Today’s News 31st December 2016

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

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

     

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

    SBC

     

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

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

     

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

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

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

     

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

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

  • Trump Is Exactly Where The Elites Want Him

    Submitted by Brandon Smith via Alt-Market.com,

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

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

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

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

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

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

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

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

     

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Vladimir the merciful?

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

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

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

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

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

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

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

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

    From the full statement posted on the Kremlin website:

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

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

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

    * * *

    Full Putin statement below:

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

     

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

     

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

     

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

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

     

    I wish all of you happiness and prosperity.

  • How Musicians Die

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

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

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

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

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

    *  *  *

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

  • Why Politicians Are To Blame For Most Terrorist Attacks

    Submitted by Patrick Coburn via Strategic-Culture.org,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • These Are The Most Expensive Zip Codes In America

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

    And the 10 Priciest ZIP Codes in the Country Are…

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

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

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

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

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

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

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

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

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

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

    Find the full sortable list here…

    Source: PropertyShark.com

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

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

    Rockkette

     

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

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

     

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

     

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

     

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

     

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

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

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

     

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

    Dear Family and Friends,

     

    This is the message I have sent to Choir:

     

    Dear President Jarrett and Choir,

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    I know that I too feel betrayed.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    Respectfully,

     

    Jan Chamberlin

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

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

    America’s Secret Planned Conquest Of Russia

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    and

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

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

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

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

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

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

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

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

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

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

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

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

  • The Political Left's Shmoo Theory Of Education

    Submitted by Matthew McCaffrey via The Mises Institute,

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

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

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

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

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

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

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

     

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  • So Many Questions…

    By Chris at www.CapitalistExploits.at

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

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

    Hey Chris,

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    I’m curious to hear your thoughts.

     

    – D

    Answer:

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

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

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

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

    Example 1:

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

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

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

    Example 2:

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

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

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

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

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

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

    Back to size of shop. Sushi shop is about half the footprint so probably half the lease costs.

    Staffing was only 2 at Sushi shop and about 8 at McDonald’s (as far as we could tell). That’s the biggest cost (labour). So McDonald’s has about a double on lease costs and a 4x on labour costs, and the average dollar spend is $12 compared to Sushi place at $18.

    Our guesstimates where that McDonald’s runs about 30% more traffic so we can level the playing field by saying that Sushi place gross dollar spend isn’t $18 but 30% less (due to 30% less traffic) so this is $12.60. Easy. Now factoring in half the lease costs and a quarter labour costs my kids quickly figured out that they’d buy Sushi place.

    Sitting there doing my own math on it, if you put a gun at my head and told me to buy one I’d buy Sushi place and I reckon I’d be correct, and that’s without ever touching their financial statements.

    Now, obviously you wouldn’t go out and buy Sushi place based on these variables and based on sitting and eating an ice cream for 10 minutes at a food hall. That would be sillier than blindly buying a low volatility ETF right now but when you do this regularly, fast, and repeatedly (I have trouble not doing it – just a defect, I guess), then you’ll find you’re pretty good at quickly rapidly analysing the world around you.

    Hi there

     

    Thanks for all the great content. I was just wondering if you knew of any great books etc that really explain the global financial system/geopolitics in depth that you have come across or would recommend?

     

    I’m fascinated by all this stuff now but I’m finding that because I lack some of the basic understanding, I’m unable to distinguish between “doom porn merchants/permabears” etc and intelligent analysis (I don’t doubt that you’re the latter btw lol).

     

    Thanks in advance, will continue to listen/read and have introduced a few friends to your work.

     

    All the best, Rob. (London, UK)

    Answer:

    I used to read a ton of financial books in my twenties but not much anymore. I tend to read about science, history, and philosophy more now.

    I’d recommend any of Soros’ books, not because I like the guy (or even agree with some of his thinking) but he has a very different and extremely valuable way of assessing risk and understanding market dynamics.

    I honestly hesitate to suggest books because I feel like you can gain something from most any of them but the critical components are making sure you think for yourself as mentioned in the answer to the previous question above. Otherwise you’re just left taking in information and believing it no matter how poor it may be.

    For example, I’d suggest reading work by that pillar of stupidity, Paul Krugman. Why? Because understanding how he and many of his ilk think is valuable but not because it’s sound reasoning. I mean, I’m all for immortalising Paul Krugman. Make a statue out of him, if only so the the pigeons can poop on him for eternity.

    The second part of the question is around distinguishing wheat from chaff.

    Ok, so this question I get all the time.

    Do your due diligence. Most of the stuff you’re referring to will be one of the publishing sites which use “professional” marketing firms to write copy and then flog something based around hype. Just go look for previous marketing they’ve done and then see whether any of it worked out.

    It’s pretty easy to spot.

    If you’re being told that “there is some catastrophic event that is coming on X date and go here to learn how to protect yourself.” Or that some “secret” meeting in a dark room with an “un-named man” has just been revealed and riches/catastrophe await. Or some special code designed in a bunker in World War II that has now revealed the most incredible information and you, some unknown dude on the internet, get to find out.

    Because if you did find something that was truly going to make you a billionaire that’s the first thing you’d do, right?

    I mean you wouldn’t tell your loved ones and set yourself up. No, you’d immediately set up a website and hire a bunch of marketing copywriters and you’d spam people about it. That’s what you’d do. For sure!

    You get the picture. Any variation of that theme and you’re about 99% probability it’s full of nonsense.

    Here is the thing: Information is actually free. What’s valuable isn’t information per se, it’s knowing how to synthesise that information and execute on it. I know that sounds boring because everyone wants some magic wand or some guru with a crystal ball to tell them what to do. I’ll be the first to tell you that I’ve two balls and I assure you neither are crystal.

    And that brings me to the end of today’s post.

    I mentioned at the beginning there were two things I’d not done in a while.

    And the second is taking a break. And since it’s the silly season I’m going to do just that for the next week so you won’t hear from me.

    I do wish you joy, happiness, and money because, well, this is Capitalist Exploits.

    – Chris

    “Christmas is a season not only of rejoicing but of reflection.” — Winston Churchill

    ————————————–

    Liked this podcast? Don’t miss our future articles and podcasts, and

    get access to free subscriber-only content here.

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  • DRUDGE REPORT HIT WITH MASSIVE DDOS ATTACK; MATT DRUDGE PONDERS IF GOVERNMENT WAS BEHIND ATTACK

    Drudgereport.com was the number 1 source of information during the elections. It was and always has been, or at least for the past decade or so, the single most popular destination for news — especially during elections. On the same day that the Obama administration announced sanctions again Russia, Drudge goes down.

    Coincidence?

    Drudge ponders aloud on Twitter.

    down

    One of my favorite interviews ever was when Drudge showed up to the Alex Jones show for a chat.

     

     

     

     

    Content originally generated at iBankCoin.com

  • Paul Craig Roberts Worries "What Is Henry Kissinger Up To?"

    Authored by Paul Craig Roberts,

    The English language Russian news agency, Sputnik, reports that former US Secretary of State Henry Kissinger is advising US president-elect Donald Trump how to “bring the United States and Russia closer together to offset China’s military buildup.” 

    If we take this report at face value, it tells us that Kissinger, an old cold warrior, is working to use Trump’s commitment to better relations with Russia in order to separate Russia from its strategic alliance with China.

    China’s military buildup is a response to US provocations against China and US claims to the South China Sea as an area of US national interests. China does not intend to attack the US and certainly not Russia.

    Kissinger, who was my colleague at the Center for Strategic and International studies for a dozen years, is aware of the pro-American elites inside Russia, and he is at work creating for them a “China threat” that they can use in their effort to lead Russia into the arms of the West. If this effort is successful, Russia’s sovereignty will be eroded exactly as has the sovereignty of every other country allied with the US.

    At President Putin’s last press conference, journalist Marat Sagadatov asked if Russia wasn’t already subject to forms of foreign semi-domination: “Our economy, industry, ministries and agencies often follow the rules laid down by international organizations and are managed by consulting companies. Even our defense enterprises have foreign consulting firms auditing them.” The journalist asked, “if it is not time to do some import substitution in this area too?”

    Every Russian needs to understand that being part of the West means living by Washington’s rules. The only country in the Western Alliance that has an independent foreign and economic policy is the US.

    All of us need to understand that although Trump has been elected president, the neoconservatives remain dominant in US foreign policy, and their commitment to the hegemony of the US as the uni-power remains as strong as ever. The neoconservative ideology has been institutionalized in parts of the CIA, State Department and Pentagon. The neoconservatives retain their influence in media, think tanks, university faculties, foundations, and in the Council on Foreign Relations.

    We also need to understand that Trump revels in the role of tough guy and will say things that can be misinterpreted as my friend, Finian Cunningham, whose columns I read, usually with appreciation, might have done.

    I do not know that Trump will prevail over the vast neoconservative conspiracy. However, it seems clear enough that he is serious about reducing the tensions with Russia that have been building since President Clinton violated the George H. W. Bush administration’s promise that NATO would not expand one inch to the East. Unless Trump were serious, there is no reason for him to announce Exxon CEO Rex Tillerson as his choice for Secretary of State. In 2013 Mr. Tillerson was awarded Russia’s Order of Friendship.

    As Professor Michel Chossudovsky has pointed out, a global corporation such as Exxon has interests different from those of the US military/security complex. The military/security complex needs a powerful threat, such as the former “Soviet threat” which has been transformed into the “Russian threat,” in order to justify its hold on an annual budget of approximately one trillion dollars. In contrast, Exxon wants to be part of the Russian energy business. Therefore, as Secretary of State, Tillerson is motivated to achieve good relations between the US and Russia, whereas for the military/security complex good relations undermine the orchestrated fear on which the military/security budget rests.

    Clearly, the military/security complex and the neoconservatives see Trump and Tillerson as threats, which is why the neoconservatives and the armaments tycoons so strongly opposed Trump and why CIA Director John Brennan made wild and unsupported accusations of Russian interference in the US presidential election.

    The lines are drawn. The next test will be whether Trump can obtain Senate confirmation of his choice of Tillerson as Secretary of State.

    The myth is widespread that President Reagan won the cold war by breaking the Soviet Union financially with an arms race. As one who was involved in Reagan’s effort to end the cold war, I find myself yet again correcting the record.

    Reagan never spoke of winning the cold war. He spoke of ending it. Other officials in his government have said the same thing, and Pat Buchanan can verify it.

    Reagan wanted to end the Cold War, not win it. He spoke of those “godawful” nuclear weapons. He thought the Soviet economy was in too much difficulty to compete in an arms race. He thought that if he could first cure the stagflation that afflicted the US economy, he could force the Soviets to the negotiating table by going through the motion of launching an arms race. “Star wars” was mainly hype. (Whether or nor the Soviets believed the arms race threat, the American leftwing clearly did and has never got over it.)

    Reagan had no intention of dominating the Soviet Union or collapsing it. Unlike Clinton, George W. Bush, and Obama, he was not controlled by neoconservatives. Reagan fired and prosecuted the neoconservatives in his administration when they operated behind his back and broke the law.

    The Soviet Union did not collapse because of Reagan’s determination to end the Cold War. The Soviet collapse was the work of hardline communists, who believed that Gorbachev was loosening the Communist Party’s hold so quickly that Gorbachev was a threat to the existence of the Soviet Union and placed him under house arrest. It was the hardline communist coup against Gorbachev that led to the rise of Yeltsin. No one expected the collapse of the Soviet Union.

    The US military/security complex did not want Reagan to end the Cold War, as the Cold War was the foundation of profit and power for the complex. The CIA told Reagan that if he renewed the arms race, the Soviets would win, because the Soviets controlled investment and could allocate a larger share of the economy to the military than Reagan could.

    Reagan did not believe the CIA’s claim that the Soviet Union could prevail in an arms race. He formed a secret committee and gave the committee the power to investigate the CIA’s claim that the US would lose an arms race with the Soviet Union. The committee concluded that the CIA was protecting its prerogatives. I know this because I was a member of the committee.

    American capitalism and the social safety net would function much better without the drain on the budget of the military/security complex. It is more correct to say that the military/security complex wants a major threat, not an actual arms race. Stateless Muslim terrorists are not a sufficient threat for such a massive US military, and the trouble with an actual arms race as opposed to a threat is that the US armaments corporations would have to produce weapons that work instead of cost overruns that boost profits.

    The latest US missile ship has twice broken down and had to be towed into port. The F-35 has cost endless money, has a variety of problems and is already outclassed. The Russian missiles are hypersonic. The Russian tanks are superior. The explosive power of the Russian Satan II ICBM is terrifying. The morale of the Russian forces is high. They have not been exhausted from 15 years of fighting without much success pointless wars against women and children.

    Washington, given the corrupt nature of the US military/security complex, can arms race all it wants without being a danger to Russia or China, much less to the strategic alliance between the two powers.

    The neoconservatives are discredited, but they are still a powerful influence on US foreign policy. Until Trump relegates them to the ideological backwaters, Russia and China had best hold on to their strategic alliance. Anyone attempting to break this alliance is a threat to both Russia and China, and to America and to life on earth.

  • Dollar Flash Crashes On Last Trading Day Of 2016

    It is oddly appropriate that in a year everyone finally admitted markets are manipulated by central banks and broken by HFT algos, that on the last trading day of 2016, the dollar flash crashed with for no reason whatsoever.

    Shortly after 6:30pm Eastern, the dollar plunged by 150 pips against the Euro, once 1.05 stops were taken out, with algos sending the EURUSD as high as 1.07 in a matter of seconds…

    … while concurrently the Swiss Franc soared as much as 1.6% against the greenback, as the USDCHF tumbled from just over 1.025 to just above 1.0050 as the pair briefly flirted with parity.

    What caused it? As there was no fundamental news, the answer is the same catalyst as the pound sterling flash crash: once EURUSD stops were taken out, algos all piled up on the same side of the trade and with virtually non existent market depth, it sent the world’s most actively traded currency pair soaring. Indeed, as FX traders in Asia, cited by Bloomberg said, the EUR/USD jump was partly driven by a surge of algo-buy orders after pair rose above 1.0500 in early session.

    Others agreed: as Shigeki Yoshitoshi, head of Japan FX and commodities sales at Australia & New Zealand Bank said, it “seems to be no particular factor driving euro sharply higher in extremely thin volume” adding that “there wasn’t any particular news. Markets are extremely thin and perhaps position tuning occurred.”

    So after the initial freak out where are markets now? Well, according to Bloomberg, after the Euro was dealt as high as 1.07 on the EBS platform, though that price level has been dismissed by banks and clients according to Asia-based FX traders, the pair is slowly returning to its pre-freakout level. As Bloomberg adds, the post-mortem of the EURUSD spike already has “traders swapping stories of clients dealing away and banks shedding tears” especially those who were stopped out by a few good stop-busting algos. 

    And while funds were seen buying under 1.0500, when the pair hit 1.0540 one trader says he had to take the loss.

    Finally, if any readers missed the move, fear not: with the world’s most actively traded market having become a farcical, flash crashing joke, it is only a matter of time before the next algo-driven freak out returns.

  • Anthony Bourdain Slams "Privileged" Liberals For Their "Utter Contempt" Of Working-Class America

    Celebrity chef and host of CNN’s Parts Unknown Anthony Bourdain is no fan of Trump, and he made as much clear in today’s interview with Reason. When asked what concerns him about Trump, he responded: “what I am not concerned about with Trump? Wherever one lives in the world right now I wouldn’t feel too comfortable about the rise of authoritarianism. I think it’s a global trend, and one that should be of concern to everyone.”

    However, while a liberal bashing Trump is hardly news, what was more noteworthy is that the celebrity chef also unloaded on “his own side”, when he called out elite east coast liberals – of which he admitted he is part of – saying that their “utter contempt” for working-class Americans was unhelpful and nauseating.

    The utter contempt with which privileged Eastern liberals such as myself discuss red-state, gun-country, working-class America as ridiculous and morons and rubes is largely responsible for the upswell of rage and contempt and desire to pull down the temple that we’re seeing now.

    Bingo. It is also why the “shocking” Trump presidency is nothing more than the public’s revolt to “Eastern liberals” shooting themselves in the foot by overly believing their own BS.

    But Bourdain did not stop there, next lashing out at the tidal wave of artificial political correctness sweeping over the nation: “I hate the term political correctness, the way in which speech that is found to be unpleasant or offensive is often banned from universities. Which is exactly where speech that is potentially hurtful and offensive should be heard” Bourdain said.

    He continued:

    The way we demonize comedians for use of language or terminology is unspeakable. Because that’s exactly what comedians should be doing, offending and upsetting people, and being offensive. Comedy is there, like art, to make people uncomfortable, and challenge their views, and hopefully have a spirited yet civil argument. If you’re a comedian whose bread and butter seems to be language, situations, and jokes that I find racist and offensive, I won’t buy tickets to your show or watch you on TV. I will not support you. If people ask me what I think, I will say you suck, and that I think you are racist and offensive. But I’m not going to try to put you out of work. I’m not going to start a boycott, or a hashtag, looking to get you driven out of the business.

    But it was his commentary on the arrogance of the liberal superclass that all other liberals (and conservatives) should note and learn from, and it is 100% accurate.

    I’ve spent a lot of time in gun-country, God-fearing America. There are a hell of a lot of nice people out there, who are doing what everyone else in this world is trying to do: the best they can to get by, and take care of themselves and the people they love. When we deny them their basic humanity and legitimacy of their views, however different they may be than ours, when we mock them at every turn, and treat them with contempt, we do no one any good. Nothing nauseates me more than preaching to the converted.

     

    The self-congratulatory tone of the privileged left—just repeating and repeating and repeating the outrages of the opposition—this does not win hearts and minds. It doesn’t change anyone’s opinions. It only solidifies them, and makes things worse for all of us. We should be breaking bread with each other, and finding common ground whenever possible. I fear that is not at all what we’ve done.

    Bourdain is, of course, correct, although we fail to see how America manages to cross so many great divides – racial, ethnic, social, religious, and of course, wealth – in the near future, no matter who the president is, in a peaceful manner.

    Finally, in an amusing twist, Bourdain despises such shining examples of self-righteous liberals as Bill Maher even more than he hates Trump. When asked what he thinks of Bill Maher, his answer was emphatic:

    Insufferably smug. Really the worst of the smug, self-congratulatory left. I have a low opinion of him. I did not have an enjoyable experience on his show. Not a show I plan to do again. He’s a classic example of the smirking, contemptuous, privileged guy who lives in a bubble. And he is in no way looking to reach outside, or even look outside, of that bubble, in an empathetic way.

    In retrospect, if more people could see the world through Bourdain’s eyes, there may still be hope.

  • The Rich Got Richer In 2016 – $237 Billion Richer!

    While Warren Buffett did best of all the billionaires in 2016, he was far from alone.

     

    The biggest fortunes on the planet whipsawed through $4.8 trillion of daily net worth gyrations in 2016.

    The volatility — triggered by disappointing economic data from China at the start of the year, the U.K.’s vote to leave the European Union in the middle and the election of billionaire Donald Trump at the end — didn’t prevent the richest from getting richer.

    Their fortunes rose 5.7 percent for the year at the close of trading on Dec. 27, or some $237 billion, according to the Bloomberg Billionaires Index.

  • Oliver Stone Slams The Establishment's "The Russians Are Coming" Narrative

    Authored by Oliver Stone (via Facebook),

    THE RUSSIANS ARE COMING

    As 2016 draws to a close, we find ourselves a deeply unsettled nation. We’re unable to draw the lines of our national interest. Is it jobs and economy, is it national security, or is it now in our interest to ensure global security — in other words, act as the world’s policemen?

    As the “failing” (to quote Trump) New York Times degenerates into a Washington Post organization with its stagnant Cold War vision of a 1950s world where the Russians are to blame for most everything — Hillary’s loss, most of the aggression and disorder in the world, the desire to destabilize Europe, etc. — the Times has added the issue of ‘fake news’ to reassert its problematic role as the dominant voice for the Washington establishment. Certainly this is true in the case of Russia’s ‘hacking’ the 2016 election and putting into office its Manchurian Candidate in Donald Trump. Apparently the CIA (via various unnamed intelligence officials), and the FBI, NSA, Director of National Intelligence James Clapper (who notoriously lied to Congress in the Snowden affair), President Obama, the DNC, Hillary Clinton, and Congress agree that Russia, and Mr. Putin predominantly, is responsible.

    Certainly the psychotic, war-loving Senator John McCain is right up there alongside these patriots, calling President Putin a “thug, bully and a murderer and anybody else who describes him as anything else is lying.” He actually said this — the man whose sound judgment chose Sarah Palin as his VP nominee in ’08. And the Times followed by printing the story in its full glory on page one, clearly agreeing with McCain’s point of view. I don’t remember Presidents Eisenhower, Nixon, or Reagan, in the darkest days of the 1950s/80s, ever singling out a Russian President like this. The invective was aimed at the Soviet regime, but never were Khrushchev or Brezhnev the target of this bile. I guess this is a new form of American diplomacy. If a black youth in our inner cities were killed or a Pakistani wedding party were murdered by our drones, would President Obama be singled out as a murderer, bully, thug? Such personalization is a sign of sickness in our thinking and way beneath what should be our standards.

    Note the enclosed link from the Veteran Intelligence Professionals for Sanity (which includes the ex-NSA reformer Bill Binney, a mathematical genius who inspired the Nic Cage character in “Snowden,” and who talks here about what hacking really means, as opposed to a ‘leak’). The Times and other mainstream media have surprisingly evaded any contrary evidence, such as that presented by Craig Murray, ex-ambassador and Wikileaks spokesman who says he was given the information in a Washington park by a Democratic ‘insider’ who was disgusted by the behavior of the DNC; Murray then gave it to Wikileaks. This was a ‘leak,’ not a ‘hack,’ and always seemed to me the likely source for this scandal (as I think the Sony leak was as well, falsely blamed on North Korea, but that’s another matter). And if this were to be properly investigated, it might very well lead to the discovery that this was Hillary Clinton’s ‘Nixon moment.’ Clearly the DNC offices were up to no good. Ironically, Clinton first made her name as one of the investigators into Watergate. See Mark Ames’s article, “Site Behind McCarthyite Blacklist,” tracking this foul play to Washington Post journalist Craig Timberg.

    I remember well in the 1950s when the Russians were supposed to be in our schools, Congress, State Department — and according to many Eisenhower/Nixon supporters — about to take over our country without serious opposition (and they call me paranoid!). It was this same media who insisted on our need to go to Vietnam to defend our freedoms against the communists 6,000 miles away. And after the Red Scare finally went away for good in 1991, let us remind ourselves that It never ended. It became Hussein of Iraq with his weapons of mass destruction, and talk of the ‘mushroom cloud.’ It became a Demon, as real as any Salem Witch Trial. It was Gaddafi of Libya, and then it was Assad of Syria. In other words, as in an Orwellian prophesy, it never ended, and I can guarantee you it never will — unless we the people who can still think for ourselves in this existential matter, can say “Enough” to this demon act. “Enough,’ “go away” — laugh in their faces.

    Of course, the NYT/WaPo nexus rarely will publish any of our serious dissents and thus we must take refuge in alternate media, such as ‘Consortiumnews,’ ‘The Intercept,’ ‘Naked Capitalism,’ ‘Counterpunch,’ ‘Zero Hedge,’ ‘Antiwar.com,’ ‘Truthdig,’ ‘Common Dreams.’ Yet I think we were all quite shocked (but not surprised) when recently we saw 200 websites listed as tools of the Kremlin (WaPo’s November 24, “Russian propaganda effort helped spread ‘fake news’ during election”).

    My God, the ghost of Izzy Stone is back from the 1950s! For that matter, so is Tom Clancy from the ’80s. False thrillers will now be written about the Russians hacking the American elections. Money and TV serials will be made. I’ve never read such hysterical junk (call it what it is — “fake news”) in the New York Times, in which the editorials have become outrageous diatribes, many of them presumably written by Serge Schmemann, one of those ideologues who still finds Russians under his bed at night (called ‘White Russians’ in the old days who, like right-wing Cubans in Miami, can never live down past grievances). Schmemann is obviously riding high at the NYT edit board. We can make fun of this, but it’s an irresponsible and dangerous editorializing, which has invaded the MSM’s reporting. Their thinking has clearly influenced the Pentagon and many of our Generals’ statements. When one group-think controls our national conversation, it’s so sad, a pathetic loss of judgment, and it becomes ultra dangerous. In this spirit, I’m linking several crucial essays of new vintage, pointing out the disgrace the MSM has become.

    As much as we may disagree with Donald Trump (and I do) he’s right now target number one of the MSM propaganda — until, that is, he changes to the anti-Kremlin track over, God knows, some kind of petty dispute cooked up by CIA, and in his hot-headed way starts fighting with the Russians. It wouldn’t be long then until he declares a state of war against Russia. I have no doubt then that our over-financed military ($10 to every 1 Russian dollar) will mean NOTHING against a country that right now believes the US, with the largest buildup of NATO on its borders since Hitler’s World War II, is crazed enough to prepare for a preemptive strike. In his analysis, “The Need to Hold Saudi Arabia Accountable,” Robert Parry points out that this conflict ironically started in the 1980s with the Neoconservatives defining Iran as the number one terrorist sponsor in the world. How this leads to our present mess is a brilliant analysis that is unknown to the American public.

    I urge you to read the following articles and stay calm in your thinking. But bring it to bear in some way.

    Robert Parry, “Making Russia ‘The Enemy’,” Consortiumnews
    http://bit.ly/2hz4jTI

    Joe Lauria, “Russia-Hack Story Another Media Failure,” Consortiumnews
    http://bit.ly/2hmndK4

    Justin Raimondo, “Stop the CIA Coup,” Antiwar.com
    http://bit.ly/2hgka9c

    Robert Parry, “The Need to Hold Saudi Arabia Accountable,” Consortiumnews
    http://bit.ly/2ifNRZ3

    Ray McGovern, “US Intel Vets Dispute Russia Hacking Claims,” Consortiumnews
    http://bit.ly/2gB2yWo

    Mark Ames, “Site behind Washington Post’s McCarthyite Blacklist,” Naked Capitalism
    http://bit.ly/2goUVT5

    Robert Parry, “A Sour Holiday Season for Neocons,” Consortiumnews
    http://bit.ly/2imXXVb

    As a believer in what Thich Nhat Hanh says, every single one of us, even through our prayers, can add to the betterment of this world. I never thought I’d find myself at this point in time praying for the level-headedness of a Donald Trump. You might remember “The Iliad.” As Homer would have it, the gods would huddle up during each day’s battles and decide on the outcome. Who would die and who would live. Are the gods still listening?

  • Duterte Says US Ambassadors Are CIA "Spies" As Alleged US Plot To Overthrow Him Emerges

    Coming at an awkward time, just as the US accused Russia of doing (once again, without a shred of valid proof as opposed to a report which the DHS was quick to disown) what the CIA has done to other nations for decades, earlier today everyone’s favorite volatile, vulgar and outspoken Philippine President Rodrigo Duterte derided U.S. ambassadors as “spies”, responding to a media report of an alleged American plot to destabilize his government, a job he said some envoys were appointed solely to do.

    Quoted by Reuters, the former mayor said though had received no intelligence reports of any U.S. plan to undermine his presidency, he believed most ambassadors were in cahoots with the Central Intelligence Agency (CIA), which had a track record of meddling in other countries’ affairs

    The reason for the latest outburst is because the Manila Times newspaper on Tuesday reported a former U.S. ambassador to the Philippines had prepared a “blueprint to undermine Duterte“, citing a document it had received from a what it described as a “highly placed source”.

    The Manila Times said Philip Goldberg, who recently ended his term as ambassador in Manila, had outlined various strategies over an 18-month period to destabilize Duterte. That would include supporting the opposition and co-opting the media, the military, neighboring countries and senior government officials to turn against Duterte and isolate him economically.

    Duterte has previously called Goldberg a “gay son of a bitch” and referred to him in three successive live television interviews on Thursday, as Washington’s “superstar” with a track record of trying to undermine governments.

    He may well be right: Goldberg was expelled as ambassador to Bolivia in 2008 by then President Evo Morales, who accused him of siding with his rightist opponents and of orchestrating street protests. The United States rejected that and said his expulsion was a “grave error”.

    “Maybe he will deny it but it’s not good,” Duterte said of Goldberg’s alleged blueprint, which he said was plausible because of Goldberg’s history.

    The U.S. State Department, which has yet to admit on the record that it is in the government overthrow business, naturally described the allegations as “false.”

    Duterte, however, had a more cynical view: “most of the ambassadors of the United States, but not all, are not really professional ambassadors. At the same time they are spying, they are connected with the CIA,” Duterte said in a television interview.

    He added that “the ambassador of a country is the number one spy. But there are ambassador of the U.S., their forte is really to undermine governments.

    Meanwhile, U.S. Assistant Secretary of State for East Asia and the Pacific Daniel Russel dismissed the Manila Times report.

    “No such blueprint exists,” he said in a statement on Tuesday.

    “The United States respects the sovereignty of the Philippines and the democratic choices made by the Philippine people.”

    Sure it does, and just to “prove” it here is a paper which showed that between 1946 and 2000, the US intervened in foreign elections “only” 81 times, of which 65% were covert.

  • US Retaliates Against Russia For "Hacking The Election": Expels 35 Diplomats, Unveils Sanctions

    As promised (or threatened), the Obama administration has unveiled – via the US Treasury – new sanctions against Russia over election hacking allegations (that as yet have not been supported by any actual evidence). Despite president-elect Trump’s comments that “we ought to get on with our lives,” the sanctions apply to five entities and six individuals, and also including the expulsion of 35 Russian diplomats and closing two Russian compounds in New York and Maryland in response to a campaign of harassment against American diplomats in Moscow, a senior U.S. official said on Thursday.

    Amusingly, one of the entities is Russia’s FSB, aka the Federal Security Service, i.e. the Russian spy service, to the list of Specially Designated Nationals and Blocked Persons. Which, perhaps, means that previously the US would look the other way when known spies would enter the US.

    The move against the diplomats from the Russian embassy in Washington and consulate in San Francisco is part of a series of actions announced on Thursday to punish Russia for a campaign of intimidation of American diplomats in Moscow and interference in the U.S. election.

    The Russian diplomats would have 72 hours to leave the United States, the official said. Access to the two compounds, which are used by Russian officials for intelligence gathering, will be denied to all Russian officials as of noon on Friday, the senior U.S. official added.

    “These actions were taken to respond to Russian harassment of American diplomats and actions by the diplomats that we have assessed to be not consistent with diplomatic practice,” the official said .The State Department has long complained that Russian security agents and traffic police have harassed U.S. diplomats in Moscow, and U.S. Secretary of State John Kerry has raised the issue with Russian President Vladimir Putin and his foreign minister, Sergei Lavrov.

    “By imposing costs on the Russian diplomats in the United States, by denying them access to the two facilities, we hope the Russian government reevaluates its own actions, which have impeded the ability and safety of our own embassy personnel in Russia,” the official said.

    As for proof, well just trust Obama, who said that “data theft and disclosure activities could only have been directed by the highest levels of the Russian government.” And Iraq had WMD, or something….

    The outgoing president finally threatens that he will continue to take more sanctions against Russia, without noting in advance just what they will be. He better hurry: Obama has 23 days left as US president.

    * * *

    Full statement from President Obama

    Statement by the President on Actions in Response to Russian Malicious Cyber Activity and Harassment

     

    Today, I have ordered a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election. These actions follow repeated private and public warnings that we have issued to the Russian government, and are a necessary and appropriate response to efforts to harm U.S. interests in violation of established international norms of behavior.

     

    All Americans should be alarmed by Russia’s actions. In October, my Administration publicized our assessment that Russia took actions intended to interfere with the U.S. election process. These data theft and disclosure activities could only have been directed by the highest levels of the Russian government. Moreover, our diplomats have experienced an unacceptable level of harassment in Moscow by Russian security services and police over the last year. Such activities have consequences. Today, I have ordered a number of actions in response.

     

    I have issued an executive order that provides additional authority for responding to certain cyber activity that seeks to interfere with or undermine our election processes and institutions, or those of our allies or partners. Using this new authority, I have sanctioned nine entities and individuals: the GRU and the FSB, two Russian intelligence services; four individual officers of the GRU; and three companies that provided material support to the GRU’s cyber operations. In addition, the Secretary of the Treasury is designating two Russian individuals for using cyber-enabled means to cause misappropriation of funds and personal identifying information. The State Department is also shutting down two Russian compounds, in Maryland and New York, used by Russian personnel for intelligence-related purposes, and is declaring “persona non grata” 35 Russian intelligence operatives. Finally, the Department of Homeland Security and the Federal Bureau of Investigation are releasing declassified technical information on Russian civilian and military intelligence service cyber activity, to help network defenders in the United States and abroad identify, detect, and disrupt Russia’s global campaign of malicious cyber activities.

     

    These actions are not the sum total of our response to Russia’s aggressive activities. We will continue to take a variety of actions at a time and place of our choosing, some of which will not be publicized. In addition to holding Russia accountable for what it has done, the United States and friends and allies around the world must work together to oppose Russia’s efforts to undermine established international norms of behavior, and interfere with democratic governance. To that end, my Administration will be providing a report to Congress in the coming days about Russia’s efforts to interfere in our election, as well as malicious cyber activity related to our election cycle in previous elections.

    More details from the NYT:

    The Obama administration struck back at Russia on Thursday for its efforts to influence the 2016 election, ejecting 35 Russian intelligence operatives from the United States and imposing sanctions on Russia’s two leading intelligence services, including four top officers of the military intelligence unit the White House believes ordered the attacks on the Democratic National Committee and other political organizations.

     

    In a sweeping set of announcements, the United States was also expected to release evidence linking the cyberattacks to computer systems used by Russian intelligence. Taken together, the actions would amount to the strongest American response ever taken to a state-sponsored cyberattack aimed at the United States.

     

    The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

     

    Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

    As Bloomberg reports, among those targeted were officials of GRU, Russia’s military intelligence agency, which cybersecurity experts in the U.S. have linked to the hacking of the Democratic National Committee and party officials through a group they have nicknamed APT 28 or Fancy Bear. The U.S. also is sanctioning some Russian state institutions and cyber companies associated with them.

    The NYT adds that the Obama administration is also planning to release a detailed “joint analytic report” from the Federal Bureau of Investigation and the Department of Homeland Security that is clearly based in part on intelligence gathered by the National Security Agency. A more detailed report on the intelligence, ordered by President Obama, will be published in the next three weeks, though much of the detail — especially evidence collected from “implants” in Russian computer systems, tapped conversations and spies — is expected to remain classified.

    In the most amusing twist, even the NYT admits that “despite the fanfare and political repercussions surrounding the announcement, it is not clear how much real effect the sanctions may have.”

    And while we are confident Putin is thoroughly amused at this moment by Obama’s last ditch effort to posion US-Russian relations, we eagerly await the Russian response.

    * * *

    From the US Treasury

    Issuance of Amended Executive Order 13694; Cyber-Related Sanctions Designations

    12/29/2016

    Today, the President issued an Executive Order Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities.  This amends Executive Order 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities.”  E.O. 13694 authorized the imposition of sanctions on individuals and entities determined to be responsible for or complicit in malicious cyber-enabled activities that result in enumerated harms that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States.  The authority has been amended to also allow for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.  Five entities and four individuals are identified in the Annex of the amended Executive Order and will be added to OFAC’s list of Specially Designated Nationals and Blocked Persons (SDN List).  OFAC today is designating an additional two individuals who also will be added to the SDN List.  

    Specially Designated Nationals List Update


    The following individual has been added to OFAC’s SDN List: 

    • ALEXSEYEV, Vladimir Stepanovich; DOB 24 Apr 1961; Passport 100115154 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    • BELAN, Aleksey Alekseyevich (a.k.a. Abyr Valgov; a.k.a. BELAN, Aleksei; a.k.a. BELAN, Aleksey Alexseyevich; a.k.a. BELAN, Alexsei; a.k.a. BELAN, Alexsey; a.k.a. “Abyrvaig”; a.k.a. “Abyrvalg”; a.k.a. “Anthony Anthony”; a.k.a. “Fedyunya”; a.k.a. “M4G”; a.k.a. “Mag”; a.k.a. “Mage”; a.k.a. “Magg”; a.k.a. “Moy.Yawik”; a.k.a. “Mrmagister”), 21 Karyakina St., Apartment 205, Krasnodar, Russia; DOB 27 Jun 1987; POB Riga, Latvia; nationality Latvia; Passport RU0313455106 (Russia); alt. Passport 0307609477 (Russia) (individual) [CYBER2].

    •  BOGACHEV, Evgeniy Mikhaylovich (a.k.a. BOGACHEV, Evgeniy Mikhailovich; a.k.a. “Lastik”; a.k.a. “lucky12345”; a.k.a. “Monstr”; a.k.a. “Pollingsoon”; a.k.a. “Slavik”), Lermontova Str., 120-101, Anapa, Russia; DOB 28 Oct 1983 (individual) [CYBER2].

    •  GIZUNOV, Sergey (a.k.a. GIZUNOV, Sergey Aleksandrovich); DOB 18 Oct 1956; Passport 4501712967 (Russia); Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    •  KOROBOV, Igor (a.k.a. KOROBOV, Igor Valentinovich); DOB 03 Aug 1956; nationality Russia; Passport 100119726 (Russia); alt. Passport 100115101 (Russia); Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    •  KOSTYUKOV, Igor (a.k.a. KOSTYUKOV, Igor Olegovich); DOB 21 Feb 1961; Passport 100130896 (Russia); alt. Passport 100132253 (Russia); First Deputy Chief of GRU (individual) [CYBER2] (Linked To: MAIN INTELLIGENCE DIRECTORATE).

    The following entities have been added to OFAC’s SDN List:

    •  AUTONOMOUS NONCOMMERCIAL ORGANIZATION PROFESSIONAL ASSOCIATION OF DESIGNERS OF DATA PROCESSING SYSTEMS (a.k.a. ANO PO KSI), Prospekt Mira D 68, Str 1A, Moscow 129110, Russia; Dom 3, Lazurnaya Ulitsa, Solnechnogorskiy Raion, Andreyevka, Moscow Region 141551, Russia; Registration ID 1027739734098 (Russia); Tax ID No. 7702285945 (Russia) [CYBER2].

    •  FEDERAL SECURITY SERVICE (a.k.a. FEDERALNAYA SLUZHBA BEZOPASNOSTI; a.k.a. FSB), Ulitsa Kuznetskiy Most, Dom 22, Moscow 107031, Russia; Lubyanskaya Ploschad, Dom 2, Moscow 107031, Russia [CYBER2].

    •  MAIN INTELLIGENCE DIRECTORATE (a.k.a. GLAVNOE RAZVEDYVATEL’NOE UPRAVLENIE (Cyrillic: ??????? ???????????????? ??????????); a.k.a. GRU; a.k.a. MAIN INTELLIGENCE DEPARTMENT), Khoroshevskoye Shosse 76, Khodinka, Moscow, Russia; Ministry of Defence of the Russian Federation, Frunzenskaya nab., 22/2, Moscow 119160, Russia [CYBER2].

    •  SPECIAL TECHNOLOGY CENTER (a.k.a. STC, LTD), Gzhatskaya 21 k2, St. Petersburg, Russia; 21-2 Gzhatskaya Street, St. Petersburg, Russia; Website stc-spb.ru; Email Address stcspb1@mail.ru; Tax ID No. 7802170553 (Russia) [CYBER2].

    •  ZORSECURITY (f.k.a. ESAGE LAB; a.k.a. TSOR SECURITY), Luzhnetskaya Embankment 2/4, Building 17, Office 444, Moscow 119270, Russia; Registration ID 1127746601817 (Russia); Tax ID No. 7704813260 (Russia); alt. Tax ID No. 7704010041 (Russia) [CYBER2].

    *  *  *

    Additionally – potentially unrelated:

    • U.S. TO CLOSE TWO RUSSIAN COMPOUNDS IN MARYLAND AND NEW YORK USED FOR INTELLIGENCE-RELATED ACTIVITIES – U.S. OFFICIAL
    • U.S. EXPELS 35 RUSSIAN DIPLOMATS IN WASHINGTON AND SAN FRANCISCO, GIVES THEM 72 HOURS TO LEAVE – U.S. OFFICIAL

    Bloomberg reports that The FBI and Homeland Security Department will release a report Thursday with technical evidence intended to prove Russia’s military and civilian intelligence services were behind hacking attacks during this year’s presidential campaign, according to a U.S. official.

    The documentation will be offered in tandem with sanctions that the Obama administration announced Thursday in retaliation for the breach of Democratic National Committee e-mails as Democrat Hillary Clinton and Republican Donald Trump were campaigning for the White House. The Russian government, which has denied responsibility for the hacking, has vowed to respond to any new sanctions with unspecified counter-measures.

     

    The joint report will include newly declassified information exposing the internet infrastructure that Russia used in the cyberattacks, including malware and computer addresses, according to the official who asked asked not to be identified before the report is made public.

     

    The release is intended to serve two purposes: to help prove the Russian government carried out the hacking while also frustrating officials in Moscow by exposing some of their most sensitive hacking infrastructure, the official said.

    And now we await as Putin retaliates, which he will momentarily, just as promised

    Anticipating the sanctions Wednesday, Russia accused Obama of acting out of spite, and pledged retaliation.

     

    “People in the White House need to understand clearly that if Washington really takes new hostile steps, then it will receive a response,” foreign ministry spokeswoman Maria Zakharova said in a video statement.

    As The New York Times reports,

    The sanctions were also intended to box in President-elect Donald J. Trump. Mr. Trump has consistently cast doubt that the Russian government had anything to do with the hacking of the D.N.C. or other political institutions, saying American intelligence agencies could not be trusted and suggesting that the hacking could have been the work of a “400-pound guy” lying in his bed.

    Mr. Trump will now have to decide whether to lift the sanctions on the Russian intelligence agencies when he takes office next month, with Republicans in Congress among those calling for a public investigation into Russia’s actions. Should Mr. Trump do so, it would require him to effectively reject the findings of his intelligence agencies.

    Obama’s executive order is below.

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Today’s News 29th December 2016

  • Chinese Professor Writing for Pine River Capital Says China Will Win Trade War with America

    The shills over at the Minnesota based hedge fund, Pine River, are making the media rounds these evening, after issuing a letter featuring a Hong Kong Professor named James Wang who said China would defeat the United States in a trade war. The entire article is suspect and wreaks of enemy propaganda.

    Have a look, penned by <<<Bei Hu>>> (hmm).

    This is what Wang had to say about a prospective trade war with the US,  which includes Trump slapping the shit out of China with 45% tariffs.

    “By design, decision-makers in a democracy face difficulties coordinating a relief effort and must eventually face a political backlash from impacted domestic producers,” Wang wrote. “On this basis, the Chinese may have more runway to play the long game in a trade war.”
     
    “The balance of power worldwide is much more diffuse compared to the early 20th century, and players like China and India have emerged to create new political centers of gravity,” Wang wrote.
     
    “However, as economic and political paralyses spread across the developed world, the most likely outcome is a trade war.”

    In other words, Pine Capital believes America is finished and the balance of power now lies in Beijing.
     
    The math, however, tells a different story, as China enjoys nearly a $300 billion per annum trade surplus with the United States, wholly dependent on the US consumer to keep their bedraggled populace at bay, saddled with incredibly high levels of debt (250%+) and soaring NPLs.

    trade

    Goldman analyst, Kinger Lau, believes punitive tariffs will clown-rape China’s GDP by 3% in 2017. Kevin Lau from Daiwa Capital isn’t as optimistic as Goldman. He thinks an American-Sino trade war will result in an 87% drop in Chinese exports to the US — a drop of $420 billion. That would equate to a 4.85% blow to the Chinese parasitical ‘economy.’

    Even in a Trump light environment of just 15% tariffs, Chinese GDP stands to drop by 1.8%, according to Daiwa.

    China’s protest would involve selling US treasuries, which have proven to be meaningless with QE programs and they might give Boeing, Ford and GM the boot. They might shut down a few disgusting KFC restaurants too.

    Bottom line: Investors freak the fuck out when China misses by one tenth of one percent. Can you imagine if Chinese exports dropped by $420 billion or 87%?

    Pain.

     

     

    Content originally generated at iBankCoin.com

  • 2016: The Terrible, Horrible, No Good, Very Bad Year

    Submitted by John Whitehead via The Rutherd Institute,

    “What’s past is prologue.” ? William Shakespeare, The Tempest

    What a terrible, horrible, no good, very bad year this has been.

    Endless wars. Toxic politics. Violence. Hunger. Police shootings. Mass shootings. Economic downturns. Political circuses. Senseless tragedies. Loss. Heartache. Intolerance. Prejudice. Hatred. Apathy. Meanness. Cruelty. Poverty. Inhumanity. Greed.

    Here’s just a small sampling of what we’ve suffered through in 2016.

    After three years of increasingly toxic politics, the ruling oligarchy won and “we the people” lost. The FBI’s investigation of Hillary’s emails ended with a whimper, rather than a bang. FBI director James Comey declared Clinton’s use of a private email server to be careless rather than criminal. Bernie Sanders sparked a movement only to turn into a cheerleader for Hillary Clinton. Clinton won the popular vote but lost the election. Donald Trump won the White House while the American people lost any hope of ending the corporate elite’s grip on the government.

    The government declared war on so-called “fake news” while continuing to peddle its own brand of propaganda. President Obama quietly re-upped the National Defense Authorization Act, including a provision that establishes a government agency to purportedly counter propaganda and disinformation.

    More people died at the hands of the police. Shootings of unarmed citizens (especially African-Americans) by police claimed more lives than previously estimated, reinforcing concerns about police misconduct and the use of excessive force. Police in Baton Rouge shot Alton Sterling. Police in St. Paul shot Philando Castile during a traffic stop. Ohio police shot 13-year-old Tyre King after the boy pulls out a BB gun. Wisconsin was locked down after protests erupt over a police shooting of a fleeing man. Oklahoma police shot and killed Terence Crutcher during a traffic stop while the man’s hands were raised in the air. North Carolina police killed Keith Lamont Scott, spurring two nights of violent protests. San Diego police killed Alfred Olango after he removed a vape smoking device from his pocket. Los Angeles police shot Carnell Snell Jr. after he fled a vehicle with a paper license plate.

