credit.

    A cash ban wouldn’t have prevented 9/11, nor would it have prevented the Berlin Christmas attack.

    What cash controls do affect, however, are the financial options of law-abiding people.

    These policymakers and academics acknowledge that banning cash would reduce consumers’ financial privacy. And that’s true.

    But they’re totally missing the point. Cash isn’t about privacy.

    It’s one of the only remaining options in a financial system that has gone totally crazy.

    Especially in Europe, where interest rates are negative and many banks are on the verge of collapse, cash is a protective shelter in a storm of chaos.

    Think about it: every time you make a deposit at your bank, that savings no longer belongs to you. It’s now the bank’s money. It’s their asset, not yours.

    You become an unsecured creditor of the bank with nothing more than a claim on their balance sheet, beholden to all the stupidity and shenanigans that they have a history of perpetrating.

    Banks never miss an opportunity to prove to the rest of the world that they do not deserve the trust that we place in them.

    And for now, anyone who wishes to divorce themselves from these consequences can simply withdraw a portion of their savings and hold cash.

    Cash means there is no middleman standing between you and your savings.

    Banning it, for any reason, destroys this option and subjects every consumer to the whims of a financial system that is stacked against us.

    Do you have a Plan B?

  • Can Trump Deliver?

    Authored by Paul Craig Roberts,

    My view of Trump is conditional and awaits evidence. I am encouraged by the One Percent’s opposition to Trump, or we have just experienced the greatest ruse in history. Indeed, a pointless ruse, as the Establishment had its candidate in Hillary.

    Trump’s executive orders don’t support the argument that he is acting for the One Percent. Trump nixed the global corporations’ beloved TPP. He is trying to close down the mass immigration that the corporations use to suppress domestic wage rates. He is committed to normalizing relations with Russia, much to the discomfort of the neoconservatives and the military/security complex.

    As for Mnuchin, he left Goldman Sachs in 2002, the same year that Nomi Prins left Goldman Sachs. That was 14 years ago. We know for a fact that Nomi, a former managing director, is not an operative for Goldman Sachs, so my position is to wait and see what Mnuchin does before we declare him to be a Goldman Sachs agent. For a different view see Nomi Prins in the Guest section of this website.

    Think about it this way: If Trump is sincere, and the Ruling Establishment seems to think that he is, about cleaning out a nest of outlaws, what better help could he have than one of the outlaws?

    Change from the top requires tough mean people. Anyone else would be run over.

    My position is to wait for the evidence. For years my readers have said that they need some hope. Trump’s attack on the Ruling Establishment gives them hope. Why take this hope away prematurely?

    From the beginning my concern has been that Trump has no experience in the economic and foreign policy debates. He doesn’t know the issues or the players. But he knows two big things: the middle and working class are hurting, and conflict with Russia could result in thermo-nuclear war. My view is support him on these two most important of all issues.

    My worry is that Trump has already gone off course on better relations with Russia. Trump had the sense to speak during his first week in office with Russia’s President Putin. Reports are that the one hour conversation went well. However, the report from the Trump administration is that the sanctions were not mentioned and that Trump is considering connecting the removal of the sanctions with a reduction in nuclear arms.

    Clearly, Trump needs more astute advisors than he has. Confronted with 28 NATO countries, Russia, the population of which is dwarfed by this collection of countries and armaments, relies on its nuclear weapons to deal with the potential threat. During the Obama regime, the threat to Russia must have seemed to be very real, as the demonization of Russia and its President were based entirely on obvious lies and reached levels of provocation seldom seem in history without leading to war.

    If I had been Trump’s advisor, I would have insisted that the first thing that Trump tell Putin is that “the sanctions are history and I apologize for the insult based on the fabricated lies of my predecessor.”

    This is what was needed. Once trust is restored, then the matter of reduction in nuclear arms can be raised without making the Russian government concerned that the duplicitous Americans are setting them up for attack.

    If you were a Russian, if you were a member of the Russian government, if you were president of Russia, if you had experienced an American coup that overthrew the elected government of Ukraine, a province that was part of Russia for 300 years, if you had experienced an American inspired attack on the Russian residents and Russian peace-keeping forces in South Ossetia, long a province of Russia, that caused the intervention of the Russian armed forces, an intervention blamed by the US government on “Russian aggression,” would you trust the United States? Only if you are a complete fool.

    Trump needs advisors sufficiently knowledgable to tell him about the situation that he has committed himself to improve.