    We lost some bright stars this year. Supreme Court justice Antonin Scalia’s death left the court deadlocked and his successor up for grabs. Joining the ranks of the notable deceased were Muhammad Ali, David Bowie, Fidel Castro, Leonard Cohen, Carrie Fisher, John Glenn, Merle Haggard, Harper Lee, George Michael, Prince, Nancy Reagan, Janet Reno, Elie Wiesel, and Gene Wilder.

    Diseases claimed more lives. The deadly Zika virus spread outwards from Latin America and into the U.S.

    The rich got richer. The Panama Papers leak pulled back the curtain on schemes by the wealthy to hide their funds in shell companies.

    Free speech was dealt one knock-out punch after another. First Amendment activities were pummeled, punched, kicked, choked, chained and generally gagged all across the country. The reasons for such censorship varied widely from political correctness, safety concerns and bullying to national security and hate crimes but the end result remained the same: the complete eradication of what Benjamin Franklin referred to as the “principal pillar of a free government.”

    The debate over equality took many forms. African-Americans boycotted the Oscars over the absence of nominations for people of color, while the Treasury Department announced its decision to replace Andrew Jackson with Harriet Tubman on the $20 bill. North Carolina’s debate over transgender bathrooms ignited a nationwide fury. Meanwhile, the U.S. military opened its doors to transgender individuals. A unanimous Supreme Court affirmed a Texas law that counts everyone, not just eligible voters, in determining legislative districts. The nation’s highest court also upheld affirmative action, while declaring a Texas law on abortion clinics to be an unnecessary burden on women.

    Environmental concerns were downplayed in favor of corporate interests. Flint, Michigan’s contaminated water was declared a state and federal emergency, while thousands protested the construction of the Dakota Access Pipeline and its impact on water sources.

    Technology rendered Americans vulnerable to threats from government spies, police, hackers and power failures. The Justice Department battled Apple in court over access to its customers’ locked, encrypted iPhones. Microsoft sued the U.S. government over its access to customers’ emails and files without their knowledge. Yahoo confirmed that over half a billion user accounts had been hacked. Police departments across the country continued to use Stingray devices to collect cellphone data in real time, often without a warrant. A six-hour system shutdown resulted in hundreds of Delta flights being cancelled and thousands of people stranded.

    Police became even more militarized and weaponized. Despite concerns about the government’s steady transformation of local police into a standing military army, local police agencies continued to acquire weaponry, training and equipment suited for the battlefield. In North Dakota, for instance, police were authorized to acquire and use armed drones. Likewise, the use of SWAT teams for routine policing tasks has increased the danger for police and citizens alike.

    Children were hurt. A 17-year-old endangered silverback gorilla was shot preemptively after a 3-year-old child climbed into its zoo enclosure. In Disney World, an alligator snatched a 2-year-old boy off one of the resort’s man-made beaches. A school bus crash in Tennessee killed five children. And police resource officers made schools less safe, with students being arrested, tasered and severely disciplined for minor infractions.

    Computers asserted their superiority over their human counterparts, who were easily controlled by bread and circuses. Google’s artificial intelligence program, AlphaGo, defeated its human opponent in a DeepMind Challenge Match. Pokemon Go took the world by storm and turned users into mindless entertainment zombies.

    Terrorism took many forms. Brussels was locked down in the wake of terrorist attacks that killed dozens and wounded hundreds. A shootout between a gunman and police wrought havoc on a gay nightclub in Orlando. Terrorists armed with explosives and guns opened fire in Istanbul Airport. A trucker drives into a crowd of revelers on Bastille Day in France. Acts of suspected terrorism take place throughout Germany, including attacks using axes, knives and machetes. Japan undergoes a mass killing when a man armed with a knife targets disabled patients at a care facility. Syria continued to be ravaged by bomb strikes, terrorism and international conflict.

    Science crossed into new frontiers. Doctors announced the birth of the first healthy three-parent baby created with DNA from three separate people. Elon Musk outlined his plan to populate Mars.

    Tragedies abounded. An Amtrak train derailed outside of Philadelphia. A commuter train crashed through a barrier in New Jersey. Floods in Texas killed nine soldiers stationed at Fort Hood. Heatwaves swept the southwest, fueling wildfires. Flash floods and heavy rain devastated parts of Maryland and Louisiana.

    The nanny state went into overdrive. Philadelphia gave the green light to a tax on sugary drinks. The FDA issued guidelines to urge food manufacturers and chain restaurants to reduce salt use.

    The government waged a war on cash. Not content to swindle, cheat, scam, and generally defraud Americans by way of wasteful pork barrel legislation, asset forfeiture schemes, and costly stimulus packages, the government and its corporate partners in crime came up with a new scheme to not only scam taxpayers out of what’s left of their paychecks but also make us foot the bill. The government’s war on cash is a concerted campaign to do away with large bills such as $20s, $50s, $100s and shift consumers towards a digital mode of commerce that can easily be monitored, tracked, tabulated, mined for data, hacked, hijacked and confiscated when convenient.

    The Deep State reared its ugly head. Comprised of unelected government bureaucrats, corporations, contractors, paper-pushers, and button-pushers who are actually calling the shots behind the scenes, this government within a government is the real reason “we the people” have no real control over our so-called representatives. It’s every facet of a government that is no longer friendly to freedom and is working overtime to trample the Constitution underfoot and render the citizenry powerless in the face of the government’s power grabs, corruption and abusive tactics. These are the key players that drive the shadow government. They are the hidden face of the American police state that has continued past Election Day.

    The U.S. military industrial complex—aided by the Obama administration—armed the world while padding its own pockets. According to the Center for International Policy, President Obama has brokered more arms deals than any administration since World War II. For instance, the U.S. agreed to provide Israel with $38 billion in military aid over the next ten years, in exchange for Israel committing to buy U.S. weapons.

    Now that’s not to say that 2016 didn’t have its high points, as well, but it’s awfully hard to see the light at the end of the tunnel right now.

    Frequently, I receive emails from people urging me to leave the country before the “hammer falls.” However, as I make clear in my book Battlefield America: The War on the American People, there is nowhere in the world to escape from the injustice of tyrants, bullies and petty dictators. As Ronald Reagan recognized back in 1964, “If we lose freedom here, there is no place to escape to. This is the last stand on Earth.”

    Let’s not take the mistakes of 2016 into a new year with us. The election is over. The oligarchs remain in power. The police state is marching forward, more powerful than ever. All signs point to business as usual. The game continues to be rigged.

    The lesson for those of us in the American police state is simply this: if there is to be any hope for freedom in 2017, it rests with “we the people” engaging in local, grassroots activism that transforms our communities and our government from the ground up.

    Let’s get started.

  • Post-Election Sale

    Still too rich?

     

    Source: Branco

  • India Fears Run On Banks: Capital Controls And Withdrawal Limits To Continue

    Submitted by Michael Shedlock via MishTalk.com,

    Indian banks are fearful of running out of cash as lines queue up to withdraw money.

    Bankers say they cannot cope with any sudden increase in demand, and warn against lifting cash withdrawal limits.

    india-banks

    A decision by New Delhi on November 8 to scrap all large-denomination banknotes overnight removed 86 per cent of India’s currency from circulation. In an effort to prevent banks running out of cash, the finance ministry then imposed strict limits on the amount of new notes that could be withdrawn. Customers can currently withdraw just Rs2,500 from an ATM per day — equivalent to $37 — or Rs24,000 over the counter per week.

     

    “If the government lifts the limits on Friday and there is a sudden rush, banks will be totally dependent on the central bank to give them enough liquidity,” said Soumyajit Niyogi, associate director at India Ratings and Research. “The Reserve Bank of India has been giving assurances that it has enough cash but reports of how much currency there currently is in the system suggest this might not be the case.”

     

    New Delhi claims that purging most of India’s old cash supply, and replacing it with a smaller quantity of new banknotes, will eliminate illicitly earned or unaccounted for income that has been beyond the reach of tax officials.

     

    But as of December 19, banks had replaced just 38 per cent of the Rs15.3tn in demonetised notes that was sucked out of the system by November’s announcement, according to RBI data.

     

    The figures have alarmed bankers, who are now urging the government not to lift the curbs immediately. One executive said: “The government and the RBI need to make sure there is enough cash in the system before they lift the withdrawal limits.” A private banker told the Indian Express newspaper: “If the limits are relaxed, people will ask for more cash and there is limited cash. This will only turn banks into villains.”

     

    When the policy was first announced, the government estimated that Rs5tn would remain undeclared as it would be part of illicit money hoards. But R Gandhi, RBI deputy governor, said earlier this month that over Rs12tn had already been handed back, and a newspaper report on Wednesday said the figure had since climbed to Rs14tn, leaving just over Rs1tn remaining.

     

    This suggests either that the amount of illicit money in the system was overestimated by the government – or that new ways to launder cash have been discovered despite the government’s efforts.

     

    The RBI did not respond to a request to comment.

    More Experiments Coming

    Speculation is rife that further unorthodox measures are coming: Modi to Crank Up Campaign Against India’s Black Money.

    Well before India’s surprise ban on using 86 per cent of its cash supply, rightwing circles were abuzz with speculation about prime minister Narendra Modi taking such a step to fight so-called black money.

     

    Mainstream economists paid little heed to the chatter — deeming it “too preposterous” to take seriously, given the economic damage it would inflict.

     

    But with India now reeling from the acute cash crunch triggered by the decision to cancel its old Rs500 and Rs1,000 notes, many economists and observers are debating what other unorthodox economic policy experiments may lie ahead.

     

    Mr Modi is expected to intensify his campaign against black money, with his next target likely to be property purchased with illicit wealth and not registered in the true owners’ names. Speculation is rife that he is also seriously considering other dramatic and unusual reform measures — including possibly abolishing income tax and replacing it with a banking transaction tax.

    Expect More Pain, Failures

    The hit to India’s GDP will be much larger than expected.

    Nonetheless, it appears that Modi is prepared to follow up with the popular economic philosophy: If it doesn’t work, do more of it.

  • With China Facing Currency, Liquidity Crises, Ex-PBOC Official Urges Use Of "Nuclear Option"

    With the PBOC fighting tooth and nail to slow outbound capital flight, which according to Goldman has reached $1.1 trillion since August 2015, and which these days mostly means keeping the Yuan from depreciating to new all time lows below 7 Yuan to the Dollar, the Chinese central bank may have its work cut out for it in the immediate future. The reason is that, as Bloomberg reminds us, the first day of 2017 is when an annual $50,000 quota to convert the yuan into foreign exchange resets, stoking concern there will be a rush to sell the local currency.

    With tax payments and a regulatory assessment also tightening liquidity in the money market toward year-end, manifesting itself in soaring unsecured funding rates such as the overnight repo hitting 33% as noted yesterday, paralyzing both the overnight…

     

    and longer-dated interbank lending markets…

    …  January may bring scant relief as lenders prepare for stronger cash demand before Lunar New Year holidays, which are only a month away.

    The narrative is familiar: China’s markets are seeing renewed pressure this month as the Federal Reserve projects a faster pace of rate increases for 2017 and its Chinese counterpart tightens monetary conditions to spur deleveraging and defend the exchange rate. The declines are capping off a tough year for investors during which bonds, shares and currency all slumped, with the last hitting all time lows, just as Kyle Bass had predicted roughly one year ago.

    Much of the blame is on the unique calendar this year: “You have Chinese New Year quite early, and because of that one-month window, most of the banks will try to lock the money in a three-month cycle,” said Arthur Lau, Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments. “The current situation in the bond market is partly because of year-end and because of Chinese New Year.”

    But two far bigger culprits are the tightening Fed, and the rapidly deteriorating standoff between China’s housing bubble, which Beijing desperately wants to deflate into a soft landing by withdrawing liquidity, and China’s banking system which in turn is desperate for more liquidity, more easing, or at least a reduction in required reserves.

    Meanwhile, the local debt market is flashing red warning lights, yet most market participants seem to be blissfully ignoring them: China’s 10-year government bond yield has surged 21 basis points in December, poised for its biggest monthly increase since August 2013, when the local banks nearly collapsed as a result of a failed deleveraging effort. The yuan’s 6.6 percent decline in 2016 puts it on course for its worst year since 1994, while the Shanghai Composite Index is headed for its largest drop in five years. The three-month interbank rate known as Shibor rose for a 50th day, its longest streak since 2010, to an 18-month high on Wednesday. The overnight repurchase rate on the Shanghai Stock Exchange jumped to as high as 33 percent the day before, the highest since Sept. 29. As banks become more reluctant to offer cash to other types of institutions, the latter have to turn to the exchange for money, said Xu Hanfei, an analyst at Guotai Junan Securities Co. in Shanghai.

    But the worst news for China is that the local population is well-aware of the financial problems facing Beijing, and has been scrambling to transfer its cash offshore. As Bloomberg notes, the recent surge in onshore yuan trading volume suggests outflows are quickening, according to Harrison Hu, chief greater China economist at Royal Bank of Scotland. The daily average value of transactions in Shanghai climbed to $34 billion in December as of Wednesday, the highest since at least April 2014, according to data from China Foreign Exchange Trade System.

    Which brings us to the January 1 clock reset, and the imminent surge in perfectly legal capital outflows.

    “In the new year, the new foreign-exchange purchase quota starts, so we expect yuan positions in January to drop significantly,” Liu Dongliang, an analyst at China Merchants Bank Co., wrote in a note this month. “Within the foreseeable future, the market will be pessimistic about funding conditions. It happens to be near year-end now, where money markets are tight, and after New Year’s Day it’s almost Chinese New Year.”

    Ultimately, trying to keep a lid on the Yuan is a game China will lose, and some are already preemptively admitting defeat. Among them is Yu Yongding, a former academic member of the PBOC’s monetary policy committee, who overnight urged his former PBOC colleagues to engage the “nuclear option” – a sharp, one off devaluation similar to what China did in August of 2015. 

    In emailed comments to Bloomberg, Yongding said that China has a window from now to President-elect Donald Trump’s inauguration to halt FX intervention and let yuan depreciate to its equilibrium level.

    Yongding believes that once FX reserves fall below a certain psychological threshold, capital outflows will only accelerate, and while depreciation expectations may weaken occasionally, they will never disappear until the yuan free floats and finds its equilibrium.

    He also warned that concerns over depreciation have severely affected the PBOC’s monetary-policy independence and said that while tightening capital controls is right move, this has massive side effects and can be evaded.

    His conclusion: letting yuan fall won’t be as scary as some imagine because Chinese companies have been paying down their FX debt and a large drop isn’t supported by nation’s economic fundamentals.

    Will the PBOC stun everyone and unveil a surprise devaluation in the next three weeks? We don’t know, but according to bitcoin, which has soared by 20% in just the past week, someone does appear to “know” something, and if they are right, a devaluation is precisely what the Chinese central bank has in store.

  • Contagion Concerns Slam Japanese Financials As Toshiba Crashes 50% In 3 Days

    After two days of total carnage in Toshiba stocks, bonds, and credit risk, the bloodbath continues with the once-massive Japanese company is collapsing once again in early trading – now down 50% in 3 days. Following the semiconductor and nuclear business catastrophes, the company had nothing to add regarding today's crash but more worryingly the massive loss of market cap is spreading contagiously to Japanese financials with Sumi down 4%, and MUFG down almost 3%.

     

    As we noted yesterday, Tsunukawa said that “I apologize to shareholders, business partners and all stakeholders for the trouble we have caused,” after Toshiba said cost overruns at U.S. nuclear reactors it is building were likely to force a write-down of as much as several billion dollars, clouding its turnaround plan after the 2015 accounting scandal. Specifically, the company said it may have to book several billion dollars in charges related to a U.S. nuclear power plant construction company acquisition, rekindling "concerns about its accounting acumen."

    The problem is that the nuclear business, together with the semiconductors, has been positioned as one of key pillars underpinning Toshiba's growth which has been trying to shift away from its consumer electronics core. Alas, the latest gaffe now means that much of Toshiba's growth is gone, and the stock price reflect that overnight, when Toshiba's stock plunged by 20%, the most permitted, before it was halted for trading.

    The derisking is weighing heavily on USDJPY…

     

    And now, as Bloomberg reports, Japanese financials are tumbling on cross-default, contagion concerns…

    Sumitomo Mitsui Trust Bank has highest capital exposure to Toshiba, with loans equaling 5.5% of the bank’s equity, analyst Shinichiro Nakamura writes in report.

     

    SMTB would also suffer greatest earnings hit, with a Toshiba impairment charge of 100b-190b yen shaving ~9.9% off bank’s current profit for fiscal year to March 31: SMBC Nikko ests.

     

    If Toshiba impairment charge reaches over 400b yen, banks may conduct debt/equity swap; would lower near-term earnings impact while carrying risk of preferred shares losing value

     

    In 3rd scenario, Toshiba could undertake private placement with strategic partner; major banks would be limited to funding support but could be asked to waive claims

    Sumitomo Mitsui Trust shares fall as much as 4%, MUFG -2.6%, Mizuho -2.4%, SMFG -2.4%

  • Bankruptcy Asset Hunters Confirm What Most Of Us Already Knew: Everyone Lies On Social Media

    Earlier this year Curtis Jackson III (aka “50 Cent”) raised some concerns with his bankruptcy judge, Ann Nevins, after he posted a couple of ill-advised pictures on Instragram of himself posing with $100,000s of dollars worth of cash.  Apparently Chapter 7 trustees frown upon omitting “buckets of cash” from your official bankruptcy disclosures and then subsequently posing with that cash on social media.  But, after being ordered to appear in court to explain the pictures, an embarrassed 50 Cent was forced to admit that the cash was fake.

    50 Cent

     

    As the Wall Street Journal points out, chapter 7 trustees all around the country are finding out that “fiddy” isn’t the bankrupt person “frontin” on social media. 

    This October, when Ido Alexander saw photos a young man had posted on social media, he thought he had hit the bankruptcy jackpot.

     

    Mr. Alexander, a Florida lawyer working for a court-appointed trustee, dispatched an appraiser to the man’s home to inspect the expensive-looking gold chains and other jewelry he had been posing in, which he hadn’t declared as assets in court filings.

     

    The appraiser made another discovery that is becoming all too common in the age of social-media braggadocio. “At the end of the day, it was really costume jewelry,” Mr. Alexander says. “It was really disappointing.”

     

    The industry’s detectives—lawyers and accountants who serve as chapter 7 bankruptcy trustees—are learning what most teenagers have already figured out, which is that you can’t always believe what you see on Facebook and Twitter. “Gotcha” moments in which they discover people in bankruptcy posing in glamorous-looking jewelry, piloting boats and ATVs and even displaying buckets full of cash have fallen flat as the items turn out to be fake, or not theirs at all.

    Of course, some people are dumb enough to actually hide real assets from the bankruptcy court which rarely works out all that well.  Just ask Gregory Sipe of Virginia who decided to omit nearly $1 million worth of vintage guitars from his asset disclosures and earned himself five months of house arrest and nice little fine to boot.

    Trustees say efforts to hide assets don’t happen often, but nevertheless have been going on for years. An Oklahoma man who filed for bankruptcy in 2005 failed to turn over profits from his ownership stake in a television show, the court ruled. The name of the show: “Cheaters.”

     

    Tipped off by a creditor, North Carolina bankruptcy trustee John Bircher III, ran an online search on a Chesapeake, Va., businessman and found a newspaper article about his collection of 250 guitars. The man, Gregory Sipe, had only listed “several collectible guitars” worth $10,000 in his August 2010 bankruptcy filing.

     

    When Mr. Bircher paid Mr. Sipe a visit, he recalls, he discovered a garage full of vintage guitars that later sold for almost $900,000. Lawyer Raymond Tarlton, who represented Mr. Sipe, said his client didn’t disclose the guitars because he thought he could fully pay his debts without selling them.

     

    Mr. Sipe pleaded guilty, was sentenced to five months of house arrest and had to pay $5,900 for falsifying court records.

    Who knew that people sensationalize their lives on social media?  We thought we were the last remaining miserable people on the planet…this is a good news day.

  • Is 100% Of "US Warming" Due To NOAA Data Tampering?

    Submitted by Tony Heller via RealClimateScience.com,

    Climate Central just ran this piece, which the Washington Post picked up on. They claimed the US was “overwhelmingly hot” in 2016, and temperatures have risen 1,5°F since the 19th century.

    The U.S. Has Been Overwhelmingly Hot This Year | Climate Central

    The first problem with their analysis is that the US had very little hot weather in 2016. The percentage of hot days was below average, and ranked 80th since 1895. Only 4.4% of days were over 95°F, compared with the long term average of 4.9%. Climate Central is conflating mild temperatures with hot ones.

    They also claim US temperatures rose 1.5°F since the 19th century, which is what NOAA shows.

    Climate at a Glance | National Centers for Environmental Information (NCEI)

    The problem with the NOAA graph is that it is fake data. NOAA creates the warming trend by altering the data. The NOAA raw data shows no warming over the past century

    The adjustments being made are almost exactly 1.5°F, which is the claimed warming in the article.

    The adjustments correlate almost perfectly with atmospheric CO2. NOAA is adjusting the data to match global warming theory. This is known as PBEM (Policy Based Evidence Making.)

    The hockey stick of adjustments since 1970 is due almost entirely to NOAA fabricating missing station data. In 2016, more than 42% of their monthly station data was missing, so they simply made it up. This is easy to identify because they mark fabricated temperatures with an “E” in their database.

    When presented with my claims of fraud, NOAA typically tries to arm wave it away with these two complaints.

    1. They use gridded data and I am using un-gridded data.
    2. They “have to” adjust the data because of Time Of Observation Bias and station moves.

    Both claims are easily debunked. The only effect that gridding has is to lower temperatures slightly. The trend of gridded data is almost identical to the trend of un-gridded data.

    Time of Observation Bias (TOBS) is a real problem, but is very small. TOBS is based on the idea that if you reset a min/max thermometer too close to the afternoon maximum, you will double count warm temperatures (and vice-versa if thermometer is reset in the morning.) Their claim is that during the hot 1930’s most stations reset their thermometers in the afternoon.

    This is easy to test by using only the stations which did not reset their thermometers in the afternoon during the 1930’s. The pattern is almost identical to that of all stations. No warming over the past century. Note that the graph below tends to show too much warming due to morning TOBS.

    NOAA’s own documents show that the TOBS adjustment is small (0.3°F) and goes flat after 1990.

    https://www.ncdc.noaa.gov/img/climate/research/ushcn/ts.ushcn_anom25_diffs_pg.gif

    Gavin Schmidt at NASA explains very clearly why the US temperature record does not need to be adjusted.

    You could throw out 50 percent of the station data or more, and you’d get basically the same answers.

    One recent innovation is the set up of a climate reference network alongside the current stations so that they can look for potentially serious issues at the large scale – and they haven’t found any yet.

    NASA – NASA Climatologist Gavin Schmidt Discusses the Surface Temperature Record

    NOAA has always known that the US is not warming.

    U.S. Data Since 1895 Fail To Show Warming Trend – NYTimes.com

    All of the claims in the Climate Central article are bogus. The US is not warming and 2016 was not a hot year in the US. It was a very mild year.

  • It's The Dollar, Stupid!

    Submitted by Paul Brodsky via Macro-Allocation.com,

    We think the markets have it fundamentally wrong. US investors are anticipating a cyclical shift towards economic expansion via new tax incentives, business de-regulation and Keynesian government spending that promise to increase output, demand and asset prices. However, there is a far more influential driver of future asset prices – a structural shift that has begun but has yet to be acknowledged by economic and political authorities, and, judging by financial asset markets, by most investors. We expect weak equity markets and a strong treasury market beginning in 2017.

    It’s the Dollar, Stupid.

    The financial model used by advanced economies since 1971 is quickly losing its ability to support economic growth and rising asset prices.1 Western economic policy, which had previously relied heavily on credit creation from 1971 to 2008, was replaced in 2009 by monetary policy that relied heavily on base money creation through asset purchases. The structural shift in central bank focus from credit to monetary creation marked a paradigm shift in the decades-long finance-based economic model – from the leveraging phase to the de-leveraging phase.

    The Fed shifted to relying on a communications policy in 2013, which focused on renewing the broad perception that by “normalizing” US interest rates the economy would again begin to react to credit incentives it could manage. It also emphasized the need for fiscal stimulus, which would ostensibly create demand and stimulate production growth. Last month the Fed hiked overnight rates for the second time in two years and the markets expect it to hike rate three times in 2017.

    Fed rate hikes tighten credit conditions in the US and, given the continued execution of QE by other major global central banks, increase the exchange value of the dollar. A stronger dollar theoretically increases other economies’ exports into the US, provided that US consumers and businesses are able to maintain the same level of demand for foreign goods and services. This is an open question.

    Donald Trump’s election raised hope that new tax incentives, business de-regulation and Keynesian government spending will create sufficient demand. The dollar and US financial markets have reacted in sympathy with stock prices rising and bond prices falling…despite the Fed’s renewed credit tightening. A strong dollar would tend to attract global wealth to the US, wealth that theoretically could find its way into US risk assets including US equities. Thus, US equity strength since the election reflects a strong dollar, which is based on the combination of Fed rate hikes and renewed hope for US government stimulus.

    This is not the first time the Fed has had to actively increase the exchange value of the dollar. Paul Volcker’s Fed had to hike overnight rates to 20% in 1980-81 so the dollar would be reaffirmed as a store of global value for US trading partners, including OPEC. We believe the Fed is doing the same today, in spite of its de-stimulative impact, because it wants to attract global capital to US banks and asset markets. Doing so would ensure USD hegemony, which would be necessary if/when global leverage leads to hyperinflation and multilateral trade and currency wars. Once substantial wealth is held in dollars and dollar-denominated assets, the US political dimension and the Fed, through the BIS and IMF, would be able to control the terms of a global monetary reset, which in turn would de-leverage balance sheets across currencies and economies in a controlled manner; in effect, a pre-packaged bankruptcy in real terms.

    Nothing has changed structurally (or cyclically) since the US election. Global central banks are de-leveraging their banks through QE, with the exception of the Fed, which already did. Commercial bank liquidity and solvency is a precondition for a global monetary reset. The table is being set for more, not less, central bank intervention in the form of monetary inflation, and more intervention from the political dimension, which would choose which non-bank creditors (and debtors) will experience credit deflation.

    The markets have it wrong

    We believe fiscal measures like those being speculated about now in the US, even if successfully executed, would fail to generate meaningful new production and demand within the US and global economies. Financial markets are vulnerable to a reversal of their recent trends.

    We cannot place specific figures or exact times when benchmark equity and fixed-income indexes will reverse current trends; however, we are increasingly confident that US and global economies have begun to experience necessary structural changes that directly impact: 1) incentives to produce and consume, 2) the fundamental manner in which the political dimension approaches monetary and fiscal policies, and 3) the way in which investors think about assets, liabilities, economics and capital markets.

    The secular US fixed income bull market, which began in 1981 when the Fed embarked on what would become a forty five-year credit easing regime that benefitted, treasury, mortgage, corporate, municipal, small enterprise and consumer borrowers, and would eventually spread globally to other advanced and emerging bond markets; which allowed the US government to deficit-spend (eventually without the expectation of recourse) its way to unrivaled military might that defeated and then contained potential hostile threats abroad; which provided primary funding for bank and shadow bank lending that gave the US dollar and financial markets status as the ultimate sanctuary of global wealth; which provided a platform on which global bank and non-bank counterparties could swap contingent liabilities amounting to many times the size of underlying cash markets without fear of regulatory interference; and which provided speculators across other asset markets (including real estate) to continually sponsor unsustainable valuations, no longer produces capital or serves an economic purpose, and is almost over.

    The secular US equity bull market, which not coincidentally also began in 1981 and served as the principal funding mechanism for great advances in digital technologies, communications, finance, logistics, health care, energy, retail, and other industries; which helped raise and maintain competitive trade advantages for the US and its allies; which expanded capital expenditures, productive output and consumer demand; which helped collateralize expansive public and private credit issuance and debt assumption, in turn creating a positive feedback loop that further increased nominal production, consumption and asset prices, and which created nominal wealth for US and non-US asset holders, is also in its evanescence.

    Stock and bond markets in advanced, financially-oriented economies, have devolved more into political imperatives necessary to maintain social services and the perception of wealth, rather than serving as the traditional means to build and price wealth and capital. They no longer serve societies or global trade.

    In over-leveraged economies, stock and bond markets become co-dependent. To sustain market prices, debt and equity require nominal output growth. To sustain market values, they require real output growth. The only way to increase nominal output growth and raise nominal equity prices in a highly leveraged economy with leveraged currency is to raise the quantity of credit, which must eventually reduce real output and asset values. The question before us is whether “eventually” is occurring now.

    The primary reason we think stocks are peaking is scale. Aggregate market caps, valuations, revenues and earnings of public companies cannot be sustained by the level of real production in the underlying US and global economy. We think bonds are on the eve of reconciliation for the same basic reason: the scale of systemic leverage has already begun to reduce incentives to expand credit for capital formation, which, in turn, promotes debt deflation.

    We expect debt deflation coincident with central bank monetary inflation, which would offset the deflation…on paper (like feet in the oven, head in the freezer producing a reasonable average). Before this occurs, we expect a financial or economic event that focuses public attention on the leverage problem.

    Drilling Down

    The incentive to invest in the stock market is to build wealth, which is accomplished by generating positive real (inflation-adjusted) returns. This presents a problem looking forward. Many of the companies the market rewards most in terms of market cap drive goods and service prices lower by innovating and connecting buyers and sellers (e.g. Amazon, Facebook).

    Against this backdrop, the Fed’s economic mandate from Congress is to work towards stable prices and full employment. To do so, it has a specific annual inflation target of 2%. If the Fed is successful in this target, then it will reduce the purchasing power of US dollars by more than 64% over the next 25 years:

    As the table above makes clear, through its specific economic mandates and acceptance of the Fed’s 2% inflation target, the US Congress effectively promotes a decline in the value of ongoing savings earned and amassed by American labor. For investors, the policy also acts as a hurdle over which investor returns must rise to create positive real returns (i.e., wealth).

    On one hand, commercial competition is naturally driving prices lower, making goods and services more economical for producers and consumers, and equity markets are inflating the asset values of businesses that deflate prices. On the other hand, the Fed is trying to drive goods, services and asset prices higher, which would drive the purchasing power value of savings lower.

    Since 1998, asset prices (portrayed by the Wilshire 5000 on the graph above) have been supported in great part by Fed liquidity and debt-driven buybacks while US economic activity, (portrayed by monetary velocity), has been in secular decline. It is tough to sustain 2% inflation for very long through financial maneuverings when domestic economic activity continues to weaken. Any further inflation the Fed might help create (as it hikes rates!?) will not be demand driven, but rather the result of more financial leverage.

    It can’t persist much longer

    The current excitement among US equity and credit investors over the promise of a best-case stimulative mix of deregulation, tax cuts, and Keynesian government spending has created a very optimistic market tone. The Fed has further intimated December’s rate hike was the start of a new regime of interest rate normalization. Together, these dynamics have caused treasury yields across the curve to rise. Rising treasury yields in past business cycles have further signaled economic recovery, which has seemed to confirm to most investors that economic and equity market optimism are warranted. We disagree.

    Any fear of demand-driven goods and service inflation is un-warranted given 1) the already-leveraged nature of public and private sector balance sheets, 2) the need to perpetuate the relative strength of the dollar, and 3) the expectation of further Fed rate hikes. Even a successful multi-trillion dollar US government spending program that provides a few jobs and necessary American capital improvements could not provide sufficient consumer demand to overcome US and global balance sheet leverage and the attendant necessity to maintain US dollar strength to sustain the current monetary system.

    The graph below plots the secular decline in long-duration treasuries against the year-over-year rate of US goods and service inflation. (The gap in 30-year treasuries is due to the elimination of Long Bond issuance from August 2001 to February 2006.) We believe the rise at the extreme right of the graph representing their most recent trends is not indicative of the next big move for long-duration treasuries.

    Given the need to maintain the US dollar as the fulcrum of the US monetary system, the most influential input for future treasury yields has become global output, which is in secular decline. This trend is logical, established and seems to be accelerating. It is logical because the secular post-War decline in global output growth was only interrupted by the emergence over the least twenty years of large new economies like the BRICs. The continuation of that secular downward trend would make sense once those emerging economies are established. The graphs below confirm that balance sheet leverage within emerging economies have surpassed those in developed economies and that, not surprisingly, global output growth is truly struggling. As a result, we expect one last spasm that takes long-term treasury yields to new lows.

    Relevant Economics for Equity Investors

    Investors will soon be forced to better understand the macro world around them. The perception of the deflation/inflation metric should determine near term and secular debt and equity market directions.

    Prices are determined by supply/demand equilibriums – where the supply of goods, services, labor and assets meets the demand for each. This is theoretically true in classical economics. However, in the current flexible exchange rate monetary system administered by banking systems and the political dimension (i.e., a fiat regime), both supply and demand are determined by the prevailing quantity of credit available to producers of supply and the quantity of credit available to consumers who create demand. (Credit is simply a claim on base money, which is created by central banks.)

    The most insipid structural problem threatening economic vitality and equity market returns is public and private sector leverage. High and rising debt-to-GDP ratios, which threaten economic liquidity, and high and rising debt-to-base money ratios, which threaten balance sheet solvency, must eventually be reconciled. Aging demographics within the world’s largest economies is accelerating the timing of the necessary reconciliation, which must occur through debt deflation, monetary inflation, or both.

    Thus, investors seeking to create wealth by investing in broad equity markets face a fundamental structural problem caused by the irreconcilability of 1) naturally occurring commercial deflation, 2) economies and political systems that rely on inflation, and 3) the crowding out of consumption and investment by necessary debt service.

    Consider the 2% inflation target established by the Fed and accepted by most political economists. See table, page 4.) The target ostensibly limits the annual loss of purchasing power to 2%, and therefore it is generally thought that having such a target is in the best interest of American workers. Such an argument is inaccurate, naïve and disingenuous. As the graph on the previous page shows, the Fed was unable to cap goods and service inflation when energy prices spiked from limited supply in the 1970s, and unable to cap inflation at 2% throughout the credit-led secular bull market in corporate and property equity in the 1980s, 1990s and 2000s.

    Goods and service inflation more recently has struggled to rise to 1.7%, where it stands today. A 2% inflation target has shifted from a target to preserve the purchasing power of the dollar to a target to ruin it. Nowhere in the public discussion has this been mentioned. As discussed above, we think the Fed’s “fear of inflation”, which is ostensibly driving the new rate hike regime, is a necessary public narrative that will let the Fed pursue its true objective – a stronger dollar and deflation amid a contracting real economy.

    Even if US domestic economic activity were to somehow reverse its secular downtrend enough to warrant current equity valuations, it is difficult to conceive how much more asset prices could rise – especially in real terms. Simple math, anachronistic economic policies and poor demographics pose insurmountable barriers for creating wealth through public share ownership. (We further discussed the current negative implications of over-valuation and the negatively convex nature of equity markets in The Grift.)

    Can the Establishment really be that wrong?

    In classic economics, both employment and inflation are derived from production. Political economists, a moniker that defines the academic discipline from which the great majority of contemporary economists spring, argue that a fully-employed labor force suggests that rising labor inflation will lead to rising goods and service inflation. Thus, the Fed is trying to raise rates currently, citing the second Fed mandate – full employment – which threatens stable prices. The ultimate policy goal is to protect the US (and global) economy from shrinking.

    According to logic and classic economics, there is nothing wrong with a shrinking economy. Why? Because an economy should shrink commensurate with a rise in leisure time. Seriously. An economy is theoretically supposed to serve its factors of production. The more economical it is, the more leisure time it produces for its participants. (We suspect economies are called “economies” because they were formed naturally as systems that actually economized.)

    In such an economy, only theoretical today, deflation would be a good thing because it would increase the purchasing power value of savings produced from past labor. In fact, an increase in deflation (i.e., an increase in declining prices) would actually raise real (inflation-adjusted) GDP because the gain in the dollar’s purchasing power from deflation would offset the declining volume of goods and services (nominal GDP). (We suspect this fundamental economic truth is the reason Congress’s mandate to the Fed includes only stable prices and employment, and not economic growth.)

    The graph below shows the decline in the American work force since 2000. It should not strike you as alarming, given 1) all the great new innovations and technologies replacing human capital and 2) the expansion of global human capital from emerging economies. Tell us again, we ask sarcastically, what “full employment” is?

    Market cap-weighted indexes notwithstanding, it may be worthwhile here to ask yourself again why an increase in the majority of US equity shares is generally perceived as a given as the US economy becomes more efficient.

    Why it is all about the Dollar Now?

    In today’s global monetary system, currencies are tranched liabilities of: 1) commercial banks that create deposits through the lending process; 2) central banks on the hook to collateralize member commercial banks that create deposits and credit without commensurate reserves or circulated currency (base money), and; 3) treasury ministries that ask constituent factors of production to have faith that its taxing authority and, as has been demonstrated throughout history, its ability to wage war to loot enough resources outside its taxing domain to protect its currency’s purchasing power value.

    As liabilities without directly-linked offsetting assets, the purchasing power value of currencies are always susceptible to dilution. Dilution comes in the form of credit issued by banks (and, potentially, non-bank lenders) that is either not collateralized by assets or collateralized by assets that themselves are liabilities (like Treasury notes). The wider the gap separating the amount of un-collateralized credit denominated in a currency from that currency’s base money (bank reserves and currency in float) – the ratio that determines monetary leverage – the greater the amount of future monetary de-leveraging will have to occur. (De-leveraging must ultimately occur so that debtors can service or repay their obligations and so producers have incentive to continue to supply goods and services in exchange for that currency.)

    We expect global monetary authorities to protect the dollar as long as they can and we expect them to fail. Stocks and bonds will react violently; stocks and weak credits falling, treasuries prices rising (at first). That failure will lead to hyperinflation – not driven by demand, but rather by central bank money printing. A new global monetary understanding will then emerge.

    We expect weak equities and a strong treasury market in 2017, as they begin to discount this fundamental structural shift.

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Today’s News 28th December 2016

  • Europe Proposes Confiscating Gold In Crackdown On "Terrorist Financing"

    Hot on the heels of China gold import restrictions, and India's demonetization and gold confiscations, The European Commission proposed tightening controls on cash and precious metals transfers from outside the EU under the guise of shutting down one route for funding of militant attacks on the continent, following the Berlin Christmas attack.

    China has already begun de facto gold import restrictions, and as Jayant Bhandari detailed previously, India is experiencing a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization. There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow.

    And now, as Reuters reports, it appears last Monday's attack on a Christmas market in Berlin, where 12 people were killed as a truck ploughed into a crowd, has given The European Commission just the excuse to tighten capital controls – specifically cash and precious metals – into and out of Europe.

    It is part of an EU "action plan against terrorist financing" unveiled after the bombings and shootings in Paris in November 2015.

     

    Under the new proposals, customs officials in European Union states can step up checks on cash and prepaid payment cards sent by post or in freight shipments.

     

    Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU.

     

    People carrying more than 10,000 euros (8,413.56 pounds) in cash already have to declare this at customs when entering the EU. The new rules would allow authorities to seize money below that threshold "where there are suspicions of criminal activity," the EU executive commission said in a note.

     

    EU officials said some of the recent attacks in Europe were carried out with limited funds, sometimes sent from outside the EU by criminal networks.

    The Commission is also considering whether to set up an EU-focussed "terrorist finance tracking programme" along the lines of the U.S.-EU TFTP, which has long been opposed by EU lawmakers and privacy campaigners because it allows widespread checks on consumers' bank transfers.

    The plan complements Commission proposals after the Paris attacks to tighten controls on virtual currencies such as bitcoin, and prepaid cards, which French authorities said were used to fund the bombings.

     

    EU states backed these proposals on Tuesday. Under the deal, which still needs European Parliament approval, holders of prepaid cards would have to show some form of identity when they make payments of 150 euros or more.

    But it gets better…

    The Commission is also proposing common rules for the 28 EU countries on freezing "terrorists' financial resources" and on confiscating assets even from those thought to be connected to criminals.

    So – cash, bitcoin, precious metals, and prepaid cards over $150 are all instruments of the "terrorists" and are now open to confiscation if you are a suspicious person… which, by their rhetoric, you are if you actually hold any of these assets.

  • How The Crackdown On Patriots Will Occur: "Dissent Will Become Unthinkable"

    Submitted by Mac Slavo via SHTFPlan.com,

    fema-camp-resettlement

    Despite the rise of populism and a resurgence of American values, it has become more dangerous than ever to speak out. A new war on patriots has begun…

    In the visible future, Americans may see real tyranny take hold at home. The deep state, which operates both inside and outside of the official channels and independently of presidents and Congress, is waging a war against the constitutional rights, financial independence and the rugged individualism that has allowed freedom to exist to a certain degree in this country.

    Speaking out as a patriot – despite the sense of victory in the people with the election of Donald Trump – has never been more dangerous.

    This is the time when people will start to disappear. But it begins digitally….

    While a major event is likely to take place in the next several years that could justify red level action on the ground to raid, round-up and re-shelter patriots and prominent voices in the alternative media may well take place in an American future – and has historically taken place in several notable regimes – it is more likely to happen online.

    The forum of social media on the internet is not only shutting down outlawed opinions, but it is also re-educating the populace about what is acceptable to think. It is doing more to reprogram the mind than TV ever could. Algorithms for censorship mean that dissent will no longer be heard by many people. Mere association with outlaws and undesirables will hurt social and credit scores, and society is likely to cluster around redundant groups of safe speech and like viewpoints reinforced by a narrow band of news coverage.

    You will see individuals in the news who are labeled as domestic terrorists; some of them will have done nothing more than spoken out against the system. The NDAA and, now, the

    BLEACHING PUBLIC OPINION

    Wash and rinse, concentrating down certain artificial attitudes, and bleaching out the undesirable ones. This has been an objective of the CIA, the State Dept., US AID and other government agencies for decades now.

    Television programming, radio broadcasts, leaf-letting and other forms of propaganda are dissemintated, both here and at home, and routinely carry pro-state messages. The coordination of public thought and discourse is alarming.

    fake-news-overton-window

    Here’s a theory: Maybe the TV will only show you what you’re allowed to believe. Political pundits already have a name for this concept: the Overton window.

    A shift in the “window of discourse,” known as the Overton window determines what the public will accept. Will any political question, the two opposing viewpoints, and all the middle ground, will fall within the accepted plane of thought, no matter how vehemently there are cries of right or left, yes or no, less or more, tyranny or freedom. Wikipedia summarizes:

    The Overton window, also known as the window of discourse, is the range of ideas the public will accept. It is used by media pundits. The term is derived from its originator, Joseph P. Overton (1960–2003), a former vice president of the Mackinac Center for Public Policy, who in his description of his window claimed that an idea’s political viability depends mainly on whether it falls within the window, rather than on politicians’ individual preferences. According to Overton’s description, his window includes a range of policies considered politically acceptable in the current climate of public opinion, which a politician can recommend without being considered too extreme to gain or keep public office.

    Because the public perceives that it has been offered multiple choices, individual members of the public take stake in whichever view – confined within that acceptable window – best fits theirs. But they lack perception of the shifts in direction that window has taken; they have forgotten all previous attitudes – or regard them as taboo or ridiculous.

    Right now, the biggest shift in the Overton window is happening on social media. Facebook and Google are leading the charge, hiring new hit teams to flag and censor news.

    Because it all works on algorithms, the “window” effect becomes literal, rather than just figurative. News and information that falls outside of the acceptable range of view is simply not seen by the public – it is hidden from view, and omitted from search results.

    Yet increasingly, Facebook accounts, Google credentials and etc. are needed for identification, transactions, etc. Banking and commerce is leaning towards becoming completely digital. Cash controls have begun in the United States and abroad.

    This is where prepping, patriotism and independence has begun to be outlawed. Politically-correct speech is now just programmed into the system.

    Electricity and data are now intertwined. Smart meters, smart grids and smart appliances go together and make tracking built in. The concept of digital footprints expands…

    OUTLAWING DISSENT & INDEPENDENCE

    In the next two decades – independence will be ferreted out.

    While a truly free spirit can never be crushed, they are making it harder than ever to go rogue in occupied America.

    Living off the grid has been criminalized in many places, and strongly discouraged in most, with codes leading to conformity in the real world. True individuals are few and far between, but the struggle goes on.

    Pockets of resistance continue to be met with public relations problems and threats of government raids. Malheur and Bundy Ranch have offered a glimpse into what may be ahead; Waco and Ruby Ridge provide examples from the past.

    Patriots will endure… but in the coming years, they will either work inside the system – where hackers and whistle blowers have become traitors – or operate outside of its boundaries altogether. Patriots will need people on the inside and outside.

    Individuals will be rounded up through police encounters; speech will flag people as dangerous, and arrests will be made in conjunction with domestic disputes, nosy neighbors, false reports, etc. Database “pings” will pre-mark dissenters for detention or prison.

    Patriots have been marked for suspicion, and so have the symbols that express those positions. Beware in how you are seen, particularly, if there is a need to stay below the radar and avoid detection. Unless you have shielded your identity, your past actions and words could give you away.

    fbi-memo-patriots

    The system places patriots under suspicion, and closely monitors independent, unaccountable actions… because they are control freaks.

    A COMING CIVIL WAR

    A civil war is being created as a response from the system to maintain long-term dominance through banking and information management.

    Meanwhile, they will be coming for those who are speaking out. The only question is when.

    As Michael Snyder reported:

    According to a senior government official who served with high-level security clearances in five administrations, “There exists a database of Americans, who, often for the slightest and most trivial reason, are considered unfriendly, and who, in a time of panic, might be incarcerated. The database can identify and locate perceived ‘enemies of the state’ almost instantaneously.” He and other sources tell Radar that the database is sometimes referred to by the code name Main Core. One knowledgeable source claims that 8 million Americans are now listed in Main Core as potentially suspect. In the event of a national emergency, these people could be subject to everything from heightened surveillance and tracking to direct questioning and possibly even detention.

    War will be asymmetrical, and physical conflict will be balanced with cyber engagement of public perception.

    As resistance continues, the liberty contingent will have to be wary of an evolving threat matrix that seeks to use technology as a means of control.

    Above all, recognize that the system will phase in their control gradually – it is this seamless shift of perception, stretched out over time, that is its greatest weapon.

    HOW TO DISAPPEAR COMPLETELY

    Identity protection will be crucial, and use of technology should reflect the state of the art of surveillance.

    If you want to get yourself totally outside of the system, and stay there, it will be increasingly difficult to do, but not impossible.

    Sargent Survival at BeSurvival.com has some very solid tips for making this a reality. Here are just a few, but read them all and be thorough about your process:

    • There are 30 million plus surveillance cameras on the US, one camera for every ten Americans.
    • The average American is in 200 databases.
    • Putting a plan in motion to keep you from being tracked is a good idea if you want to devise a new life for yourself
    • Right before you leave, change your appearance significantly
    • Before you leave, terminate all of your accounts (email, bank accounts, credit cards, etc).
    • Don’t terminate your social network sites as you can use these sites to provide disinformation.
    • Before you leave, delete all of your computer files and get rid of your computer’s hard drive  – boil; smash; run a Degausser/ electromagnetic wand
    • Get rid of all of your personal items like photos, trophies, mementos, etc. that could tie you to your old life.
    • Get rid of your cell phone or tablet as these can be easily used to track your location
    • Break your normal patterns (what you eat, where you frequent, how you shop, the kind of work you do, etc).
    • Completely change your lifestyle [and employment]
    • Pay for everything with cash.
    • Avoid frequenting your usual places
    • Ditch your car and find a substitute; get rid of the toll pass which can track your movements
    • To determine the best place to resettle, choose a mid-sized city in a not overly cold place. Big cities and small towns are not good places for anonymity because of all the cameras.
    • To change your identity … petition the court to change your name legally to a new–and common–name.
    • Apply for a driver’s license under your new name.
    • Buy a basic pre-paid cell phone (not a smart phone). Replace the pre-paid phone frequently, about every 2 weeks.
      When you are not using the cell phone, remove the battery
    • To get back online use a new laptop. Stay away from libraries!
    • Always use a hard wire to your laptop and turn off the wi-fi; reroute your ip address so your location can’t be determined
    • Be aware of the NSA spying and the ECHELON program in the US which monitors phone and computer transmissions for keywords and messages.
    • The police now consider common activities suspicious such as bird watching, sketching or painting, or taking photographs in public.
    • There are 70+ FUSION centers in the US which coordinate surveillance and other information.
    • Technology is now available to identify you by the way you walk, your facial measurements and biometrics
    • It will be 7 to 10 years before your old identity drops off of databases, if ever.
    • The less you interface with technology, the better off you will be.

    In the next few years, you must make careful decisions about when you will and will not engage the system, use technology, or participate in society.

    Freedom will not be compatible with the digital control grid; it will endure in ways that out think the constraints that have been placed on us, in whatever way it can.

  • CNBC's John Harwood Blames "White Fear" For Democrat Losses Under Obama

    In the months leading up the 2016 election, daily WikiLeaks dumps repeatedly exposed CNBC’s John Harwood as nothing more than a pawn of the Hillary Clinton campaign who constantly behaved like a subservient puppy who would stop at nothing to garner his master’s love and affection (see our posts on the topic here and here).  And while the embarrassment of being exposed as a complete fraud would be sufficient motivation for most people to actually start performing their jobs with some level of integrity, John Harwood is apparently immune to the side effects of public humiliation that afflict the masses.

    As the latest testament to his extreme impartiality as CNBC’s chief Washington Correspondent, Harwood sent out the following tweet storm aimed at all of “those making [the] silly argument that Obama hurt [the] Democratic Party” to confirm, once and for all, that “white fear” (aka racism) was responsible for democratic losses in Congress under Obama’s leadership and not his failed policies

     

    If true, perhaps Mr. Harwood could explain to us why the “racist” and “angry” white people of Michigan, Wisconsin and Pennsylvania voted for Obama by margins of 10-20 points in 2008 before suddenly turning on Democrats in 2016?  Did those people who voted overwhelmingly for the first black President in U.S. history in 2008 suddenly become racists over the course of 8 years?  Or, is it just maybe possible that those people were disappointed that Obama’s “Hope and Change” rhetoric turned out to be nothing more than a pretty speech by yet another superficial politician?

  • India's Prime Minister Has Singlehandedly Crushed The Economy With His Reckless Cash Ban

    Submitted by Mike Krieger via Lberty Blitzkrieg blog,

    Today’s piece should be seen as a bit of a followup to yesterday’s post, India’s Demonetization Debacle Highlights the Dangers of Monetary Monopoly. While yesterday’s piece was more philosophical/strategic in nature, today’s zeroes in on some of the devastating real world impacts of Narendra Modi’s insane and inhumane cash ban. It’s hard to overstate the damage this policy has done to India’s economy. Modi is quickly solidifying his place as one of monetary history’s biggest idiots.

    First, let’s take a look at the destructive impact the move has had on India’s massive small businesses community. The Washington Post reports:

     Over the past two years, this suburb of New Delhi mushroomed into a flourishing enclave of small cellphone manufacturers, attracting tens of thousands of workers from the countryside. Noida, known as the “handset hub,” was touted as a showcase for Prime Minister Narendra Modi’s pet “Make in India” initiative.

     

    Then on Nov. 8, Modi’s government took a step that has jolted the bustling industrial quarter. It scrapped high-denomination currency, with a view, officials said, to curbing illicit wealth and the financing of terrorism. But the cash shortage triggered by the move has also curbed legitimate small enterprises. Many of Noida’s manufacturing units have slashed production by nearly half, and more than a quarter of the workers have gone back to their villages.

     

    “It was a booming sunrise industry before November 8th. Not now,” said Vipin Malhan, president of the Noida Entrepreneurs Association, who also runs a business that makes cellphone accessories here. “Many small factories and assembling units, which used to work round-the-clock, with three shifts, have scaled down to just a single shift. We are all in shock now. One word that businesses dread is ‘uncertainty.’ The government has thrown that at us.”

     

    Several small- and medium-scale industrial clusters, employing a total of more than 80 million people across India, are reporting declining sales, production slowdowns and layoffs since bills worth 500 and 1,000 Indian rupees were invalidated (500 Indian rupees is worth about $7.40). Towns famous for weavers, lockmakers, power looms, bicycle-parts manufacturers, ready-made garments and handicrafts face rising inventories of unsold goods.

     

    Even large car manufacturers have halted production in some of their factories for several days because of a sharp dip in consumer spending. And in a reflection of the belt-tightening that has accompanied the general sense of uncertainty, credit card companies have posted a decline in the total value of transactions, even as the cash shortage is forcing people to use their cards more.

     

    “We started hearing murmurs that there were no fresh orders from the market. That our raw material was stuck because we could not pay. Stocks were piling up,” said Sudhir Ramphool Singh, 33, who lost his job at a cellphone assembly unit in Noida and returned to his Dharavu village in northern India this month. He is the sole breadwinner for his family of seven. “Production slowed. The unit was shut down for 10 days. When it reopened, many of us were asked to go.”

     

    With the large bellwether state of Uttar Pradesh slated to hold elections early next year, the business slump — and the lines at the banks — have become campaign issues.

     

    “Forget about creating new jobs. Modi’s decision is taking away people’s jobs,” the opposition Congress party leader, Rahul Gandhi, said at a public meeting this month.

     

    Modi has urged people to adopt digital payment methods and bear some pain to support the long-term goal of rooting out corruption.

     

    Mishra’s office is conducting 50 training sessions every day in small industrial hubs to help residents transition to cashless transactions. But many business owners in these clusters say it is not easy to change because daily wage laborers do not accept checks and do not have smartphones with Internet.

    Well done Modi.

    Last week, about 200 business executives in Ludhiana staged a sit-in against the cash-swap decision, calling it “ill-conceived.” They even formed a “stick brigade” and are threatening to beat tax officers who show up to “scrutinize our books needlessly and harass us.”

     

    In the country’s largest textile town, Bhiwandi, in western India, more than 2 million power looms used to operate round-the-clock. Countless machines are silent now.

     

    “The cash shortage has come as the latest blow to the industry that was already hit by global competition. Fifty to 60 percent of power looms have shut down, and more than 150,000 workers have gone back to their villages,” said Rashid Tahir Momin, whose family owns about 400 power looms.

    Naturally, this is just the tip of the iceberg. The Indian diamond market has also been thrown into total chaos.

    As Reuters reports:

    The global diamond industry is facing disruption that could stretch through the first few months of next year, including Valentine’s Day in February, as a result of Indian Prime Minister Narendra Modi’s radical move to abolish most of the nation’s cash overnight.

     

    In the western Indian city of Surat craftsmen usually spend 10-12 hours a day in small mills or grimy sheds cutting and polishing 80 percent of the world’s diamonds but the business is based on cash and the demonetization of the high-value banknotes from Nov. 8 has prevented many from operating. Thousands of diamond brokers in the area’s narrow lanes are also doing little business.

     

    In India, jewelry demand typically climbs in the winter months’ wedding season. But this year sales are plunging as nearly two-thirds of jewelry is usually purchased with cash, which is in short-supply.

     

    Ishu Datwani, owner of Mumbai-based Anmol Jewellers, says his sales are down nearly 70 percent since the government scrapped the high-value notes.

     

    The demand is unlikely to revive any time soon as India struggles to dispense enough new notes, industry officials say.

    Let this be a lesson to all of us regarding the dangers of centralized power. There’s no reason we should ever allow ourselves to be in a position where the foolish, capricious actions of one man can have such a devastating impact on an economy of more than one billion. This is precisely why we need to move toward a more decentralized way of living and discard many of the archaic, unnecessary and harmful institutions of the past.

  • Post-Christmas Chaos Strikes America's Malls: SWAT, Gunfire, & Mass Brawls From Texas To New Jersey

    Two days ago, we reported that heading into Christmas, countless “mall brawls” had broken out across America’s as last minute holiday shoppers were filmed fighting with each other in shopping malls in New Jersey, Alabama, Georgia and other states for those last minute “holiday cheer” purchases. The videos made for for a very Unmerry Christmas.

    Now, in the spirit of holiday symmetry, following the one day lull on Christmas Day, the brawls returned on the day after Christmas, with fights, disturbances and false reports of gunfire causing chaotic scenes and shutting down several malls across the United States on Monday, as shoppers scrambled for the best deals in the typically busy post-Christmas shopping day.

    The first calls from the The Mills at Jersey Gardens came in just after nightfall Monday. Witnesses said they thought they had heard shots fired. That, along with a fight, led to what Elizabeth police Officer Greg Jones described as a “chaotic panic and everybody running all at once.”  Eight to 10 people suffered minor injuries during a melee in the food court at the Jersey Gardens malls the mayor there said on Twitter.

    Panic followed when someone shouted “gun,” after a chair hit the ground, causing a loud noise in the mall’s food court, Elizabeth Mayor Chris Bollwage tweeted.

    The incident led to a SWAT team with riot shields and body armor raiding the mall, while shoppers either ran or hid in stores. No weapons were found and no-one was arrested.

    Photos and video clips posted on social media showed heavily armed police officers responding to the incident as shoppers raced to exits and alarms rang out inside the mall.

    Similar disturbances unfolded across the United States on Monday at malls that were packed with shoppers returning gifts, using gift cards they received over the holiday weekend or simply searching for clearance deals. Many involved calls of shots being fired and youths fighting. It was unclear if the incidents were connected.

    As Reuters reports, a large fight between teenagers broke out in the food court at the Cross Creek Mall in Fayetteville, North Carolina. Police fielded several unconfirmed reports of shots fired, said a Facebook post by the Fayetteville Police Department, which also said the mall was evacuated.


    The Cross Creek Mall in Fayetteville, North Carolina, was evacuated as police arrived

    to break up the fight. Claims were made that shots were fired.

    “Once people start running in that area or chairs are getting knocked over, tables, that sort of thing, that echoes and it could resemble the sound of a gunshot to a lot of people,” he said.

    The Hulen Mall in Fort Worth, Texas, was on lockdown, Fort Worth police said on Twitter. The CBS website there reported that police said officers responded to reports of gunshots but arrived to find that several fights had broken out involving 100-150 people. There were no injuries, police said.  Fort Worth Police spokeswoman Tamara Velle said officers initially responded to reported gunfire inside the mall. After breaking up the fights, officers stopped by each store to let people leave while the lockdown remained in effect, KTVT reported.

    At least one fight shut down the Fox Valley Mall in Aurora, Illinois, late on Monday, and police were called to quell the disturbance, the Chicago Daily Herald reported, citing managers of businesses in the building.

    Online videos showed uniformed personnel directing mall patrons out of the building and customers fleeing down an escalator. Police and mall management could not be reached for comment.


    Hundreds of people (left) were in the vicinity of a food court brawl (right) in the

    Fox Valley Mall in Aurora, Illinois. Seven juveniles were arrested in the fight

    In Memphis, Tennessee, seven people were arrested after incidents at two malls, CNN affiliate WMCA reported. Police said a group started a disturbance in the Wolfchase Galleria food court and started running, which prompted some customers to call 911, according to Fox 13.


    Cops at Wolfchase Mall in Memphis removed both adults and juveniles.


    An officer leaves Oak Court Mall in Memphis, Tennesse where police were called

    after a fight broke out and reports were made of shots being fired.

    Then a crowd gathered outside Oak Court Mall, about 10 miles west, and
    started a disturbance, WMCA said. Both malls were cleared and closed
    early for the night.


    Visitors to Oak Creek Mall linger in the parking lot outside as police patrol the area

    The Town Center Aurora in Aurora, Colorado, was also closed early after multiple skirmishes were reported inside the mall, the Aurora Police Department said on Twitter.


    Teens were tackled by cops at the Aurora Mall in Colorado. There were several
    large fights ‘involving juveniles’, cops said

    Aurora PD spokesman Sgt. Chris Amsler said about 100 people had gathered in the food court before the brawls broke out — prompting the Colorado mall to close early on Monday afternoon. “(It) kind of morphed into this large disturbance,” Amsler said.

    When off-duty police officers working as security guards tried to break up a fight, people circled the officers, who called for backup, Amsler said. As police officers on duty arrived, fights broke out throughout the mall, at a movie theater and at a nearby park-and-ride lot, he said. He estimated 500 people were involved. Authorities arrested five people, all juveniles, and recovered no weapons, he said. One person assaulted at the park-and-ride lot suffered “significant” injuries and was taken to a hospital, Amsler said.

    In Monroeville, Pennsylvania, seven people were arrested after incidents at two malls, CNN affiliate WMCA reported. Police said a group started a disturbance in the Wolfchase Galleria food court and started running, which prompted some customers to call 911, WMCA said. Then a crowd gathered outside Oak Court Mall, about 10 miles west, and started a disturbance, WMCA said. Both malls were cleared and closed early for the night.

    Shots were reported in both incidents, but police said they found no evidence of gunfire, WMCA said. No injuries were reported, CNN affiliate WATN said.

    Police put the Arizona Mills mall in Tempe, Arizona, on lockdown after reports of shots fired inside the shopping center. Two people, including a juvenile, were arrested after two fights broke out at the mall, an ABC affiliate reported.

    In Beechwood, Ohio, a juvenile was arrested for hitting a police officer after police used pepper spray to break up a fight that started about 6:30pm near a food court. Crowds were seen falling over themselves in a stampede towards the exits at the Beechwood Place mall, which went into lockdown as police investigated. Officers initially responded to the scene for a report of shots fired. Police later confirmed that there were no gunshots.


    Shoppers rush into a wild stampede at the Beechwood Place Mall after a fight broke
    out and someone shouted – incorrectly, police said – that a gun had been drawn

    Fire officials say a man and a police officer were exposed to the pepper spray and received medical treatment. No one else was injured. John Boyd, the 19-year-old who was hit with pepper spray, described the sensation to Cleveland.com.  ‘My face burned… it went into my skin,’ Boyd said. ‘My whole body burned.’ It wasn’t clear what caused the fight, but police told USA Today that the incident had apparently been ‘loosely organized on social media’.

    Finally, a fight at The Shoppes at Buckland Hills mall in Manchester, Connecticut, led to the mall being evacuated around 5:30pm, according to police. Video shows boys throwing swift jabs at one another while other youths crowd around to watch.

    ‘Up to ten’ teenagers were involved in the fights, according to police. One police officer was assaulted while trying to break up one of the first fights, authorities said, but didn’t seek medical attention.


    Crowds peered through glass as boys threw punches at one another in The Shoppes

    at Buckland Hills mall in Manchester, CT. Several boys were arrested

    There were several hundred teens in the mall when the fights broke out, and several were arrested, Manchester police Captain Chris Davis said on Twitter. There were no weapons involved and no sign that the fight was gang related, police said.  It’s not known whether the rash of incidents across the country were coordinated in any way, or were just coincidental.

  • Things That Make You Go Hmm… Like The Death Of The Petrodollar, And What Comes After

    Excerpted from “Get It. Got It. Good” by Grant Williams, author of “Things That Make You Go Hmm…”

    The story begins in the 1970s when Henry Kissinger and Richard Nixon struck a deal with the House of Saud — a deal which gave birth to the petrodollar system.

    The terms were simple The Saudis agreed to ONLY accept U.S. Dollars in return for their oil and that they would reinvest their surplus dollars into U.S. treasuries.

    In return, the U.S. would provide arms and a security guarantee to the Saudis who, it has to be said, were living in a pretty rough neighbourhood. As you can see, things went swimmingly (chart below)

    Saudi purchases of treasuries grew along with the oil price and everyone was happy.  (We’ll come back to that blue box on the right shortly)

    The inverse correlation between the dollar and crude is just about as perfect as one could expect (until recently that is… but again, we’ll be back to that).

    And, as you can see here, beginning when Nixon slammed the gold window shut on French fingers and picking up speed once the petrodollar system was ensconced, foreign buyers of U.S. debt grew  exponentially.

    Having the world’s most vital commodity exclusively priced in U.S. dollars meant everybody needed to hold large dollar reserves to pay for it and that meant a yuuuge bid for treasuries. It’s good to be the king.

    By 2015, as the chart on the next page shows quite clearly, there were treasuries to the value of around 6 years of total global oil supply in the hands of foreigners (if we assume a constant 97 million bpd supply which I think is a pretty reasonable estimate).

    Now… with that brief background on the petrodollar system, here’s where I need you to stick with me. I promise you it’ll be worth the mental effort

    Ready? Here we go.

    Now, back in 2010, then-World Bank President Robert Zoellick caused something of a commotion when he suggested that an entirely new global monetary system maybe wasn’t such a bad idea.

    The system he had in mind involved a freely-convertible Yuan and, controversially was constructed around gold as its central reference point:

    (Robert Zoellick, November 8, 2010): …the G20 should complement this growth recovery programme with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account.

     

    The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old  money, markets are using gold as an alternative monetary asset today.

    In seemingly unrelated news, two years later, Iran began accepting Yuan in payment for its oil amid US sanctions. The transactions were conducted through Russian banks:

    (Financial Times, May 2012): Iran is accepting renminbi for some of the crude oil it supplies to China…

     

    …Tehran is spending the currency, which is not freely convertible, on goods and services imported from China…

     

    The trade is worth as much as $20bn-$30bn annually according to industry estimates…

     

    The renminbi purchases began some months ago…much of the money is transferred to Tehran through Russian banks, which take large commissions on the transactions…

     

    Beijing has been trying to get its trading partners to use the renminbi, in effect transferring the exchange rate risk to its counterparties, since the price of crude is set in US dollars. It also frees Beijing of the need to hold as many dollars in its reserves.

    The crucial part of this deal was that, by diversifying their purchases in this way, the Chinese had found a path towards not only needing to hold fewer U.S. dollar reserves, but to circumventing the petrodollar system altogether.

    By 2013, the penny had clearly dropped at the PBoC who declared an end to the era of their accumulation of U.S. treasuries:

    (Bloomberg, November 2013): The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.

     

    “It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range

    Yes, it was, apparently “no longer in China’s interest” to accumulate foreign exchange reserves.

    Sure enough, in 2014, global FX reserves began to decline at the fastest rate in 80 years as you can see from this chart:

    That same year, another piece of the puzzle was laid in place when Xu Luode, the Chairman of the newly-founded Shanghai Gold Exchange, explained that gold would be priced and sold in Yuan as a step towards what he called the “internationalization of the renminbi” (for those of you confused by Yuan and Renminbi, just think of them as the Chinese equivalent of ‘Pound’ and ‘Sterling’):

    (Xu Luode, Speech to LBMA, May 2014): Foreign investors can directly use offshore yuan to trade gold on the SGE international board, which is promoting the internationalization of the renminbi…

     

    Shanghai Gold will change the current gold market “consumption in the East priced in the West” situation.

     

    When China will have a right to speak in the international gold market, pricing will get revealed…

     

    Interestingly, Luode acknowledged what he accurately described as the “consumption in the East, priced in the West” situation and assured the world that the ‘real’ price of gold would become apparent once China took its rightful place at the centre of the gold market.

    We can but hope he is correct. When that day comes, the change on the world’s gold markets will be unprecedented.

    In 2015, another announcement slipped by the world when it was revealed that Russia’s Gazprom would also begin selling oil to the Chinese in exchange for yuan and that they were negotiating further agreements to use rubles and yuan to settle natural gas trading directly, without the need for dollars:

    (Moscow Times, June 2015): “Two state energy companies, gas producer Gazprom and its oil arm Gazprom Neft, said they would use more Chinese currency in trade, while Russia’s largest bank, Sberbank, has also promoted the use of the yuan…

     

    Gazprom Neft announced that it began settling shipments of oil to China in yuan. And previously, the head of Gazprom, Alexey Miller, said in a TV interview that the company was negotiating with China to use yuan and rubles for gas deliveries via a planned pipeline in Western Siberia.

    OK… hands up if you’re still with me… great!

    Oh… you’re reading this so I can’t see you but hopefully you’re following the dots…

    For those of you who aren’t, here’s a little recap of where we are so far to help you get things into the right order before we push on to the end:

    Get it? Got it? Good.

    So… here we are, in 2016 and, as it turned out, April was a hell of a month if you were paying attention.

    Firstly, the Saudis threatened to sell almost a trillion dollars of U.S. assets—including over $300 billion of treasury bonds—should a bill be passed by the congress allowing the Saudis to be held responsible for the 9/11 attacks:

    NY Times, April 16, 2016): Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the 9/11 attacks.

     

    Adel al-Jubeir, the Saudi foreign minister, delivered the kingdom’s message personally last month during a trip to Washington, telling lawmakers that Saudi would be forced to sell up to $750B in treasury  securities & other assets in the US before they could be in danger of being frozen by American courts.

    In a rare show of bipartisanship, the bill was subsequently passed before being vetoed by President Obama who then had to watch in ignominy as he suffered the first veto override of his presidency.

    Just days later, the Saudis were the cause of a seemingly surprise failure by OPEC to agree a production cut as the oil price languished in the low-$30s:

    (Wall Street Journal, April 17, 2016): DOHA, Qatar—Oil producers that supply almost half the world’s crude failed Sunday to negotiate a production freeze intended to strengthen prices.

     

    The talks collapsed after Saudi Arabia surprised the group by reasserting a demand that Iran also agree to cap its oil production.

     

    Oil prices had rallied in recent weeks on speculation that Saudi Arabia might successfully lead an initiative between members of the Organization of the Petroleum Exporting Countries and Russia, which joined the talks. 

     

    A deal would have marked a new level of cooperation between non-OPEC countries and OPEC members that producers hoped would keep prices above January lows of $26 a barrel.

    Just 48 hours after that surprise, the Chinese finally launched their twice daily gold fixing, setting the price at 256.92 yuan per gram:

    (Bloomberg, April 19, 2016): China, the world’s biggest producer and consumer of gold, started a twice-daily price fixing on Tuesday in an attempt to establish a regional benchmark and bolster its influence in the global market.

     

    The Shanghai Gold Exchange set the price at 256.92 yuan a gram ($1,233.85 an ounce) at the 10:30 a.m. session after members of the exchange submitted buy and sell orders for metal of 99.99 percent purity.

     

    “This is a very important development and will obviously be very

     

    closely watched,” said Robin Bhar, an analyst at Societe Generale SA in London. “But as long as it exists inside a closed monetary system it will have limited global repercussions. It could be a very important development if the new benchmark is a precursor to greater use of gold in the Chinese monetary system, Kenneth Hoffman…said by e-mail on Monday. It may also boost interest in the Shanghai free-trade zone, he said.

    As Soc Gen’s Robin Bhar correctly identified, if the ability to trade gold for yuan exists within a closed monetary system, its importance will be limited BUT, as Bloomberg’s Ken Hoffman also correctly pointed out, if this was the thin end of the wedge, things could get very interesting indeed. Now, this chart shows the oil price going back to before the U.S. Civil War:

    Between 1865 and 1973, the price of oil was incredibly stable against a backdrop of perhaps the greatest simultaneous economic, demographic and technological expansion in human history.

    How was that possible?

    Well simply put, because oil was effectively priced in gold.

    However…

    Once the gold window closed and the petrodollar system was implemented, the price of oil soared 50-fold in just 35 years.

    The move on the right? With the question mark against it? We’re getting there, I promise.

    Now, you remember this next chart and the yuuuuuge supply of treasuries which exists compared to oil now? Well, when we add in the roughly $100 trillion in boomer entitlements that will need to be paid for by issuing—you guessed it, more treasuries—the chart changes somewhat:

    That red circle down at the bottom of the second chart is the spike you see on the first chart.

    Ruh-roh!

    It’s safe to say that, relative to even oil, and without any infrastructure spending by Donald Trump, treasuries are going to be…. abundant in the coming years.

    Conversely, if we look at the value of gold relative to foreign-held treasuries, we see an altogether different story unfold.

    During Reagan’s presidency, US treasuries were backed 132% by the market value of the country’s gold reserves.

    Today, that number has fallen to just 4.7%

    If we do the same thing and account for the $100 trillion in entitlement promises, as you can see from the chart on the next page, the number falls to 0.3% in 2025.

    So the second chart (below, right) should come as no surprise to anybody.

    Yes, the Chinese have started to do what they promised to start doing, when they promised to start doing it.

    Now, this next part of the presentation was a rattle through a whole bunch of charts showing the recent activity in the U.S. treasury, corporate bond, agency bond and securities markets so you’ll have to brace yourself.

    The charts will appear on the next page.

    Chinese sales of US treasuries (1) have been consistent for the last three years…

    …as have their sales of US securities (2) since 2015 after plateauing in 2013 when treasury divestiture began Concurrently, Chinese sales of corporate bonds (3) have accelerated over the same period…

    …though agency sales (4)—despite a few periods of consistent selling—have yet to follow suit.

    But now, as tensions rise and the cross-currents get harder to discern, guess who else has showed up as a seller?

    That’s right, the Saudis are now steady sellers of US treasuries (5)…

    …and even more aggressive sellers of U.S. securities (6)…

    Meanwhile, taking a broader view, net foreign purchases of treasuries, according to the TIC data, have been in a clear downtrend since 2009 (7) and have been largely outflows for the last three years.

    If we look at the 12-month sum of sales (8), we see an even sharper decline…

    …and if we take the trailing net official demand chart for treasuries back to 1979, the scale and extent of the change is evident—as are the catalysts for the acceleration (and we’re back on this page once  again):

    Take a long, hard look at that last chart folks—particularly within the context of the bond bull market and the ‘bid’ for treasuries we’ve seen throughout 2015 and 2016…

    Meanwhile, the Russians—who, as we’ve seen are now selling oil for yuan to the Chinese, remember?— have been picking up the pace of their accumulation of gold reserves yet again, with the most recent monthly data setting yet another record…

    …and the pick up in pace is evident when we look at average monthly purchases prior to 2013 and post the agreements put in place around that time between the various parties. Now, the next chart (top of the following page) is crucial to understand because a look at the market value of Russia’s gold reserves shows just how crucial their ongoing accumulation of bullion has been for the country’s finances over the last two years…

    …and that increase in value has cushioned the effects of, amongst other things, the bailing out of the ruble.

    As you can see from the green line, Russia’s gold reserves in Ruble terms have soared as the country’s currency has weakened—something which confounded all the doommongers who called Game Over for Russia amidst sharply declining oil revenues:

    (Bloomberg, April3, 2015): Here’s why Governor Elvira Nabiullina is in no haste to resume foreign-currency purchases after an eight-month pause: gold’s biggest quarterly surge since 1986 has all but erased losses the Bank of Russia suffered by mounting a rescue of the ruble more than a year ago.

     

    While the ruble’s 9 percent rally this year has raised the prospects that the central bank will start buying currency again, policy makers have instead used 13 months of gold purchases to take reserves over $380 billion for the first time since January 2015.

    Hmmm…

    Now, crucially, being given the ability to sell oil to the Chinese for yuan and buy gold with that same yuan directly through the Shanghai Exchange has completely changed the game for the Russians and those changes are being reflected where they matter most—in the energy markets, the supply/ demand dynamics of which are quietly morphing in plain sight.

    By August of this year, Russia had overtaken Saudi Arabia as the largest exporter of oil into China…:

    (Al Awsat, August 3, 2016): During the first seven months of this year, China imported about 30.5 million metric tons of Saudi oil, a 0.4% decrease than that of last year. Whereas, China imported about 29.5 million metric tons of Russian oil with 27% increase than last year.

    …and that wasn’t something the Saudis could take lying down:

    Amid this fierce competition, it is important for Saudi Arabia to fortify its oil position in China with more political and strategic support

    On the contrary, they rededicated their efforts to increase what they call “political and strategic support” for China.

    Now, I hope you’re all still with me because here’s where we get to the final piece of this glorious puzzle—the piece that ties all these seemingly unrelated threads together: China’s own crude oil futures contract, to be priced in Yuan and traded at the Shanghai International Energy Exchange—a yuan contract which will be made fully-convertible:

    (Bloomberg, November 5, 2015): By the end of 2015, China, the world’s No. 1 oil importer as of April, may start its own crude futures contract.

     

    The idea is to establish a Chinese rival to the world’s two most traded oil contracts: West Texas Intermediate, housed on the New York Mercantile Exchange, and Brent Crude Futures, owned by ICE Futures Europe in London.

     

    The yuan-based contract will trade on the Shanghai International Energy Exchange and will be among the first Chinese commodity contracts available to foreign investors as China promotes global use of its currency…

     

    Participation will be open to all foreign investors and the yuan will be fully convertible under the contract, according to Song Anping, the chairman of the Shanghai Futures Exchange.

    As you can see from the date of the article, this contract has been postponed several times— ostensibly for reasons such as stock market volatility in China, but perhaps there is more going on behind the scenes that is causing the delay because, once this contract is in place, things change.

    Dramatically.

    In the interim, China has supplanted the U.S to become the world’s biggest importer of oil, which serves to increase both its importance in the oil markets and the likelihood of it launching its own yuan-denominated contract at some point in time:

    (Bloomberg, October 13, 2016): China is now the world’s biggest oil importer, unseating the U.S. The country’s crude imports climbed to a record 8.08 million barrels a day in September, a year-on-year increase of 18 percent, customs data released Thursday showed.

    So, the world’s largest exporter of oil is now dealing with the largest importer directly in yuan and it has the ability to convert those yuan proceeds into physical gold through the Shanghai exchange— which the data suggest it is doing as fast as possible.

    Currently, the bilateral oil for gold trade is only available to what the U.S. would no doubt consider a ‘basket of deplorables’ in Iran and Russia…but just think what happens once that fully convertible oil contract is up and running…?

    Suddenly, the availability to price oil in gold is available to everybody and, given rising Saudi/U.S. tensions and the Middle East nation’s recent rededication to providing “political and strategic support” to China it’s easy to see why this would be attractive to the Saudis, for example.

    Whatever happens, opening that contract creates a market-wide arbitrage opportunity which affords anybody with oil to sell the ability to exchange said oil for gold and anybody wanting oil to acquire it cheaply by buying cheap gold in the West and shipping it to Shanghai or HK where it can be sold for yuan.

    Already, places like Tokyo, Seoul and Dubai are opening physical gold markets and discussing linking their nascent markets for bullion to the Shanghai exchange which has rapidly become the largest physical delivery market in the world.

    Now, were this arbitrage to begin happening in any meaningful size, with the market for oil far bigger than that for gold, it would immediately be evident in the ratio between the two commodities…

    …which, interestingly, is precisely what has happened since the peak of global reserves in 2014 and the Sino-Russian agreement to essentially transact oil for gold. With those conditions in place, the gold/oil ratio has broken out to its highest level in 80 years (chart, next page):

    …which brings us right back to the question mark on the second chart which we left hanging like a matzah ball earlier in this presentation

    The recent move in the oil price looks to me suspiciously like a sign that a move has started to return to pricing oil in gold.

    That move, if indeed it is happening beneath the surface, allied with the endless possibilities enabled by the potential full convertibility of the yuan under the Shanghai-based oil contract leaves oil producing nations with a rather obvious choice for the first time in almost half a century—a choice made perfectly clear by the two charts on the next page:

    If you are an oil producing country, do you…:

    MINIMIZE your production in order to MAXIMIZE your holdings of one of the most abundant and easily-produced commodities in the world—U.S. treasuries—as has been the case for the last 40 years… knowing full well that, with the level of entitlements due in the next decade, more will need to be printed like crazy?

    Or……

    Do you MAXIMIZE production in order to gain the largest possible market share in the biggest oil market in the world and, through the ability to buy gold for yuan, thereby maximize your reserves of a scarce, physical commodity which is impossible to produce from thin air and which happens to be not only the most undervalued asset on the planet, but is trading at its most undervalued relative to U.S. treasuries in living memory?

    With an annual production of $170bn, gold is by far the largest metal market by value.

    However, that figure is dwarfed by the oil market which is 10x the size of the gold market on an annual production basis.

    If we throw in the average annual foreign holdings of U.S. treasuries over the last 2 years, we see that the ‘other’ commodity is at a different magnitude altogether.

    So, which one of these commodities has any scarcity value? Given the choice, which one would you seek to maximize your holdings of?

    U.S. treasuries which can be conjured out of thin air by the U.S. government and which, are described thus by The Securities Industry and Financial Markets Association:

    Because these debt obligations are backed by the “full faith and credit” of the government, and thus by its ability to raise tax revenues and print currency, U.S. Treasury securities – or “Treasuries” – are generally considered the safest of all investments. They are viewed in the market as having virtually no “credit risk,” meaning that it is highly probable your interest and principal will be paid fully and on time.

    Or how about oil? Which the Saudis, for example, can simply print pull out of the ground at will at a cost of a little under $10/barrel?

    Or gold? A commodity which is limited in availability, trading at its all-time low relative to U.S. treasury supply and is not only getting harder and more expensive to produce, but which is also catching the eye not only of the central banks of the world’s two largest producers, but of the largest importer and largest exporter of oil?

    * * *

    Much more in the full PDF below

  • Here's Who Democrats Say Are The Top 15 Presidential Candidates For 2020

    As Democrats continue to slowly come to terms with their stunning defeat on November 8th, one coping mechanism that has helped them to deal with the grief is getting a head start on a list of most likely new saviors who can defeat the evil Donald Trump in 2020 and restore “Hope” to America.  As such, Niall Stanage of The Hill has compiled a list of the 15 most likely challengers.  Most of the list is not terribly surprising and includes a number of establishment politicians which, given how the 2016 election cycle evolved, would almost certainly result in another Trump victory.

    Among the “establishment” names on the list, both Hillary Clinton and Tim Kaine were noted as 2020 hopefuls despite their epic defeat in 2016.  Vice President Joe Biden eked out a top-10 place after having been defeated twice before in 1998 and 2008.  Meanwhile, despite repeated denials, First Lady Michelle Obama came in at a respectable 6th place.

    Potential political newbies that could vie for the presidency in 2020 included Cory Booker, a senator of New Jersey, and Senator-elect Kamala Harris of California.  While The Hill notes that Harris could face criticism for her lack of “political experience,” Trump’s victory would seems to suggest that to be a positive rather than a negative attribute and ironically, she would have the same level of “political experience” in 2020 as Obama had when he ran in 2008.

    Finally, in the “outlier” category, The Hill rounded out their Top 15 with Oprah Winfrey who, for the most part, stayed out of politics until going all-in for Barack Obama in 2008.

    Of course, the only prominent contender for 2020 that didn’t seem to make The Hill’s list was Kanye West.  We assume this was a simple mistake and look forward to the prompt correction.

    Kanye

     

    With that, here is The Hill’s official list of the 15 democratic hopefuls for 2020:

    1. Sen. Elizabeth Warren (Mass.)

     How would the 2016 election have panned out had Warren challenged Clinton in the primary? That’s one of the great unknowables of Democratic politics. But now, there is little doubt that the Massachusetts senator is the leading contender for the 2020 nomination.

     

    Warren, a former Harvard Law School professor, has been beloved by the left throughout her late-blooming political career, largely because of her no-punches-pulled attacks on banks and the financial industry. She got under Trump’s skin via Twitter during the 2016 campaign too.

     

    The recent news that Warren will join the Senate Armed Services Committee in January has stoked speculation that she is looking to bolster her foreign policy and national security credentials in advance of a presidential run. Warren would be 71 by the time of the next election, but she is three years younger than Trump.

     

    2. Sen. Bernie Sanders (I-Vt.)

     Sanders came from semi-obscurity in the Senate to give Clinton a serious run for her money in the battle for the Democratic nomination this year.

     

    He won 23 contests and amassed more than 13 million votes. He also fired the enthusiasm of young voters and progressives, two pillars of the Democratic base that Clinton struggled to charm.

     

    The Vermonter’s focus on income inequality and his broader point that the system is rigged against working Americans resonated. Sanders’s main problem when it comes to a 2020 run could be his age. He will be 79 next Election Day. Still, Sanders might well be tempted to try one more time — especially if Warren stood aside.

     

    3. Sen. Cory Booker (N.J.)

     Booker raised eyebrows earlier this month when it emerged that he would join the Senate Foreign Relations Committee when the new Congress convenes. As with Warren and the Armed Services panel, his decision was interpreted as an effort to burnish his resume for a potential presidential run.

     

    Booker is just 47, and he is one of only two African-Americans in the Senate for now. (That number will rise to three in January when California’s Kamala Harris will be sworn in.)

     

    He is also one of the most media-savvy members in the upper chamber — a trait that has been apparent since the start of his career, when his first, failed bid to become mayor of Newark was captured in a sympathetic documentary, “Street Fight.”

     

    Booker is far from the most liberal member of the caucus. During the 2012 presidential campaign, he criticized an Obama campaign ad that hit Mitt Romney’s business record, insisting on NBC’s “Meet the Press”, “I’m not about to sit here and indict private equity.”

     

    An optimistic view is that he could bridge the gap between the progressive and center-left strands of the party. Skeptics will question whether he is a little too corporate-friendly for the tastes of Democratic primary voters.

     

    4. Sen. Amy Klobuchar (Minn.)

    Klobuchar has already appeared on several shortlists of likely contenders for the nomination, and it’s not hard to see why.

     

    The New Yorker called her, “popular, practical, appealing [and] progressive.” She is from a state where the currents of labor and progressivism run strong. But the no-nonsense, affable Klobuchar could also plausibly appeal to Rust Belt voters whom her party needs to win over.

     

    One issue for Klobuchar right now is that she does not have a high profile outside of her native state and the Beltway. There is plenty of time to change that if she wants to run and win in 2020. But she could be eclipsed by higher-wattage candidates.

     

    5. Sen. Kirsten Gillibrand (N.Y)

     Gillibrand followed in Clinton’s footsteps when she replaced her as a New York senator in 2009. Could she do the same at the presidential level — but actually win the White House?

     

    It’s certainly possible. Gillibrand’s profile has risen in tandem with her making the prevention of sexual assaults in the military a signature issue. Representing New York, she has easy access to the national media and to powerful Democratic fundraising networks.

     

    But Gillibrand’s similarities with Clinton, superficial though they may be, could go against her. It’s just not clear Democrats would roll the dice again, as soon as 2020, on another prominent female nominee from New York.

    Critics also charge that Gillibrand emphasized more centrist positions as a congresswoman from a somewhat conservative district than she does as a senator from a liberal state.

     

    6. First lady Michelle Obama

     If the first lady exhibited even a slight inclination to run, she would be ranked near the top of this list.

     

    There is no figure in public life, with the possible exception of her husband, who has so strong a hold on liberal hearts and minds.

     

    Obama has become more comfortable with her public role over the years. Her two major speeches during the 2016 campaign — one at the Democratic convention, another excoriating Trump for “hurtful, hateful language about women” — were among the most powerful delivered during the cycle.

     

    The first lady insists that she won’t run, citing the effect such an effort would have on her two daughters among other factors. But Malia and Sasha Obama will be 22 and 19, respectively, by the time of the next election. When it comes to the first lady’s future plans, many Democrats still cling to the audacity of hope.

     

    7. Gov. John Hickenlooper (Colo.)

     Hickenlooper presides over a state that is considered a key battleground, even though it has become more solidly Democratic in recent years. Colorado has gone for the Democratic nominee in the past three presidential elections and Clinton won the state by five points.

     

    Hickenlooper, who has a politically effective down-to-earth persona, could potentially boost the party’s appeal in the heartlands. He has enjoyed solid approval ratings during his time in office.

     

    One problem? While his chances are talked up among Beltway pundits, he is almost unknown in the nation at large.

     

    8. Sen. Chris Murphy (Conn.)

     Murphy has come to the fore on the issue of gun control. He can speak with moral authority on the issue: In his state, a gunman killed 20 young children, as well as six adults, at Sandy Hook Elementary School in December 2012. President Obama has called that moment the worst day of his presidency.

     

    Politically speaking, Murphy would need to display more policy breadth and heighten his national profile if he is to be a genuine contender. For the moment, he’s one to watch.

     

    9. Vice President Joe Biden

    The vice president could have definitively ruled himself out of the running, but hasn’t. He joked with reporters about the possibility earlier this month, and then sought to clarify by saying he had “no intention” of running.

     

    Biden would clearly have loved to run in 2016, were it not for the fact that he was still grieving the loss of his son, Beau. Biden’s age is a real issue, however. He would be 77 by next Election Day. If he won, he would turn 78 before being inaugurated.

     

    For all his political skills, his two previous runs for the presidency, in 1988 and 2008, ended in failure.

     

    10. Gov. Andrew Cuomo (N.Y.)

     On paper, Cuomo looks like a strong candidate. He is the governor of a huge, liberal state and hails from a well-established political family. Cuomo’s late father, Mario, served as governor of the Empire State for three terms.

     

    No one doubts the younger Cuomo’s ambition, but whether he is the right fit for the times is a tougher question. In a party where the left is ascendant, he has positioned himself as a centrist foil to New York City’s liberal mayor, Bill de Blasio. It’s not clear what Cuomo’s power base would be for a primary fight.

     

    11. Sen.-elect Kamala Harris (Calif.)

     Harris is one of the bright spots for Democrats who are dismayed by their failure to retake the Senate. She will succeed the retiring Sen. Barbara Boxer in January.

     

    Harris has been seen as a rising star in the party for some time, her fans including President Obama, who once praised her in imprudent terms.

     

    Harris, a leading lawyer before shifting into politics, is the daughter of an Indian-American mother and a Jamaican-American father. It’s not clear she has any presidential ambitions and, if she ran in 2020, she would face criticism about her relative lack of political experience. But she would be as experienced as then-Sen. Obama was when he began his 2008 White House run.

     

    12. Former Secretary of State Hillary Clinton

     Could she run again? It’s possible. Many people thought Clinton’s electoral ambitions had ended in 2008, with her devastating loss to Obama in the Democratic primary. That turned out not to be the case.

     

    There is still a large, wealthy circle of Clinton loyalists, who would back any future run. But, even if she had the appetite for a 2020 bid, she would have enormous hurdles to overcome.

     

    One of the biggest would be the question of how she lost the presidency to Donald Trump. Beyond the hardline Clintonistas, there aren’t many Democratic insiders who were wowed by her campaign. In a USA Today/Suffolk University poll released earlier this month, 62 percent of Democrats and independents said Clinton should not run again.

     

    13. Former Gov. Deval Patrick (Mass.)

     Patrick has considerable political skills and was once talked up as a potential inheritor of President Obama’s mantle. David Axelrod, one of the aides closest to Obama, worked with Patrick as well, and both Patrick and Obama adopted “Yes We Can!” as a campaign slogan.

     

    But Patrick left office in 2015, and it’s just not clear whether he could — or would want to — come off the sidelines for 2020. He also joined Bain Capital, which is hardly the ideal launching pad for a quest to win over liberal activists.

     

    14. Sen. Tim Kaine (Va.)

     Kaine achieved a new national prominence when Clinton named him as her 2016 running mate. But his performance was a mixed bag.

     

    The Virginia senator gave some energetic speeches on the campaign trail, defying his reputation for dullness. On the other hand, his showing in his sole debate with his counterpart, Indiana Gov. Mike Pence, was uneven at best.

     

    15. Oprah Winfrey

     Trump proved how powerful a currency celebrity can be — and there may be no more trusted celebrity in America than Oprah. Having steered largely clear of partisan politics for most of her career, Winfrey became an enthusiastic backer of Obama when he looked a long shot to beat Hillary Clinton to the 2008 nomination.

     

    Winfrey has said she “couldn’t breathe” after Trump won in November. She softened her stance later, but could she be tempted into a race to defeat the president-elect?

  • The Great "Fake News" Scare Of 1530

    Submitted by Rick Falkvinge via PrivateInternetAccess.com,

    Fake news has always been around for humor purposes, but the real “fake news” scares happen when the establishment is so used to getting away with lying, that any alternate narrative is demonized as factually false, irresponsible, and dangerous.

    “The Onion” was next to “The Economist” in the newspaper stands for almost two decades. “Weekly World News”, which one-ups most British tabloids with regular Elvis sightings and vivid descriptions of two-mile fish orbiting in the rings of Jupiter, is still next to “Foreign Policy” in the same newspaper stands. This was never considered problematic in the slightest. Why, then, is a unified establishment screaming bloody murder about “fake news” all of a sudden?

    To see the pattern here, it helps to know a little history – let’s look at the great “Fake News” scare of 1530. It has a lot of elements similar to ours today.