    Who are these advisors?

    Consider now the “Muslim ban.” Muslim refugees are a problem for the US and Europe because the US and its NATO puppets have bombed a large number of Muslim countries entirely on the basis of lies. One might have thought, that with all its experience of war, the Western countries would be aware that wars produce refugees. But apparently not.

    The easiest and most certain way to deal with the problem of Muslim refugees is to stop the bombings that produce refugees.

    Apparently, this solution is beyond the grasp of the Trump administration. According to news reports—and considering the presstitute status of news organizations one never knows—the new Trump administration authorized a SEAL team attack in Yemen that murdered an 8 year old girl along with a number of women and children on January 29. As far as I can ascertain, no women are marching in opposition to the Trump administration’s continuation of the policy of the Bush/Obama regime of murdering Muslims in the name of a hoax “war on terror.”

    Trump’s Archilles’ heel is his belief in the “Muslim threat,” an orchestrated threat cooked up by the neoconservatives. If Trump wants to defeat ISIS, all he needs to do is to stop the US government and CIA from funding ISIS. ISIS is Washington’s creation, used to overthrow Libya and sent to Syria to overthrow Assad until the Russians intervened.

    Someone needs to have enough geo-political knowledge to tell Trump that he cannot simultaneously mend relations with Russia and revive the conflict with Iran and threaten China.

    As I feared, Trump has no idea who to appoint in order to achieve his agenda.

    Now let’s turn to Trump’s critics: Identity Politics, that is, the explanation of Western history as the victimization of everyone by white heterosexual males. The attacks on Trump lack legitimacy, and everyone except those immersed in victim politics sees that. The same people who march against Trump and condemn his Muslim ban do not march against the wars that produce the Muslim refugees and immigrants. Trump’s opponents are in the illogical position of supporting the “war on terror” and the 9/11 story on which the war is based, but objecting to the ban on entry of “Muslim terrorists” into the US. If Muslims are terrorists as the Bush/Obama narative claims, it is totally irresponsible to admit into the US Muslims harmed by Washington’s attacks on their countries who might have thoughts of revenge.

    The liberal/progressive/left long ago abandoned the working class. The consequence of their illegitimate complaints will be to lump all dissent into their illegitimate category. Thus truth-tellers along with fiction-tellers will be shut down. The public will not be able to differenate between the orchestrated attacks on Trump and those telling the truth.

    My conclusion is that the stupidity of Identity Politics by discrediting dissent will empower the worst elements of the right-wing. If Goldman Sachs is also operating against us, as Nomi Prins believes, then the US is history.

  • California Considering Legislation To Become First Ever Sanctuary State

    We’ve written frequently in recent weeks/months about the brewing battle between the Trump administration and so-called “sanctuary cities” where local police officers are specifically instructed to ignore federal immigration laws.  Now, the leftist state of California is considering a new senate bill that would have the entire state become America’s first “sanctuary state.”

    According to CBS Los Angeles, Senate Bill 54, written by Senate President Pro Tem Kevin de Leon of Los Angeles, will come to the floor for it’s first public hearing today.  While Democrat-controlled cities like Los Angeles, San
    Francisco and Sacramento are already considered sanctuary cities, SB54
    would enforce the same protections for illegal immigrants on more
    conservative California cities in the San Joaquin Valley and elsewhere.

    As if that weren’t enough, CBS points out that the bill will also consider providing taxpayer dollars to fund lawyers for illegal immigrants facing deportation. 

    California may prohibit local law enforcement from cooperating with federal immigration authorities, creating a border-to-border sanctuary in the nation’s largest state as legislative Democrats ramp up their efforts to battle President Donald Trump’s migration policies.

     

    The legislation is scheduled for its first public hearing Tuesday as the Senate rushes to enact measures that Democratic lawmakers say would protect immigrants from the crackdown that the Republican president has promised.

     

    While many of California’s largest cities — including Los Angeles, San Francisco and Sacramento — have so-called sanctuary policies that prohibit police from cooperating with immigration authorities, much of the state does not.

     

    The Democratic legislation, written by Senate President Pro Tem Kevin de Leon of Los Angeles, comes up for debate less than a week after Trump signed an order threatening to withdraw some federal grants from jurisdictions that bar officials from communicating with federal authorities about someone’s immigration status.