    After the Black Death hit Europe hard around 1350, the monasteries were chronically short on manpower. The families that had used to send a child or two to become monks or nuns simply needed all their kids to work in the fields, to ensure food production, before such luxuries as manning the monasteries could even be considered. Therefore, any work that required involving monasteries became increasingly steep or scarce for the coming century.

    This is relevant as those monasteries were the only places that produced books, all of which were in Latin, and all of which were in complete synchronization with the messages of the Catholic Church, the owner of the monasteries and therefore the owner of all mass media at the time. To compound the situation, the same owner also employed all the news anchors – the village preachers, who were the ones who read the books (in Latin) and translated them to the common tongue in villages.

    A book was hideously expensive to produce. Not only was each page copied by hand, but the pages were made from animal hides: it was estimated that a single book may require the hides of as much as 300 calves. We don’t have a lot of comparative numbers from Europe of the time, but we do have them from elsewhere: a fine book in the Islamic world of the time could cost 100 dinars, with the annual paycheck required to support a middle-class family being about 25 dinars. Put differently, the prospect of buying one single book would consume an entire family income for four years – or in the $500k to $1M range in today’s value.

    To the day, almost a century later, Johannes Gutenberg combined the four inventions of the squeeze press, oil-based inks, metal movable type, and cheap rag-based pages to produce the first printing press. All of a sudden, books could be mass produced cheaply, and there was an enormous profit motive to be made in producing books for the common people. You could accurately and shamelessly call it an undercutting of the monastery business. (“How will the monks get paid if we allow cheap copying technologies?”)

    Gutenberg was convinced his invention would strengthen the Church, as the ability to mass produce books from a single original would eliminate all the small copying errors invariably introduced in the manual book production process. The result was the exact opposite, through mechanisms Gutenberg did not foresee.

    It’s important to remember here, that through the media cartel of the medieval ages (where the Catholic Church produced all news and reported all news), that there was an absolute gatekeeper position over the narrative. The Church could essentially claim that something was true, and everybody would believe it. This is a very powerful position, being the gatekeeper of true and false – one that is prone to abuse without any opposition, or competition, in reporting. As it turned out, the Catholic Church would indeed come to abuse this power quite egregiously, and paid the price for it.

    In the late 1400s, the Catholic Church needed to raise money, and came up with the idea of selling forgiveness for sins, the basic idea being that you didn’t need to be a good person to gain the favor of the Church (and divine beings), you only needed to be Rich. A priest, monk, and theologist named Martin Luther took particular exception to this message, seeing how it stood in complete opposition to everything the Church was supposed to be about, and nailed his 95 theses to the church door in 1517.

    These 95 theses outlined how the entire practice of selling divine forgiveness was based on falsehoods, fabrications, and fiction. However, it’s important to look at the bigger picture here: what Martin Luther protested was only superficially the selling of salvation to raise funds. More fundamentally, he was objecting to abuse of the gatekeeper position over truth and lie to twist the narrative for the gatekeeper’s material benefit.

    This is where the story should start to feel familiar with modern day conflicts over the Power of Narrative.

    Luther was excommunicated – banished, exiled – in 1521. This was one of the graver punishments administered, short of the death penalty, and the only thing remaining for somebody thus punished was normally to leave for foreign lands. However, in Luther’s case, he was given refuge in lands siding with him instead of the Catholic regime, ultimately setting off a century of civil war over the Power of Narrative.

    The final death knell came when Luther published bibles in German and French using the new printing press, the so-called Luther Bibles, first published in 1522. These set off shockwaves, as they were 1) distributed by the cartload in the streets of Paris and France, 2) were readable by the common people without translation by the clergy, and 3) didn’t cost the equivalent of a million dollars each.

    The Church immediately went into a panic, as they had instantly lost their gatekeeper position. No longer were they able to stand unchallenged when they were reading from the Bible in Latin, as people could – and would – verify the claims made, using their own direct sources. And as it turned out, a lot of the things that had been claimed – selling salvation among them – had been baloney of the highest order with no support in the Christian Bible as claimed.

    The Catholic church went on a rampage and a crusade against this new spread of ideas that would challenge its narrative, and in particular, against the technology which enabled people to challenge its narrative. Copying books cheaply and efficiently instead of paying four annual salaries for a single book – the audacity, the outrageous heresy! How dared people copy books themselves without respecting the Church? Obviously, books could only be properly copied in monasteries, to ensure proper quality.

    (“How will the monks copying books get paid otherwise?” was as much a smokescreen then as it is today.)

    The church kept up the pressure against the printing press, as it saw all the resulting non-sanctioned news channels as completely fake, not just being wrong, but being dangerous. They were irresponsible. They were deliberately spreading misinformation – at least the Church saw it that way, a Church which was institutionally incapable of unlearning that it was no longer the single source of information and would no longer have whatever outlandish claim accepted without question.

    However, the nobility and royalty of the time were certainly paying attention to the Church. After all, the Archbishop installed Kings, so there was a mutual dependence for power between the clergy and royalty at the time. Therefore, when the Church exclaimed the sky is falling (“there is fake news everywhere! We must do something!!!!!!!”), the royalty tended to listen.

    As a result, on January 13, 1535, the French King Francis I signed into law the death penalty by hanging for using a printing press at all. Yes, you read that right: there was a death penalty for making unauthorized copies. The justification for the law, as still readable in the preserved logs from 1535, was to “prevent the spread of misinformation and false news”.

    So the gatekeepers of knowledge and culture in 1530, on losing their gatekeeper position over the narrative, didn’t counter with higher-quality reporting, but instead attacked the technology enabling competition, calling it out as spreading misinformation and irresponsible fake reports. Does any of this seem… familiar?

    The law was a complete fiasco. Once people had learned to read competing reporting, there was no unlearning it. The law was repealed shortly thereafter. England went another route to prevent the success of the printing press by establishing a censorship regime with printing monopolies, known as copyright, but that’s a story for another day.

    As a final touch, let’s consider the words of Paul Graham, in his excellent essay “what you can’t say”:

    “No one gets in trouble for saying that 2 + 2 is 5, or that people in Pittsburgh are ten feet tall. Such obviously false statements might be treated as jokes, or at worst as evidence of insanity, but they are not likely to make anyone mad. The statements that make people mad are the ones they worry might be believed. I suspect the statements that make people maddest are those they worry might be true. […] If Galileo had said that people in Padua were ten feet tall, he would have been regarded as a harmless eccentric. Saying the earth orbited the sun was another matter. The church knew this would set people thinking.

    Privacy and narrative remain your own responsibility.

  • Obama Set To Announce Economic Sanctions And "Covert Cyber Ops" Against Russia For "Election Hacking"

    Just a week after Obama held a press conference announcing that he sent a stern warning to Vladamir Putin regarding his alleged “election hacking” efforts (see “Obama Told Putin To “Cut It Out” On Hacking“), the Washington Post is reporting that the Obama administration is close to announcing a series of economic sanctions and other measures to punish Russia for its “interference” in the 2016 presidential election.  Quoting “U.S. officials,” WaPo said that an announcement from the Obama administration could come as early as this week and would likely include “covert cyber operations.”

    According to WaPo’s “sources”, the delay in sanctions against Russia have come from Obama’s inability to take unilateral actions under current laws.  While Obama previously signed an executive order that would allow him to freeze the assets in the United States of people overseas who have engaged in cyber acts, it only applies to actions that have threatened U.S. national security or financial stability.  Further, per a “senior administration official,” use of the existing law would require (1) actual election infrastructure to be designated as ‘critical infrastructure’ and (2) the administration to prove that such infrastructure was actually “harmed,” conditions which the National Security Council say have not been met. 

    The White House is still finalizing the details of the sanctions package. Holding up the announcement is an internal debate over how best to adapt a 2015 executive order that gave the president the authority to levy sanctions against foreign actors who carry out cyberattacks against the United States.

     

    The order was used as the “stick” in negotiations over a highly-publicized 2015 agreement with China that neither nation would hack the other for economic gain.

     

    But officials concluded this fall that the order does not cover the kind of covert influence operation that the Intelligence Community believes Russia carried out during the election — hacking political organizations and leaking stolen emails with the goal of influencing the outcome.

     

    The April 2015 order allows the Treasury Department to freeze the assets of individuals or entities who used digital means to damage U.S. critical infrastructure or engage in economic espionage.

     

    The National Security Council concluded that it would not be able to use the authority against Russian hackers because their malicious activity did not clearly fit under its terms, which require harm to critical infrastructure or the theft of commercial secrets.

     

    “You would (a) have to be able to say that the actual electoral infrastructure, such as state databases, was critical infrastructure, and (b) that what the Russians did actually harmed it,” a senior administration official told The Post. “Those are two high bars.”

    Obama Putin

     

    Of course, laws are merely suggestions for an Obama administration that has grown quite comfortable legislating through executive action from the White House.  As Zachary Goldman, a sanctions and national security expert at New York University School of Law, points out the current laws simply require the Obama administration to “engage in some legal acrobatics to fit the DNC hack into an existing authority, or they need to write a new authority.”

    “Fundamentally, it was a low-tech, high-impact event,” said Zachary Goldman, a sanctions and national security expert at New York University School of Law. And the 2015 executive order was not crafted to target hackers who steal emails and dump them on WikiLeaks or seek to disrupt an election. “It was an authority published at a particular time to address a particular set of problems,” he said.

     

    So officials “need to engage in some legal acrobatics to fit the DNC hack into an existing authority, or they need to write a new authority,” Goldman said.

     

    Administration officials would like Obama to use the power before leaving office to demonstrate its utility.

    And, not surprisingly, another administration official points out that “part of the goal here is to make sure that we have as much of the record public or communicated to Congress in a form that would be difficult to simply walk back.”  Yes, that is the problem with legislating through executive action rather than acknowledging the will of the American people and trying to work with Congress.

    And while Obama and Democrats continue their crusade to deligitamize the Trump administration, we would point out once again that, despite all the rhetoric, not a single person has gone on the record and/or presented a single shred of tangible evidence to confirm Russian involvement in the DNC and/or John Podesta email hacks

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Today’s News 27th December 2016

  • Racist White Professor Calls For “White Genocide,” Then Blames Everyone Else For Misinterpreting His Racist Tweets

    A Drexel University Political Science professor – who has a book coming out in February – and is a communist, graced the world with his Christmas wish to see an entire race of human beings exterminated. You know, like Hitler. 

     

    c0kevonucaa8k7

    Hilarious, right? Especially if you replace the word “white” with any other race. This warm holiday sentiment comes from the mind of George Ciccariello-Maher, a cultishly liberal academic who’s never existed outside of a university environment, having previously corrupted young minds at U.C. Berkeley and the Venezuelan School of Planning in Caracas. Ciccariello then doubles down on his Christmas Eve banter:

    1482745932036

    To review, this is what he’s talking about:

    1482746023031

    Nice guy. Now, in an attempt to backpedal during an Eichenwaldian moment of clarity liberals get after haphazardly revealing they’re fucking idiots underneath that academic exterior, Ciccariello is lashing out by blaming everyone who was offended for not having “bothered to do their research” in preparation for his satirical tweets.

    drexelsss

    Drexel university has issued a statement:

    responsedrexel

    No word on which wrist Drexel plans to slap, but 4chan anon knows what’s up: 

    drexelres

    1482775181122People like Ciccariello-Maher exist to indoctrinate adult children into a reactionary class of morons who hear a trigger word and start regurgitating information without even moderate possession of the facts. These perpetual winners are are easily manipulated by identity politics which “intellectual” losers like Ciccariello capitalize on. While undeniably atrocious, slavery in America was conducted almost entirely by rich southern democrats – a small percentage of Americans, in the 1800’s. It has been a fucked up institution for thousands of years, and is still happening today in many parts of the world. It’s also been abolished in the USA for over 130 years, and the playing field has been legally leveled for over half a century despite structural racism legislated into society. There are of course vestiges of slavery which affect minorities to this day, none of which should be used as a tool for manipulation to generate guilt or resent – or as a reason to exterminate white people. I wonder if Ciccariello-Maher would issue the same call to genocide for all brown people, since slavery is alive and well in places like Saudi Arabia?

    As long as angry radicalized career academics continue peddling white guilt to impressionable snowflakes – many of whom entered into lifelong debt to fund their own brainwashing, untold millions of basement-dwelling failures to launch will have a perpetual villain to blame for their shitty lives. That is, until the last white person has been exterminated.

    1482756133132

    Content originally generated at iBankCoin.com

  • India's Demonetization Debacle Highlights The Dangers Of Monetary Monopoly

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    As longtime readers know, I believe we are at the beginning stages of what will be historical paradigm level change across the planet. We sit on the precipice of the self-destruction of almost all the dominant institutions we’ve been accustomed to throughout our lifetimes. To borrow a bit of played out and painfully clichéd Silicon Valley lingo, everything is on the table for “disruption.”

    Naturally, this doesn’t necessarily mean the paradigm that follows the current one will be materially better, but I am personally optimistic about what will emerge following a period of considerable confusion, hardship and conflict. In order to tilt the scales toward a positive outcome, those of us who wish to usher in a world characterized  by human freedom, decentralization, self-government and kindness, need to recognize the most likely avenues we have to get there. Technology is obviously extremely important, as a recent move by Whisper Systems to thwart censorship demonstrates.

    As Wired reported last week:

    Any subversive software developer knows its app has truly caught on when repressive regimes around the world start to block it. Earlier this week the encryption app Signal, already a favorite within the security and cryptography community, unlocked that achievement. Now, it’s making its countermove in the cat-and-mouse game of online censorship.

     

    On Wednesday, Open Whisper Systems, which created and maintains Signal, announced that it’s added a feature to its Android app that will allow it to sidestep censorship in Egypt and the United Arab Emirates, where it was blocked just days ago. Android users can simply update the app to gain unfettered access to the encryption tool, according to Open Whisper Systems founder Moxie Marlinspike, and an iOS version of the update is coming soon.

     

    Signal’s new anti-censorship feature uses a trick called “domain fronting,” Marlinspike explains. A country like Egypt, with only a few small internet service providers tightly controlled by the government, can block any direct request to a service on its blacklist. But clever services can circumvent that censorship by hiding their traffic inside of encrypted connections to a major internet service, like the content delivery networks (CDNs) that host content closer to users to speed up their online experience—or in Signal’s case, Google’s App Engine platform, designed to host apps on Google’s servers.

    It goes without saying how critical technology such as the above, combined with dedicated activists such as Moxie Marlinspike, will be to making the world a better place. Beyond that, we also need to understand what our adversaries will do. I define such adversaries as the defenders of the status quo, who will do whatever it takes to retain power and influence in the face of their increasing irrelevance. As it becomes more and more obvious to people that these legacy institutions have become so corrupt and bureaucratic that they do far more harm than good, their leaders are likely to resort to more and more authoritarian tactics in order to defend their untenable position. This is where we need to see opportunity as opposed to cowering in fear.

    We are on the right side of history, while the old institutions are simply living on borrowed time. We must be smart about how we see the world and understand that Donald Trump is likely to react to such a situation quite similarly to a Barack Obama. Whoever’s in charge of the government will by definition work to preserve the power of government as opposed to the liberty of the citizenry. This goes for pretty much every political leader and government worldwide. As such, we must assume government will lash out in increasingly irrational and authoritarian ways in the coming years, as the old paradigm becomes unglued.

    As I mentioned earlier, when a government reacts in an absurd and harmful way, we need to see this for the opportunity it presents as opposed to becoming overcome with fear concerning its inevitable near-term harm. A perfect example is the recent extremely destructive decision by Indian Prime Minister Narendra Modi to unilaterally scrap old 500 and 1,000 rupee notes, which merely represents a particularly egregious move within a broader push by elitist and status quo bureaucrats across the world to ban cash. As disruptive as this move has been, it also carries with it a significant silver lining. For example, it’s causing us to ask the really big questions we need to be asking.

    As R. Jagannathan wrote earlier today in Swaraja Magazine, where he is the editorial director:

    A philosophical question that economists need to answer after Lehman, zero-interest money, QEs, and demonetisation (in our case) is whether central banks ought to have that kind of monopoly over money.

     

    Most free-market economists would agree that monopolies are bad, but they do not usually challenge the state’s monopoly over violence and law-making or the central banks’ monopoly over the issue and regulation of currency.

     

    Leaving aside the state’s monopoly on some kinds of power, let’s ask whether a central bank’s money monopoly is worthwhile since it does not appear to have delivered the kind of benefits to the world in recent decades which can justify the conferment of a monopoly.

     

    The fundamental reason why we have grown to love (or learned to live with) central banks is that we cannot remember a time when they did not exist. So the argument is better the devil you know…

     

    But consider their track record…

     

    The US Fed could not prevent or even moderate the 1930s depression. It took a world war to rescue the US economy from deflation.

     

    The US government (and the Fed) reneged on their most important commitment – to link the dollar value to gold – in 1971. This link was crucial to getting the world to accept payment in US dollars. But once that got done, the US did not want to honour its commitment since this was costing it a bit. In short, central banks cannot always be trusted.

     

    “Independent” central banks were never able to prevent governments from debasing the currency by resorting to huge fiscal deficits. So they could not maintain the exchange values of their currencies without creating hardships for their people.

     

    Central banks have been particularly bad at predicting when money was too cheap or too expensive – the main job they are supposed to do – and we have seen that in bold relief post-Lehman, and with the ongoing Eurozone crisis and Japan’s never-ending stagflation.

     

    In India, we were happy to assume that for Reserve Bank of India (RBI) governor Raghuram Rajan brought inflation down, but this is a story we concocted after noting that the man was talking a lot about inflation. We presumed that what he did must have helped inflation come down, but we can never be sure. But his predecessor D Subbarao spent five years chasing down both inflation and disinflation (pre-2008, post-2008, and post-2011-12) and was considered “behind the curve” on policy. As if one human being can predict the net outcomes from the individual actions of a billion-and-a-quarter people responding to inflation or deflation.

     

    And now we have a new Governor, Urjit Patel, taking the flak for a decision he was only partially involved in – demonetisation.

     

    But the real question to ask of Urjit Patel and the government that appointed him is not whether demonetisation was a good idea or whether it has been implemented badly, but whether either government or the central bank should have had this monopoly power at all?

     

    That Patel and the Modi government are being attacked both by Left and Right for demonetisation leads us to a larger and more basic question: Could demonetisation have happened if the Indian state did not have a monopoly in central banking, and there were several money issuers vying for the citizen’s custom?

     

    The answer is probably no, for it is only monopoly that assures central banks this kind of power. If India had another currency issuer, the RBI could not have demonetised the currency in one go. It would have had to announce a plan, and take the bad money out in stages.

     

    But the central bank’s monopoly is really a consequence of the state’s monopoly on law-making and power. This is why states, despite being at odds with their central banks on the short-term direction of monetary policy, are equally keen to let them retain their money monopoly.

     

    In the US, a private player launched a gold-based currency called e-Gold, but when it grew big enough, the powers-that-be had it wound up. Launched in 1996, e-Gold, founded by Douglas Jackson, allowed account-holders to make cash transfers to other e-Gold account-holders through its website. At its zenith, e-Gold was said to be handling more than $2 billion worth of annual transactions. (Read more about e-Gold here and here).

     

    But governments can’t stand a rival who challenges their own right to mint currency, and so in 2009, e-Gold was shut down, ostensibly because it did not have a licence to transfer money. The Patriot Act, enacted after 9/11, gave the US government powers to do this.

     

    The 21st century will challenge the idea of the state and its monopoly powers, but Step One in that process is whether central banks should have a monopoly on money.

     

    The answer is no. Competition will be good even in the business of creating money and managing its ebbs and flows.

    All of this reminds me of something I wrote recently with regard to the self-implosion of mainstream media in the post, ‘Then We Will Fight in the Shade’ – A Guide to Winning the Media Wars:

    It is when you get desperate, scared and panicky that you make the biggest mistakes, and the legacy media is currently desperate, scared and panicky.  As Napoleon Bonaparte allegedly said:

     

    “Never interrupt your enemy when he is making a mistake.”

     

    We mustn’t get in the way of the legacy media’s inevitable self-destruction. Part of this means that we do not self-destruct in the process. We need to recognize that there’s a reason independent, alternative media is winning the battle of ideas in the first place. For all the warts, mistakes and bad actors, the emergence of the internet is indeed the historical equivalent of the invention of the printing press on steroids.

    The same mindset and strategy should be applied to the state as well. One thing I’m relatively certain of, is that as economies continue to decay under the weight of the status quo way of doing things, the incredibly corrupt men and women in charge of our dominant institutions will flail from one destructive, authoritarian action to the next. We must expect this and prepare to respond.

    Technology will do its part by providing the necessary tools to transition from one paradigm to the other, but equally important will be winning the narrative when it comes to the 7 billion people inhabiting the planet. This is where websites such as Liberty Blitzkrieg and others will play an increasingly significant role in pointing out and articulating the harmful, irrational and destructive nature of the status quo response to challenges that arise. In this way, we can be sure to win the battle of ideas, which will be crucial to successfully ushering in a new age of human freedom, creativity, opportunity and progress.

  • Commodity Futures Plunge Following China Growth Downgrade

    Less than a month ago we warned that the Chinese commodity bubble 2.0 was bursting as speculative volume had exploded relative to open interest and exchanges had begun (after unreal surges in prices) to crackdown on the speculation. The carnage continued and over the last few days has bloodbath'd even more as China warns that it will miss its growth targets.

    Spot The Odd One Out…

    • Zinc -22%
    • Iron Ore -20%
    • Steel Rebar -20%
    • China Coking Coal -25%
    • Copper -13%
    • Bitcoin +18%

     

    It appears as China housing bubble pops, commodity bubble pops, and credit-fueled growth bubble pops… there is only one place left for Chinese trend-followers to flee to – Bitcoin.

  • Refugee Admissions Surge 86% YoY As Obama Rushes Arrivals Ahead Of Trump Inauguration

    In the first 84 days of the 2017 fiscal year (October 1, 2016 – December 23, 2016), the Obama administration has accepted 25,584 refugees into the United States, according to data provided by the State Department.  Per Breitbart, compared to the same period in FY2016, that represents an 86% increase year-over-year.  And while we were expecting a large increase in refugee admittances in 2017 (see “Hillbama Administration Plans To Admit At Least 110,000 Refugees In 2017“), the ~30% increase that Secretary John Kerry estimated back in September is looking like a fairly modest increase now compared to actual numbers. 

    And while the new Trump administration will likely slow the rate of the new arrivals after taking office next month, the current Obama run-rate puts us on track to blow through the 20-year record high set back in 1999.

    Refugees by Region

     

    As we’ve noted before, per data from the U.S. State Department, the overwhelming majority of refugees admitted into the U.S. over the past couple of months are coming from Syria, Iraq and Somalia… 

    Refugees by Region

     

    …and being resettled in Texas, California, Arizona and New York.

    Refugees by State

     

     

    Obviously, Trump has been fairly clear about is intention to “suspend immigration from areas in the world where there is proven history of terrorism against U.S.” which likely was a stance that helped him win the presidency in November. 

     

     

    But, Obama doesn’t seem to care about any of that…nothing like completely ignoring the will of the American people to pursue your own agenda.  

  • "Operation Cankles" – Russian Intervention Exposed

    Did the Russians really rig the 2016 US election? The Daily Telegraph's Tim Blair exposes 'the truth' – You bet they did!

    Secret documents recently discovered in a bin behind a Kremlin-district 24-hour cabbage and tobacco store reveal for the first time the devious extent of Russian interference. These plans were decades in the making.

    Read on, as never-before-seen communiques between Russian agents Sergei Potrov and Dimitri Bienko outline the wicked plot – beginning in 1947, on the day of Hillary Clinton’s birth:

    Dearest Dimitri

     

    I am pleased to report that phase one of Operation Cankles is total success! Soviet implantation of stupid American woman resulted in birth today of hefty girl-child destined to be unelectable candidate 70 years from now.

     

    Child is basically just ankles and head, similar to sturdy and hard-working female stock from adored Ilmensky Mountains. In decadent America, nobody will ever vote for such a noble being.

     

    Yours in Soviet solidarity,

    Sergei

    Back in Moscow, Bienko receives the news from his undercover US-based operative with communist glee:

    Dearest Sergei,

     

    You have done very well, comrade! Especially with the implantation. I trust the child has your eyebrow.

     

    We have already begun looking at similar strategies in other western nations. When you are next on leave, ask me to show you plans for Operation Julia. Australia is next to face unforgiving Soviet wrath!

     

    Yours,

    Dimitri

    As the years go by, our pair of dedicated spies continue to monitor Hillary’s progress and other events:

    Dearest Dimitri,

     

    Greetings again from Americas. Heh heh heh! Apologies for chuckles, but am watching hilarious documentary called Honeymooners. Is about domestic violence. Very good.

     

    Am needing laugh because hips in pain from imitating the Elvis Presley. Will send you LP of the Presley once Russia has record players.

     

    Hillary now at school and shunned by corrupt classmates in thrall of military-industrial capitalism. All proceeding exactly according to strategic project timeline.

     

    Yours in everlasting revolution,

    Sergei

    Called away from Operation Cankles for a brief and triumphant mission to Dallas in 1963, Potrov soon returns to his main quest:

    Dearest Dimitri,

     

    My ‘holiday’ in Texas was wonderful, thank you for asking. Not so good for Agent Oswald, however. I will miss him. He could make a fine okroshka soup, which is very rare here. The Americans, they prefer their eggs shelled and cooked. And from birds.

     

    How is this for funny? Hillary ran for president of high school and lost to braggart teen with big crazy hair and grabby hands! Is almost like a practice run or something.

     

    Next step is to find university for her. Wellesley is ideal. More communists than all of Soviet Union, except parents drive Cadillacs (sort of like our ZiL, but wheels stay on).

     

    Yours in earnest progress,

    Sergei

    Occasionally Agent Potrov would vanish from the attention of his Soviet overlords, as this urgent 1967 cable shows:

    Comrade Sergei Potrov,

     

    We have not heard from you since you volunteered to investigate the ‘counterculture movement’ in San Francisco three months ago. We assume that your one message, requesting ‘more bread, man’ to buy ‘reefer and doobies’, was written in a code unknown even to our finest cryptographers.

     

    Also, the message was sent on paper from which several strips had been torn. Have you insufficient funds to purchase cigarettes? Please contact your superiors immediately. And stop playing Creedence on our interspy sonic network. This is not what the Soviet surveillance system is for.

     

    Yours in concern,

    Central Command

    During the mid-70s, the Russians toast a mission-advancing coup:

    It is not to be believed! Hillary is getting married – to a man! You owe me 50 rubles, Dimitri.

     

    The fellow is Bill, called by friends ‘horn dog’, ‘el squeezo’ and ‘the Arkansas assman’. He is very political. All his girlfriends say so. By ‘all his girlfriends’, I mean whole female population of Little Rock. He go through them like great winter purge of traitor generals.

     

    This can only assist our mission. Perhaps this Bill will even make it to the White House, if he can keep it in his pants for long enough (is phrase I pick up here).

     

    Yours in jubilation,

    Sergei

    Even tectonic global changes could not sway Agents Potrov and Bienko from their cause:

    Dearest Sergei,

     

    Alas, our beloved Soviet Union is no more. Gorbachev has ruined everything. Please do not give up on Operation Cankles. It may prove to be the final major accomplishment of our great land and heroic peoples.

     

    In other news, our budget has been slightly trimmed. Suggest you monitor Hillary from American streets, where lucrative sign-holding job will provide cover and help pay rent.

     

    Yours in Glasnost,

    Dimitri

    Finally, on November 8, 2016, Sergei’s long mission comes to a victorious conclusion – on the veteran agent’s 94th birthday:

    Dearest Dimitri,

     

    I know you have been dead ten years already, but I write to you for fondness and memories. Great friend, it is done. All that we have worked for, all that we have planned, all that we have dreamed. Our unelectable candidate was truly unelectable. Even the other patients here in the home did not vote for her. One voted for Eisenhower.

     

    My time is not long, Dimitri. Soon I shall see you again, in the heaven that is a frozen-solid Siberian grave. We will rest in honour. Our work on this earth is complete.

     

    Yours in espionage,

    Sergei

    Satirical Source: The Daily Telegraph

  • As Mystery Of China's Multi-Billionaire Default Deepens, A New "Bond Scare" Emerges

    Last week, in a largely “under the radar” event, one of China’s wealthiest billionaires (if only on paper), Wu Ruilin, chairman of the Guangdong based telecom company Cosun Group, and whose personal fortune of 98.2 billion yuan ($14 billion) makes him wealthier than Baidu founder Robin Li who is ranked 8th on the Hurun Rich List 2016, shocked Chinese bond market watchers when he defaulted on a paltry 100 million yuan ($14 million) in bonds sold to retail investors through an Alibaba-backed online wealth management platform, citing “tight cash flow.”

    Needless to say, many were stunned that a billionaire for whom $14 million is pocket change, blamed “tight cash flow” for defaulting on mom and pop investors. In any case, as South China Morning Post reported, despite the founder’s personal fortune, according to a notice put up by the Guangdong Equity Exchange on Tuesday, two subsidiaries of Cosun Group are each defaulting on seven batches of privately raised bonds they issued in 2014. According to the notice, “the issuer had sent over a notice on December 15, claiming not to be able to make the payments on the bonds on time, due to short-term capital crunch.”

    To be sure, yet another default in a Chinese landscape suddenly littered with bankrupting debt dominoes would have been the end of it, however this morning Reuters added to the mystery when it said that the fate of the defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online wealth management platform was thrown into doubt on Monday, after a bank said letters of guarantee for the bonds were counterfeit.

    Quoted by Reuters, China Guangfa Bank Co Ltd (CGB) said guarantee documents, official seals and personal seals presented by the insurer of the bonds “are all fake” and that it has reported the matter to the police.

    The dispute highlights challenges in China’s loosely regulated online finance industry, where retail investors often buy high-yielding bonds and other assets, expecting them to be “risk-free” due to guarantees provided by various parties.

    As first reported last Wednesday, at the center of the latest dispute are up to 312 million yuan ($45 million) worth of high-yielding bonds issued by southern Chinese phone maker Cosun Group that defaulted this month. The bonds were sold through Zhao Cai Bao, an online platform run by Ant Financial Services Group, the payment affiliate of e-commerce firm Alibaba Group Holding Ltd.

    Ant Financial has asked Zheshang Property and Casualty Insurance Co Ltd, which wrote insurance on the bonds, to repay investors. On Sunday, Zheshang Insurance published two documents on its website that it said were from CGB carrying the bank’s official seals, and that guaranteed Zheshang Insurance policies for the Consun bonds. The letters were issued at CGB’s Huizhou branch in December 2014, when the Cosun bonds were sold, Zheshang Insurance said.

    And yet, suggesting there is a massive landmine hiding just below the surface of China’s bond market, far worse than merely the consequences rising interest rates, on Monday, CGB said the documents were fake and that it had reported the incident to police as “suspected financial fraud.”

    While material misrepresentation of facts in Chinese finance is hardly new, the recent alleged violations usher in a whole new breed of fraud, one which is far less nuanced and far more simpllistic and includes outright forgeries of documents that backstop tens if not hundreds of billions in debt. The Cosun dispute follows similar instances of financial fraud this year including forged bond agreements that led to brokerage Sealand Securities sharing potential losses of up to $2.4 billion. In May, the government advised banks to be vigilant after several cases of bill fraud.

    Ant Financial on Tuesday said Zheshang Insurance “hasn’t any reason to refuse repayment” which it was obliged to do “within three days” of default.

    Making matters worse, the fraud has taken place in the context of a bond default that, according to an Ant Financial spokeswoman cited by Reuters, was a “a one in billions incident” on the platform.

    Incidentally, Cosun’s bond issuance totals 1 billion yuan, according to Zheshang Insurance. The insurer’s total registered capital is 1.5 billion yuan.

    Should more such “one in billions incidents” emerge, Chinese bond investors – already freaked out by the recent record plunge in Chinese govt bond futures, soaring overnight funding rates, and fears over Fed rate hikes – will rush for the exits just as China’s housing bubble is also popping as reported yesterday, leading to a rerun of the US 2006/2007 dual bursting of the housing/credit bubbles, only this time instead of an $8 trillion financial system, the world will have to backstop China… whose banking system at last check had over $30 trillion in liabilities.

    Incidentally, we wonder if now that China’s bond insurers are also under the spotlight, if that means China’s very own MBIA/Ambac moments is imminent, as billions in bond insurance contracts are deemed “fake” by the insurers who would rather not pay up on what is set to be an avalanche of defaults.

    * * *

    Finally, for those interested in what Bloomberg last week dubbed the “latest China Finance Scare”, namely outright forgeries in various debt products, mostly focusing on Entrusted Bonds, here is a useful primer courtesy of BBG:

    There’s another Chinese financial practice that’s prompting high-decibel warnings. So-called entrusted bond holdings are a way for financial institutions to skirt rules on using borrowed money to invest in bonds. How? By getting a third party to buy the bonds and agreeing to purchase them at a later date. What could possibly go wrong? How about the worst rout in China’s bond market in a decade. That’s left regulators concerned about the prospect of investors failing to make good on such arrangements, estimated to involve at least $144 billion of bonds.

    1. Why entrust us with this news only now?

    Concerns about entrusted bond holdings have worsened the tumble in the debt market. Last week, Caixin cited market rumors when it reported a brokerage called Sealand Securities Co. had refused to take over bonds held by a counterparty. That got investors worried. Oversea-Chinese Banking Corp. then said in a note, citing media reports it didn’t identify, that the entrusted holding agreement may have been tied to alleged fraud by ex-staff. Sealand cleared the air when it said it would in fact fulfill the bond contracts that had been stamped with a forged seal. The whole incident was enough to frighten an already jittery market.

    2. So why do investors use entrusted holding agreements?

    Brokerages and other institutional investors ask counterparties to buy bonds from them when they need to circumvent internal rules on note holdings and leverage, according to Xu Hanfei, a bond analyst at Guotai Junan Securities Co. Or they can simply have third parties buy the notes directly from the market. The practice boosts leverage by effectively giving the financial institutions loans: As brokerages and institutional investors don’t carry the bonds on their books, they can use the funds freed up on paper to purchase more bonds, which can then be rolled into more such agreements. “Non-bank financial institutions, which emphasize returns, have more motivation to amplify leverage through entrusted holdings,” said Li Liuyang, a market analyst at Bank of Tokyo-Mitsubishi UFJ in Shanghai.

    3. How widespread is the practice?

    Outstanding entrusted holdings are “in the trillions of yuan,” according to Guotai Junan’s Xu. That estimate is based on the bond holdings of the brokerages and smaller banks that are major participants in such transactions. That means the amount of money tied up in such deals is at least 5 percent of the 21 trillion yuan ($3 trillion) of outstanding corporate notes in China, according to data compiled by Bloomberg.

    4. What broader risks does it pose to China’s financial markets?

    A default in an entrusted holding could turn what otherwise might have been a problem with one company’s liquidity into a broader credit event, given that multiple parties may be involved, according to Li at Bank of Tokyo-Mitsubishi UFJ. Li says “everyone is worried about similar situations in their transactions with non-bank financial institutions.” OCBC said that things had got so bad that banks were reluctant to lend to non-bank institutions amid a breakdown in trust between investors.

    5. What are regulators doing about it?

    Authorities including the central bank and the China Securities Regulatory Commission are investigating some financial institutions’ entrusted bond holdings after the Sealand incident, people familiar with the matter said Tuesday. The holdings run contrary to the central bank’s push to trim investments made on borrowed money, according to China Merchants Bank Co. “It’s just a question of when Chinese regulators will clean up entrusted bond holdings,” said Liu Dongliang, a senior analyst at the bank. Tommy Xie, an economist in Singapore at OCBC, says China’s market rout may prompt regulators to strengthen rules on entrusted holdings. He describes them as “a common practice in the grey area of the bond market.”

  • The Future Of Passports (& Citizenship By Investment)

    Submitted by Jeff Thomas via InternationalMan.com,

    "The bottom line is that anyone can be ISIS. We therefore need an approach to securing civilized societies that doesn't allow individuals to hide behind the cloak of Western passports… The time has come for a "global passport," a parallel digital certification of a person's identity, background, criminal record, travel history, and other details. The digital record would be regularly updated based on databases from airlines, customs agencies, banks and other sources, and could be managed by an independent international authority.”

    The above quote comers from CNN, an American news network that has done such an exemplary job in recent years in serving as a mouthpiece for the US Government.

    The argument for global passports is a familiar one – “You are in danger of being killed by terrorists. We will save you by removing yet another of your freedoms.” Or, as Hermann Goering said,

    The people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.”

    Over one billion people presently cross borders each year. In addition, there are over 250 million people who are expatriates – living outside their home country. These numbers are higher than ever before in history and growing. As The Great Unravelling progresses, we will witness a dramatic increase in both statistics. Along the way, we can expect the more restrictive governments, particularly those of the EU and US, to institute limitations on travel for their citizens, in order to keep them captive at home.

    So, we can therefore anticipate changes in the issuance of passports. There are two concepts afoot with regard to the future of passports, and they’re direct opposites of each other. The first is for a Global Passport, that all countries would issue and all would share computer information on all passport holders. The other is a proliferation of passports created by an easing of citizenship requirements in small countries, resulting in each individual having the ability to possess several passports, thus diminishing his “ownership” by his home country.

    These two concepts are both almost certain to develop considerably in the coming years and for the same reason. As stated, the more restrictive countries are likely to push for a global passport – an Orwellian document that says, “No matter where you are, you travel on our document. We have all your information and we own you.” The more this trend increases in prominence, the more the second trend will increase, in direct reaction. More and more countries will offer citizenship to non-nationals, as the demand for freedom increases amongst oppressed people.

    Most of the countries that presently offer “Citizenship by Investment” are small countries – Malta and Cyprus in the Mediterranean, plus five island nations in the Caribbean: Grenada, Antigua & Barbuda, St. Kitts & Nevis, Dominica and, recently, St. Lucia.

    A visit to any of the small Caribbean countries will reveal that since the decline of the sugar industry, they have had few choices with regard to future prosperity. Quaint small towns and villages and nice beaches attract a certain amount of tourism, but something greater is needed to support an entire population. Decades ago, St. Kitts & Nevis decided to try Citizenship by Investment. At first, the takers were few, but, in recent years, with much of the world imploding, the programme has attracted greater interest.

    The way it works is that an applicant can either buy citizenship (approval takes only a month or two) for $250,000, or he can buy into a real estate project for $400,000 or more. Due to recent success, other island nations have jumped on board, offering their own programmes… and here’s where it gets interesting.

    As soon as eight or 10 island nations are offering similar programmes, it will become a citizenship norm for the Caribbean. And, of course, that will mean competition will develop. With many countries to choose from, prices will need to drop. At some point, national leaders will seek to increase gross sales by lowering the sale price. Although $400,000 is out of reach to most who dream of buying an alternate passport, there will be far more takers at $200,000 or even $100,000, but I believe the magic price point to be $50,000. At that price, hundreds of thousands of second-passport seekers will jump on board. Indeed, many will purchase passports from several islands. (If one backup passport is good, multiple backup passports are better.)

    But, why are “bargain” passports not already available? From my own experience, as a West Indian, this is due to the fact that our political leaders often fear a dramatic influx of new voters. They feel safer appealing to natives than outsiders and worry that the electorate balance may be upset and cost them their seats in future elections.

    Yet, many West Indian countries already have laws that limit the rights of new citizens (with particular regard to the right to run for public office). To date, none of these countries has figured out that citizenship without the right to vote is an easy solution. Once they twig onto this new category of citizenship, we may see a major drop in citizenship costs and a dramatic increase in the number of applicants.

    At present, the passport schemes have attracted Russians, Canadians, Middle Easterners, Chinese and, increasingly, Americans. At present, the US is the foremost objector to Citizenship by Investment, describing its purpose to be “to provide cover for financial crimes.” However, over one hundred other countries, including most of Europe, accept the passports and the US is very much in the minority here.

    This is an issue to be watched closely. Historically, whenever governments have put the squeeze on their citizens’ freedoms, citizens have reacted by trying to wriggle out. The squeeze in many countries is presently at its zenith and many, many people are voting with their feet. There will always be takers in the world when this occurs and, in the Caribbean, opportunities for increased freedom are very much on the increase.

    *  *  *

    A second passport is the ultimate insurance policy against an out-of-control government. Think of it as your “freedom insurance.” The rules on second passports can change quickly. This is why it’s so important to have the most up-to-date, accurate, and actionable information out there. Be sure to get the guide we just released on the easiest countries to get a second passport from. Click here to download the PDF.

  • Did Donald Trump Just Jump The 'Dow 20,000' Shark?

    It appears the sugar-high from holiday celebrations is still running through president-elect Trump's veins as his tweets took an even more narcisistic tone on this oh-so-aptly-named 'Boxing Day' in America.

    First Trump decided to take credit for the unprecedented short-squeeze in US stock markets – and the Christmas spending numbers…

    We just wonder what he will sat if/when Goldman Sachs stops rising and stocks tumble ("never gonna happen", probably The Fed's fault after all), but perhaps even more importantly, how does he feel about the $1.2 trillion of value he has erased from global capital markets since his election?

     

    The drop in global debt and equity values in Q4 2016 is very reminiscent of the drop into 2015's Fed rate hike… which did not end well…

     

    But, the last time that global stocks and global bonds decoupled so aggressively was following the end of QE3… here's what happened next…

    But it's probably different this time, right? China is fine (oh wait, failed auctions and liquidity crisis), Europe is fine (oh wait, Italian banks are collapsing), and the US economy is great (oh wait, automakers are shuttering plants due to credit-created excess inventory).

    *  *  *

    But Trump was not done there, he took on the arrogance of Obama, as we detailed earlier

    Invincible politician and stock market savior…Let's just hope nothing goes wrong to break that narrative in the next 4 years (or 4 weeks).

  • Exit, Hope & Change – The Obama Post-Mortem

    Submitted by Howard Kunstler via Kunstler.com,

    By now, anyone in this country still of sound mind knows that Barack Obama presided through eight years of remarkable continuity – of changeless conditions that left a great many hopeless. As the days of his tenure dwindle, what do we make of the departing 44th president?

    He played the role with cool-headed decorum, but that raises the question: was he just playing a role? From the get-go, he made himself hostage to some of the most sinister puppeteers of the Deep State: Robert Rubin, Larry Summers, and Tim Geithner on the money side, and the Beltway Neocon war party infestation on the foreign affairs side. I’m convinced that the top dogs of both these gangs worked Obama over woodshed-style sometime after the 2008 election and told him to stick with the program, or else.

    What was the program?

    On the money side, it was to float the banks and the whole groaning daisy chain of their dependents in shadow finance, real estate, and insurance, at all costs. Hence, the extension of Bush Two’s bailout policy with the trillion-dollar “shovel-ready” stimulus, the rescue of the car-makers, and a much greater and surreptitious multi-trillion dollar hand-off from the Federal Reserve to backstop the European banks with counter-party obligations to US banks.

    In April of 2009, Obama’s new SEC appointees, strong-armed by bank lobbyists, pushed the Financial Accounting Standards Board (FASB) into suspending their crucial Rule 157, which had required publically-held companies to report their asset holdings based on standard market-based valuation procedures — called “mark-to-market.” After that, companies like Too-Big-Too-Fail banks could just make shit up. This opened the door to the pervasive accounting fraud that allowed the financial sector to pretend it was healthy for the eight years that followed. The net effect of their criminal fakery was to only make the financial sector artificially larger, more dangerously fragile, and more prone to cataclysmic collapse.

    Another feature of life on the money-side of the Obama presidency was that nobody paid a personal price for financial misconduct. This established the basic ethos of Obama-era finance: anything goes, and nothing matters. All the regulators looked the other way most of the time. And when forced to act by egregious behavior, they made deals that let banking executives off-the-hook while their companies shelled out fines that amounted to the mere cost of doing business. It happened again and again. The poster boy for this kind of “policy” — or just plain racketeering — was Jon Corzine, the head of the commodities brokerage MF Global, whose company looted “segregated” customer accounts to the tune of nearly a billion dollars in the fall of 2011. Corzine was never prosecuted and remains at large to this day.

    Another signal failure in the money realm was Obama’s response to the 2010 Citizen United Supreme Court decision, which declared that the alleged legal “personhood” of corporations entitled them to exercise “free speech” by giving as much money as they wanted to political candidates for election. Big business no longer had to just rent congressmen and senators, they could buy them outright with cash.

    A conservative Supreme Court made the call, but Obama could have acted forcefully in the face of it. The former constitutional law professor-turned-politician could have marshaled a response in his Democratic Party-controlled congress to draft legislation, or a constitutional amendment, that would properly redefine the personhood of corporations. It should be obvious, for instance, that corporations, unlike human citizens, do not have duties, obligations, and responsibilities to the public interest; by legal charter they have only to answer to their shareholders and boards of directors. How does this confer the kind of political free speech “rights” that the court allowed them to claim? And how did the Obama and his allies in the legislative branch roll over to allow this disgraceful affront to the constitution to stand? And how is that almost nobody in the mainstream press or academic law even pressed these issues? Thanks to all of them, we’ve set up the primary means for establishing a fascist Deep State: the official marriage of corporate money and politics. Anything goes and nothing matters.

    Finally, in foreign affairs, there is Obama’s mystifying campaign against the Russian Federation. The US had an agreement with Russia after the fall of the Soviet Union that we would not expand NATO if they gave us a quantity of nuclear material that was in danger of falling into questionable hands in the disorder that followed the collapse. Russia complied. What did we do? We expanded NATO to include most of the former eastern European countries (except the remnants of Yugoslavia), and then under Obama, NATO began holding war games on Russia’s border. For what reason? The fictitious notion that Russia wanted to “take back” these nations — as if they needed to adopt a host of dependents that had only recently bankrupted the Soviet state. Any reasonable analysis would call these war games naked aggression by the West.

    Then there was the 2014 US State Department-sponsored coup against Ukraine’s elected government and the ousting of President Viktor Yanukovych. Why? Because his government wanted to join the Russian-led Eurasian Customs Union instead of an association with European Union. We didn’t like that and we decided to oppose it by subverting the Ukrainian government. In the violence and disorder that ensued, Russia took back the Crimea — which had been gifted to the former Ukraine Soviet Socialist Republic (a province of Soviet Russia) one drunken night by the Ukraine-born Soviet leader Nikita Khrushchev. What did we expect after turning Ukraine into another failed state? The Crimean peninsula had been part of Russia for longer than the US had been a country. Its only warm water naval ports were located there. They held a referendum and the Crimean people voted overwhelmingly to return to Russia. So, President Obama decided to punish Russia with economic sanctions.

    Then there was Syria, a battleground between the different branches of Islam, their sponsors (Iran and Saudi Arabia), and their proxies, (Hezbollah and the various Salafist jihad armies). The US “solution” was to sponsor the downfall of the legitimate Syrian government under Bashar al-Assad. We apparently still favored foreign relations based on creating failed states — after our experience in Iraq, Somalia, Libya, and Ukraine. President Obama completely muffed his initial attempt at intervention — the “line-in-the-sand” moment — and then decided to send arms and money to the various Salafist jihadi groups fighting Assad, claiming that our bad guys were “moderates.” Meanwhile, Russia stepped in to prop up Assad’s government, apparently based on the idea that the Middle East didn’t need yet another failed state. We castigated Russia for that.

    The idiotic behavior of the US toward Russia in these matters led to the most dangerous state of relations between the two since the heart of the Cold War. It culminated in the ridiculous campaign this fall to blame Russia for the defeat of Hillary Clinton. And here we are.

    I didn’t vote for Hillary or Donald Trump (I wrote-in David Stockman). I’m not happy to see Donald Trump become president. But I’ve had enough of Mr. Obama. He put up a good front. He seemed congenial and intelligent. But in the end, he appears to be a kind of stooge for the darker forces in America’s overgrown bureaucratic Deep State racketeering operation. Washington truly is a swamp that needs to be drained. Barack Obama was not one of the alligators in it, but he was some kind of bird with elegant plumage that sang a song of greeting at every sunrise to the reptiles who stirred in the mud. And now he is flying away.

     

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Today’s News 26th December 2016

  • A Loser's Malice: What's Behind Obama's Attacks On Putin

    Submitted by Michael Jabara Carley via Strategic-Culture.org,

    Relations between Russian president Vladimir Putin and US president Barack Obama are poisoned and irretrievably damaged. It’s therefore a good thing that Obama is leaving office on 20 January. Bad US-Russian relations are of course nothing new. Since the Anglo-American war against Iraq in 2003, the US-Russian relationship has been headed downhill. For Obama, it appears that everything has gotten personal. The US president often acts like a petulant adolescent, jealous of a high school rival. You know, the kid who does everything better than he does. The lad takes it badly and won’t let it go. He challenges his nemesis to some new contest at every opportunity only to lose again and again. That’s got to be hard on the ego. Between Obama and Putin there have been many such encounters. Nor can it help that western cartoonists so often ridicule Obama as out of his depth in comparison to Putin.

    Let’s consider Obama’s remarks at his last press conference on Friday, 16 December. «The Russians can’t change us or significantly weaken us», said Obama: «They are a smaller country. They are a weaker country. Their economy doesn’t produce anything that anybody wants to buy, except oil and gas and arms. They don’t innovate». This was insulting both Putin and his country, but not enough apparently for Obama. «They [the Russians] can impact us if we lose track of who we are. They can impact us if we abandon our values. Mr. Putin can weaken us, just like he’s trying to weaken Europe, if we start buying into notions that it’s okay to intimidate the press, or lock up dissidents, or discriminate against people because of their faith or what they look like».

    Western cartoonists so often ridicule Obama as out of his depth in comparison to Putin

    What on earth is Mr. Obama talking about? Intimidate the press? The Moscow newspapers and television media are loaded with «liberals». Many Russians call them «fifth columnists». They are «people with ‘more advanced’ worldview[s] who do not tolerate ‘Russian propaganda’ themselves», according to one colleague in Moscow. But Mr. Putin tolerates them and pays them no mind.

    «Lock up dissidents… discriminate against people»? What alternate reality does Mr. Obama live in? Doesn’t produce anything people want to buy? The United States buys rocket engines that it does not now produce at home. Maybe the Americans, a Russian commentator joked, can use high tech trampolines to get into space and do without Russian technology.

    In an interview the previous day with the American National Public Radio Obama ranted about Putin. It must have been a rehearsal for his press conference. «This is somebody, the former head of the KGB», said Obama, «who is responsible for crushing democracy in Russia… countering American efforts to expand freedom at every turn; is currently making decisions that's leading to a slaughter in Syria». What stupefying hypocrisy; what utter nonsense. Putin was a lieutenant colonel in the KGB, but never its head, and he certainly has not «crushed democracy in Russia». He even treats his political opposition with respect compared to Obama who dismisses president-elect Donald Trump as some kind of Russian Manchurian candidate. The Russians, according to Obama, interfered in the US presidential elections, and helped defeat fellow Democrat Hillary Clinton. They hacked the Democratic National Committee’s hard drive and passed thousands of emails to WikiLeaks, although, according to others, an outraged Clinton insider leaked the cache of embarrassing emails. Obama has dismissed that possibility. The Russians did the hack, he insists , and Putin must be held personally responsible.

    In Syria, the United States and its NATO and regional vassals are waging a war of aggression against the legitimate government in Damascus, backing jihadist terrorists

    Where’s the evidence? In Moscow, an angry Putin challenged Obama to put up or shut up. This is a hard thing for Obama to do. The Russians, he says, «counter American efforts to expand freedom at every turn». One wonders where that would be. In the Ukraine where the United States and European Union backed and guided the coup d’état against the democratically elected Ukrainian government? Or in Syria where the United States and its NATO and regional vassals are waging a war of aggression against the legitimate government in Damascus, backing jihadist terrorists? How many democratic governments or popularly supported political movements has the United States plotted against or destroyed since 1945? The list is long, including the 1996 Russian presidential election.

    Remember 2013, when the US government started a propaganda campaign about Syrian chemical weapons and warned of «red lines» that could not be crossed?

    Obama directly raised the issue of Syria during his NPR interview. The liberation of E. Aleppo from Al-Qaeda and other jihadists has infuriated the west. To the everlasting shame of France, the Eiffel Tower was darkened to mourn the defeat of Al-Qaeda. The Mainstream Media (MSM) is up in arms. Russia, Iran, Hezbollah, Palestinian and Iraqi militias have helped the Syrian Arab Army to cleanse Aleppo of jihadist terrorists, and thwart the United States and its vassals. This is what galls Obama, being outmanoeuvred by a lesser man than he and a lesser country than the United States. How deplorable to speak of the liberation of E. Aleppo as «a slaughter in Syria».

    Obama’s frustrations began several years ago. Remember back in 2013, when the US government started a propaganda campaign about Syrian chemical weapons and warned of «red lines» that could not be crossed? Apparently, the US government came within an ace or two of launching massive air attacks on Syria. Putin intervened and the Syrian government gave up its chemical weapons, removing the US pretext for intervention. The print media had a field day showing Putin helping Obama out of a corner of his own making. All the while, Putin kept urging Russian-US cooperation against the jihadists in Syria, trying to draw the United States away from its ruinous policies. To no avail. Who then acted with greater statesmanship, Putin or Obama?

    In 2013, when the US government started a propaganda campaign about Syrian chemical weapons, Putin intervened and the Syrian government gave up its chemical weapons, removing the US pretext for intervention. The print media had a field day showing Putin helping Obama out of a corner of his own making.

    Temporarily thwarted in Syria, the United States opened up a new front on Russia’s southern frontier in the Ukraine. It backed the coup d’état in Kiev and turned a blind eye to the fascist vanguard, which kept the new Ukrainian junta in power. «The fascists are just ‘a few bad apples’», officials said in Washington, thinking that NATO had scored a great victory in getting its hands on Sevastopol so it could kick the Russian Black Sea fleet out of its traditional home base.

    You have to give credit to Obama; he was ambitious, aiming for a big prize and the humiliation of Russia and its president. Again, he was thwarted not so much by President Putin but by the Russian people of the Crimea who immediately mobilised their local self-defence units backed by «polite people», Russian marines stationed in Sevastopol, to kick out the Ukrainians with scarcely a shot fired. They organised a referendum to approve entry into the Russian Federation. Reunification was quickly approved by a huge majority and celebrated in Moscow. Putin gave a remarkably candid speech, explaining the Russian position. «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory. I simply cannot imagine that we would travel to Sevastopol to visit NATO sailors. Of course, most of them are wonderful guys, but it would be better to have them come and visit us, be our guests, rather than the other way round».

    «NATO remains a military alliance,’ he said, «and we are against having a military alliance making itself at home right in our backyard or in our historic territory», Putin said

    It all happened so quickly, Obama must have looked on, dumbfounded, sputtering with angry frustration at having been outmanoeuvred by Crimean Russians who knew a thing or two after all about «innovating» and defending their land. Russians in the eastern Ukraine also resisted, taking up arms to defend themselves against Kiev’s fascist battalions.

    That was too much. Putin became Obama’s nemesis. The US president struck back with economic sanctions, which his European vassals quickly endorsed. When Malaysian Airlines, MH17, was shot down over the eastern Ukraine, Obama and the EU at once accused Putin of being responsible without a shred of evidence. In fact, the available evidence points to the Kiev junta as the guilty party, but the MSM paid no attention. It ran an orchestrated propaganda campaign leading to harder sanctions against Russia intended to sabotage the Russian economy and break the Russian government.

    Obama and his advisors again miscalculated. The Russian government instituted its own sanctions against the EU, and looked for other sources of supply or replaced foreign imports with Russian products. «We can do without Polish apples and French cheese», most Russians thought. «Liberals» sulked over the loss of their camembert, but that’s a small price to pay for Russian independence. Obama was outsmarted again by Russians who, he insists, can’t innovate. As for the EU, it suffered huge economic losses because of sanctions at American behest in a classic case of shooting oneself in the foot. It’s getting to be a habit; the EU has again renewed its sanctions against Russia.

    The EU has suffered huge economic losses because of its anti-Russia sanctions at American behest in a classic case of shooting oneself in the foot.

    Whilst the Ukrainian crisis dragged on, Obama had to turn his attention back to Syria. In the autumn of 2015, Putin ordered Russian aerospace and naval forces to intervene on behalf of the hard-pressed Syrian government which asked for assistance against the western-backed jihadist invasion. The tide of battle slowly turned. Again, Obama was caught off guard; again, the US plan to overthrow the Syrian government was thwarted by Obama’s nemesis. The United States tried bogus truces to allow its jihadist mercenaries to refit and resupply. At first, the Russians did not seem to catch on, accepting American proposals as genuine. They had to learn the hard way, but they did eventually. The liberation of E. Aleppo, although overshadowed by the simultaneous loss of Palmyra, is another blow to Obama’s policies and to his fragile ego.

    How could this «weaker… smaller country» outsmart the all-powerful Mr. Obama and the great US Hegemon?

    No wonder the US president is lashing out at Putin, publically insulting him and his country. No wonder the MSM is up in arms. How could this «weaker… smaller country» outsmart the all-powerful Mr. Obama and the great US Hegemon?

    Like the USSR before it, Russia has always had to pursue a politique du faible, a poor man’s policies, never having the abundant resources of it western adversaries. Russians learned early on to innovate. The fox has to make its way in a world full of dangerous wolves.

    What Obama must hate most of all is Putin’s exposure of US support for Al-Qaeda and the Islamic State. Who indeed is responsible for the «slaughter» in Syria? Obama calls it fighting for democracy. «Airstrike democracy», Putin once derisively replied. «Do you realise what you have done?» Putin asked at the UN in 2015, shocking the MSM. Obviously not, if one is to judge by Obama’s remarks of the last few days. He’s still the obsessive adolescent with doubts about himself and in over his head against a real statesman. Thank heavens Obama is on his way out the door of the White House. It’s not a minute too soon. Olliver Cromwell’s famous remark in 1653 to the Rump Parliament seems apposite. «You have sat too long for any good you have been doing lately… Depart, I say; and let us have done with you. In the name of God, go!»

  • Goldman Sachs' 2016 Review (Crossword-Style)

    2016 was chock-full of surprises, both in markets and in politics.

    As Goldman's Allison Nathan explains, the year began with a perfect storm of worries that had become all too familiar already in 2015. Oil prices plunged and fears of faltering growth and a sharp depreciation of China’s currency escalated, driving disruptive sell-offs in credit and other risk assets. Confidence in global growth faltered, particularly after an anemic US GDP report for Q1.

    But oh, how the world has changed. Today, the price of crude oil is almost exactly double its January low in the wake of announced production cuts by OPEC and key non-OPEC producers (Russia). We expect WTI oil prices to move higher to a peak of $57.50/bbl in 1H17 as the cuts push the oil market into deficit and whittle down the current large inventory surplus. But we also expect shale producers to respond to the higher prices, implying limited upside from there.

    The rebound in oil prices led to a remarkable turnaround in credit markets, with HY Metals & Mining and E&Ps returning 49% and 36%, respectively, YTD; default rates normalizing; and spreads no longer pricing recession risk. We expect a further moderate compression of spreads in 2017 given expectations of a generally positive macro environment, gradual improvement in credit fundamentals, and, of course, our somewhat rosier oil outlook.

    And fears about China have generally receded into the background as Chinese policymakers continued an ambitious stimulus program that helped stabilize growth. A more dovish tilt by the Fed in response to the tightening of financial conditions caused by the Q1 sell-off also assuaged market fears. But we warn that China risk is not far from the surface.

    Capital outflow pressures have resumed amid the renewed strengthening in the US dollar. And policies that re-ignited growth in the short-term have just increased concerns about the future, particularly as credit growth has climbed. These potentially destabilizing trends merit watching next year, despite our mainline view of orderly currency moves and a continued bumpy deceleration in Chinese growth. (Side note: Meeting growth targets will be paramount next year amid China’s leadership transition.)

    It was not long after the market left China, oil, and credit concerns in the dust that political uncertainty took center stage—a place where it has solidly remained since. Brazil had its president impeached amid one of the country’s longest recessions/depressions on record; French primaries established an unexpected presidential candidate in former Prime Minister François Fillon; and Italy will enter the new year with an interim government following the resignation of Matteo Renzi.

    And we’ve not forgotten about one of the biggest political shocks of the year (decade, century?!): the UK’s vote in favor of Brexit. The now infamous Article 50, which needs to be activated to formally start the UK’s withdrawal process, still has not been triggered, and likely won’t be before March.

    Meanwhile, UK and EU priorities for their future relationship remain at odds, leaving market participants closely watching “soft Brexit”/”hard Brexit” swings in the headlines. That said, UK growth has proved remarkably resilient, and assets have held up with the exception of sterling, which is 10% weaker than before the referendum. Next year, we expect a formal start to Brexit talks, a moderation in UK growth, and further declines in sterling as uncertainty over Brexit sinks in.

    While it was hard to trump (sorry, we couldn’t resist!) the shock of Brexit, we dare say that Donald Trump defying almost all polls and betting markets to win the US Presidential election did just that. Trump’s cabinet and policy leanings are still being sorted out, but there appears to be potential for significant change ahead, be it in taxes, or environmental policy. There is no question that the policies of the new administration and their market implications will be Top of Mind throughout 2017.

    The unexpected election outcome also super-charged the narrative around two themes already in train: the global trade slowdown and reflation. Trump’s protectionist rhetoric—and the considerable executive power he will have on trade policy—do not bode well for global trade growth, which had already slowed considerably in recent years, or for some multilateral trade deals on the table (think the Trans-Pacific Partnership or TPP). Although we are keeping an eye on potential protectionist measures (a particular risk for EM Asia and Mexico, but also a likely drag on US growth), we otherwise see signs of a moderate improvement in trade ahead. Key to watch: how countries respond to the apparent shelving of the TPP (e.g., bilateral vs. multi-lateral trade talks).

    On reflation, we expect fiscal expansion and some further tightening in the labor market to sustain inflationary momentum in the US alongside moderately stronger growth, with US 10-year yields expected to end 2017 at 2.75%. This should be good news for equity markets at first: We expect the S&P 500 to rise to 2400 through 1Q2017, but then see the index settling to 2300 by year-end as rates rise further and investors recalibrate their policy outlooks. We still caution that equities are vulnerable should rates move too much, too fast, given stretched valuations following years of exceptionally low rates.

    Lastly, despite recent market optimism about fiscal expansion providing more stimulus, central bank policy will never be too far from investors’ minds next year. (And let’s not forget that ECB and BOJ asset purchases in fact enable more fiscal spend, so the lines between monetary and fiscal policy continue to blur.) We expect an acceleration of divergence as the Fed follows last week’s hike with three more in 2017 while the ECB and BOJ continue their asset purchases under new and apparently more sustainable parameters.

    Between this divergence, Trump, China, and a number of important European elections, 2017 is sure to be yet another interesting year for markets.

    We wish you a happy, healthy, and prosperous New Year.

    *  *  *

    While you're relaxing on the sofa, full of food, and wine,  here's Goldman's year-end crossword…

     

    Solution here.

  • How Americans Spent Their Money In The Last 75 Years (In 1 Simple Chart)

    Consumer spending makes up a large percentage of the United States economy. We all have bills to pay and mouths to feed, but where do Americans spend their money? Here is a breakdown of how Americans spent their money in the last 75 years…

    In the chart above, spending is broken into 12 categories: Reading, alcohol, tobacco, education, personal care, miscellaneous, recreation & entertainment, healthcare, clothing, food, transportation and housing. Each category is further broken down into spending by year, from 1941 to 2014, and each category is given a unique color. The data were collected from the Bureau of Labor Statistics. The data is adjusted for inflation and measures median spending of all Americans.

    Unsurprisingly, housing expenses have almost always been the largest area of spending in America for over 70 years. The only exception is 1941, when spending on food averaged $8,311, whereas spending on housing came to $7,537. However, in 1941 the government included alcohol in the food spending category, which inflates the food spending data for that year. In the other years, alcohol was given its own category. In every other year measured, spending on housing outpaced every other category.

    Another interesting trend is the downward slope of spending on clothing. Americans spent the most on clothing in 1961 for an average of $4,157. In every year measured since 1961, spending on clothing fell, even when accounting for inflation.

    At the same time, Americans began spending more on education, transportation and healthcare. Spending on education has increased far more than any other category, jumping from $242 in 1941 to $1,236 in 2014. Education spending increased at a particularly fast rate between 1984 and 1994 and onward. While spending on healthcare increased between 1941 and 2014, overall spending dipped between 1973 and 1984, but then began rising rapidly thereafter.

    Between 1941 and 2014 Americans spent money on most of the same things, with a few changes. Housing has persisted as a large area of spending for Americans, as has the food category. However, spending on food and clothing has fallen when adjusting for inflation while spending on education and healthcare has risen quickly.

    Source: HowMuch.net

  • The 'Triggered' 12 Days Of Trumpian Christmas

    It’s been quite a year…

    Source: Ben Garrison

  • At What Age Do You Outgrow IKEA?

    By Priceonomics

    If you’re a twenty something, it may already have happened: that awkward moment when you realize all your friends have the same Pinsoshen coffee table from IKEA. 

    The Swedish brand’s reputation for stocking stylish furniture and selling it for low prices has made it a one-stop shop for cash-strapped students furnishing their first apartments. 

    But when do they leave IKEA behind in favor of something more grown-up? We wanted to find out, so we analyzed data from Earnest , a Priceonomics customer. We analyzed a dataset of more than 10,000 anonymous user responses on spending habits. When does it begin? When does it end? And where do people turn when they’re ready for something new? 

    We first wanted to know how reliance on IKEA changes over a person’s lifetime, so we calculated the percent of our clients who shopped at IKEA. For the sake of comparison, we did the same for Lowe’s, a home improvement chain with similar overall popularity within our dataset.

    As it turns out, age 34 is when you start to outgrow IKEA:


    Data source: Earnest

    It’s written in the data: you’re more likely to buy from IKEA when you’re 24 than at any other time in your life. IKEA remains popular throughout the late 20s and early 30s, but drops after age 34. We may as well call the 10-year period spanning the mid-20s and mid-30s the “IKEA decade.”

    Lowe’s, meanwhile, shows the opposite trend: people are more likely to shop there as they get older. This makes sense, as increasing homeownership means more home improvement projects.

    We wanted to further explore where shoppers turn once they grow out of their IKEA interiors. For each of 14 top furniture retailers, we found the age when the most respondents reported shopping at that store. We tabulated those “peak customer ages” below.


    Data source:  Earnest

    Not only is IKEA popular among young adults, it is the only retailer with a peak customer age below 30. 

    People in their 30s are more likely to shop stores that specialize in housewares and home accessories like Bed Bath & Beyond and Williams-Sonoma – perhaps because their IKEA furniture is still serving them well. 

    The oldest customers in our dataset prefer to do it themselves, favoring Home Depot and Lowe’s. When buying ready-to-use furniture, they visit big-box retailers like Ashley Furniture.

    Beyond age, we were curious about which personal attributes predict furniture retailer preference. We calculated the percent of men and women in our sample claiming to shop each brand.


    Data source:  Earnest

    By and large, men and women visit the same stores when they go furniture shopping. And they visit IKEA in particularly even numbers. But do-it-yourself stores like Home Depot and Lowe’s are visited by men more often than women, and women visit most of the other stores we considered in greater numbers than men.

    Does geographic location influence retailer preference? We next looked at the percent of respondents from each state who identified themselves as IKEA shoppers. Results are listed below for all states for which we had at least 10 respondents.


    Data source:  Earnest

    The Swedish brand began its North American expansion in the mid-Atlantic states, and this region still has the most IKEA brick-and-mortars. But it doesn’t lay claim to the most shoppers; that distinction goes to the Midwest and West Coast, which are home to the top 8 states.

    This ranking is curiously uncorrelated to a listing of IKEA’s store locations. The top 4 states have just one store apiece. The popularity of IKEA in the west may have less to do with store ubiquity and more to do with lifestyle attributes that make the brand a natural fit.

  • Singer George Michael Dead At 53

    In a year that has claimed the lives of some of the most prolific and visible musical talents of more than one generation, including Prince and David Bowie, it is morbidly fitting that the man who gave us “Last Christmas”, George Michael, passed away on Christmas Day, “peacefully at home” according to his publicist.

    As the BBC first reported, the star, who launched his career with Wham in the 1980s and later continued his success as a solo performer, is said to have “passed away peacefully at home”.

    Thames Valley Police said South Central Ambulance Service attended a property in Goring in Oxfordshire at 13:42 GMT. Police say there were no suspicious circumstances.

    The cause of death has not been revealed.

    Michael, who was born Georgios Kyriacos Panayiotou in north London, sold more than 100m albums throughout a career spanning almost four decades.

    In a statement, the star’s publicist said: “It is with great sadness that we can confirm our beloved son, brother and friend George passed away peacefully at home over the Christmas period.

    “The family would ask that their privacy be respected at this difficult and emotional time. There will be no further comment at this stage.”

    Michael nearly died from pneumonia in late 2011. He received treatment in a Vienna hospital after which he made a tearful appearance outside his London home.

    He said it had been “touch and go” whether he lived. Surgeons had performed a tracheotomy to keep his airways open and he was unconscious for some of his time in hospital.

    Michael’s 1990 album Listen Without Prejudice Vol. 1 had been set to be reissued.

    It was due to be accompanied by a new film featuring Stevie Wonder, Elton John and the supermodels who starred in the video to his hit single Freedom! ’90.

    * * *

    Together with so many other greats who passed away in 2016, we thank George for the memories.

  • Bank Of Canada Lays Out In YouTube Clip How The Economy Could Tank

    As MacLean’s Jason Kirby points out, the Bank has taken to YouTube to warn Canadians about the dangers of too much debt and unrealistic house price expectations. He wonders, however, whether anyone will listen as one after another real estate bubble form in Canada, a nation whose household debt ratio has never been higher.

    As BMO pointed out, when the latest household debt ratio data was released, the upward trend in household debt goes back for the 26 years for which it has records and is showing no signs of slowing down.

    “While it looks as though the Vancouver housing market is cooling after the foreign buyers’ tax was implemented, the Toronto market remains very strong, and others are showing signs of improving as well,” said BMO senior economist Benjamin Reitzes.

    Meanwhile, none other than Canada’s central bank has ramped up its warnings about heavily indebted households and the unreasonable expectations driving the housing market, yet all indications are that Canadians have stuffed cotton in their ears.

    In Toronto, for instance, house prices are up nearly 15 per cent since the summer when Bank of Canada governor Stephen Poloz warned that price gains in the city were “difficult to match up with any definition of fundamentals that you could point to.” In the more than 15 years that the Teranet-National Bank House Price Index has tracked property prices in the city, there’s never been a six-month period when prices rose that fast. Meanwhile, the latest figures released by Statistics Canada showed the household debt-to-income ratio broke yet another record in the third quarter.

    Now Canada’s central bank is trying a different platform to get its message across: YouTube.

    In a video posted Monday on YouTube, in conjunction with the release of the Bank’s semi-annual financial system review last Thursday, Bank of Canada senior policy adviser Joshua Slive sketches out how Canada’s dangerous brew of debt and inflated house prices could combine to devastate the economy.

    Here’s the scenario that worries the Bank.

    1. As the Bank has pointed out already, households are highly indebted and house prices are rising at an unsustainable rate, though as Slive observes, people can often cope with these vulnerabilities for an extended period.

    2. That is, until an economic shock triggers a negative chain of events. For instance, a severe recession would lead to “a sharp increase” in unemployment.

    3. A lot of households, especially those carrying the heaviest debt loads, would have trouble meeting their debt payments. As a result, some households would start to default on their loans, and in turn, banks and trust companies would foreclose and try to sell those houses.

    4. At the same time, with the economy slowing, new buyers would delay house purchases until the economy improved. Given the challenges already facing the economy, this could “cause a large drop in house prices.”

    5. If house prices fell, it would push down household wealth, which has received a huge boost from the housing boom, and that could curtail consumer spending, which itself has become a primary driver of growth. The added stress on the financial sector would also weigh on the economy as lenders cut back on making new loans. Slive doesn’t use the term, but what he’s talking about is a credit crunch.

    There is good news, Slive says. Stress tests show Canada’s big banks will be just fine even with a large drop in house prices (stress tests also showed that both Belgian Dexia and Spanish Bankia were perfectly solvent just months prior to their respectively failrues). It’s also important to note that the Bank, in its financial system review, said there is a “low probability” of a sharp correction in house prices. But there’s no getting around the immense damage such a scenario would have on the economy.

    The video is a break from regular fare on the Bank of Canada’s YouTube channel, which is largely made up of speeches by top Bank officials. And even if Slive’s delivery is trademark central-banker dry, the message is stark, and shows the Bank is desperate for Canadians to heed its warnings on debt and rising house prices.

    If there’s one quibble to be made, it’s with the initial domino that the Bank sees setting everything in motion—a severe recession leading to job losses. Since the U.S. housing bubble popped and that country went into its long, dark funk, a chicken-versus-egg debate has raged over whether the housing collapse triggered the U.S. recession, or whether something else, like soaring oil prices, brought on the recession and turned the housing slowdown into a total collapse. What’s beyond debate is that America’s housing market reached its frothiest in mid-2006, and then began its decline, one-and-a-half years before the recession began.

    Whatever the case, the Bank’s video should be another wake-up call for Canadians, but “not that anyone’s listening” as Jason Kirby laments.

    Here’s the video in full.

  • Islamists Attack Christmas, But Europeans Abolish It

    Submitted by Giulio Meotti via The Gatestone Institute,

    • A statue of the Virgin Mary was ordered taken away by a court in the French municipality of Publier. Senator Nathalie Goulet slammed the judges as "ayatollahs of secularism".
    • A German school in Turkey just banned Christmas celebrations: the school, Istanbul Lisesi, funded by the German government, decided that Christmas traditions and carol-singing would no longer be allowed. A Woolworth's store in Germany scrapped Christmas decorations telling customers that the shop "is now Muslim".
    • Europe is already mutilating her own traditions "to avoid offending Muslims". We have become our own biggest enemy.
    • Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the Catholic Church's claim of ownership of the cathedral. Now Islamists want it back.
    • The final result of Europe's self-destructive secularism could seriously be a Caliphate.

    "Everything is Christian", Jean-Paul Sartre wrote after the war. Two thousand years of Christianity have left a deep mark on the French language, landscape and culture. But not according to France's Minister of Education, Najat Vallaud-Belkacem. She just announced that instead of saying "Merry Christmas", state officials should use "Happy Holidays" — clearly a deliberate intent to erase from discourse and the public space any reference to the Christian culture in which France is rooted.

    Jean-François Chemain called it the "eradication of any Christian sign in the public landscape". A year ago, the controversy was ignited in the French town of Ploermel, where a court decided that the statue of Pope John Paul II, erected in a square, had to be removed for violating "secularism".

    Then, a statue of the Virgin Mary was ordered taken away by a court in the municipality of Publier. Senator Nathalie Goulet slammed the judges as "ayatollahs of secularism".

    The newspapers of the French "left", outraged by the "right's" ban on burkinis on the French Riviera, have been endorsing this anti-Christian policy.

    France's Council of State has just ruled that "the temporary installation of cribs [nativity scenes] in a public place is legal if it has a cultural, artistic or festive value, but not if it expresses the recognition of a cult or a religious preference". What precautions to justify a millenary tradition!

    In the town of Scaer, a nursing home has been the subject of a similar secularist complaint, for the presence of a fresco of the Virgin Mary. Then, it was the turn of the manger in the train station of Villefranche-de-Rouergue, in Aveyron. In the town of Boissettes, the church bells have been muted by court decision.

    Fortunately, some ideas from the Observatory of Secularism — the organ established by President François Hollande to coordinate his neo-secularist policies — have not been implemented. One proposed even to eliminate some Christian national holidays to make room for the Islamic, Jewish and secular holidays.

    President Hollande, on the occasion of Easter, "forgot" to express holiday wishes to the Christians of France. But a few months before, Hollande had extended his best wishes to the Muslims during the feast of Eid, which closes Ramadan. "Hollande's greeting to Muslims is opportunistic and political. For the Socialist Party, it is a crucial electoral clientele", said the French philosopher Gerard Leclerc in the newspaper, Le Figaro.

    This Christianophobia is the Trojan Horse of Islam. As Charles Consigny writes in the weekly Le Point, "Through this tabula rasa of the past, France will make a clean sweep of its future". Unfortunately, France is not an isolated case. Everywhere in Europe, a weary, secularist absence of purpose and confused values damns Christianity in favor of Islam.

    A jihadist terrorist, targeting a symbol of Christian tradition, last week slaughtered 12 people at a Christmas market in Berlin. But Europe is already mutilating her own traditions "to avoid offending Muslims". We have become our own biggest enemy.

    The annual candlelit Saint Lucia ("Sankta Lucia") procession, a Swedish Christian tradition celebrated for hundreds of years, is "dying" out. Uddevalla, Södertälje, Koping, Umeå, and Ystad are among the growing numbers of cities no longer holding this lovely cultural event. According to Jonas Engman, an ethnologist at the Nordic Museum, the declining interest in the St. Lucia procession accompanies a more general alienation from the culture of Christian Sweden. A study conducted by Gallup International reveals that in observing the Christian religion, Sweden is "the least religious in the West". In the meantime, with a young, strong, driven sense of purpose and a set of sharia values, Islam is growing.

    A German school in Turkey just banned Christmas celebrations. The school, Istanbul Lisesi, funded by the German government, decided that Christmas traditions and carol-singing would no longer be permitted. The Washington Post summarized the decision: "No teaching of Christmas customs, no celebrations and no Christmas caroling". It is not an isolated incident. A Woolworth's store in Germany also scrapped Christmas decorations, telling customers that the shop "is now Muslim".

    In Britain, David Isaac, the new head of the Equalities and Human Rights Commission (EHRC), told employers that they should not suppress Christian tradition out of fear of offending anyone. Previously, Dame Louise Casey, the British government's integration "tsar", warned that "traditions such as Christmas celebrations will die out unless people stand up for British values".

    In many Spanish towns, such as Cenicientos, the municipality of this Autonomous Community of Madrid removed the Christian Stations of the Cross. Then, Madrid's mayor, Manuela Carmena, decided to remove the city's traditional Nativity display at the Puerta de Alcalá.

    Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the claim of ownership of the cathedral by the Catholic Church. Built on the site of Saint Vincent's church, it then served as a mosque for over 400 years when Islamic Spain was part of a caliphate, before the Christian kingdom of Castile conquered the city and converted it again into a church. Now Islamists want it back.

    Muslims are also reclaiming "the mosque of Cordoba". Authorities in the southern Spanish city recently dealt a blow to the claim of ownership of the cathedral by the Catholic Church. Built on the site of Saint Vincent's church, it then served as a mosque for over 400 years when Islamic Spain was part of a caliphate, before the Christian kingdom of Castile conquered the city and converted it again into a church. (Image source: James (Jim) Gordon/Wikimedia Commons)

    Belgium, the most Islamized democracy in Europe, is also purging its Christian heritage. The Nativity, the traditional manger scene, has not been put up in the Belgian town of Holsbeek, just outside Brussels. Claims were scenes it was scrapped to "avoid offending Muslims".

    As reported by the newspaper La Libre, school calendars within Belgium's French speaking community are also using a new secularized terminology: All Saints Day (Congés de Toussaint) is now be referred to as Autumn Leave (Congé d'automne); Christmas Vacation (Vacances de Noël) is now Winter Vacation (Vacances d'hiver); Lenten Vacation (Congés de Carnaval) is now Rest and Relaxation Leave (Congé de détente); and Easter (Vacances de Pâques) is now Spring Vacation (Vacances de Printemps). Then Belgium installed an abstract, de-Christianized Christmas tree in the capital, Brussels.

    In the Netherlands, the Christian tradition of Black Pete is under attack and it will soon be abolished. In Italy, Catholic priests this year canceled Christmas to "avoid offending Muslims".

    The final result of Europe's self-destructive secularism could seriously be a Caliphate, in which the fate of its ancient and beautiful churches recapitulates those in Constantinople, where the Hagia Sophia, for thousand years Christianity's greatest cathedral, was recently turned into a mosque. The muezzin's call now reverberates inside this Christian landmark for the first time in 85 years.

    Islamic terrorists targeted Christmas in Berlin, but it is the Christian secularists who are abolishing it all over Europe.

  • The Scariest Forecast For Treasury Bulls

    With Trump’s border tax adjustment looking increasingly likely, the stock market – as JPM has warned in recent days – is starting to fade the relentless Trumponomic, hope-driven rally since election day instead focusing on the details inside the president-elect’s proposed plans. And, as explained earlier in the week, if the border tax proposal is implemented, economists at Deutsche Bank estimate the tax could send inflation far above the Federal Reserve’s 2% target and drive a 15% surge in the dollar.

    While this would be bad for stocks, as a 5% increase in the dollar translates into about a 3% negative earnings revision for the S&P 500 all else equal, a surge in inflation would also wreak havoc on bond prices, and send interest rates surging, at least initially, before they subsquently plunge as a result of a rapidly tightening, deep “behind the curve” Fed unleashes a curve inversion and recessionary stagflation becomes the bogeyman du jour.

    There’s more.

    In a separate report by Deutsche, the bank looks at future prospects for rates and concludes that “tightening monetary policy, higher breakevens, and declining central bank purchases relative to net supply should all contribute to significant bearish steepening during 2017.”

    In its analysis of future bond rates, Deutsche Bank says that the biggest risk is that when looking at the menu of “threats” presented by the Trump stimulus, “there is a significant risk that if the Fed decides to aggressively lean against higher inflation expectations, the entire “regime shift” might stall. That is, higher wages and inflation expectations are a prerequisite to the substitution of capital for labor, which is in itself necessary for more rapid productivity growth and hence higher potential growth and sustainably higher levels of r*.”

    And then the focus shifts so that whatever degree of accommodation is warranted, there will be the push to rebalance away from rising short rates to shrinking the Fed’s balance sheet, in other words, the Fed begins real normalization.

    In DB’s model, the net effect of ending reinvestment of SOMA portfolio run-off, some asset sales, and an ECB taper is almost 200 bps. This would allows 10s to move well over 4 percent in 2018. That although roll offs are significant – maybe $50 billion/month – in order to get the balance sheet down from more than $4 trillion to say $1 trillion before the 4-year presidential term is over would still require asset sales of  approximately $50 billion.

    Assuming Deutsche Bank is correct, the result would be the scariest forecast bond bulls have seen in years: a 10-Year TSY whose yield fades all gains attained during the past decade, in the span of just two short years, hitting 4.5% in early 2019. The adverse implications from such a fast, steep move on all asset classes, not just bonds, would be devastating.

    Will this forecast come true? Readers can make their own determinations upon reading DB’s assumptions:

    Formally, DB’s model of 10s has three explanatory variables. The main driver is the ratio global QE purchases to net supply in nominal terms with a nine-month lead, i.e., the market is forward looking. Global QE and supply figures are from the US, Europe and Japan. The other two variables in the model are Fed funds and the 2s/funds spread. The model is estimated between October 2006 and September 2016.

    These assumptions are summarized in the following three scenarios:

    1. Base case: Trump’s fiscal stimulus, amounting to about $530 billion per year for ten years.
    2. Base case + ECB taper + Fed portfolio rolloff. In this case, 10s are about +70bp higher in yields than in the base case.
    3. Base case + ECB taper + Fed portfolio rolloff + Fed asset sales. 10s are about +100bp higher in yields than in base case.

    The assumptions in the scenarios are:

    • President-elect Trump’s stimulus package, scored by the Committee for a Responsible Federal Budget adds $5.3 trillion to the deficit over the next decade. This averages to $530 billion per year, starting in July 2017, around the time the plan is expected to be passed by Congress.
    • The ECB tapers QE purchases by ½ in 2018, and stops all purchases in 2019.
    • Fed balance sheet reductions: The Fed stops reinvestments of maturing Treasuries and MBS pre-payments starting Q4 2017. Asset sales at $250 billion in 2018 and $500 billion in 2019.
    • The Fed funds target range rises to 2.50%-2.75% by year end 2019, with the 2s/funds spread at 60bp.

    Visually:

    Needless to say, DB is convinced that there is a lot of pain coming for the bond market. To wit:

    “Our strongest market view, therefore, is that investors should be short duration. Rates are going higher. The curve should end up steeper but this Fed’s initial reaction as per this week can confuse curve dynamics. Real rates should not rise more than breakevens. In the short run dollar strength should persist.”

    We are far less confident, especially if indeed the border tax is implemented, sending the dollar soaring, US exports, and GDP crashing, and corporate profits plunge. In short: if Trump unleashes a recession by implementing a policy which is meant to eliminate the US trade deficit.

    In such a case, forget steepeners: buy every flattener you can get your hands on, and then use leverage, because before you know it the 2s30s will be back in the double digits, then single, and then, not too long from now, negative.

    Whether that is the catalyst that will kick off QE4 or whatever the current number is, we don’t know, but by that point China will be spitting up blood as a result of a historic collapse in the Yuan, hundreds of billions in monthly outflows and a paralyzed, and crushed financial system. Ironically, in light of the devastation that may soon befall China should Trump’s policies pan out, the US – recession or not – may still be the “cleanest dirty shirt” in a world where things are about to get very messy.

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Today’s News 25th December 2016

  • Shifting Power: Visualizing The World's Largest Cities For The Last 6000 Years

    In 300 B.C., Carthage was one of the world’s largest cities with up to 700,000 people living within its walls. The Carthaginian republic was a force to be reckoned with, controlling inconceivable amounts of wealth and land all around the Mediterranean.

    However, just over a century later in 146 B.C., Carthage was burnt to the ground by the Romans. The destruction of Carthage was so thorough that many things are still not known about their civilization today. Carthage went from being a major power to literally being wiped off of the map.

    A few decades after the annihilation of Carthage, it was Rome’s turn to become the world’s largest city for close to 500 years. Of course, Rome itself would fall by 476 A.D. for a variety of reasons.

    And so the title of the world’s largest city would transfer again, this time to Constantinople across the Mediterranean.

    The World’s Largest Cities Throughout History

    In the grand scheme of history, things change quite fast. As Visual Capitalist's Jeff Desjardins explains, one cataclysmic choice or event can turn even the greatest empire into a heap of rubble. Sometimes the decline of a world-class city is more gradual – and it is over time that it loses its title to another place in a far and distant land.

    The following animated map from KPMG Demographics tracks the world’s largest cities from 4,000 BC to today, and it shows how temporary a city’s rise to prominence can be.

    World's Largest Cities Throughout History
    (Keep in mind that there is some disagreement by historians over which cities were the biggest in certain time periods.)

    The power of industrialization and technology can be seen here. Up until the 1800s, it was almost unfathomable to have a city of more than a million inhabitants.

    Sanitation was a major limiting factor, but other issues like transportation and a lack of density also made it a challenge. The Industrial Revolution changed that, and starting in the 1800s you see cities like London, New York, and Tokyo taking the title in an exponential fashion. It caps off with Delhi in 2050, expected to have a whopping 40 million inhabitants by that time.

    Source: Visual Capitalist

  • Trump 'Triggers' Social Media Over Democrat-Bashing Putin Tweet

    President-elect Donald Trump 'triggered' the social media world into a frenzy Friday night with a tweet that praised Russian president Vladimir Putin's criticism of Democrats. As The Hill reports, Putin on Friday deflected accusations of Russian interference in the U.S. election, saying at a press conference: "Democrats are losing on every front and looking for people to blame everywhere. They need to learn to lose with dignity."

    Later Friday, Trump piled on, lauding Putin and continuing his denial that Russia interfered in the election.

      Trump's words drew widespread condemnation on Twitter,   from journalists, liberals, conservatives and those in the entertainment industry…

     

    Truth hurts eh?

  • The Radical Jesus: How Would The Baby In A Manger Fare In The American Police State?

    Submitted by John Whitehead via The Rutherford Institute,

    “Jesus is too much for us. The church’s later treatment of the gospels is one long effort to rescue Jesus from ‘extremism.’”—author Gary Wills, What Jesus Meant

    Jesus was good. He was caring. He had powerful, profound things to say – things that would change how we view people, alter government policies and change the world. He went around helping the poor. And when confronted by those in authority, he did not shy away from speaking truth to power.

    Jesus was born into a police state not unlike the growing menace of the American police state.

    But what if Jesus, the revered preacher, teacher, radical and prophet, had been born 2,000 years later? How would Jesus’ life have been different had he be born and raised in the American police state?

    Consider the following if you will.

    The Christmas narrative of a baby born in a manger is a familiar one.

    The Roman Empire, a police state in its own right, had ordered that a census be conducted. Joseph and his pregnant wife Mary traveled to the little town of Bethlehem so that they could be counted. There being no room for the couple at any of the inns, they stayed in a stable, where Mary gave birth to a baby boy. That boy, Jesus, would grow up to undermine the political and religious establishment of his day and was eventually crucified as a warning to others not to challenge the powers-that-be.

    However, had Jesus been born in the year 2016…

    Rather than traveling to Bethlehem for a census, Jesus’ parents would have been mailed a 28-page American Community Survey, a mandatory government questionnaire documenting their habits, household inhabitants, work schedule, how many toilets are in your home, etc. The penalty for not responding to this invasive survey can go as high as $5,000.

    Instead of being born in a manger, Jesus might have been born at home. Rather than wise men and shepherds bringing gifts, however, the baby’s parents might have been forced to ward off visits from state social workers intent on prosecuting them for the home birth. One couple in Washington had all three of their children removed after social services objected to the two youngest being birthed in an unassisted home delivery.

    Had Jesus been born in a hospital, his blood and DNA would have been taken without his parents’ knowledge or consent and entered into a government biobank. While most states require newborn screening, a growing number are holding onto that genetic material long-term for research, analysis and purposes yet to be disclosed.

    Then again, had his parents been undocumented immigrants, they and the newborn baby might have been shuffled to a profit-driven, private prison for illegals where they would have been turned into cheap, forced laborers for corporations such as Starbucks, Microsoft, Walmart, and Victoria’s Secret. There’s quite a lot of money to be made from imprisoning immigrants, especially when taxpayers are footing the bill.

    From the time he was old enough to attend school, Jesus would have been drilled in lessons of compliance and obedience to government authorities, while learning little about his own rights. Had he been daring enough to speak out against injustice while still in school, he might have found himself tasered or beaten by a school resource officer, or at the very least suspended under a school zero tolerance policy that punishes minor infractions as harshly as more serious offenses.

    Had Jesus disappeared for a few hours let alone days as a 12-year-old, his parents would have been handcuffed, arrested and jailed for parental negligence. Parents across the country have been arrested for far less “offenses” such as allowing their children to walk to the park unaccompanied and play in their front yard alone.

    Rather than disappearing from the history books from his early teenaged years to adulthood, Jesus’ movements and personal data—including his biometrics—would have been documented, tracked, monitored and filed by governmental agencies and corporations such as Google and Microsoft. Incredibly, 95 percent of school districts share their student records with outside companies that are contracted to manage data, which they then use to market products to us.

    From the moment Jesus made contact with an “extremist” such as John the Baptist, he would have been flagged for surveillance because of his association with a prominent activist, peaceful or otherwise. Since 9/11, the FBI has actively carried out surveillance and intelligence-gathering operations on a broad range of activist groups, from animal rights groups to poverty relief, anti-war groups and other such “extremist” organizations.

    Jesus’ anti-government views would certainly have resulted in him being labeled a domestic extremist. Law enforcement agencies are being trained to recognize signs of anti-government extremism during interactions with potential extremists who share a “belief in the approaching collapse of government and the economy.”

    While traveling from community to community, Jesus might have been reported to government officials as “suspicious” under the Department of Homeland Security’s “See Something, Say Something” programs. Many states, including New York, are providing individuals with phone apps that allow them to take photos of suspicious activity and report them to their state Intelligence Center, where they are reviewed and forwarded to law-enforcement agencies.

    Rather than being permitted to live as an itinerant preacher, Jesus might have found himself threatened with arrest for daring to live off the grid or sleeping outside. In fact, the number of cities that have resorted to criminalizing homelessness by enacting bans on camping, sleeping in vehicles, loitering and begging in public has doubled.