     

    The Senate Public Safety Committee considers SB54 Tuesday morning. The Judiciary Committee will also consider fast-tracked legislation that would spend state money, in an amount that has not been disclosed, to provide lawyers for people facing deportation.

    Of course, this new California bill comes just as Trump signed an executive order to make good on his campaign pledge to block federal funding
    to states and cities where local law enforcement refuse to report
    undocumented immigrants they encounter to federal authorities.  Here are recent comments from White
    House press secretary Sean Spicer:

    “The American people are no longer going to have to be forced to subsidize this disregard for our laws,” Spicer said.

    Spicer said an executive order signed by Trump on Wednesday directs the Secretary of Homeland Security to look at federal funding to cities to figure out “how we can defund those streams.”

    The move by the Trump administration threatens $2.3 billion in annual funding to the nation’s 10 largest cities.

     

     

    As we noted a few days ago, California has already threatened counter measures to withhold tax payments to the U.S. Treasury to the extent Trump makes good on his promise to block federal grants to the rogue state.

    KPIX5 reports that officials are looking for money that flows through Sacramento to the federal government that could be used to offset the potential loss of billions of dollars’ worth of federal funds if President Trump makes good on his threat to punish cities and states that don’t cooperate with federal agents’ requests to turn over undocumented immigrants, a senior government source in Sacramento said.

     

    It almost feels like this showdown between Trump and California Governor Jerry Brown should be a Pay-Per-View event.

    And here is the full text of California Senate Bill 54, for your reading pleasure:

  • Sizing Up The Bubble – A Major Inflection Point Is Coming

    Submitted by John Rubino via DollarCollapse.com,

    Fund manager John Hussman is always good for dramatic charts. Here’s a recent one:

    This ratio is even scarier than it looks, says Hussman:

    Historically-reliable valuation measures now approach those observed at the 2000 bubble peak. Yet even this comparison overlooks the fact that in 2000, the overvaluation featured a subset of very large-capitalization stocks that were breathtakingly overvalued, while most stocks were more reasonably valued (see Sizing Up the Bubble for details). In many ways, the current speculative episode is worse, because it has extended to virtually all risk-assets.

     

    To offer some idea of the precipice the market has reached, this chart shows the median price/revenue ratio of individual S&P 500 component stocks. This median now stands just over 2.45, easily the highest level in history. The longer-term norm for the S&P 500 price/revenue ratio is less than 1.0. Even a retreat to 1.3, which we’ve observed at many points even in recent cycles, would take the stock market to nearly half of present levels.

    One of the reasons share prices have risen so dramatically relative to revenues is that corporations are earning a lot more on each dollar of sales these days. How are they doing that? By squeezing their workers.

    The following chart, from the Economic Policy Institute shows labor’s share of corporate income plunging recently.

    The next chart illustrates the same point from a different angle. Workers, it seems, have been producing more per hour but their pay hasn’t kept up as their bosses held onto more of the resulting profit.

    A big part of this has been due to offshoring. If you close a factory where the workers make $30 an hour and set up in a place where your new workers make $5, then the $25 difference flows to the bottom line. Other contributors are automation, which is both inexorable and hugely favorable for the guys who own the robots, and the fact that the minimum wage in many states has kept up with neither the true inflation rate nor the increase in free-trade driven corporate earnings.

    As EPI’s Josh Bivens puts it:

    This 6.8 percentage-point decline in labor’s share of corporate income might not seem like a lot, but if labor’s share had not fallen, employees in the corporate sector would have $535 billion more in their paychecks today. If this amount was spread over the entire labor force (not just corporate sector employees) this would translate into a $3,770 raise for each worker.

    For stock market investors, the scary thing about this imbalance between capital and labor is that it’s only temporary. As the details and magnitude of the scam have been exposed, the political tide has shifted. At the national level, fed-up US workers have installed an anti-free trade administration that is already tilting the playing field towards domestic workers. At the state and local level, calls for a higher minimum wage are being heard and acted upon. A major French party has even nominated a presidential candidate who wants to tax robots.

    So it’s safe to assume that the above charts will develop serious inflection points going forward, as a rising share of profits flow to the nether regions of the org chart and investors respond by lowering the value they place on a given dollar of corporate revenues.

    As Hussman notes, just a return to 1990s valuation levels would cut the average US stock in half.