    Viewed by the government as a dissident and potential threat to its power, Jesus might have had government spies planted among his followers to monitor his activities, report on his movements, and entrap him into breaking the law. Such Judases today—called informants—often receive hefty paychecks from the government for their treachery.

    Had Jesus used the internet to spread his radical message of peace and love, he might have found his blog posts infiltrated by government spies attempting to undermine his integrity, discredit him or plant incriminating information online about him. At the very least, he would have had his website hacked and his email monitored.

    Had Jesus attempted to feed large crowds of people, he would have been threatened with arrest for violating various ordinances prohibiting the distribution of food without a permit. Florida officials arrested a 90-year-old man for feeding the homeless on a public beach.

    Had Jesus spoken publicly about his 40 days in the desert and his conversations with the devil, he might have been labeled mentally ill and detained in a psych ward against his will for a mandatory involuntary psychiatric hold with no access to family or friends. One Virginia man was arrested, strip searched, handcuffed to a table, diagnosed as having “mental health issues,” and locked up for five days in a mental health facility against his will apparently because of his slurred speech and unsteady gait.

    Without a doubt, had Jesus attempted to overturn tables in a Jewish temple and rage against the materialism of religious institutions, he would have been charged with a hate crime. Currently, 45 states and the federal government have hate crime laws on the books.

    Rather than having armed guards capture Jesus in a public place, government officials would have ordered that a SWAT team carry out a raid on Jesus and his followers, complete with flash-bang grenades and military equipment. There are upwards of 80,000 such SWAT team raids carried out every year, many on unsuspecting Americans who have no defense against such government invaders, even when such raids are done in error.

    Instead of being detained by Roman guards, Jesus might have been made to “disappear” into a secret government detention center where he would have been interrogated, tortured and subjected to all manner of abuses. Chicago police “disappeared” more than 7,000 people into a secret, off-the-books interrogation warehouse at Homan Square.

    Charged with treason and labeled a domestic terrorist, Jesus might have been sentenced to a life-term in a private prison where he would have been forced to provide slave labor for corporations or put to death by way of the electric chair or a lethal mixture of drugs.

    Either way, whether Jesus had been born in our modern age or his own, he still would have died at the hands of a police state. Indeed, as I show in my book Battlefield America: The War on the American People, what Jesus and other activists suffered in their day is happening to those who choose to speak truth to power today.

    Thus, we are faced with a choice: remain silent in the face of evil or speak out against it. As Nobel Prize-winning author Albert Camus proclaimed:

    Perhaps we cannot prevent this world from being a world in which children are tortured. But we can reduce the number of tortured children. And if you don’t help us, who else in the world can help us do this?

  • "Lines Out The Door": How Americans Respond When Liberal States Restrict Their Gun Rights

    Submitted by Mac Slavo via SHTFPlan.com,

    The window is closing on freedom in the Golden State, as liberal government leaders and increasingly bureaucratic laws are being used to strip away the rights of the people.

    Gov. Jerry Brown has signed a slew of new laws, seen by many as unconstitutional, that will make it incrementally more difficult for Californians to keep and bear arms.

    But in response to new restrictions on owning so-called “assault weapons” and certain types of semi-automatic firearms, millions are lining up to make purchases during the last legal time frame to do so.

    While the state tramples on freedom and bites back at the spirit of the founders who abhorred such bureaucratic tyranny, these patriots are sending a message that they won’t take it lying down, and will do all they can to hold onto their American heritage – and pass it down to future generations.

    As of today, people can no longer legal purchase under the new laws taking effect, due to the 10-day waiting period law already in place.

    via The Blaze:

    Gun sales in California have skyrocketed during the second half of 2016 after California Gov. Jerry Brown, a Democrat, signed into law earlier this year a sweeping new set of gun control laws that are set to take effect Jan. 1.

     

    Brown signed into law six measures, including one that requires California citizens to allow the government to confiscate their “high capacity” magazines, a law that requires a background check for ammunition sales, in addition to a “bullet button law.”

     

    So-called bullet buttons are devices on semi-automatic rifles that allow a user to easily eject and insert a new magazine. You will still be able to own rifles that have a bullet button in California, but you’ll no longer be able to purchase a firearm that has one, according to the Los Angeles Times.

     

    However, citizens who own firearms with the “bullet button” will have one year to register the gun with the state of California as an “assault weapon.”

     

    […]

     

    The new guns laws have led to a run on firearms in California… Joshua Deaser, the owner of Just Guns in Sacramento, told the Times, “When Gov. Brown signed that bill, the first 30 days in July were just insane. It died down for a while but now we are back with everyone trying to get what they can before the end of the year.”

     

    “We have people lined up out the door and around the block,” Terry McGuire, owner of the Get Loaded gun store in San Bernardino, added.

    And they aren’t stopping there.

    Breitbart is reporting that Californian lawmakers are planning an attempt at all-out ban of semi-automatic weapons in the coming year.

    How that will play out remains to be seen, but the continued assault on the 2nd Amendment rights of all Americans trapped inside the country’s most populous state:

    In a recent conversation with Breitbart News, Gun Owners of California’s (GOC) Sam Paredes told us to be ready for an all-out ban on semi-automatic long guns in California’s coming legislative session.

     

    Paredes suggested the “assault weapons” ban and the “bullet button” ban have both been part of an incremental move…

     

    “These laws are the tip of the iceberg here in California. We expect they are going to introduce legislation to totally ban semi-automatic long guns in California. They will do this because they know we will come up with a new way to beat their latest ban–the ‘bullet button’ ban–if given time.”

    Eventually, a chaotic world will attempt to take away all the rights of the individual to self-defense.

    If there wasn’t so much push back, it would surely be overnight.

    Never mind that it opens up big cities to unrestricted violence and an overall diminished quality of life and access to opportunity.

    This is a system that wants control, and to achieve that, they will stop at nothing short of a totally-disarmed population.

    Read more:

    The Watchlist Gun Bans Begin: Obama Enlists Governors to Bypass Congress: “By Executive Order”

    Are You Designated As A “Super Gun Owner” And Will You Soon Be Targeted For Disarmament?

    Texas Police Chief Warns Obama That Gun Control Will “Cause A Revolution… You’re Not Our Potentate, Sir”

    Confiscation Is Coming: Obama To Issue Executive Order Targeting 4.2 Million Retirees With Massive Gun Ban

    The Push For Full Disarmament of America Has Begun: “Outright Gun Ban and Mass Confiscation Once and For All”

  • IceCap Asset Management On Investing Through The Eyes Of An Ostrich

    Submitted by Keith Dicker IceCap Asset Management

    The ostrich is an awesome bird. It has awesome legs, awesome eggs and an even more awesome history. 5,000 years ago, the Mesopotamians featured the giant bird on cups, shirts, and walls; and even used its eggs as currency in trade. 2,000 years later, the ostrich continued to be revered and this time in Egypt. On special occasions, pharaohs received ostrich eggs, ostrich feathers, and even ostrich hats as gifts of honor and respect.

    Yet, despite all of these accolades, the ostrich is also incredibly odd. During heated moments of battle, the giant bird chooses not to use its powerful legs as weapons, but instead uses its head to slam it repeatedly against its opponent. As well, the ostrich loves a good bath. Sight of the slightest pool of water is enough to make the ostrich circle about in delight.

    But when it comes to oddities, nothing is more odd than the ostrich and the most famous coping mechanism of all – sticking its head in the sand.

    Today, the ostrich population is in decline but not its relevance. With the financial and political world in chaos, investors everywhere are suddenly imitating this legendary bird.

    Some investors recognise global financial risks are accelerating, yet they remain stubborn, refusing to acknowledge where the risk runs deepest and are repeatedly slamming their heads against the wall in frustration. Others meanwhile, refuse to believe that any risk exists at all, continue to wear their favourite market hat and shirt, while sticking their heads in the sand at the next sight of trouble. So, for everyone with a bruised and sandy head, we suggest you alter your perspective, shed any biases and embrace the opportunity to run around in delight in our rapidly changing world.

    * * *

    Our research firmly reasons that the world is in the late stages of an enormous bubble in the bond market, and as it turns over it will affect all markets and strategies – regardless of where you sit in the world.

    This convergence of political, social, economic, monetary and fiscal factors is developing, that while may seem chaotic to many – appears quite plain and simple to those who are able to see straight.

    Our view has remained very consistent and has been stated through various media outlets and in private presentations – which results in our view as being “made public” with a “time stamp”. This means we cannot suddenly twist any of our past words to reconcile with current markets. Considering all of the recent chaos in the world, it’s important for us to revisit our success in forecasting many of these seemingly low probability events.

    Of course, we share these experiences not because we want to tout our success in forecasting these events, but rather because it helps investors understand our perspective, why it has been correct, and most importantly – why we continue to maintain our view.

    Our September 2016 Global Outlook “Fright Night” described in detail how and why long-term interest rates will catapult higher and therefore create an incredible rush of capital away from bonds and into USD and the stock market. After publishing, we had many kind emails, meetings and conversations thanking us for providing a simplified explanation of the risk in bond markets. We also had people shrug their shoulders and roll their eyes – after all, while bonds may not provide much of a return anymore, they are the safest investment in the world.

    Or, so you’ve been told. The reason why the world’s bond market was turned upside down, inside out and tossed out with the trash was because of the following:

    Long-term interest rates increased from +1.7% to +2.4%

    Yes, that is not a typo. A mere 0.7% move higher was enough to wake up sleepy bond investors, create $1.7 Trillion in losses, and devastate the entire bond world.

    Our Chart 1 below puts this historical event in perspective.

    It’s at this point where big bank economists and bond lovers everywhere carelessly proclaim this is not a big deal. In fact, they say it’s easy to see that long-term rates have increased like this before and everyone adjusted swimmingly.

    Of course, this kind of linear thinking fails to consider the following:

    • massive accumulation of government debt
    • deteriorating government deficits
    • increasing taxes & increasing government spending
    • NEGATIVE and 0% interest rates
    • money printing

    Analysing these points obviously shows that the problems in the world today are squarely centered in the public/government sector – not the private sector. Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important. Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

    Few people alive today, and certainly no one working in the investment industry, has ever experienced a global crisis in the government sector before. Think about this for a long time – yes, it is that important.

    Every other crisis we’ve experienced (housing crisis, tech bubble crisis, savings and loan bank crisis, 1970s oil/inflation crisis, etc) has always originated in the private sector.

    And since these crises were in the private sector – the risks eventually manifested themselves (they always do) in the stock market.

    Since today’s sovereign debt crisis is in the public sector – the risks will manifest not in the stock market, but in the bond market.

    This really is the most important point to understand today. Yet because the big bank mutual fund machines cannot find (or really, even bother to look) this risk or perspective, trillions of investment Dollars, Yen, Pounds and Euros are all fighting yesterday’s war and refuse to see where the front has opened.

    To be clear – the front is the bond market. Of course, many investment managers clearly know there is a certain big risk in today’s market place. As well, we’ve commented before that many of the really big investment firms in the world do not really manage your wealth. Instead, they simply collect your assets, plunk them into their various investment funds, make micro-changes at the fringe and then proceed to watch the trillions in fees roll through the door.

    Those who are in the investment industry are quietly nodding in agreement, while those not in the investment may be rather unconvinced. After all every investment manager and mutual fund manager is sharp as a tack, and has their finger on the pulse of the global financial system. Sadly, this isn’t true. Instead, if it hasn’t happened already, many investment managers are actually slowly morphing into – an ostrich.

    As this can be a tricky and uncomfortable transition, our Chart 2 below provides an easy to follow analysis to help you determine whether your investment manager is in fact a giant, bird-like creature.
    The first type of manager is the one who believes the world is just fine. Yes, growth may be a little slow but markets are forward looking and have discounted any and all future worries.

    While the optimism is to be respected, the ignorance towards zero and negative interest rates, money printing strategies to suppress long-term interest rates, and the sharpening knife of the anti-establishment political movement – results in these managers sticking their heads in the sand at the first sight of trouble. Since these managers are always seeking the best growth opportunities around the world, today they find themselves drooling over emerging market stocks as well as emerging market bonds, and high yield bonds.

    Next up, we have the investment manager who is acutely aware of the many risks running around the world today. They clearly see the rise of political uncertainties, fear the consequences of zero and negative interest rates and feel queasy towards all of the money printing going on.

    This deep respect and acknowledgment of the risks around the world is a sign of a dynamic thinking investment firm. There are many of these firms out there, and some of them correctly foresaw the housing market crash.  However, while we obviously respect this group of managers we politely point out that while we agree with their deep concern about market risk, we disagree with their conclusion as to where the risk lies. This group believes the stock market & USD are the center of the evil universe and investment in these areas should be avoided at all cost.

    Unfortunately, if you avoid stocks and the USD then by default you love bonds, Euros and gold.

    And even more unfortunately – bonds, Euros and especially gold are growing weaker by the minute, which is resulting in these managers repeatedly slamming their heads in frustration.

    Investments in these markets are eliciting not only painful negative returns, but also painful reasons why the market is wrong and it will turn around any day now. While investment markets are always full of unexpected events, we do hope that these managers are able to see the error of their ways, otherwise there’s the very real probability that eventually they turn into a different bird altogether – a turkey.

    Code Red

    Days after the dust settled on the bond market debacle, we had a meeting with one of the world’s largest bond managers. We asked them on a scale of 1-10 with 10 being complete devastation, how would they rate the recent decline in the bond market?

    The answer = 8

    Again, we stress to you that a 0.7% increase in long-term interest rates created untold havoc throughout the bond world. Imagine what would happen if long-term interest rates increased by 1% or 3%, or even 6%? The short answer is a surging USD and a surging stock market.

    The best thing (or worst, depending upon your view), is that this tiny 0.7% increase in long-term rates is merely the tip of the iceberg.

    The long end of the bond market is now broken and the 30 year bull market in long duration, fixed income is over, kaput, done. If you own any of this stuff, it’s time to make a change. If you manage any of this stuff, it’s time to get a new job. But, if you need to borrow money, now is the time to borrow and lock in the longest maturity possible. Doing any of these three, will help you prosper in a devastating world for bonds.

    * * *

    Optimism is a human trait, and since bond managers are humans it is only natural to expect optimism to arise from the bond ashes in some shape or form. And that form is clearly in the shape of inflation-protected bonds.

    While most investors are enthralled with the stock market, the bond market is THE most interesting investment market on the planet. After all, there are seemingly no limits as to what Wall Street can create. In effect, if Wall Street thinks they can convince someone to buy it, they’ll create it (look no further than the 2008 housing crisis).

    And one ‘different’ product from the bond market has actually stood the test of time, and that is the ‘Real Return Bond’. To begin, know that besides rising interest rates – the other giant monster that scares the crap out of bond managers is inflation.

    Since bond interest/coupon payments are usually fixed, any rise in inflation means the income from your bond can’t buy as much stuff as it could before. Therefore, inflation is bad for bonds and it causes bond prices to decline. To counter this, Wall Street created a bond that actually benefits from rising inflation. These Treasury Inflation Protected Securities (TIPS) have been around now for over 20 years, and aside from short-term spikes in inflation, these bonds haven’t exactly set the world on fire.

    Until now.

    The narrative goes something like this – Donald Trump will dramatically cut taxes which means there will be dramatically more money available for spending, AND he will also borrow dramatically to spend even more money. While all of this spending is considered to be good for the economy and jobs, bond investors see it as creating a devastating surge in inflation. And since inflation is bad for regular bonds, it must be awesome for TIPS. This would be true if the world was experiencing a normal business and interest rate cycle.

    But since the world is not experiencing a normal business and interest rate cycle, we suggest investors be cautious or at least somewhat skeptical about a focus on TIPS. Should the geopolitical and economic world continue to trend as we expect, yes there will be inflation around the world – but not in the United States.

    Let us explain.

    There are 3 kinds of inflation:

    1. inflation caused by an increase in demand for certain things
    2. inflation caused by a decrease in supplies of certain things
    3. inflation caused by a currency moving sharply

    Investors who are trumpeting TIPS are clearly expecting inflation to rise due to #1.

    All else being equal, if there are no further disruptions across the political establishment, social tensions decline, zero and negative interest rates disappear, and European banks magically replace their bad loans and bad investments with new capital – then yes, TIPS will be a good investment. As you may sense, our view is different and TIPS investors should take notice. As the world continues to trend towards our outlook and forecast, our expectation for a surging USD will absolutely create inflation, but not in the United States.

    Instead, the surging USD will actually create deflation in the US making TIPS a not so good investment. Investors everywhere should know that the world does not work with an extremely strong USD. And unfortunately, the world continues to venture down the path that we have explained very clearly.

    A strong USD is negative for global growth, which means less demand for global goods and global services. The United States will not be immune and their exports will be affected – which is deflationary. As well, a strong USD makes foreign goods/services cheaper for people who own USD – this is also deflationary.

    The net effect of slower economic growth and a stronger USD therefore means less inflation for the United States which is not good for TIPS investors.

    Naturally, financial markets move in anticipation of something happening. And, since the bond world has suddenly realized their days in the sun are over – they will be tripping over themselves to climb onto to this next sure thing. Yes, this trade may work out for a while. However, as the world continues to move along as we expect, the USD will surge which will be good for some markets and not so good for other markets. Unfortunately for TIPS investors, financial markets will eventually anticipate this as well meaning they will be on the wrong side of this trade.

    Much more in the full report below

  • Is Obama A Russian Agent?

    Authored by Dmitry Orlov,

    Sometimes a case looks weak because there is no “smoking gun”—no obvious, direct evidence of conspiracy, malfeasance or evil intent—but once you tally up all the evidence it forms a coherent and damning picture. And so it is with the Obama administration vis à vis Russia: by feigning hostile intent it did everything possible to further Russia’s agenda. And although it is always possible to claim that all of Obama’s failures stem from mere incompetence, at some point this claim begins to ring hollow; how can he possibly be so utterly competent… at being incompetent? Perhaps he just used incompetence as a veil to cover his true intent, which was always to bolster Russia while rendering the US maximally irrelevant in world affairs. Let’s examine Obama’s major foreign policy initiatives from this angle.

    Perhaps the greatest achievement of his eight years has been the destruction of Libya. Under the false pretense of a humanitarian intervention what was once the most prosperous and stable country in the entire North Africa has been reduced to a rubble-strewn haven for Islamic terrorists and a transit point for economic migrants streaming into the European Union. This had the effect of pushing Russia and China together, prompting them to start voting against the US together as a block in the UN Security Council. In a single blow, Obama assured an important element of his legacy as a Russian agent: no longer will the US be able to further its agenda through this very important international body.

    Next, Obama presided over the violent overthrow of the constitutional government in the Ukraine and the installation of an American puppet regime there. When Crimea then voted to rejoin Russia, Obama imposed sanctions on the Russian Federation. These moves may seem like they were designed to hurt Russia, but let’s look at the results instead of the intentions.

    • First, Russia regained control of an important, strategic region.
    • Second, the sanctions and the countersanctions allowed Russia to concentrate on import replacement, building up the domestic economy. This was especially impressive in agriculture, and Russia now earns more export revenue from foodstuffs than from weapons.
    • Third, the severing of economic ties with the Ukraine allowed Russia to eliminate a major economic competitor.
    • Fourth, over a million Ukrainians decided to move to Russia, either temporarily or permanently, giving Russia a major demographic boost and giving it access to a pool of Russian-speaking skilled labor. (Most Ukrainians are barely distinguishable from the general Russian population.)
    • Fifth, whereas before the Ukraine was in a position to extort concessions from Russia by playing games with the natural gas pipelines that lead from Russia to the European Union, now Russia’s hands have been untied, resulting in new pipeline deals with Turkey and Germany.

    In effect, Russia reaped all the benefits from the Ukrainian stalemate, while the US gained an unsavory, embarrassing dependent.

    Obama’s next “achievement” was in carefully shepherding the Syrian conflict into a cul de sac. (Some insist on calling it a civil war, although virtually all of the fighting there has between the entire Syrian nation and foreign-funded outside mercenaries). To this end, Obama deployed an array of tactics. He simultaneously supported, armed, trained and fought various terrorist groups, making a joke of the usual US technique of using “terrorism by proxy.” He made ridiculous claims that the Syrian government had used chemical weapons against its own people, which immediately reminded everyone of similarly hollow claims about Saddam’s WMDs while offering Russia a legitimate role to play in resolving the Syrian conflict. He made endless promises to separate “moderate opposition” from dyed-in-the-wool terrorists, but repeatedly failed to do so, thus giving the Russians ample scope to take care of the situation as they saw fit. He negotiated several cease fires, then violated them.

    There have been other achievements as well. By constantly talking up the nonexistent “Russian threat” and scaremongering about “Russian aggression” and “Russian invasion” (of which no evidence existed), and by holding futile military exercises in Eastern Europe and especially in the geopolitically irrelevant Baltics, Obama managed to deprive NATO of any residual legitimacy it once might have had, turning it into a sad joke.

    But perhaps Obama’s most significant service on behalf of the Russian nation was in throwing the election to Donald Trump. This he did by throwing his support behind the ridiculously inept and corrupt Hillary Clinton. She outspent Trump by a factor of two, but apparently no amount of money could buy her the presidency. As a result of Obama’s steadfast efforts, the US will now have a Russia-friendly president who is eager to make deals with Russia, but will have to do so from a significantly weakened negotiating position.

    As I have been arguing for the last decade, it is a foregone conclusion that the United States is going to slide from its position of global dominance. But it was certainly helpful to have Obama grease the skids, and now it’s up to Donald Trump to finish the job. And since Obama’s contribution was especially helpful to Russia, I propose that he be awarded the Russian Federation’s Order of Friendship, to go with his Nobel Peace Prize.

  • America Has Unofficially Declared War On The Homeless

    Submitted by Josie Wales via TheAntiMedia.org,

    Police departments across the country have been ramping up raids on the homeless, stealing coats, blankets, and other personal items and leaving those on the street with no protection from the cold and rain.

    The Homelessness San Diego Facebook page recently posted a video of city workers conducting an “encampment sweep” that was recorded by homeless advocate Michael McConnell. According to CW6, “the city says it routinely posts clean-up notices downtown as part of its regular weekly abatement schedule.

    The Denver Police Department released a statement last Thursday evening defending police officers caught on video taking blankets, sleeping bags, and tents from homeless people and issuing some citations. Freezing temperatures didn’t stop the cold-hearted cops from confiscating the items “as evidence of the violations.

    The video taken by a bystander went viral after being shared by the ACLU of Colorado’s Facebook page. It was swiftly followed up by an open letter to Denver Mayor Michael Hancock, Denver City Council, and city officials. The letter, which expresses horror at the willingness of the local government officials to endanger the lives of the homeless, demands that the City immediately (1) direct its police officers to cease confiscation of blankets and other survival gear possessed by people experiencing homelessness, (2) suspend enforcement of the Denver Urban Camping Ban through the winter months, using that time to explore alternative approaches to homelessness that do not criminalize people for having nowhere they can afford to live and (3) end the coordinated sweeps of people experiencing homelessness, whether they are conducted through police, public works, private security, all of the above, or any other means.”

    This is not the first time Colorado authorities have come under fire for their brutal treatment of the homeless. In February of this year, Denver Law School released a report called Too High A Price: What Criminalizing Homelessness Costs Colorado, which examined the economic and social cost of the anti-homeless laws. According to the paper, “Laws that criminalize panhandling, begging, camping, sitting or lying in public, and vagrancy target and disproportionately impact homeless residents for activities they must perform in the course of daily living.”

    Los Angeles deployed an entire task force to crack down on homeless people, imposing their own “encampment sweeps” in September. The ironically named “Homeless Outreach and Proactive Engagement” teams are supposed to help reduce the number of people living on the street, but they appear to be doing nothing more than turning those who are less fortunate into criminals.

    The ACLU declared a small victory over the summer when it successfully defended the rights of a man charged with trespassing after trying to gain access to emergency shelter. According to Jessie Rossman, a staff attorney with the ACLU of Massachusetts:

    “Today’s landmark, unanimous ruling has affirmed, e.in the state high court’s own words that ‘our law does not permit the punishment of the homeless simply for being homeless.’”

    Anti-homeless laws are cruel, unconstitutional, and create more hardship for those targeted, making it harder for them to get back on their feet. It is unthinkable to believe that stealing blankets and clothing from people living on the street is justifiable by any legislation, and it is terrifying to see law enforcement follow orders to do so without blinking an eye.

  • Duterte: "I Will Burn Down The United Nations"

    The United Nations is making a lot of enemies.

    Yesterday, when the Obama administration refused to veto a UN vote over Isreal settlements, one which provoked Israel to lash out at the Obama administration saying “friends don’t act that way”, but more importantly defied Trump who in a previous tweet urged Obama to veto the resolution, the President-elect had one message, or rather tweet, to the UN:

    However, Trump is not the only one to hold a prominent grudge against the international organization, which many have accused of being nothing but an ineffective, if material, waste of taxpayer funds: taking Obama’s threat several steps further, Philippines President Rodrigo Duterte threatened to “burn down” the United Nations headquarters in New York, in response to mounting international criticism over his bloody crackdown on suspected drug dealers.

    “You go and file a complaint in the United Nations, I will burn down the United Nations if you want,” Duterte said, quoted by the New York Times. “I will burn it down if I go to America,” he added during a speech at an army base in the country’s southern city of Zamboanga.

    Earlier in the week, Duterte called Zeid Ra’ad Al Hussein, a top UN official, an “idiot” and “son of a bitch” after the UN High Commissioner for Human Rights suggested launching an investigation into Duterte’s own accounts of killings when he was mayor of Davao City, and the “shocking” number of deaths during the ongoing anti-drug war.

    “This guy [Zeid] is ever the joker or crazy,” Duterte said during a televised speech, repeatedly calling him stupid. “You UN officials, sitting there on your asses, we pay you your salaries. You idiot, do not tell me what to do… Who gave you the right?” he said quoted by Reuters

    Needless to say, the UN does not appear to be very popular among the Philippines ruling elite.

    In September, the outspoken Philippines leader refused to meet UN Secretary-General Ban Ki-moon, and even threatened to leave the UN after it criticized his ‘War on Drugs.’ A UN official told Reuters it was “basically unheard of” for a leader to be too busy to meet the secretary-general.

    More than 6,000 people have been killed as part of Duterte’s crackdown, a third by police and the rest still officially under investigation. Duterte says the shootings by police were in self-defence.

    Duterte’s “controversial” methods of cracking down on illegal drugs stem from his 22 years as mayor of Davao City. Last week, Duterte admitted he personally killed suspected criminals during his time as mayor of Davao City (the third most populous metropolitan area in the Philippines with more than 1.6 million inhabitants), patrolling the streets on a motorcycle.

    “In Davao I used to do it personally. Just to show to the guys [the police] that if I can do it, why can’t you,” Duterte said, as quoted by AFP.

    He added that he would “go around in Davao with a motorcycle, with a big bike around, and I would just patrol the streets, looking for trouble also. I was really looking for a confrontation so I could kill.”

    As for his parting shot at the UN’s employee and the overall organization, Duterte lashed out: “please shut up because your brain is lacking there,” he told Zeid.

    “Go back to school. You United Nations, you do not know diplomacy. You do not know how to behave to be an employee of the United Nations” adding “You do not talk to me like that, you son of a bitch.”

    And now, Trump seems to agree.

  • While Blaming Trump For "Arms Race", Obama Signs Momentous "Star Wars II" Defense Bill

    As politicians and mainstream media blast Trump's apparently incendiary tweet regarding nuclear arms, none other than President Obama just signed legislation that, by striking a single word from longstanding US nuclear defence policy, could heighten tensions with Russia and China and launch the country on an expensive effort to build space-based defense systems.

    Oh the irony… Following Trump's tweet…

    The mainstream media has lambasted the president-elect for "endangering the world" and "starting another nuclear arms race." However, that same mainstream media appears mute in their response to what President Obama just did…

    The National Defence Authorisation Act, a year-end policy bill encompassing virtually every aspect of the US military, contained two provisions with potentially momentous consequences. As AP reports,

    One struck the word “limited” from language describing the mission of the country’s homeland missile defence system. The system is said to be designed to thwart a small-scale attack by a non-superpower such as North Korea or Iran.

     

    A related provision calls for the Pentagon to start “research, development, test and evaluation” of space-based systems for missile defence.

     

    Together, the provisions signal that the US will seek to use advanced technology to defeat both small-scale and large-scale nuclear attacks.

     

    That could unsettle the decades-old balance of power among the major nuclear states.

     

    Huge bipartisan majorities in both houses of Congress approved the policy changes over the past month, with virtually no public debate.

     

    Although the White House had earlier criticised the changes, it stopped short of threatening a veto. On Friday, Obama signed the legislation.

    Leading defence scientists said the idea that a space-based system could provide security against nuclear attack is a fantasy…

    “It defies the laws of physics and is not based on science of any kind,” said L. David Montague, a retired president of missile systems for Lockheed and co-chair of a National Academy of Sciences panel that studied missile defence technologies at the request of Congress.

     

    “Even if we darken the sky with hundreds or thousands of satellites and interceptors, there’s no way to ensure against a dedicated attack,” Montague said in an interview. “So it’s an opportunity to waste a prodigious amount of money.”

     

    He called the provisions passed by Congress “insanity, pure and simple.”

     

    Republican Congressman Trent Franks, who introduced and shepherded the policy changes in the House, said he drew inspiration from former president Ronald Reagan’s Strategic Defence Initiative of the 1980s, which was intended to use lasers and other space-based weaponry to render nuclear weapons “impotent and obsolete.” Known as “Star Wars”, the initiative cost taxpayers US$30 billion, but no system was ever deployed.

    Philip E. Coyle III, a former assistant secretary of defence who headed the Pentagon office responsible for testing and evaluating weapon systems, described the idea of a space-based nuclear shield as “a sham”.

    “To do this would cost just gazillions and gazillions,” Coyle said. “The technology isn’t at hand – nor is the money. It’s unfortunate from my point of view that the Congress doesn’t see that.”

     

    He added: “Both Russia and China will use it as an excuse to do something that they want to do.”

    Finally, when asked whether the country could afford it, Franks replied: “What is national security worth? It’s priceless."

    Priceless indeed.

    So who is "starting an arms race?"

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Today’s News 24th December 2016

  • Tucker Carlson Takes on Ivanka Trump Hater, Then Drops Mic on Her

    This wasn’t all that crazy, until the very end when he dimmed the lights and executed a fatality move on her. The look on her face was priceless.

    Watch the full vid for full effect, so that you can appreciate the fatality move all the more.

    I’m all about spreading the holiday cheer. Enjoy this with your families by the fireside.

     

    Content originally generated at iBankCoin.com

  • This Is How The US Government Destroys The Lives Of Patriotic Whistleblowers

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    We live in a time and within a culture where the best amongst us are thrown in jail, demonized or destroyed, while the worst are celebrated, promoted and enriched. Nothing more clearly crystalizes this sad state of affairs than the U.S. government’s ruthless war on whistleblowers who expose severe constitutional violations by those in power. This war knows no political affiliation, and has be waged with equal vigor by the administrations of George W. Bush and Barack H. Obama.

    Earlier this morning, I read one of the most enlightening articles on the subject to-date. It was published back in May, and should be read by every single American citizen. We need to admit to ourselves what we have become before we can make changes.

    What follows are excerpts from the Guardian piece, How the Pentagon Punished NSA Whistleblowers, but you should really take the time to read the entire thing.

    If you want to know why Snowden did it, and the way he did it, you have to know the stories of two other men.

     

    The first is Thomas Drake, who blew the whistle on the very same NSA activities 10 years before Snowden did. Drake was a much higher-ranking NSA official than Snowden, and he obeyed US whistleblower laws, raising his concerns through official channels. And he got crushed.

     

    Drake was fired, arrested at dawn by gun-wielding FBI agents, stripped of his security clearance, charged with crimes that could have sent him to prison for the rest of his life, and all but ruined financially and professionally. The only job he could find afterwards was working in an Apple store in suburban Washington, where he remains today. Adding insult to injury, his warnings about the dangers of the NSA’s surveillance program were largely ignored.

     

    But there is another man whose story has never been told before, who is speaking out publicly for the first time here. His name is John Crane, and he was a senior official in the Department of Defense who fought to provide fair treatment for whistleblowers such as Thomas Drake – until Crane himself was forced out of his job and became a whistleblower as well.

     

    His testimony reveals a crucial new chapter in the Snowden story – and Crane’s failed battle to protect earlier whistleblowers should now make it very clear that Snowden had good reasons to go public with his revelations.

     

    During dozens of hours of interviews, Crane told me how senior Defense Department officials repeatedly broke the law to persecute Drake. First, he alleged, they revealed Drake’s identity to the Justice Department; then they withheld (and perhaps destroyed) evidence after Drake was indicted; finally, they lied about all this to a federal judge.

     

    “Name one whistleblower from the intelligence community whose disclosures led to real change – overturning laws, ending policies – who didn’t face retaliation as a result. The protections just aren’t there,” Snowden told the Guardian this week. “The sad reality of today’s policies is that going to the inspector general with evidence of truly serious wrongdoing is often a mistake. Going to the press involves serious risks, but at least you’ve got a chance.”

     

    “None of the lawful whistleblowers who tried to expose the government’s warrantless surveillance – and Drake was far from the only one who tried – had any success,” Devine told me. “They came forward and made their charges, but the government just said, ‘They’re lying, they’re paranoid, we’re not doing those things.’ And the whistleblowers couldn’t prove their case because the government had classified all the evidence. Whereas Snowden took the evidence with him, so when the government issued its usual denials, he could produce document after document showing that they were lying. That is civil disobedience whistleblowing.”

     

    Crane’s testimony is not simply a clue to Snowden’s motivations and methods: if his allegations are confirmed in court, they could put current and former senior Pentagon officials in jail. (Official investigations are quietly under way.)

     

    But Crane’s account has even larger ramifications: it repudiates the position on Snowden taken by Barack Obama and Hillary Clinton – who both maintain that Snowden should have raised his concerns through official channels because US whistleblower law would have protected him…

     

    Within weeks of the September 11 attacks, Drake was assigned to prepare the NSA’s postmortem on the disaster. Congress, the news media and the public were demanding answers: what had gone wrong at the NSA and other federal agencies to allow Osama bin Laden’s operatives to conduct such a devastating attack?

     

    As Drake interviewed NSA colleagues and scoured the agency’s records, he came across information that horrified him. It appeared that the NSA – even before September 11 – had secretly revised its scope of operations to expand its powers.

     

    Since its inception, the NSA had been strictly forbidden from eavesdropping on domestic communications. Drake’s investigation persuaded him that the NSA was now violating this restriction by collecting information on communications within as well as outside of the United States. And it was doing so without obtaining legally required court orders.

     

    Drake’s descent into a nightmare of persecution at the hands of his own government began innocently. Having uncovered evidence of apparently illegal behaviour, he did what his military training and US whistleblower law instructed: he reported the information up the chain of command. Beginning in early 2002, he shared his concerns first with a small number of high-ranking NSA officials, then with the appropriate members of Congress and staff at the oversight committees of the US Senate and House of Representatives.

     

    Drake spent countless hours in these sessions but eventually came to the conclusion that no one in a position of authority wanted to hear what he was saying. When he told his boss, Baginski, that the NSA’s expanded surveillance following 9/11 seemed legally dubious, she reportedly told him to drop the issue: the White House had ruled otherwise.

     

    John Crane first heard about Thomas Drake when Crane and his colleagues at the Pentagon’s Office of the Inspector General received a whistleblower complaint in September 2002. The complaint alleged that the NSA was backing an approach to electronic surveillance that was both financially and constitutionally irresponsible. The complaint was signed by three former NSA officials, William Binney, Kirk Wiebe and Edward Loomis, and a former senior Congressional staffer, Diane Roark. Drake also endorsed the complaint – but because he, unlike the other four, had not yet retired from government service, he asked that his name be kept anonymous, even in a document that was supposed to be treated confidentially within the government.

     

    Binney, Wiebe, Loomis and Roark shared Drake’s concerns about the constitutional implications of warrantless mass surveillance, but their complaint focused on two other issues.

     

    The first was financial. The whistleblowers contended that the NSA’s surveillance programme, codenamed Trailblazer, was a shameful waste of $3.8 billion – it had been more effective at channelling taxpayer dollars to corporate contractors than at protecting the homeland.

    Of course it was.

    Second, the whistleblowers warned that Trailblazer actually made the US less secure. They acknowledged that Trailblazer had vastly expanded the amount of electronic communications NSA collected. But this avalanche of raw data was too much – it left NSA’s analysts struggling to distinguish the vital from the trivial and thus liable to miss key clues.

     

    Drake had discovered a shocking example while researching his postmortem report on the September 11 attacks. Months beforehand, the NSA had come into possession of a telephone number in San Diego that was used by two of the hijackers who later crashed planes into the World Trade Center. But the NSA did not act on this finding.

     

    As Drake later told the NSA expert James Bamford, the NSA intercepted seven phone calls between this San Diego phone number and an al-Qaida “safe house” in Yemen. Drake found a record of the seven calls buried in an NSA database.

     

    US officials had long known that the Yemen safe house was the operational hub through which Bin Laden, from a cave in Afghanistan, ordered attacks. Seven phone calls to such a hub from the same phone number was obviously suspicious. Yet the NSA took no action – the information had apparently been overlooked.

    Incredible.

    The Bush administration’s mass surveillance efforts were partly exposed in December 2005, when the New York Times published a front page article by reporters James Risen and Eric Lichtblau, which revealed that the NSA was monitoring international phone calls and emails of some people in the US without obtaining warrants.

     

    Eight years later, that story would be dwarfed by Snowden’s revelations. But at the time, the Bush White House was furious – and they were determined to find and punish whoever had leaked the details to the New York Times.

     

    According to Crane, his superiors inside the Pentagon’s Inspector General’s office were eager to help. Henry Shelley, the general counsel – the office’s top lawyer – urged that the IG office should tell the FBI agents investigating the Times leak about Drake and the other NSA whistleblowers.

    This Shelley character is a particularly heinous cretin in this entire saga.

    After all, the NSA whistleblowers’ recent complaint had objected to the same surveillance practices described in the Times article – which made them logical suspects in the leak. Crane objected strenuously. Informing anyone – much less FBI investigators – of a whistleblower’s name was illegal.

     

    After debating the matter at a formal meeting in the personal office of the inspector general, Shelley and Crane continued arguing in the hallway outside. “I reached into my breast pocket and pulled out my copy of the Whistleblower Protection Act,” Crane recalled. “I was concerned that Henry was violating the law. Our voices weren’t raised, but the conversation was, I would say, very intense and agitated. Henry [replied] that he was the general counsel, the general counsel was in charge of handling things with the Justice Department and he would do things his way.”

     

    There the disagreement between Crane and Shelley stalled. Or so it seemed until 18 months later. On the morning of 26 July, 2007, FBI agents with guns drawn stormed the houses of Binney, Wiebe, Loomis and Roark. Binney was towelling off after a shower when agents accosted him; he and his wife suddenly found themselves with guns aimed directly between their eyes, the retired NSA man recalled.

     

    Crane smelled a rat. The investigation that his staff had conducted into the whistleblowers’ complaint had been highly classified: very few people could have known their names, and they would have been inside the IG’s office. After the raids, Crane confronted Shelley and demanded to know whether the IG’s office had given the names to the FBI. Shelley refused to discuss the matter, Crane says.

     

    The battle soon escalated. Four months later, FBI agents stormed Drake’s house in an early morning raid, as his family watched in shock.

     

    After Drake was indicted in 2010, his lawyers filed a Freedom of Information Act request to obtain documents related to the investigation Crane’s office had conducted into the claims of the NSA whistleblowers. According to Crane, he was ordered by his superiors in the IG’s office to delay releasing any documents – which could have exonerated Drake – until after the trial, which was expected to take place later in 2010.

     

    Crane alleges that he was ordered to do so by Shelley and Lynne Halbrooks – who had recently been named the principal deputy inspector general (in other words, the second-highest ranking official in the IG’s office). Crane protested but lost this skirmish as well. (Halbrooks did not respond to repeated requests for an interview.)

     

    Crane was at once alarmed and revolted. The complaint from Drake’s lawyers seemed to confirm his suspicion that someone in the IG’s office had illegally fingered Drake to the FBI. Worse, the indictment filed against Drake had unmistakable similarities to the confidential testimony Drake had given to Crane’s staff – suggesting that someone in the IG’s office had not simply given Drake’s name to the FBI, but shared his entire testimony, an utter violation of law.

     

    Drake’s complaint demanded investigation, Crane told Halbrooks. But Halbrooks, joined by Shelley, allegedly rejected Crane’s demand. She added that Crane wasn’t being a “good team player” and if he didn’t shape up, she would make life difficult for him.

     

    But there was even worse to come. As Drake’s trial approached in the spring of 2011, Crane knew that the law required the IG’s office to answer the retaliation complaint filed by Drake’s lawyers. But, Crane says, Shelley now informed him it would be impossible to respond – because the relevant documents had been destroyedLower level staff “fucked up”, Crane said Shelley told him: they had shredded the documents in a supposedly routine purge of the IG’s vast stores of confidential material.

     

    Crane could not believe his ears. “I told Henry that destruction of documents under such circumstances was, as he knew, a very serious matter and could lead to the inspector general being accused of obstructing a criminal investigation.” Shelley replied, according to Crane, that it didn’t have to be a problem if everyone was a good team player.

     

    On 15 February, 2011, Shelley and Halbrooks sent the judge in the Drake case a letter that repeated the excuse given to Crane: the requested documents had been destroyed, by mistake, during a routine purge. This routine purge, the letter assured Judge Richard D Bennett, took place before Drake was indicted.

     

    “Lynne and Henry had frozen me out by then, so I had no input into their letter to Judge Bennett,” Crane said. “So they ended up lying to a judge in a criminal case, which of course is a crime.”

     

    With Drake adamantly resisting prosecutors’ pressure to make a plea deal – “I won’t bargain with the truth,” he declared – the government eventually withdrew most of its charges against him. Afterwards, the judge blasted the government’s conduct. It was “extraordinary”, he said, that the government barged into Drake’s home, indicted him, but then dropped the case on the eve of trial as if it wasn’t a big deal after all. “I find that unconscionable,” Bennett added. “Unconscionable. It is at the very root of what this country was founded on … It was one of the most fundamental things in the bill of rights, that this country was not to be exposed to people knocking on the door with government authority and coming into their homes.”

     

    We are now becoming a police state,” Diane Roark said in a 2014 television interview. Referring to herself and the other NSA whistleblowers, she added, “We are the canaries in the coal mine. We never did anything wrong. All we did was oppose this programme. And for that, they just ran over us.”

     

    “They’re saying, ‘We’re doing this to protect you,’” Roark’s fellow whistleblower William Binney told me. “I will tell you that that’s exactly what the Nazis said in Special Order 48 in 1933 – we’re doing this to protect you. And that’s how they got rid of all of their political opponents.”

     

    These are strong statements – comparing the actions of the US government to Nazi Germany, warning of an emerging “police state” – so it’s worth remembering who made them. The NSA whistleblowers were not leftwing peace nuts. They had spent their professional lives inside the US intelligence apparatus – devoted, they thought, to the protection of the homeland and defence of the constitution.

     

    They were political conservatives, highly educated, respectful of evidence, careful with words. And they were saying, on the basis of personal experience, that the US government was being run by people who were willing to break the law and bend the state’s awesome powers to their own ends. They were saying that laws and technologies had secretly been put in place that threatened to overturn the democratic governance Americans took for granted and shrink their liberties to a vanishing point. And they were saying that something needed to be done about all this before it was too late.

    Let’s all make a resolution to do whatever we can to alter this situation and restore constitutional values to the land. Let’s also give thanks to all the incredibly courageous American patriots who have been relentlessly and despicably persecuted by their government.

  • Irrational Exuberance in US Stock Market Grasps at 20K for Dow

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

    Celebrate because the Epocalypse is here!

    Since Trump’s election, the US stock market has climbed unstoppably along a remarkably steep path to round off at a teetering height. Is this the irrational exuberance that typically marks the last push before a perilous plunge, or is the market reaching escape velocity from the relentless gravity of the Great Recession? 

    This burst of enthusiasm in response to Trump’s victory, flew in the face of almost everyone’s predictions. That it lifted the market from seven months of languor certainly makes 20K on the Dow look like the elevation marker of a breathtaking summit.

    While breaking 20k, if it happens, may be as meaningless as one more mile on the odometer when all the numbers roll over, it is psychologically potent for many. Breaking through it, could cause fear as eyes turn down and see how far below the earth now is, or the rarified air up here may bring euphoria that lifts the market to even greater levels on a rising current of hot air.

    Investors have been buying and selling with as much frenzy as Christmas shoppers. Now there will be much eating and drinking to celebrate this record-setting Santa-Clause rally, even if it doesn’t top 20, before Christmas, as investors take a brief rest to enjoy their surprise gains, fat and happy in belief that 2017 will be a prosperous new year.

    There is almost no evidence of fear amongst all the cheer. According to Gallop, economic confidence has never been higher in the general population. Some are calling it Trumphoria as people seem to be relieved that eight years of Obamanomics are ending, and business is seizing the reins of government, guided by one of the world’s richest and most dazzling developers.

     

    The first positive double-digit index score since the inception of Gallup Daily tracking in 2008 reflects a stark change in Americans’ confidence in the U.S. economy from the negative views they expressed in most weeks over the past nine years.

     

    A similar CNBC survey indicates this is the greatest breath of fresh air for consumer confidence since Obama was elected in 2008, and it is not just stocks that are soaring. The US dollar has reached its highest peak in fourteen years. TechonoMetrica also says consumer confidence has just hit its highest level since 2006 (just in time for Christmas shopping).

     

    The surge in consumer confidence is primarily due to a collective sense of relief among Americans over the conclusion of the contentious 2016 presidential election season, as well as a feeling of hope regarding the prospect of a new administration taking office…. Consumers are ecstatic that the election is finally over.

     

     

    Will this exuberant ride continue in 2017?

     

    Many analysts believe the push through a major milestone, if it happens, confirms a strong new market trend; but what does history say about breaking past such major psychological resistance barriers? When the Dow first broke past the 100 level in 1916, it tumbled below the line immediately and then sputtered along that ceiling for almost ten years. It didn’t break through with any continuance again until the mid 20s! When the Dow flirted with the 1,000 mark for the first time in 1966, it tumbled down and again stumbled along near that ceiling for seven years. When it finally passed it at the end of 1972, it did continue a tiny ways higher; but in less than three months the market fell for the next two years, eventually plumbing a depth 44% lower, while the nation sank into recession. The Dow didn’t permanently break through 1,000 again until 1982! And, after the Dow broke major, major milestone of 10,000 in 1999, it made it about 10% above that and then fell about 30% from 2001 to 2003 in what became known as the dot-com crash.

    What if we look at what history has to say about irrational exuberance by using other measures than the Dow? The ratio of stock prices against corporate earnings is one of the most common ways of assessing the relative height of a market peak. Here again, there are only a few times in history that the S&P 500 has climbed to prices that are 27.9 times more than corporate earnings of the last ten years, which is where the S&P stands now. Once was in 1929 just before the Great Depression, then again in an ill-fated boom of the 60’s, and only one other time in 2002.

    The altimeter I’m using here to assess our present peak is called the CAPE (the Cyclically Adjusted Price-Earnings ratio that won Yale’s Robert Schiller his Nobel Prize). In market terms, our present mark on the gauge means we’re entering the stratosphere! Even in 2007, the market was not this overpriced by the CAPE’s measure, and irrational exuberance has always accompanied this level: (Some will argue otherwise, but hang with me a minute.)

     

    Early 1929 was actually a fantastic time to get into the US stock market — so long as you didn’t stick around. So were the late 1990s. Someone who sold their stocks in late 1996, when the CAPE hit 28, missed out on the biggest free-money bubble bonanza in recorded history…. Nonetheless … over the past 150 years, it has generally been an extremely poor move to invest in U.S. stocks with the CAPE at these levels. (Market watch)

     

    Not everyone thinks passing this mark on the CAPE matters. In fact, apparently many don’t, or the stock market wouldn’t have kept climbing into the CAPE’s red zone this month, but according to Valentin Dimitrov of Rutgers University and Prem Jain of Georgetown, the measure has been applied too simplistically by those who disregard it:

     

    In a nutshell: Investors shouldn’t flee stocks simply because the Shiller PE is above average. They shouldn’t flee stocks even when the Shiller PE is way above average. But history has said they should flee stocks when the Shiller PE is at extreme levels — like now. Only when the CAPE is “higher than 27.6”, they conclude, has the stock market proven to be a really bad investment. (Marketwatch)

     

    It is, however, not just the height of this peak, but the rate of rise that evidences irrational exuberance. This month, the US stock roller coaster ratcheted its way relentlessly up its highest hill one clanky link at a time. If the Dow closes above 20,000 this week, it will be the fastest 1,000-point rise in market history! The previous record rate of rise came in 1999 in the run-up to the dot-com bubble crash. Of course, the higher the market is, the less meaningful a thousand-point rise is.

     

    Do these graphs look like irrational exuberance?

     

    Sometimes a visual says more than words:

     

     

    Irrational exuberance in stock market?

    Fastest, longest rise of the Dow in the past two years. Irrational exuberance?

     

     

     

    Notice that it is not just prices that have shot up. Sometimes prices soar while trading volume treads flatly. In other words, there are very few traders, but those that are buying are willing to pay more. This time, trading volume has gone astronomical (lower part of graph) as money floods  into stocks. That means it’s a flurry of high-stakes trading. The last time we saw this kind of trading volume was …

     

     

     

    Irrational exuberance in stock market seen in steepest rise and highest volume in a decade

    Is the steepest climb in a decade irrational exuberance, particularly when accompanied by the highest trading volume since the Great Recession began?

     

     

    Yes, the last time trading volume (lower graph) reached this frenzy was in 2008 and 2009 when we experienced the greatest stock market crash since the Great Depression. And look how long and steep the post-Trump rally (right end of upper graph) looks compared to any other climb during the past decade, including the run-up to the Great Recession. It’s almost a straight-up wall!

     

    How irrationally exuberant are investors right now?

     

    Forget about measures for a moment, let’s look at forecasts by the revered experts in the industry because if everyone is running with glee in the same direction …

     

    Some market experts are espousing an unequivocally bullish outlook for equities. That level of enthusiasm was on full display after Robert Doll, Nuveen Asset Management’s chief equity strategist, on Wednesday said he was “fully invested” in the market. Asked by one CNBC reporter if he recommended keeping any cash holdings … Doll had this to say: Hold cash? “What for? Market’s going up!” (Marketwatch)

     

    Clearly, Doll sees no top to the hill in sight. Apparently neither do others: in spite of our present nose-bleed heights, Wall Street’s gauge of investor fear, the CBOE Volatility Index VIX, rests comfortably at a 16-month low. Seems almost no one sees any reason for concern at all.

    Lance Roberts writes,

     

    Over this past weekend, Barron’s Magazine published its big story the “2017 Market Outlook….” After 8-years of a bull market advance not one of the forecasters had a “bearish” outlook. In fact, as the article concludes: “If all goes smoothly, our experts’ forecasts might even prove too tepid. The old bull isn’t ready to call it quits yet….” Of course, since it is rising asset prices which drives their business – being “bullish” is good for business…. However … it is extremes in both “psychology” and “behaviors” that tend to give us the best indications as to future outcomes. The legendary Bob Farrell had two rules specifically relating to today’s topic. The first was … “When all the experts and forecasts agree – something else is going to happen.”

     

    Barron’s panel of ten experts (from JPMorgan, Goldman Sachs, Barclays, Citi, Morgan Stanley, BofA, Blackrock and others) were unanimous in their cheer that the US stock market will ascend well beyond its present record heights.

    But, if everything is so rosy, Wolf Richter asks, why are bank insiders and big industrials selling their own company’s stocks faster than ever: (Someone has to be selling for all that buying to happen.)

     

    Why are insiders at banks and industrial companies selling their shares as if there were no tomorrow? Banks had a blistering run. The shares of Wells Fargo, the most hated bank in America these days, soared 28% over the past 30 days, Citigroup 25%, JP Morgan 26%, Goldman Sachs, which is successfully placing its people inside the Trump administration, 37%. It has surged 50% since the end of October…. But high-ranking insiders have been dumping their shares faster than at any time in the data going back to 2003. These executives are considered the “smart money.”

     

    Have market insiders just lost their appetite for dizzying heights, or do they have reason to believe they are selling into the stock market’s last hurrah? Are their banks, perhaps, getting clobbered by the bond crisis that is now developing on the other side of all this trading?

    Even the Wall Street Journal, notes Richter, saw this high-volume trading as a bullish sign. They couldn’t, however, say why it was bullish, but only that it might be profit-taking. Well, why take profits now if you’re confident your bank has room to run? Is WSJ’s bullish note just more irrational exuberance from all market experts who can smell nothing but roses since Trump’s victory?

     

    This is how BofA’s Michael Hartnett explains it: Wall St. is bullish: expectations of “above trend” growth at five-year highs … global inflation expectations at second highest % since Jun 2004 … global bank stock positioning has hit record highs. (Zero Hedge)

     

    Bonds are smarter … and far from exuberant

     

    One old adage says that bond traders are the smart money. Money is now fleeing bonds at a record rate of fall that matches the record rate of rise we are seeing in the stock market. Bond money has to go somewhere; so, it could easily be that stocks are going up less because of Trumphoria and more because of bond phobia, triggered by Trump.  Fear of what could easily turn into the biggest bond-bubble crash in the history of the world makes stocks look like the safest haven.

    The global realization that central banks are not so enthusiastic about additional stimulus anymore, has bond investor’s realizing that the longest bull market in bond history may finally be waning. At the same time Trump’s plan of spending somewhere between half a trillion and one trillion dollars on infrastructure investments (financed on national credit) means interest rates will have to rise in order to attract enough creditors, which they are already doing in anticipation. In many nations, investors’ money is trapped in bonds near zero-percent interest. Knowing higher interest on new bonds is almost inevitable now, these investors want to get their money out of current bonds. Even in the US, who wants to be stuck in bonds at 2.5% for ten years when two to three years from now, interest may be at 5%?

    The prevalent thinking is that Trump’s credit-card spending spree will heat the economy with numerous new jobs, and those new jobs will raise wages in order to attract enough workers. The increased demand for great amounts of materials will also drive up the cost of materials for everyone. The combination of many more workers flush with new cash and rising demand for materials means inflation will rise significantly; and inflation eats away at the value of money stored in bonds. So, one more reason to exit bonds. Goldman Sachs believes the main effect from fiscal stimulus this late in the employment recovery curve will be to drive up interest and inflation.

    In my view, all of that means the Fed’s statement that it will be raising interest more often next year is now irrelevant. I said that before the Fed’s last meeting, and I think we see it is true in the stock market’s relative indifference to what the Fed said. Interest rates are already rising everywhere in the US economy, regardless of the Fed’s target. So, the Fed is clearly failing to accomplish anything with its stated target rate because the market is finally taking over and driving interest. That is why it was easy for the Fed to say it will increase its number of rate increases. I suspect its stated target will play catchup all year in 2017 to what the market is already doing with interest rates.

    So the bond bull is breaking; but that break can cause major bond funds to wind up in liquidity traps where they cannot pay off investors who want out fast enough because the more they sell bonds that people don’t want anyway to raise cash and pay out investors, the more they have to lower the price to make a sale, driving down the value of the bonds they continue to hold, causing more investors to want out. The breaking of the longest and highest bond bull market in history could become a financial vortex, and bond values have already been falling at their fastest rate in history.

    David Gundlach, the bond king who manages the DoubleLine Total Return Bond Fund, sees trouble if bonds get about half a percent higher than they are today:

     

    We’re getting to the point where further rises in Treasurys, certainly above 3 percent, would start to have a real impact on market liquidity in corporate bonds and junk bonds…. Also, a 10-year Treasury above 3 percent in my view starts to bring into question some of the aspects of the stock market and of the housing market in particular. (Newsmax)

     

    If bond funds go bust, they will likely take banks and retirement funds and ultimately the whole economy down with them, since almost everyone has been parking large amounts of money in bond funds because they are typically viewed as safe havens in uncertain times. If all of that goes down, the stock market likely does, too. It’s hard to see how it wouldn’t. It’s always been hard for me to see which would go first in the next big drop back into the Great Recession because both look so dangerous, and it is still hard to say. Will the insolvency of bond funds wipe out some banks and hedge fund managers, taking their stocks down to nothing, or will irrational exuberance in the stock market give way to panic? Right now, it appears to me that bonds will lead the crash.

    Of course, I predicted the Epocalypse of 2016, so you might not want to listen to me. (Though I did say it might not happen until after the election when the Fed gives up and lets Trump take the fall.) I also predicted a second plunge in the price of oil in 2016, and that didn’t happen either. My predictions for 2016 were apparently badly off (at least in timing) for the first time in almost a decade. I started writing regularly on eonomics after predicting the crash of the housing market nearly to the month back in 2007, which I said would quickly become an enduring global catastrophe, the likes of which few people alive had ever seen.

    That said, I anticipate the remainder of this December will go something like last year’s transition into the new year where the market crashed in the manner I said it would by going up first (due to euphoria that the Fed’s interest rate increase didn’t bring down the house), then rounds off and then falls off a cliff; but we’ll see. I’m not certain of that this year, as I was last year, and the fall off the cliff last year was not as severe as I thought it would be … though it was the worst January in the history of the stock market. This year, the euphoria is MUCH higher, so the fall could be much greater and be the kind that I anticipated for 2016.

     

    Is it irrational for stocks to rise due to betting on the Trump card?

     

    It could be. Consider that the entire marketplace began shifting overnight out of bonds and into stocks when Trump won, and it’s still shifting like a huge landslide. What if it repositions to this large degree, and then Trump changes his positions … again? As a matter of fact, he’s already started to backpedal from his infrastructure pledge just as he has been doing from almost all of his stated campaign pledges since being elected:

     

    Trump made rebuilding the nation’s aging roads, bridges and airports very much part of his job-creation strategy in the presidential race. But lately lobbyists have begun to fear that there won’t be an infrastructure proposal at all, or at least not the grand plan they’d been led to expect…. Senate Majority Leader Mitch McConnell tried to tamp down expectations last week, telling reporters he wants to avoid “a $1 trillion stimulus.” And Reince Priebus, who will be Trump’s chief of staff, said in a radio interview that the new administration will focus in its first nine months with other issues… He sidestepped questions about the infrastructure plan. In a post-election interview with The New York TimesTrump himself seemed to back away, saying infrastructure won’t be a “core” part of the first few years of his administration…. He acknowledged that he didn’t realize during the campaign that New Deal-style proposals to put people to work building infrastructure might conflict with his party’s small-government philosophy. “That’s not a very Republican thing — I didn’t even know that, frankly,” he said. (Newsmax)

     

    Seriously? Wow! How could he not know this, given that Republicans have resisted doing any infrastructure stimulus plans for eight years? He is either scarily out of touch if he didn’t realize he’d have a fight from the Republican congress, or this statement is proof that Trump was a Trojan horse from the beginning. This is a remarkably rapid turn from the New-Big-Deal plan that Steve Bannon advocated as being the economy’s salvation, given that Trump is not even in office yet.

    We could have one wild roller coaster ride in 2017 since the market is entirely repositioning itself toward Trump’s infrastructure pledge if that plan takes a few years to come about or doesn’t make it through congress at all … or maybe doesn’t even get presented. It certainly never had a chance of making it through congress unless Trump pushed hard and leveraged his campaign victory toward that end, and the above statements don’t sound like Trump has any push left!

    Zero Hedge recently reported on growing Republican resistance to Trump’s tax and infrastructure plans:

     

    [In an article titled] “A “Big Problem” Emerges For Trump’s Economic Plan” … we reported that while the market may (still) be blissfully unaware about the emerging conflict between Trump’s debt-fueled vision for the future, Republican politicians had started to notice…. Republican lawmakers warned “that there could be a major obstacle to enacting President-elect Donald Trump’s agenda: the national debt.” “I was disappointed that it wasn’t brought up in the campaign,…” Sen. Jeff Flake (R-Ariz.) said of deficits and debt. “So I’m very concerned about it. It’s going to be tough to address if there’s no push from outside of the Congress,” he added. “I’m very concerned about it. It’s the biggest problem we face, by far.”

     

    Rapidly rising interest rates already mean the infrastructure program will become much harder to finance. If Trump waits three years to get seriously started, interest rates could make the plan nearly impossible, plus he will likely have expended all his political capital that comes from a surprise election victory, which will be ancient news by then. He will need that capital to get the plan through a reluctant congress.

    Rising interest rates already mean the mammoth national debt that came about as the result of the Great Recession will become much harder to finance over the next few years, even without taking out another trillion for new infrastructure. So, that will be a new and serious burden on the economy unless so much money flees Europe to bond and stock safety in the US that we’re saved by dumb luck … as once again being the best horse in the glue factory.

    So, is the stock market irrational in its exuberance for shifting so much just because of Trump’s pledges, which are far, far from becoming reality? I think so. I haven’t even talked about Democrat resistance to Trump’s plans, and he’s already got resistance from the Republican leader of the senate. He is already fading back on his own push for the plan … before he is even in office. He has faded back on almost everything he has promised.

    So, I think it is extremely irrational for the market to completely reposition from bonds to stocks — especially banking stocks — when Trump is hedging his words on all of his pledges … backpedaling hard on immigration enforcement and on putting Hillary in jail and now even on infrastructure spending.

    David Rosenberg, chief investment strategist at Gluskin Sheff & Associates Inc., agrees:

     

    The bullish run “probably can get extended into the new year,” but “we’ve just taken a very big leg up here, and levels of sentiment, levels of market positioning and levels of valuation do have me a bit worried that if we see any disappointment at all, it could lead to the sort of pullback we had last year….” Rosenberg calls current valuation levels “extreme.” (Newsmax)

     

     

    1929 stock market crash

    Gathering around the stock ticker in the US stock market crash of 1929.

     

    That doesn’t mean the market won’t keep going up. Who knows what the maximum height or duration of irrational exuberance is (because who knows how crazy people can get); but I am certain of this much: the higher stock market rockets upward on such irrationality, the harder it falls into the chasm of ever-growing debt from which it has been constructed. NO significant economic reforms have happened since the start of the Great Recession. There has been no significant improvement in corporate earnings, just a lot of expanded debt to buy back shares in order to improve Price-Earning ratios, which still look terrible. The entire market is but a poof of speculative hot air.

    But, for the time being, Merry Christmas. If you’re not heavily invested in stocks or bonds, raise a glass of cheer and party on because you have less to fear. There is nothing you’re going to do that can stop the markets (in stocks and bonds) from having their hangover when the bubbly stuff is over and irrational exuberance suddenly looks like delirium. Our greatest economic crashes have always happened when least expected.

  • Hillary Voters Ate Their Feelings On November 9th – Cheesecake Orders Surged 72%

    On Novemer 9, 2016, America’s pampered, Hillary-supporting snowflakes chose to express their complete devastation in a variety of ways.  Some took to the streets to riot and burn down entire city blocks of private property…

     

    …Lena Dunham, in a letter entitled “Don’t Agonize, Organize,” gave us excruciating details of how she simply lay in the shower “crying,” “mumbling incoherently” and “clutching herself”…which is way more than any of us needed to know.

    By the time we’d made it over the bridge, a friend called. “It’s over,” she said. “I love you.” I was frozen. We stopped at the diner. No one was speaking as they ate, no one in the whole place.

     

    At home I got in the shower and began to cry even harder. My boyfriend, who had already wept, watched me as I mumbled incoherently, clutching myself. “It wasn’t supposed to go this way. It was supposed to be her job. She worked her whole life for the job. It’s her job.”

    Lena Dunham

     

    Still others wandered aimlessly in the Arizona desert on shroom-induced “vision quests” seeking guidance from the “big red rock”oh wait, that was Lena Dunham too.  Oh well, you get the idea.

    Lena

     

    Finally, new evidence from the calorie counting app, Lose It!, and meal-ordering app, Caviar, suggest that the majority of America’s disaffected millennial democrats simply lay in bed eating their feelings. 

    According to the CEO of Lose It!, the number of active users going to the gym on the Wednesday after election day this year declined by over 4x the typical mid-week decline.  Per Bloomberg:

    So they did what Americans do best: They ate. And ate. And ate.

     

    Lose It!, a calorie counting app that helps users track their daily food intake, says there’s always a Tuesday to Wednesday drop-off of active users, as dieters lose motivation they had earlier in the week. (Ever notice how the gym is always more crowded on Monday?) But something funny happened the Wednesday after Election Day. The drop-off rate was four times as much as usual.

     

    “There was definitely a post-election slump,” said Charles Teague, chief executive officer of Lose It!. The company doesn’t record its users’ political leanings, but it says 75.8 percent are female and 77 percent are aged from 18 to 44—demographics that swung to Clinton.

    Meanwhile, meal-ordering app Caviar, which operates in 15 urban markets like Boston, New York and Seattle that all swayed massively towards Hillary, said that orders of cheesecake, pie and ice cream surged 72% the day after Hillary lost.

    Meanwhile, orders for desserts such as cheesecake, pie, and ice cream were up 72 percent on Caviar, a meal-ordering app operating in 15 urban markets, including Boston, New York, Dallas, and Seattle. Clinton also carried cities with 50,000 residents or more with a strong margin, even in deep-red Texas.

    On the bright side, unintentional pregnancies collapsed in the days following November 8th.

    Eating Feelings

  • Geopolitics, Globalization, And World Order: Part 1

    Submitted by Federico Pieraccini via Strategic-Culture.org,

    Understanding the objectives and logic that accompany the expansion of nations or empires is always of paramount importance in helping one draw lessons for the future

    In this series of four articles I intend to lay a very detailed but easily understandable foundation for describing the mechanisms that drive great powers. To succeed, one must analyze the geopolitical theories that over more than a century have contributed to shaping the relationship between Washington and other world powers. Secondly, it is important to expound on how Washington’s main geopolitical opponents (China, Russia and Iran) have over the years been arranging a way to put a stop to the intrusive and overbearing actions of Washington. Finally, it is important to take note of the possibly significant changes in American foreign policy doctrine that have been occurring over the last twenty years, especially how the new Trump administration intends to change course by redefining priorities and objectives.

    The first analysis will therefore focus on the international order, globalization, geopolitical theories, their translations into modern concepts, and what controlling a country’s sovereignty means.

    Before examining geopolitical theories, it is important to understand the effects of globalization and the changing international order it entails, a direct consequence of US strategy that seeks to control every aspect of the economic, political and cultural decisions made by foreign countries, usually applying military means to achieve this objective.

    Globalization and the International Order

    It is important to first define the international order among nations before and after the collapse of the Berlin wall, especially focusing on the consequences of existing in a globalized world.

    For the first half of the twentieth century the world found itself fighting two world wars, then, during the Cold War, lasting from 1945 to 1989, the balance of power maintained by the US and USSR held the prospect of a third world war at bay. With the dissolution of the USSR, the United States, the only remaining world superpower, thought it could aspire to absolute domination over the globe, as was famously expressed through the Project for A New American Century. Putting aside for a moment perpetual wars, one of the key strategies towards fulfilling this objective was the so-called experiment of globalization, applied especially in trade, economics and finance, all of course driven by American interests.

    Having achieved victory in the Cold War over its socialist rival, the world went from a capitalist system to a turbo-charged capitalist system. US corporations, thanks to this model of world globalized economy, have experienced untold riches, such as Apple and other IT corporations generating amounts of cash flow equivalent to that of small countries.

    Banks and US financial institutions such as Wall Street incrementally increased their already considerable influence over foreign nations thanks to the rise of computer technology, automation and accounting deceptions such as derivatives, just to give one example. The FED implemented policies that took advantage of the role of the dollar in the globalized economy (the dollar is the premier world reserve currency). Over the years this has caused economic crises of all kinds all over the world, defrauding the entire economic system, consisting of schemes such as being able to print money at will, allowing for the financing massive wars, even going so far as lowering interest rates to 0% to keep banks and big corporations from failing – all a repudiation of the most basic rules of capitalism. All this was made possible because the US being the sole world power after 1989, allowing Washington to write the rules of the game in its favor.

    Since the fall of the Berlin Wall, Wall Street, Big Oil and military corporations, health-care providers, the insurance and agricultural industries slowly replaced national governments, managing to dictate agendas and priorities. A political form of globalization has led to an expropriation of national sovereignty in Europe, with the creation of the Euro and the Lisbon Treaty signed by all EU nations in 2007.

    Globalization has forced the concept of sovereign states directed by their citizens to be replaced with an international superstructure led by the United States, driving away even more citizens from the decision-making process. The European Union, and in particular the European Commission (not elected, but appointed), is unpopular not only for the decisions it has taken but also for the perception that it is an imposter making important decisions without ever having been elected.

    Basically, with the end of the USSR, the international order went from a relationship between states made up of citizens to a relationship between international superstructures (NATO, UN, IMF, WTO, World Bank, EU) and citizens, with the weight of the balance of power decisively in favor of the globalists with the economic burden resting on the people.

    The international order and globalization are therefore to be interpreted according to the logic of Washington, always looking for new ways to dominate the globe, preserving its role of world superpower.

    It is also for this reason that it is important to understand some geopolitical theories that underlie US strategic decisions in the pursuit of world domination. These theories are some of the most important with which Washington has, over the last 70 years, tried to pursue total domination of the planet.

    MacKinder + Spykman + Mahan = World Domination

    Heartland

    The first geopolitical theory is the so-called Heartland theory, drawn up in 1904 by English geographer Sir Halford Mackinder. The basic principle was the following:

    «Heartland or Heartlands (literally: the Heart of the Earth) is a name that was given to the central zone of the Eurasian continent, corresponding roughly to Russia and the neighboring provinces, by Sir Halford Mackinder, the English geographer and author of Democratic Ideals and Reality; the Heartlands of the theory was submitted to the Royal Geographical Society in 1904.

     

    The Heartland was described by Mackinder as the area bounded to the west by the Volga, the Yangtze River to the east, from the Arctic to the north and south from the western Himalayas. At the time, this area was almost entirely controlled by the Russian Empire.

     

    For Mackinder, who based his theory on the geopolitical opposition between land and sea, Heartland was the "heart" button of all the earth civilization, because logistically unapproachable by any thalassocracy. Hence the phrase that sums up the whole concept of Mackinder’s geopolitics: ‘Who controls East Europe commands the Heartland: Who controls the Heartland commands the World-Island: Who controls the World-Island commands the world’».

    In terms of countries, the Heartland consists mainly of Russia, Kazakhstan, Afghanistan, Mongolia, the Central Asian countries, and parts of Iran, China, Belarus and Ukraine.

    Rimland

    The second geopolitical theory, another important lodestar for US foreign policy, was developed in the 1930s by the American Nicholas J. Spykman, also a student of geography as well as a scholar of MacKinder’s theory. Spykman, thanks to advancing naval technology, added to the definition of the Heartland theory the Rimland theory. The Rimland is divided into four main areas: Europe, North Africa, Middle East and Asia.

    «For ‘world island’ it means the Eurasian region, ranging from Western Europe to the Far East. If for Mackinder the Tsarist empire represents the aforesaid area-pin, Spykman instead focuses on the area around Heartland, i.e. Rimland, recognizing it as a strategic point of great importance. The Rimland is characterized by the presence of rich countries, technologically advanced, with great availability of resources and easy access to the seas. Its size at the same time makes sea and land attacked by both sides. On the other hand this means that its dual nature as a possible mediating zone between the two world powers: the United States and Russia. The greatest threat from the geopolitical point of view lies in the union between Heartland and Rimland under one power».

    The Rimland essentially consists of Europe (including eastern Europe), Turkey, the Middle East, the Gulf States, India, Pakistan, Southeast Asia (Brunei, Cambodia, Laos, Malaysia, Myanmar, the Philippines*, Thailand, Vietnam) and Japan.

    As one can see from observing a map, the United States is not physically close to either the Rimland or the Heartland. They are both on the other side of two 6,000-mile oceans. The US is undeniably protected in this way, almost impervious to attack, with an abundance of resources and powerful allies in Europe. These are all characteristics that have favored the rise of the American superpower throughout the twentieth century.

    But world domination is a different matter and, given the geographical location of the US compared to the Heartland and Rimland, first requires a large capacity to project power. Of course with two oceans in between, it is naval power through which power has been conveyed, especially in the early part of the last century.

    Mahan and Maritime Power

    The third geopolitical theory is based on the importance given to maritime (or naval) power. The author of this theory, propounded towards the end of 1800, was US Admiral Alfred Thayer Mahan.

    «Mahan was a ‘precursor’ to international organizations. He assumed that through a union between the United States and Britain, being two maritime powers, they could unite to share the conquest of the seas. The key concept is that ‘the maritime powers are united in opposition to those continental.’ Mahan explains the concept of naval doctrine, which is the policy that states pursue in the maritime and military arenas. In order for a state to have a naval doctrine, it must possess a substantial navy, as well as of course access to the sea, adequate projection capability, adequate means, and have strategic objectives to be protected (such as security zones exposed to risk)».

    As one can easily understand, these three doctrines are central to controlling the whole world. Dominating the Heartland is possible thanks to the control of the Rimland, and in order to conquer the Rimland it is necessary to control shipping routes and dominate the seas, relying upon the Mahan theory of maritime supremacy.

    In this sense, seas and oceans of great geographic importance are those that encircle the Rimland: The East and South China Seas, the Philippine Sea, the Gulf of Thailand, the Celebes Sea, the Java Sea, the Andaman Sea, the Indian Ocean, the Arabian Sea, the Gulf of Aden, the Red Sea, and finally the Mediterranean.

    In particular, straits such as Malacca, between Indonesia and Malaysia, or the Suez Canal, are of strategic importance due to their role as a transit route and connection between all the seas adjacent to the so-called Rimland.

    A bit of history. Route to global domination

    It was Hitler's Germany during World War II that tried to put into practice the theory of geopolitics MacKinder was describing, managing to seize the Heartland but ultimately amounting to nothing with the final victory of the Red Army, who rebuffed and destroyed the Nazis.

    After the end of World War II, the United States placed the Soviet Union in its crosshairs, with the intention of conquering the Heartland and thereby dominating the world. Alternatively, Plan B was to prevent other nations from teaming together to dominate the Heartland. This explains the historical conflicts between the US and Iran and between Russia and China, the three most important nations composing the Heartland.

    Russia, since Tsarist times and throughout the Soviet period to today, has always been in the crosshairs of the United States, given its geographical location central to the Heartland.

    Iran also constitutes a valuable piece of the 'Heart of the World', which was gifted to the Anglo-Americans courtesy the Pahlavi monarchy lending itself to the American plan to conquer the heart of the land. It was only after the 1979 revolution, which ousted the Pahlavi monarchy and installed an Islamic Republic, that Tehran became an enemy of Washington.

    The reason why Afghanistan was invaded and Ukraine destabilized, and why the Belarusian leadership is hated almost as much as is the Russian one, is the same, namely, the geographical positions of these countries in composing the Heartland compels the US to conquer them as part of its grand strategy to dominate the world through the control of the Heartland.

    The Republic of China, another constituent part of the Heartland theory, was during the Cold War the great Asian pivot thanks to Kissinger’s policy aimed at curbing the USSR and preventing the birth of a possible alliance between Tehran, Moscow and Beijing that would dominate the Heartland, especially in the late 1980s. The United States, instead of directly attacking China, used it against the Soviet Union. Washington's primary goal, as well as to expand its influence everywhere, was to prevent any kind of alliance that would control the Heartland, specially preventing any alliance or understanding between Moscow and Beijing; but this will be very well explained in my third analysis on how Eurasia reunited to reject the American global empire.

    Control of a nation

    Historically, control of a nation takes place through military power that allows for a variety of impositions. Also, culture is part of the process of conquering a nation. Today, other than militarily, it is mainly economic power that determines the national sovereignty of a nation. In the modern world, especially in the last three decades, if you control the economy of a nation, you control the rulers of that nation. The dollar and neoliberal experiments like globalization are basically the two most powerful and invasive American tools to employ against geopolitical opponents. The application of military force is no longer the sole means of conquering and occupying a country. Obligating the use of a foreign currency for trade or limiting military supplies from a single source, and impeding strategic decisions in the energy sector, are ways the globalist elites are able to dominate a foreign country, taking control over its policies. The European Union and the NATO-member countries are good examples of what artificially independent nations look like, because they are in reality fully dispossessed of strategic choices in the areas mentioned. Washington decides and the vassals obey.

    It is not always possible to employ military power as in the Middle East, or to stage a color revolution as in Ukraine. Big and significant nations like Russia, India, China and Iran are virtually impossible to control militarily, leaving only the financial option available. In this sense, the role of central banks and the de-dollarization process are a core strategic interest for these countries as a way of maintaining their full sovereignty. In going in this direction, they deliver a dramatic blow to US aspirations for a global empire.

    The next article will focus on how the United States has tried to implement these strategies, and how these strategies have changed over the last seventy years, especially over the last two decades.

  • In His Latest Letter, Odey Refuses To Throw In The Towel

    With his fund down ~50%  YTD, one wonders if Crispin Odey should be thinking about quietly exiting stage left after along and mostly illustrious career. However, as his latest letter suggests, Odey is just getting his second, or maybe third, wind and is confident that he will ultimately win the war against central bankers, although as he himself points out, the risk is not so much his own fund blowing up as much as LPs saying enough to active investing altogether, and cautioned that “skilled investors are being driven out by mindless (passive) investing.”

    Putting it mildly (especially for his own fund), Odey said that “this has been a difficult year for active managers,” and added that “passive investing has taken money which typically would have been in the bond market and deposited it in the equity market.”

    While it remains to be seen if active management is on the endangered list, Odey has bigger troubles with his own LPs in the coming weeks, although his fortune may change in 2017 when as he warns, “central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates. There could be trouble ahead.”

    There could, indeed, which simply means the cycle starts from scratch and central banks LBO even more of the global capital markets, until the 0.01% own all the assets while the rest “own” the debt.

    His full November letter below:

    This is not the beginning of a new cycle. This recovery which began in 2009 on the back of zero interest rates is long in the tooth. After 7 years, the benefits of low interest rates – cheaply financed cars and houses – are played out, whilst oil is now a conundrum. For half the world, the problem is that oil has fallen 50% and for the other half the problem is that the price of oil is up 50%.

    What is true is that there are two problems for the developed world that have not gone away. They are that house prices, and assets in general, are too expensive to be bought out of income. The disparity between the “Haves” and the “Have-nots” is too great. Secondly and relatedly is the brutal difference in lifestyle of the young and the old.

    QE has resulted in very high asset prices and ushered in weaker and weaker productivity gains. Low growth cannot sit alongside rising inequality.

    Brexit, Trump, the Italian referendum came about because the problems seem impossible to solve. Everyone is now looking to any individual who believes he can solve the problem.

    A world fuelled by government spending initiatives, as demanded by voters, promises to undermine the careful husbandry of the developed economies crafted by the policies of central banks.

    If unemployment is already at cyclical lows, new expansionary policies will get reflected in higher inflation reasonably quickly.

    At present markets are just pleased to see a yield curve coming back, but there is no thought that inflation will truly come through.

    Part of this is a belief in the USA that Trump is like Reagan and 2017 is like 1981. However, Reagan was elected after a re-cession. Interest rates were over 20% when he took office. Indebtedness for the whole economy was at 0.9x GNP and the P/E for the stockmarket was 12x. Trump comes in with indebtedness at 3.5x GNP and the stockmarket on 22x current earnings.

    Leverage means every 1% rise in interest rates demands a 3% rise in incomes to keep debt serviceable.

    This has been a difficult year for active managers. 70% of turnover is now accounted for by passive managers. Passive investing has taken money which typically would have been in the bond market and deposited it in the equity market. Naturally skilled investors are being driven out by mindless (passive) investing.

    Is this the time to dump the active managers? One imagines that their time comes again when this sea of money starts to ebb, driven by inflation and higher interest rates. The UK is already facing it. Companies are encountering higher import prices, which is increasing the working capital requirement as well as wage pressures. Is this the beginning of a new cycle?

    Beware leap years! 1994 was the year that deflation came to the world, and a difficult year then was the prelude to many hap-pier years because the skill set required for the subsequent years was exactly the opposite of what was required for 1994.

    Similarly a world of inflation and default is a world in which active managers should outperform.

    Certainly, politicians are no longer interested in higher prices for assets. Politics demands the solution of the “Haves” and “Have-nots”, the young and the old.

    Stockmarkets since the Trump victory have merely served to put cyclical sectors on the same high ratings of growth compa-nies. Whether it is the oil price or other commodities, spot prices are now almost flat going out along the curve. There is little to go for in this area unless inflation comes through.

    China is now the source of inflation. Tax changes in the USA involving raising import prices by 20% effectively and lowering export prices by 12%, will also increase inflationary pressures.

    2017 looks to be a year when central bankers will have to respond to what their governments are doing fiscally, rather than bolstering asset prices with low interest rates. There could be trouble ahead.

    * * *

    Curious what Odey’s biggest positions were as of November 30? The answer is  below.

  • Here Are The Countries Where Millennials Will Have To Work Until They Die

    It turns out there is a downside to spending 120% of your annual income every year from the time you graduate college until that day you turn 40 and finally realize that you’re getting old and have absolutely no liquid assets and no hopes of ever retiring.  While the above strategy seemingly makes sense to our elitist, Ivy League-educated central planners at the Fed who have waged a nearly decade-long war on saving (because how can we have economic growth if people aren’t willing to lever their income 5x and spend every dollar they make?), the roughly 19% of Americans who are over the age of 65 and are still forced to work are probably wishing they could go back and do things slightly differently. 

    As Bloomberg points out, the percentage of 65 years olds working in the U.S. today is higher than at any point going back to at least 1965.

    Millennials

     

    Unfortunately, this looks to be a record that millennials are destined to beat.  As we recently pointed out (see “Most Millennials Have Less Than $1,000 In Savings, Live Paycheck-to-Paycheck“), the majority of millennials are living paycheck to paycheck.

    A recent survey of millennials by HowMuch.net found that 51.8% of those aged 18-34 have less than $1,000 held between bank accounts and cash savings.

    As Visual Capitalist’s Jeff Desjardins notes, this echoes previous data we’ve seen – not just on millennials, but Americans in general. For example, we know that 14% of Americans have “negative” wealth. We also know that 62% of Americans don’t have emergency savings that could cover a $1,000 hospital visit or a $500 car repair.

    Taking that into consideration, here’s a deeper dive into the more recent millennial data…

    Courtesy of: Visual Capitalist

     

    Meanwhile, as a testament to their strong work ethic, a study by ManpowerGroup recently found that roughly 30% of millennials envisioned taking an “extended break” from work at some point in their careers to “relax/travel/vacation” while another ~20% said they’d take a break to “pursue a life dream or hobby.”  Sure, why not?  If everything goes horribly wrong then taxpayers will be waiting to payoff your student loans for you…so no worries.

    Millennials

     

    And, unless you thought this was just a phenomenon limited to America’s snowflakes, turns out millennials all over the world have very little confidence in their ability to save.

    Millennials

     

    Well, at least we’re not alone…misery loves company as they say.

  • Forget Monte Paschi, Italy May Have A Far Bigger Problem

    While the metaphorical 'earthquake' of a systemic banking crisis is coming to a head, it appears Italy may have a far more existential problem on its hands. As The Independent reports, one of the world’s most dangerous supervolcanoes is showing signs of reawakening under the Italian city of Naples.

    The Campi Flegrei may be nearing a critical pressure point necessary to drive an eruption for the first time in 500 years, according to scientists.

    Researchers say the volcano is moving towards a threshold beyond which rising magma could spark the release of fluids and gases at 10 times the normal rate.

    This surge would cause an injection of extremely hot steam into surrounding rocks, Giovanni Chiodini, lead author of the study, told AFP.

    This could ultimately trigger a “very dangerous” eruption for the three million people living in the area.

    Since 2005, the Campi Flegrei  has been undergoing “uplift”, which is the accumulation of magma under the surface of a volcano.

    In response, Italian authorities raised the threat level from green to yellow in 2012, signalling the need for the supervolcano to be actively monitored.

    Four years ago, scientists warned any eruption could kill millions living near or on top of the volcano.

    "These areas can give rise to the only eruptions that can have global catastrophic effects comparable to major meteorite impacts," said Giuseppe De Natale, head of a project to monitor the volcano's activity.

    Nearby Mount Vesuvius, whose massive eruption buried Roman settlements including Pompeii in AD79, is also considered an active volcano.

  • 6 Charts That Make The Case We Are In Long-Term Secular Bear

    Submitted by John Mauldin via MauldinEconomics.com,

    As I look out over the coming years, I am convinced that we’ll see the blowing up of the biggest bubbles in history – including those of government debt and government promises. And it’s not just in the US, but all over the world.

    That will lead to an eventual global crisis of biblical proportions. Although, it isn’t clear what the immediate cause of the crisis will be.

    Let’s start with some basics

    The most common way to measure valuation is with the price-to-earnings ratio (P/E). Analysts compile P/E and other indicators from many companies to give us valuation metrics on entire markets and indexes.

    You can see overvaluation and undervaluation in this chart from my friend Ed Easterling of Crestmont Research.

    The red line is the combined P/E ratio of the S&P 500 as originally reported. The green and blue lines are adjusted Crestmont and Shiller versions, which occasionally diverge. The P/E ratio spent most of the last century between 10 and 25.

    Presently, all three P/E versions are near or above 25, indicating overvaluation. This doesn’t mean the end is near—though it could be. But it does suggest that we are not at the beginning of another long-term bull market.

    P/E adjusted to economic growth

    The next chart illustrates the past and present trend in a different way.

    Direct your attention to the dashed line.

    It’s Ed’s long-term earnings baseline, which he adjusts to reflect the relationship of earnings to economic growth. Reported earnings per share go below the baseline during bear markets and above it in bullish periods. Currently, it is way above trend and is projected by S&P and many others on Wall Street to become even more so.

    The Buffett indicator

    The Buffett Indicator is essentially the market value of all publicly traded securities as a percentage of GDP. Intuitively, it seems odd that the combined value of every public stock would be worth more than the country’s annual production. But sometimes it is. Those periods tend to mark overvaluation, as you can see here.

    The interesting thing here is that right now, the Buffett Indicator—while down from its late 2014 peak—is still higher than it was before the 2008 financial crisis. That should not be encouraging if you’re a bull.

    S&P 500 median since 1964

    The next chart is from Ned Davis and shows us the S&P 500 median P/E back to 1964, which is 16.9 (dotted green line). The distance we are above or below the median is a valuation clue.

    Could the market get more overvalued? Absolutely. It did in the tech bubble.

     

    Household equity percentage vs. S&P 500 total return

    The following chart takes some explaining.

    It shows the percentage of household financial assets invested in stocks (blue line) versus the S&P 500 total return for the following 10 years (dotted line).

    Notice that the right axis is inverted and the dotted line tracks pretty close to the solid blue one. The correlation is 0.91, which is extraordinarily high.

    What the chart shows us is that a higher percentage of household assets in equities points to a lower annualized return over the next 10 years.

    Note the green arrow at the 2009 low. It points off to the right scale just below 15. That suggests that someone who bought stocks at that low point and holds them until 2019 will realize a roughly 15% annualized return.

    That’s the good news. The bad news is that the red arrow at 6-30-2016 means that the 10 years ending 6-30-2026 should produce a 3.25% annual gain. That’s not awful, of course, but it is nowhere near the 7% or more that many pensions and insurance companies think they can earn on their portfolios.

    We are way overdue for a correction

    Bottom line: We are way overdue for a correction. Again, our situation is not the worst it’s ever been, but we are beginning to bump up against historical lines in the sand.

    Here’s the chart, which shows the number of days before the start of 5%, 10%, and 20% corrections.

    Here is how you read this chart:

    The top section shows the history of the S&P 500 Index from 1928 to present. The next three sections show the number of days prior to the start of 5%, 10%, and 20% corrections.

    I think we are still in a very long-term secular bear, although there has been a clear cyclical bull market since 2009. I think the next global recession (hopefully not a depression) will potentially give us a vicious bear market that will mark the end of this secular bear.

    You can see that it has been 116 days since we had a 5% correction. Since 1928, the average number of days before a 5% correction occurred was 50. In secular bull periods, the average number of days was 84. In secular bear periods, the average number of days was 31.

    Note that we have been 210 days without a 10% correction. Since 1928, the average number of days before a 10% correction occurred was 167. In secular bull periods, the average number of days was 331, while in secular bear periods, the average number of days was 91.

    It has been 1955 days since we suffered a 20% correction. Since 1928, the average number of days before a 20% correction occurred was 635. In secular bull periods, the average number of days was 1105. In secular bear periods, the average number of days was 486.

    The current case of 1955 days without a 20% correction is more than three times the average of 635 days (for the whole period from 1-3-1928 to 12-8-2016).

    For this record number of days, let us all join hands and exclaim, “Thank you, Fed, BOJ, and ECB!”

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Today’s News 23rd December 2016

  • TUCKER CARLSON CRUCIFIES CNN REPORTER FOR RETWEETING ADAM SALEH PRANK

    How dare Brian Stelter, so called ‘journalist’ at CNN, retweet an obvious prank by some dipshit named Adam Saleh — over what he sensationalized to be ISLAMOPHOBIA at the hands of a fine American company called Delta Airlines.

    The claim by the very flamboyant and effeminate Adam Saleh was that he was merely talking a barbarous version of Arabic to his Mother, to which was met with an unrelenting form of ISLAMOPHOBIA by the employees at Delta, who quickly ferreted him off the fucking plane for obvious fears that he was about to stage a terrorist event by way of hijacking or shoe bomb detonation.

    Little did the plebian employees know that Adam was just an effete member of the youtube theatre, playing tricks on the people, hoping to cash in on his adsense ads on his stupid videos. In other words, he was full of shit. A simply cursory google search would’ve produced such valuable information, something the CNN journalist named BRIAN STELTER didn’t bother to do.

    Mr. Stelter didn’t bother to do a cursory search on Adam Saleh, instead opting to RETWEET his salacious story, because he’s a very dumb man — a stone aged type of person with savage qualities occupying a very low station in life. Most of the time Mr. Stelter is busy putting out stories about FAKE NEWS, while at the same time creating his own FAKE NEWS. The main stream media today is an active practice of a nonsensical nature, very Kafkaesque for you literary and Orsen Welles aficionados.

    Here’s Brian making fun of himself.
    loser

    The bow-tie less Tucker Carlson calls out Mr. Stelter, and the media as a whole, for being very stupid, falling for the oldest tricks in the book.

    Content originally generated at iBankCoin.com

  • Bitcoin Soars Above $900 As China Opens

    For the 3rd night in a row, China opens with a panic bid for Bitcoin. The cryptocurrency is now up over 14% in less than 3 days, topping $900 for the first time since December 2013. Interestingly yuan is not moving much tonight.

    The USD price for a Bictoin has soared over 14% in the last 2 days. We first warned of this 'outlet' for Chinese capital in September 2015 when Bitcoin was trading around $200…now it is topping $900…

     

    And volume is very heavy once again from China…

     

    Getting very close to record highs…

     

    As a reminder, back in 2013, the government classified bitcoin as a commodity and not currency, placing it outside the purview of the foreign-exchange regulator, the people said.  That does not mean, however, that China is powerless at limiting bitcoin's upside.

    Several Chinese government bodies including the People’s Bank of China and the financial regulators said in a joint notice that year that bitcoin functioned like a digital commodity without the legal status of a currency. The central bank said in January it is studying the prospects of issuing its own digital currency and aims to roll out a product as soon as possible.

    While China dominates bitcoin mining and trading, the government has shown caution over its spread in the nation. In 2013, the PBOC barred financial institutions from handling bitcoin transactions.