  • Meet America's Newest Supreme Court Justice: Judge Neil Gorsuch

    Confirming a choice that many had already pegged as a front-runner to fill Antonin Scalia’s vacant seat, President Trump officially announced Judge Neil Gorsuch as his nominee for the Supreme Court of the United States. Gorsuch, 49, the youngest supreme court nominee in 25 years, was among a group of federal judges reported in recent weeks to be on Trump’s shortlist. A strict adherent of judicial restraint known for sharply-written opinions and bedrock conservative views, Gorsuch, a Colorado native, is popular among his peers and is seen as having strong backing among Republicans generally.

    A fly-fishing enthusiast and skier who lives outside Boulder, Colorado, Gorsuch lived in Washington DC as a boy, after his mother Anne Gorsuch Burford was appointed by Reagan to lead the Environmental Protection Agency. After graduating from Columbia University, Gorsuch, who is said to have “an inexhaustible store of Winston Churchill quotes”, went on to Harvard Law school and attended Oxford University on a Marshall scholarship. He worked as a corporate lawyer in Washington for a decade before his appointment to the circuit court by George W Bush in 2006, a post to which the Senate confirmed him by voice vote.

    Per Politico, Gorsuch has the typical pedigree of a Supreme Court Justice with degrees from Columbia, Harvard and Oxford.  Moreover, Gorsuch’s professional background includes time at a Washington law firm, the Department of Justice and clerkships with Justices Byron White and Anthony Kennedy, and some conservative analysts theorize that he could assert a rightward influence on the centrist Ronald Reagan nominee.

    Gorsuch has the typical pedigree of a high court justice. He graduated from Columbia, Harvard and Oxford, clerked for two Supreme Court justices and did a stint at the Department of Justice.  He attended Harvard Law with former President Barack Obama.

     

    His work background includes time as a partner with the Washington law firm Kellogg Huber Hansen Todd Evans & Figel, a stint with the U.S. Department of Justice and clerkships with Supreme Justices Byron White and Anthony Kennedy.

     

    Since 2006, he has served on the 10th Circuit Court of Appeals, in Colorado. His supporters note that he is an outdoorsman who fishes, hunts and skies. On the court, conservatives hope he could become the intellectual heir to Scalia, long the outspoken leader of the conservative bloc.

    Gorsuch

    For conservatives, Gorsuch meets conservative standards as an originalist and a textualist — someone who interprets the Constitution and statutes as they were originally written. His family has ties to the Republican party locally and in Washington, and at the age of 49, he could sit on the high court for decades — a big plus for conservative supporters.  Per The Denver Post:

    Gorsuch is best known nationally for taking the side of religious organizations that opposed parts of the Affordable Care Act that compelled coverage of contraceptives. In one of those cases, Burwell vs. Hobby Lobby Stores, he wrote of the need for U.S. courts to give broad latitude to religious beliefs.

     

    “It is not for secular courts to rewrite the religious complaint of a faithful adherent, or to decide whether a religious teaching about complicity imposes ‘too much’ moral disapproval on those only ‘indirectly’ assisting wrongful conduct,” he noted in a concurring opinion.

     

    The Supreme Court later ruled in favor of Hobby Lobby, which now is not required to subsidize birth control that it finds objectionable.

     

    Gorsuch also has written against euthanasia and assisted suicide, the latter of which Colorado legalized last November. “All human beings are intrinsically valuable and the intentional taking of human life by private persons is always wrong,” he wrote in his 2006 book “The Future of Assisted Suicide and Euthanasia.”

    Of course, while his conservative record will no doubt be enticing to Republican Senators, Gorsuch’s past support of term limits may draw criticism from both sides of the aisle, as can’t have anyone disrupting the power structure of Washington D.C. now can we.

    One position that might give pause to the lawmakers voting on his nomination is his past advocacy on behalf of term limits. In 1992 he co-wrote a paper for the Cato Institute that argued term limits are “constitutionally permissible.”

     

    “Recognizing that men are not angels, the Framers of the Constitution put in place a number of institutional checks designed to prevent abuse of the enormous powers they had vested in the legislative branch,” he wrote. “A term limit, we suggest, is simply an analogous procedure designed to advance much the same substantive end.”

    As the Guardian notes, Trump’s nominee has the potential to tip the court one way or the other on those questions. If confirmed, Gorsuch would return the court to nine justices, filling a seat left vacant since the death of Justice Antonin Scalia in February 2016.  Working for the last year with an even number of justices, the court issued split 4-4 decisions on high-stakes questions such as the protection of undocumented immigrants and the health of public unions, leaving lower court rulings in place.

    The next justice to be confirmed may break such ties, giving new strength to the court’s conservative bloc, which could be further buttressed by future Trump nominations in the case of the retirement or death of a justice. One of the four liberal-leaning justices on the court, Ruth Bader Ginsburg, turns 84 in March. Justice Anthony Kennedy, a centrist on the court who has sometimes split tie votes for the progressive wing, is 80 years old.

    Gorsuch’s track record as a judge on the US court of appeals for the 10th circuit does not shed obvious light on how he might rule as a supreme court justice on hot-button topics such as abortion and marriage equality. He is the author of a book about euthanasia in which he writes, “to act intentionally against life is to suggest that its value rests only on its transient instrumental usefulness for other ends.”

    Ideological strands running through Gorsuch’s appeals court rulings would seem likely to endear him to congressional Republicans and Trump’s conservative base. He has shown himself to be solicitous to claims of religious exemptions from the law, to gun rights claims and to the prosecution of death penalty cases.

    During Trump’s announcement, Gorsuch addressed the crowd briefly, declaring himself “honored and humbled” and promising to be a “faithful servant to the constitution and laws of this great country” and paying tribute to the principles of partiality, independence, collegiality and courage.

    For a lawyer’s view on Gorsuch, read this SCOTUSblog profile on Gorsuch. Some of his key legal positions are below

    • Second Amendment: He wrote in United States v. Games-Perez these rights “may not be infringed lightly.”
    • Roe v. Wade: Gorsuch has never had the opportunity to write on Roe v. Wade. But, for any indication on how he would vote on abortions, the “right to privacy” defense from the dormant commerce clause is relevant, and he isn’t buying it. This clause, known as “dormant” since it is not explicitly written out in the Constitution, indicates that since Congress regulates interstate commerce, states cannot pass legislation that unduly burdens or discriminates against other states and interstate commerce.
       
    • Hobby Lobby v. Sebelius: He distrusts efforts to remove religious expression from public spaces generally, but watch out for cases citing RFRA and RLUIPA — he ruled in Hobby Lobby v. Sebelius that the contraception mandate in Obamacare placed an undue burden on the company’s religious exercise and violated RFRA.
    • Capital punishment: Gorsuch is not friendly to requests for relief from death sentences through federal habeas corpus.
    • Criminal law: Gorsuch believes there is an overwhelming amount of legislation about criminal law, and believes that cases can be interpreted in favor of defendants even if it hurts the government. On mens rea — which means “guilty mind,” or essentially the intent to commit a crime — Gorsuch is willing to read narrowly even if it means it doesn’t favor the prosecution.
    • Checks and balances: Gorsuch does not like deferring to federal agencies when they interpret laws, so watch out for use of the Chevron rule, which allows federal agents to enforce laws in any way that is not expressly prohibited. Gorsuch may push back.

    As a side note, per the The Denver Post, Gorsuch comes from a well known Republican family whose mother served in the Reagan Administration before being forced to resign in 1983, facing a criminal investigation and a House contempt of Congress citation over records related to alleged political favoritism in toxic-waste cleanups. 

    Gorsuch comes from a well-known Colorado Republican family. His mother, the late Anne Gorsuch Burford, was Environmental Protection Agency director for the Reagan administration for 22 months. She slashed the agency’s budget and resigned under fire in 1983 during a scandal over mismanagement of a $1.6 billion program to clean up hazardous waste dumps.

    With that, let the Senate confirmation theatrics commence.

    Under current Senate rules, which require 60 votes for a supreme court confirmation, Gorsuch would need to win the support of multiple Democrats, who count 48 Senate caucus members to the Republicans’ 52.

    If the Democrats follow through with a filibuster, however, those rules could change. The previous Democratic leadership of the Senate changed the rules to require fewer votes for the confirmation of most executive nominees, and the current Republican leadership could make an additional change to the rules. McConnell earlier had vowed to confirm Trump’s nominee. White House press secretary Sean Spicer downplayed the looming threat of an all-consuming political brawl over Trump’s nominee, telling reporters on Tuesday that he believed the Senate would reach the 60-vote threshold required to confirm supreme court appointees.

    Interest groups across the political spectrum will spend millions on a public campaign to legitimize or tear down a supreme court nominee. Already, conservative groups are running ads to pressure Senate Democrats in red states into siding with Republicans over the nominee.

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