  • Federal Reserve Initiates End Game As Trump Heads To White House

    Submitted by Brandon Smith via Alt-Market.com,

    For years, alternative economic analysts have been warning that the “miraculous” rise in U.S. stock markets has been the symptom of wider central bank intervention and that this will result in dire future consequences. We have heard endless lies and rationalizations as to why this could not be so, and why the U.S. “recovery” is real.  At the beginning of 2016, the former head of the Dallas branch of the Federal Reserve crushed all the skeptics and vindicated our position in an interview with CNBC where he stated:

    “What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.It’s sort of what I call the “reverse Whimpy factor” — give me two hamburgers today for one tomorrow. I’m not surprised that almost every index you can look at … was down significantly.” [Referring to the results in the stock market after the Fed raised rates in December.]

    Fisher continued his warning (though his predictions in my view are wildly conservative or deliberately muted):

    “…I was warning my colleagues, “Don’t go wobbly if we have a 10-20 percent correction at some point. … Everybody you talk to … has been warning that these markets are heavily priced.”

    Here is the issue stocks are a mostly meaningless factor when considering the economic health of a nation. Equities are a casino based on nothing but the luck of the draw when it comes to news headlines, central banker statements and algorithmic computers. Today, as Fischer openly admitted, stocks are a purely manipulated indicator representing nothing but the amount of stimulus central banks are willing to pour into them through various channels.

    Even with the incredible monetary support pooled together by international financiers, returns on equities investments continue to remain mostly flat.  It would seem that the propping up of indexes like the Dow has been only for the sake of keeping up appearances. For many people, revenue is barely being generated.

    Unfortunately, the majority of Americans do not care to educate themselves on the finer points of finance. Their only relation to the health of the economy is their daily glance at the Dow. If it is green, or at all time highs, they assume that all is well, even if their gut is telling them something is not quite right.

    The elites that stand at the helm of the Federal Reserve understand this dynamic very well. They are not stupid. They know that the whole of the global economy could be in a shambles but as long as stocks remain positive the masses will continue to ignore reality until the flames of destabilization are at their very doorsteps.

    With this fact in mind one might think that the Fed would consider it in their best interest to keep stimulus measures operating indefinitely; but that is not what they are doing.

    In fact, the Fed along with other central banks like the ECB has been slowly peeling back pillars of support from markets that have been in place since 2008-2009 and leaving the system open to a crisis event that should have been dealt with years ago. I examined this process of deliberate destabilization in my article 'The Global Economic Reset Has Begun.'

    In that piece I outlined the three major pillars holding up the U.S. market system and certain parts of our economy and how they were being systematically removed.

    The first pillar was the use of bailouts and quantitative easing measures. These were diminished through the implementation of the Fed “taper,” which I predicted would happen three months prior that year.

    The second pillar was the use of near zero interest rates, which allowed numerous banks and corporations to access low-cost and no-cost overnight loans from the Fed. These companies then used these loans in large part to support a never-ending program of stock buybacks, which reduced the stock pool and artificially boosted the values of the remaining stocks.  I predicted in August of 2015 that the Fed would hike interest rates and that this would be the beginning of the end for the stock buyback bonanza. The Fed hiked rates in December of that year.

    This process of removing backdoor manipulation through low interest rates should be our main concern right now. Early in 2016 I believed that the Fed would reach a position in which it would finally unleash a series of rate hikes. I did not think they would be so blatant as to wait until right after the U.S. presidential election to do so. I was wrong.

    This is why I eventually predicted the launch of a series of rate hikes starting right after the election of Donald Trump in my article 'World Suffers From Trump Shell Shock  Here’s What Will Happen Next.' The Fed has now once again hiked interest rates with assertions that they will be “accelerating” such hikes throughout 2017.

    As I have been arguing for most of the past year, the election of Donald Trump was inevitable and would precede the triggering of the final stage of our ongoing economic crisis. I came to realize that the Fed’s timing of their latest rate hike is highly strategic. Not only does it set the stage for a series of hikes that will crush U.S. stock markets this coming year and finally shock the public out of their fiscal stupor, but it also maneuvers the crisis right into the lap of Donald Trump and the conservative movements that support him.

    Beyond this, it perpetuates an increasing Left/Right division in America. Think about it  during a fiscal crisis under Trump, tiggered by accumulating Fed rate hikes, liberals will immediately set upon Trump as the culprit, while conservatives will immediately defend Trump as a victim of Federal Reserve meddling.

    The Federal Reserve and the mainstream media are already composing the narrative by stating that Trump's potential economic policies and a widening budget deficit would REQUIRE higher rates at a faster pace in order to be accommodated.

    I have heard arguments from some that this tactic would simply not work. That people would “never buy” a narrative in which Trump and conservatives are blamed for a market collapse that was at least eight years in the making. I have to say, this view is incredibly naive.

    I understand why people would want to embrace the notion that the public is as savvy as the liberty movement when looking at economic events, but this simply isn’t reality. A large portion of the U.S. population identifies with the “Left” end of the political spectrum. We have already seen how they react in the face of a Trump election win. They are predisposed to believe that Trump is responsible for a market crash regardless of the facts. Not to mention, much of the rest of the world is economically ignorant and will likely jump on the anti-conservative bandwagon during a crisis as well.

    But the real master stroke of this strategy on the part of the elites is that it creates the perfect platform for the destruction of the U.S. dollar’s world reserve status  the third and final pillar I mentioned months ago that is supporting our economic system.

    Imagine that the Fed’s rate hike frenzy sparks an open feud between the central bank and Trump? Some people might say “Good! Shut the bastards down!” However, this is exactly what the elites want. With the Fed “at odds” with the president of the U.S., faith in the U.S. dollar will plummet. Its world reserve status will be destroyed. And instead of being blamed on central banks, the majority of people around the world will claim it was the fault of Trump.

    With a historically sufficient excuse for the end of dollar dominance in hand, the elites can move forward with their great global reset, which includes the replacement of the dollar with the IMF’s special drawing rights as the go-to reserve currency mechanism. The SDR basket is an essential bridge in the formation of a single global monetary authority and a true single global currency.

    I believe that the Fed will not only continue hiking interest rates throughout 2017, but that some of these rate hikes may be LARGER than many people expect (50 basis points or more). I believe this will be designed to foster extreme tensions between the executive branch and the central bank.

    A few months ago I would have said that Trump may or “may not” be aware of this dynamic and the potential that he is a scapegoat. Now that I have seen Trump’s cabinet picks which include neo-con and Goldman Sachs alumni, I have little doubt that he is fully cognizant of the plan.  I will be writing more on the issue of Trump as a "Trojan horse" in my next article.  In the meantime I would point out that all of the elements of psychological support for stock markets will also disappear in the face of a Trump verses establishment narrative.

    All those leftist media outlets cherry picking economic stats and telling half truths to support the recovery lie now have no reason to continue cheerleading for the economy. I expect that propaganda rags like Reuters and Bloomberg will quickly change their tune with Trump in the Oval Office and begin a consistent chorus of negative financial data. Not only will the Fed remove all support from the system, but the mainstream media will be pounding day traders with the kind of “doom and gloom” headlines that they have been criticizing us for over the years.

    Make no mistake, the election of Trump may have some in the liberty movement ready to pack up their preps and forget about any national crisis in their lifetimes, but the truth is, vigilance is needed now more than ever. I said it before the election and I’ll say it today  do not get comfortable; the times are about to get even more interesting.

  • Royal Mint And CME Make A Mint On The Blockchain?

    Royal Mint And CME Make A Mint On The Blockchain?

    The last fortnight has been an exciting one in the gold and blockchain space. Earlier this week Euroclear and Paxos announced that a group which included Société Générale, Citi, Scotiabank had completed the first pilot of the blockchain-based gold trading platform as being developed by Euroclear. In Canada, the Royal Canadian Mint became the latest sovereign mint to announce a blockchain product with GoldMoney.

    gold-bullion-sovereign-2017Royal Mint Gold Sovereigns 2017

    The Royal Mint in the UK had beaten the Royal Canadian Mint and GoldMoney to it by announcing at the end of November that they were launching a blockchain project, one which will be in direct competition with the Euroclear project.

    We will be looking at this week’s development in more detail shortly but today focus on the UK Royal Mint announcement and ask what this means for the 1,000 year old institution, the gold market and blockchain technology.

    The Royal Mint and CME Group announced a gold and blockchain ‘solution’ three weeks ago. As one would expect from a trading solution using blockchain, it will ‘log each transaction’. The two parties will collaborate on a digital gold asset called Royal Mint Gold (RMG) and will ‘transform the way traders and investors trade, execute and settle gold.’

    In a conference call quoted by the Internatonal Business Times, there was very little said about what made the plans any different to what is already being offered by the likes of Goldcore. Bars will be held in secure storage, represented on an online trading platform and then traded. But, a blockchain will be in place.

    Despite the fanfare and considerable PR benefit surrounding the announcement there is very little information on the hows and the whys of the decision by HM Treasury owned Royal Mint and the world’s largest futures exchange operator to launch a joint blockchain offering. Instead this appears to be about encouraging physical gold ownership, facilitated by a government who happen to own a storage facility.

    But what does it mean?

    Blockchain has to be the most hyped technology in a very long time. Even AI, IoT and VR, all of which are creating a lot of excitement, are not experiencing the same level of fuss.

    blockchain-gold
    Solutions for trading physical assets, based on the blockchain are becoming more popular and as a result more sophisticated. Many are autonomous which is obviously attractive to those who choose to invest in gold.

    This is where there is an interesting point when it comes to the Royal Mint and their interest in blockchain. It is too easy for someone unfamiliar with blockchain technology and the gold market to assume that this move by the 1,000 year old institution is to offer some kind of autonomy to the gold market.

    It seems that we live in a world where we shout ‘got a problem? Blockchain’ll fix it!’

    Take health records, for example. There is little doubt that blockchain technology really could transform the systems and processes that are currently in place. However those problems exist because of a multitude of reasons location, legacy systems, interest of invested parties to name a few.

    None of which will disappear with the appearance of a blockchain.

    The case is the same for gold and the blockchain. I do believe that blockchain could play a big role in the international gold market. But, in this case for the end customer and for the wider gold market I believe this will not have a significant positive impact. As explained earlier, this is a gold trading platform that happens to be using blockchain.

    Economist Ashe Whitener agrees

    “In my opinion, this is only news because the Royal Mint is basically a government-owned entity experimenting with blockchain. Just because something tangible like gold has a serial number on a blockchain, doesn’t mean that it is any more secure, safe or less risky.

    Since the underlying asset is still physical, we still must place our trust with the Mint in terms of vaulting the gold. So nothing here really changes.”

    What is it good for?

    This is likely better news for the blockchain industry than for the gold market. For the blockchain space an announcement by a 1,000 year-old, government owned institution along with the world’s largest futures exchange operator is another tick in the legitimacy box for this relatively new and much hyped technology.

    The announcement has lead to even more discussions about how the distributed ledger technology can be used in the world of gold trading.

    As Michael Scott wrote upon hearing the announcement:

    “It reflects blockchain’s ability to adroitly track and authenticate data, secured by a global ecosystem of computers which ensure that recorded transactions are tamper resistant and unalterable.”

    Does the Royal Mint need a blockchain?

    Blockchain’s abilities to remove uncertainties could be particularly beneficial to the gold market, a market that is so overrun with uncertainty and opacity that companies such as GoldCore go to great lengths to put systems and processes in place in order to guarantee transparency and accessibility.

    At present, very little information has been released by CME Group and the Royal Mint on the specifics of what kind of blockchain will be used, and in what capacity it will play a role.

    As Sandra Ro of CME said in the conference call

    “We will go into further details about exactly how a lot of process will work and the finer details around the platform at a later date.”

    What we do know (thanks to Ro) is that the blockchain in place will be a permissioned network. This effectively means that Joe Bloggs cannot decide he would also like to participate in the Royal Mint’s blockchain and start approving transactions. Instead, all actors will be known and ‘and there will be a mechanism by which validators will validate the transactions.’

    As the two parties have themselves said, this is not about a blockchain product, this is an investment platform that happens to use blockchain. However, be sure that both the Royal Mint and CME Group will have full oversight and likely control over the blockchain.

    The attraction of blockchain technology in the gold market, is similar to that in any other marketplace where there is an exchange of information (which may or may not lead to an exchange of an asset). A central database, or registry, is not needed thanks to the decentralised network of records.

    This creates some significant cost and time savings, as well as boosting the efficiencies in how information is recorded, updated and shared.

    One of the claims by the Royal Mint is that by using a blockchain solution, they will not have to pass storage fees onto clients. How using the blockchain means that storage fees no longer have to be charged is something that is not yet clear. If RMG is fully-backed by gold then who is covering the storage and insurance costs for participants?

    Is it not of interest as to why an institution owned by a heavily indebted government would be making a lot of noise about it’s gold trading platform that just so happens to be connected to some storage vaults?

    Boost to London?

    The decision to use blockchain technology is, according to the UK’s Daily Telegraph “a bid to broaden London’s appeal as a place to buy and sell bullion.”

    Currently the London Gold market, along with the COMEX is the biggest price creator in the gold market. Around $5 trillion of gold deals are done in the capital city, per year. The City is not currently struggling in terms of appeal, to the mainstream at least.

    However of late a series of moves across the globe may have current gold market influencers thinking about what the future may hold.

    The move to blockchain by both groups is not surprising.

    The Royal Mint has been looking at the space for the last couple of years, whilst CME Group have investments in two blockchain companies. Both will no doubt be feeling the pressure from the developments that are going on in London. We recently discussed the increasingly fragmented London gold market, which has new players offering blockchain solutions for various aspects of gold trading.

    In the US, CME Group will also be carefully watching TradeWindMarkets, a spin off from IEX Group (of Flashboys fame) which will also be launching a blockchain supported gold exchange.

    Outside of London announcements by Singapore and China, plus the setting of the Sharia Gold Standard likely has current price setters in the gold market, anxious about how they can maintain their stronghold.

    But this is unlikely to just be about increasing awareness of the London Gold market. The big gold trading institutions are already aware of, and are using the OTC market.

    Royal Mint gold is not diversification

    Gold investors buy gold to diversify their portfolio. There are more detailed reasons, and further reasons for doing so, but this is the one that covers most gold investors. You might also invest in gold because you read that it would perform well in the next five years, your colleague might invest in gold because of concerns over the cashless society and it goes on. But ultimately we all do it to diversify our investments and as a form of financial insurance.

    We want some portfolio diversification because we want to protect (and grow) our wealth as much as possible. What are we protecting it from? Changes in the economy. This in turn is affected by a multitude of factors from financial developments, economic policies, governments, geopolitical events and even the weather.

    When we invest in an asset that is designed to reduce our exposure to global risk, it’s probably a great idea to choose one which is as far removed from the system as possible.

    This is why we choose gold. It is a border less, autonomous asset, a gold bar or coin cannot be printed many times over at the will of government or central bank, it cannot be eaten away by negative interest rates, if held non bank, non government, safer jurisdictions, a government will find it very hard to remove it through bail-ins or asset confiscation. History has shown how its value remains and it is an invaluable wealth preservation tool.

    This is also why a lot of people like bitcoin, and why many are interested in the benefits a blockchain can bring to a system that represents exchange of value.

    So when we invest in gold, it flummoxes me why many people choose to do so with the help of the very system that has created the need to hold safe haven assets e.g. gold and silver. Why place your gold in the custody of a heavily indebted national government?

    We like the Royal Mint and their bullion coins, including Gold Sovereigns and Gold Britannias, are some of  our best selling gold coins. However, for those looking to own gold for diversification, safe haven and financial insurance purposes it is prudent to opt for owning such bullion coins and bars in allocated and segregated storage in large, stable, creditor nations.

    It is unlikely that a blockchain solution will give those Royal Mint users greater automony over their gold. The gold will still be stored in Royal Mint vaults, in the UK and, therefore, the custodian will remain the British Government which is under considerable stress and faces many challenges including Brexit and a massive national debt.

    To begin to promote gold ownership, via the hype of the blockchain, at a zero-storage fee cost leads to obvious questions as to whether this is a win for the investor or for the Royal Mint.

    Gold and Silver Bullion – News and Commentary

    Gold steady as dollar edges away from 14-year peak (Reuters.com)

    India Said to Consider Lowering Gold Import Tax to 6% From 10% (Bloomberg.com)

    Gold Futures Little Changed, But Lower Dollar Lends Some Support (EconomicCalendar.com)

    Investors shun Italian bank Monte Paschi’s share offer (Reuters.com)

    Italy approves €20 billion bailout fund – MPS closer to collapse (MarketWatch.com)

    Yuan Collapse Sends China Physical Gold Premium Soaring To 3-Year Highs (ZeroHedge.com)

    Gold: The Wait For Inauguration Day (321Gold.com)

    The Most Hated Asset On The Planet – Gold (TheMacraTourist.com)

    Krugman’s Latest Conspiracy: Trump Is A Gold Bug (Mises.org)

    Why modern monetary policy doesn’t work – the models it uses are horribly out of date (MoneyWeek.com)

    7RealRisksBlogBanner

    Gold Prices (LBMA AM)

    22 Dec: USD 1,130.55, GBP 916.20 & EUR 1,080.47 per ounce
    21 Dec: USD 1,134.40, GBP 919.20 & EUR 1,091.07 per ounce
    20 Dec: USD 1,132.75, GBP 915.94 & EUR 1,090.84 per ounce
    19 Dec: USD 1,137.60, GBP 913.15 & EUR 1,089.14 per ounce
    16 Dec: USD 1,134.85, GBP 911.17 & EUR 1,084.80 per ounce
    15 Dec: USD 1,132.45, GBP 904.37 & EUR 1,080.70 per ounce
    14 Dec: USD 1,160.95, GBP 917.38 & EUR 1,091.99 per ounce

    Silver Prices (LBMA)

    22 Dec: USD 15.77, GBP 12.78 & EUR 15.10 per ounce
    21 Dec: USD 16.03, GBP 12.96 & EUR 15.40 per ounce
    20 Dec: USD 15.80, GBP 12.80 & EUR 15.22 per ounce
    19 Dec: USD 16.00, GBP 12.89 & EUR 15.34 per ounce
    16 Dec: USD 16.05, GBP 12.91 & EUR 15.36 per ounce
    15 Dec: USD 16.14, GBP 12.95 & EUR 15.51 per ounce
    14 Dec: USD 17.11, GBP 13.52 & EUR 16.07 per ounce


    Recent Market Updates

    – China Gold and Precious Metals Summit 2016 – GoldCore Presentation
    – Trumpenstein ! Who Created Him and Why?
    – Bail-Ins Coming? World’s Oldest Bank “Survival Rests On Savers”
    – Fed’s “Fool Me…”, Silver Suppression, Euro Contagion In 2017?
    – Fed Raised Rates 0.25% – Rising Rates Positive For Gold
    – Shariah Gold Standard Is “Revolutionary” – Mobius
    – Silver Fixing By Banks Proven In Traders Chats
    – Euro Crisis and Contagion Coming In 2017
    – ECB ‘Bazooka’ Reloaded Until At Least December 2017 – Euro Gold Rises 1%; 13% YTD
    – UK £6 Billion Worse Off After Multi Billion Pound Gold “Accounting Error”
    – Buy Silver – May Replace Gold As Money In India
    – Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market
    – Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns

  • Ron Paul: "US Interferes In Foreign Elections All The Time"

    When asked whether all the “Russian hacking” allegations were just a simple “political stunt” or whether a serious investigation needed to be conducted, Ron Paul offered up a startling bit of reality pointing out that America has a long history of interfering with elections and even invading countries “to have our guy in.”  We suspect the following response was a bit more truth than Fox Business News expected.

    “I think it is politics more than anything else.  It’s really is nothing new. It’s like, guess what – somebody might have done A, B, C.”

     

    “The very rarely, if ever, compare what we do with election around the world.  We are interfering all the time.” 

     

    “I’m sure the Russians are interfering.  But when you lose, you can jump on that and make a big point of it. But I don’t think it made any difference.  I think it’s insignificant.”

     

    “If you review the history of how many elections we’ve been involved with, how many countries we’ve invaded and how many people we’ve killed to have our guy in, I’ll tell you what – we don’t have very much room for condemning anybody else.”

     

    “I think the spying and interference is sort of the nature of our governments. That’s why I’d like to see government much smaller.”

    Here is the full interview:

  • Save The Snowflakes

    Our nation’s snowflakes are being cared for by colleges and universities across the country. These schools – no, HEROES – are financially supporting cry-ins, hot chocolate, bubbles, kittens, puppies and ponies, crayons, and Play-Doh to comfort these wounded snowflakes. Some schools even canceled exams and classes to ensure that America’s youth are treated with extra care and understanding during these difficult times.

    But clearly, state funding – tax-payer dollars – are simply not enough.

    State budgets cannot be expected to bear this burden alone. It’s going to take a far more sustainable funding source to ensure special snowflakes have the emotional support they need. In response, we here at the Media Research Center have launched the Save the Snowflakes project to respond to this emergency and bring crucial attention to this devastating human crisis.

    The media may not choose to expose this atrocity, but the folks at Media Research Center, through their Save the Snowflakes initiative, is doing much more…

    "We won’t rest until we save each and every special snowflake from the horrors of exposure to … things they simply do not agree with."

    A testimonial will tug at your heart- and purse-strings…

     

    Source: SaveTheSnowflakes.org

  • Tennessee Man Gets $75 Check To "Restart His Life" After Being Wrongfully Imprisoned For 31 Years

    In October 1977, a Memphis, Tennessee woman was raped in her home by two intruders.  The woman subsequently identified one of the perpetrators as her neighbor, 22 year old Lawrence McKinney.  One year later, McKinney was convicted on rape and burglary charges and sentenced to 115 years in prison.

    The only problem is that he didn’t do it.  After spending 31 years in prison, DNA evidence cleared Mckinney of any wrongdoing in 2008 and he was later released in 2009 with a very “generous” check of $75 from the Tennessee Department of Corrections to help “restart his life.”  To add insult to injury, McKinney told CNN that “because I had no ID it took me three months before I was able to cash it.”

    McKinney

     

    Now, a 61-year-old McKinney is asking Tennessee Governor Bill Haslam to exonerate him, a move that would clear a path to pursue up to $1 million in compensation from the state Board of Claims for 3 decades of wrongful imprisonment. The Tennessee Board of Parole, which makes recommendations to the governor on such issues, denied McKinney’s request for exoneration by a 7-0 vote at a hearing in September saying they could not “find clear and convincing evidence of innocence.”

    “The (parole) board reviewed all relevant information related to the crime, conviction and subsequent appeals, as well as all information provided by the petitioner,” said Melissa McDonald, spokesperson for the Tennessee Board of Parole. “After considering all of the evidence, the board did not find clear and convincing evidence of innocence and declined to recommend clemency in this matter.”

     

    One of McKinney’s attorneys, Jack Lowery, believes the decision should rest solely with Haslam.

     

    “The parole board is not qualified to make these decisions and should not,” he said. “For the parole board to step in when many (of them) are not trained in the law is ridiculous.”

    Apparently the parole board based their decision, in part, on McKinney’s admission to the 1977 burglary charge, an admission his lawyer at the time told him he needed to make if he wanted any shot at an early parole.

    According to John Hunn, McKinney’s pastor and most ardent supporter, the board cited a list of 97 infractions that McKinney incurred while he was in jail, including the alleged assault of a fellow inmate, who testified against McKinney at the hearing. McKinney told the board he’d been in prison for years, and that “only the strong survive,” Hunn said. Hunn testified at the hearing on McKinney’s behalf.

     

    “Lawrence has told that story at our church,” Hunn said. “He doesn’t deny that story. He was in prison, man.”

     

    The parole board also knew that 28 years into his sentence, McKinney admitted to the burglary charge he was convicted of. McKinney said his lawyers at the time told him that if he wanted any chance of being released early, he would need to admit to something.

    Despite being forced to waste more than half his life behind bars, Mckinney says he’s not bitter and just wants to “be treated right and fair for what has happened to me.”

    “Although I’ve spent more than half of my life locked up for a crime I did not do, I am not bitter or angry at anyone, because I have found the Lord and married a good wife,” McKinney said. “All I ask is that I be treated right and fair for what has happened to me. I didn’t do nothing, and I just want to be treated right.”

    Perhaps the “commuter-in-chief” could take a little break from pardoning hardened drug dealers to help clear someone that seemingly actually deserves a break.

  • Deutsche Bank Settles With DOJ: Will Pay $3.1 Billion Civil Penalty

    With analyst expectations/hopes in the $2 to $5 billion range (against the initial $14 billion fine), Deutsche Bank said it has reached settlement with US authorities to pay a $3.1 billion civil penalty (and provide $4.1bn in relieef to consumers). Removing considerable uncertainty about Deutsche’s capital position, one wonders how much this remarkably low-ball settlement had to do with Donald Trump’s current loan re-negotiations with the “world’s most systemically dangerous bank.”

    As a reminder, the Wall Street Journal noted that DB’s attorneys had privately suggested that a $2 – $3 billion settlement with the DOJ was probably in the ballpark.  Meanwhile, wall street analysts had estimated settlements in the $2-$5 billion range.  Any fines paid pursuant to current negotiations would be in addition to the $1.9 billion already paid in 2013 to settle other U.S. claims related to mortgage-backed securities.

    Per the table below, as of June 30, DB had reserved a total of €5.5 billion for civil litigation and regulatory penalties on it’s balance sheet.

    DB

    And so this lower than expected penalty has sent US equity futures higher…

    As Bloomberg reports, Deutsche Bank said it has reached a $7.2 billion agreement to resolve a years-long U.S. investigation into its dealings in mortgage-backed securities, removing a major legal hurdle for the bank.

    Deutsche Bank will pay a $3.1 billion civil penalty and provide $4.1 billion in relief to consumers under a settlement in principle with U.S. authorities, which was announced by the Frankfurt-based bank in a statement early Friday. The deal compares with the Justice Department’s opening request of $14 billion, which the firm has said it expected to whittle down.

     

    While the agreement removes significant uncertainty hanging over Deutsche Bank, Germany’s biggest lender remains under Justice Department investigation in several other matters and also faces potentially expensive civil suits. Chief Executive Officer John Cryan has made resolving major litigation a priority as he seeks to restore confidence in the Frankfurt-based lender.

     

    The Obama administration is pressing to wrap up investigations of Wall Street firms for creating and selling the subprime mortgage bonds that fueled the 2008 financial crisis. Authorities have already extracted more than $46 billion in fines from six U.S. financial institutions over their dealings in mortgage-backed securities. Bank of America Corp., which had the largest such settlement, agreed to pay $16.7 billion over bonds that were worth four times what Deutsche Bank’s bonds were worth.

    While Obama’s legacy played its part, no doubt; we just can’t help but wonder how much the fact that, as Bloomberg reports, the bank is trying to restructure some of Trump’s roughly $300 million debt as part of an attempt to reduce any conflict of interest between the loan and his presidency, according to a person familiar with the matter.

    Normally, the removal of a personal pledge might lead to more-stringent terms. But there is little normal about this interaction. Trump’s attorney general will inherit an investigation of Deutsche Bank related to stock trades for rich clients in Russia — where Trump says he plans to improve relations — and may have to deal with a possible multibillion-dollar penalty to the bank related to mortgage-bond investigations.

     

    Whatever terms a restructured loan might include, they will reflect the complex new relationship spawned between Germany’s largest bank and its highest-profile client. Ethicists say this concerns them.

     

    “When you have political appointees making decisions about banks that the president owes a lot of money to, it looks terrible,” said Richard Painter, a law professor at the University of Minnesota who was the chief ethics lawyer for President George W. Bush. “The U.S. government is dealing with regulatory and criminal issues with the big banks all the time, and if he owes them a lot of money, there might be an incentive to favor less regulation and less enforcement for the banks.”

     

    Deutsche Bank declined to comment.

    Even better news, Deutsche Bank expects to record a pretax charge of about $1.17b in 4Q.

    So between Obama’s legacy and Trump’s loan mods, the department of Justice settled for 22c on the dollar of their original demand? That is around 10% of 2016’s revenues… “cost of doing business”?

    Where did the number come from? That’s easy…

  • Deep State Desperation

    Submitted by Robert Gore via StraightLineLogic.com,

    The pathetic attempts to undo Donald Trump’s victory are signs of desperation, not strength, in the Deep State.

    The post World War II consensus held that the USSR’s long-term goal was world domination. That assessment solidified after the Soviets detonated an atomic bomb in 1949. A nuclear arms race, a space race, maintenance of a globe-spanning military, political, and economic confederation, and a huge expansion of the size and power of the military and intelligence complex were justified by the Soviet, and later, the Red Chinese threats. Countering those threats led the US to use many of the same amoral tactics that it deplored when used by its enemies: espionage, subversion, bribery, repression, assassination, regime change, and direct and proxy warfare.

    Scorning principles of limited government, non-intervention in other nations’ affairs, and individual rights, the Deep State embraced the anti-freedom mindset of its purported enemies, not just towards those enemies, but toward allies and the American people. The Deep State gradually assumed control of the government and elected officials were expected to adhere to its policies and promote its propaganda. Only John F. Kennedy directly challenged it, firing CIA Director Allen Dulles after the Bay of Pigs disaster. He was assassinated, and whether or not CIA involvement is ever conclusively proven, the allegations have been useful to the agency, keeping politicians in line. The Deep State also co-opted the media, keeping it in line with a combination of fear and favor.

    Since its ascension in the 1950s, the biggest threat to the Deep State has not been its many and manifest failures, but rather what the naive would regard as its biggest success: the fall of the Soviet Union in 1991. Much of the military-industrial complex was suddenly deprived of its reason for existence—the threat was gone. However, a more subtle point was lost.

    The Soviet Union has been the largest of statism’s many failures to date. Because of the Deep State’s philosophical blinders, that outcome was generally unforeseen. The command and control philosophy at the heart of Soviet communism was merely a variant on the same philosophy espoused and practiced by the Deep State. Like the commissars, its members believe that “ordinary” people are unable to handle freedom, and that their generalized superiority entitles them to wield the coercive power of government.

    With “irresponsible” elements talking of peace dividends and scaling back the military and the intelligence agencies, the complex was sorely in need of a new enemy. Islam suffers the same critical flaw as communism—command and control—and has numerous other deficiencies, including intolerance, repression, and the legal subjugation of half its adherents. The Deep State had to focus on the world conquest ideology of some Muslims to even conjure Islam as a plausible foe. However, unlike the USSR, they couldn’t claim that sect and faction-ridden Islam posed a monolithic threat, that the Islamic nations were an empire or a federation united towards a common goal, or that their armaments (there are under thirty nuclear weapons in the one Islamic nation, Pakistan, that has them) could destroy the US or the entire planet.

    There was too much money and power at stake for the complex to shrink. While on paper Islam appeared far weaker than communism, the complex had one factor in their favor: terrorism is terrifying. In the wake of the 9/11 attacks, Americans surrendered liberties and gave the Deep State carte blanche to fight a war on terrorism that would span the globe, target all those whom the government identified as terrorists, and never be conclusively won or lost. Funding for the complex ballooned, the military was deployed on multiple fronts, and the surveillance state blossomed. Most of those who might have objected were bought off with expanded welfare state funding and programs (e.g. George W. Bush’s prescription drug benefit, Obamacare).

    What would prove to be the biggest challenge to the centralization and the power of the Deep State came, unheralded, with the invention of the microchip in the late 1950s. The Deep State could not have exercised the power it has without a powerful grip on information flow and popular perception. The microchip led to widespread distribution of cheap computing power and dissemination of information over the decentralized Internet. This dynamic, organically adaptive decentralization has been the antithesis of the command-and-control Deep State, which now realizes the gravity of the threat. Fortunately, countering these technologies has been like trying to eradicate hordes of locusts.

    The gravest threat, however, to the Deep State is self-imposed: it’s own incompetence. Even the technologically illiterate can ask questions for which it has no answers. Why has the US been involved in long, costly, bloody, and inconclusive wars in Afghanistan and Iraq? Why should the US get involved in similar conflicts in Syria, Libya, Somalia, Yemen, Iran, and other Middle Eastern and Northern African hotspots? Isn’t such involvement responsible for blowback terrorism and refugee flows in both Europe and the US? Have “free trade” agreements and porous borders been a net benefit or detriment to the US? Why is the banking industry set up for periodic crises that inevitably require government bail-outs? (SLL claims no special insight into the nexus between the banking-financial sector and the Deep State, other than to note that there is one.) Why does every debt crisis result in more debt? How has encouraging debt and speculation at the expense of savings and investment helped the US economy? The Deep State can’t answer or even acknowledge these questions because they all touch on its failures.

    Brexit, Donald Trump, other populist, nationalist movements catching fire, and the rise of the alternative media are wrecking balls aimed at an already structurally unsound and teetering building that would eventually collapse on its own. The shenanigans in the US after Trump’s election—violent protests, hysterical outbursts, the vote recount effort, the proof-free Russian hacking allegations, “fake news,” and the attempt to sway electoral college electors—are the desperate screams of those trapped inside.

    Regrettably, the building analogy is imperfect, because it implies that those inside are helpless and that the collapse will only harm them. In its desperation, incompetence, and corrupt nihilism, the Deep State can wreak all sorts of havoc, up to and including the destruction of humanity. Trump represents an opportunity to strike a blow against the Deep State, but the chances it will be lethal are minimal and the dangers obvious.

    The euphoria over his victory cannot obscure a potential consequence: it may hasten and amplify the destruction and resultant chaos when the Deep State finally topples. Anyone who thinks Trump’s victory sounds an all clear is allowing hope to triumph over experience and what should have been hard-won wisdom.

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Today’s News 22nd December 2016

  • Paul Craig Roberts Warns "As the Coup Against Trump Fails, the Threat Against His Life Rises"

    Authored by Paul Craig Roberts,

    The use of the presstitute media to deny Trump the Republican presidential nomination failed.

    The use of the presstitute media to deny Trump victory in the presidential election failed.

    The vote recount failed.

    The effort to sway the Electoral College failed.

    But the effort continues.

    The CIA report on Russia’s alleged interference in the US presidential election ordered by Obama is in process. Faked evidence is a hallmark of CIA operations.

    In their determination to seal Trump’s ears against environmental concerns, a group of environmentalists plan to disrupt the inauguration. This in itself is of little consequence, but chaos presents opportunity for assassination.

    Trump himself seems to think he is in danger. According to MSNBC, Trump intends to supplement his Secret Service protection with private security. As there is evidence of CIA complicity in the assassination of President John F. Kennedy (film shows Secret Service agents ordered away from JFK’s limo immediately prior to his assassination), Trump, who is clearly seen as a threat by the military/security complex, is not being paranoid. MSNBC implies that Trump’s private security is to suppress protesters, as if government security forces have shown any compunction about suppressing protesters.

    This provides an indication of the threat that the CIA sees in Trump:

    John F. Kennedy famously threatened to "smash the CIA into a thousand pieces." But ultimately, the 35th president lost his solitary battle to completely break the power of the deep state.

     

    Though I respect Kennedy, I believe Donald Trump is a much more serious proposition.

     

    Donald Trump is Michael Corleone. He will keep his friends close, and his enemies closer (including the likes of John Bolton). But those he doesn't keep closer, he will ruthlessly "screw against the wall" for targeting him.

     

    The no-nonsense Mike Pompeo, Trump's nominee for CIA director, will be the hatchet man for this merciless house cleaning operation.

     

    Come January 20th, the reckoning begins.

    Global Research’s Michel Chossudovsky has explained that Trump’s peaceful approach to Russia aligns him with oligarchs, whose wealth benefits from business deals with Russia, and puts Trump at odds with the military/security oligarchs, who benefit from the one trillion dollar annual military/security budget. The latter group have been in control since President Eisenhower warned us about them and can muster deep state forces against a Trump presidency.

    To take on a group like this requires a tough SOB. Anything less than Trump wouldn’t have a chance. Indeed, if Douglas Valentine’s just published book, The CIA As Organized Crime (Clarity Press, 2017) is even half true, Trump’s life is certainly at risk.

    Donald Trump is clearly no saint. Given what we are up against—dangerous tensions between nuclear powers and the military/security complex’s stake in these tensions—a saint is not what the situation calls for.

    The military/security complex has been entrenched since NATO’s formation on April 4, 1949, a provocation that preceded by six years the formation of the Warsaw Pact on May 14, 1955. Any president willing to confront this entrenched deep state superpower deserves the support of all of us.

  • San Fran Billionaire Luanches Plan To House Homeless In Shipping Containers

    Last year we noted, via the Liberty Blitzkrieg blog, that rents in San Francisco and surrounding areas had grown so out of control that even Ivy Leaguers, like 31 year old Luke Iseman of The Wharton School, were having a hard time making ends meet.  After growing tired of renting a run down, tiny apartment for $4,200 per month, Iseman decided to take a novel approach to housing.  So he rented out a warehouse space and filled it with 11 steel shipping containers that he now rents out as makeshift apartments for $1,000 per month.  We learn more from Bloomberg:

    Luke Iseman has figured out how to afford the San Francisco Bay area. He lives in a shipping container.

     

    The Wharton School graduate’s 160-square-foot box has a camp stove and a shower made of old boat hulls. It’s one of 11 miniature residences inside a warehouse he leases across the Bay Bridge from the city, where his tenants share communal toilets and a sense of adventure. Legal? No, but he’s eluded code enforcers who rousted what he calls cargotopia from two other sites. If all goes according to plan, he’ll get a startup out of his response to the most expensive U.S. housing market.

     

    Iseman collects $1,000 a month for each of the 11 structures parked in the 17,000-square-foot warehouse he rents for $9,100. Tenants include a Facebook Inc. engineer, a SolarCity Corp. programmer and a bicycle messenger.

    Screen Shot 2015-08-03 at 10.41.45 AM

     

    Now, billionaire California real estate developer John Sobrato is looking to implement a similar plan in Santa Clara to house a portion of the city’s 6,500 homeless.  The plan calls for converting 200 steel shipping containers into a mix of 160 and 240 square foot micro apartments that could then be rented out homeless and low-income families. 

    Sobrato, who has spent much of his career building office space for many of Silicon Valley’s technology giants, asked the Santa Clara City Council for exclusive negotiating rights to lease a 2.5-acre plot of city-owned land, three miles south of the San Francisco 49ers football stadium and currently leased to a Hyundai dealership. His plan for the lot calls for a mix of 160- and 240-square-foot units, large enough for a kitchenette and bathroom with shower, which he said could be fashioned out of re-purposed shipping containers.

     

    Under the plan, the developer asked for a 57-year lease at the cost of $1 a year. In return, the Sobrato Organization, based in Cupertino, would build and own the apartments, then lease them back to Santa Clara County, which would hire property management and homeless service providers. The project, called Innovation Place, could open as soon as 2018, with half the units rented to homeless and half offered to renters earning between 50 and 80 percent of the area’s median income.

    Mock ups of the proposed housing complex were presented at the Santa Clara city counsel meeting:

    Container Homes

    Container Homes

    Container Homes

     

    Of course, not everyone is supportive of Sobrato’s efforts.  Nearby neighbors, who are undoubtedly paying $1,000’s of dollars per month for their shoe boxes, have already started an online petition to shut down the project.

    What has not been stated in this proposal, is how the nearby neighborhood is already being negatively affected by the mismanaged apartment complexes to the north of this potential landing spot for the homeless. Nearly 5 blocks of mismanaged, high density, low-income housing already exists across the street. Due to these apartments and the high density living that accompanies these apartments, nearby neighborhoods are experiencing a spike in crime, drug use, alcohol use, litter and lack of available parking. The nearby neighborhood streets, which at one time were quiet are now being used as a main thoroughfare for vehicles and pedestrians. Cars are being broken into and keyed and houses are being burglarized. There have been multiple hit-and-runs associated with the extra foot and vehicle traffic and the police have been called out multiple times for “suspicious” individuals either loitering around the neighborhood or sleeping in their cars.

    NIMBY

     

    Isn’t it so interesting how the liberal elites of San Francisco are always the most vocal supporters of any number of federal subsidy programs for low-income families…but we guess that only applies to the extent those low-income families stay far away from their posh, suburban, “safe places.”

  • Mass Deception

    Submitted by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,

    Janet Yellen

    At the December 14, 2016 FOMC press conference, Federal Reserve Chairwoman Janet Yellen responded to a reporter’s question about equity valuations and the possibility that equities are in a bubble by stating the following: “I believe it’s fair to say that they (valuations) remain within normal ranges”. She further justified her statement, by comparing equity valuations to historically low interest rates.

    On May 5, 2015, Janet Yellen stated the following: “I would highlight that equity-market valuations at this point generally are quite high,” Ms. Yellen said. “Not so high when you compare returns on equity to returns on safe assets like bonds, which are also very low, but there are potential dangers there.”

    In both instances, she hedged her comments on equity valuations by comparing them with the interest rate environment. In May of 2015, Yellen said equity-market valuations “are quite high” and today she claims they are “within normal ranges”? The data shown in the table below clearly argues otherwise.

    Interestingly, not only are equity valuations currently higher than in May of 2015 but so too are interest rates.

    Further concerning, how does one define “normal”? Does a price-to-earnings ratio that has only been experienced twice in over hundred years represent normal? Do interest rates near historical lows with the unemployment rate approaching 40-year lows represent normal? Is there anything normal about a zero-interest rate monetary policy and quadrupling of the Fed’s balance sheet?

    Does the Federal Reserve, more so than the collective wisdom of millions of market participants, now think that it not only knows where interest rates should be but also what equity valuations are “normal”?

    One should expect that the person in the seat of Chair of the Federal Reserve would have the decency to present facts in an honest, consistent and coherent manner. It is not only her job but her duty and obligation.

    Homebuilders

    On December 15, 2016, CNBC reported the following:The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose to 70, the highest level since July 2005. Fifty is the line between positive and negative sentiment. The index has not jumped by this much in one month in 20 years.”

    The graph below shows how much house one can afford at various interest rates assuming a $3,000 mortgage payment.

    Over the past two months U.S. mortgage rates increased almost a full percent from 3.50% to 4.375%. Given such an increase, a prospective homeowner determined to limit their mortgage payment to $3,000 a month would need to seek a 10% reduction in the price of a house. In the current interest rate environment, this equates to drop from $668,000 to $601,000 in order to achieve a $3,000 a month mortgage payment. One would expect that homebuilders temper their optimism, given that a key determinant of housing demand and ultimately their companies’ bottom lines is facing a sturdy headwind.

    Advice/Summary

    The point in highlighting these examples is to remind you that people’s opinions, especially those with a vested interest in a certain outcome, may not always be trustworthy. We simply urge you to examine the facts and data before blindly relying on others.

    We leave you with historical insight from a few so-called experts:

    • “We will not have any more crashes in our time.”: John Maynard Keynes 1927
    • There is no cause to worry. The high tide of prosperity will continue” : Andrew Mellon 1929
    • Stock prices are likely to moderate in the coming year but that doesn’t mean the party is coming to an end.” : Phil Dow 1999
    • The Federal Reserve is not currently forecasting a recession.” : Ben Bernanke 2008

  • Goldman Warns "China Remains A Key Risk", Sees Yuan Downside Accelerating

    With Bitcoin at 3 year highs, China’s renewed efforts to curb declines in its currency are doing little to stop yuan bears who have sent forward devaluation expectations to record highs and options positioning to six-month lows. And judging by Goldman Sachs' outlook – a potential resurgence in Chinese growth fears early next year, but more broadly, a continued bumpy deceleration – things are not getting better anytime soon.

    As Bloomberg notes, traders have turned increasingly negative amid tighter liquidity, sending bets for further losses soaring. The gap between forward contracts wagering on the offshore yuan a year from now versus its current level is heading for a record monthly jump…

     

    Just as the extra cost for options to sell the currency against the dollar hit a six-month high relative to prices for contracts to buy.

     

    The currency is facing a triple whammy of accelerating capital outflows, faster U.S. interest-rate increases and concerns over domestic financial markets as liquidity tightens. Strategists say its weakening, set to be the biggest this year in more than two decades, may accelerate as the government restores the annual quota for citizens to convert yuan holdings into foreign exchange. And Goldman Sachs warns, China remains a key risk to watch…

    Where we stand now:

    Broader concerns about China risk derailing global growth and markets proved somewhat short-lived. After the S&P 500 hit its low for the year on February 11, two days after we published, better economic data and a sense that the Fed would react to global concerns—confirmed by the dovish March FOMC meeting—helped improve market sentiment. Political events in the western hemisphere have since broadly taken center stage in global markets, leaving China concerns in the background. But the reality is that growth—on some level—did take a hit; for example, US GDP growth came in at an anemic 1.1% annualized in 1H2016, owing in part to weakness in the industrial sector and energy-related activity but largely due to tighter financial conditions primarily in the wake of China concerns. China growth itself also remained relatively weak in 1H as measured by the GS China Current Activity Indicator, which declined towards 4% in 1Q and began to climb slowly thereafter.

     

    Stabilizing growth in China has helped push China to the background of investor concerns. In order to stabilize growth and meet official GDP targets, China’s policymakers continued to pursue an ambitious stimulus plan begun in early 2015 that entailed pausing fiscal reforms, sharply cutting interest rates, loosening housing policies, and increasing credit growth. The result: GDP growth looks set to meet the target of 6.5%-7% for 2016, and producer prices are rising after years of deflation.

     

    But policies that re-ignited growth in the short-term just increase concern about the future, especially in terms of credit. We estimate that total credit growth adjusted for muni bond issuance accelerated from 13% yoy in 1Q15 to 17% yoy as of 2Q16, and to 20% yoy when including shadow lending not captured in official statistics. In short, the potential credit problems in China have not receded, and indeed have likely grown given the very fast pace of credit expansion.

     

    Policymakers have taken note of these potentially destabilizing dynamics and have refocused on risk management; indeed, China’s recent Central Economic Work Conference to plan for next year’s economic policy included strong statements on controlling financial risks. Risk management measures employed in recent months include increasing short-term repo rates, reining in off-balance sheet exposures such as wealth management products, and rolling out measures to try to curb home price appreciation. Fiscal policy also seems likely to tighten at least slightly in coming months. But any tightening will likely prove short-lived given that meeting growth targets will remain critical in 2017—a year of leadership transition.

     

    Our RMB view has also become more negative, presenting risk to the US dollar and S&P 500. When we published at the height of market anxiety around China, we were relatively constructive on the RMB, arguing that a large, one-off devaluation was unlikely and envisioning only a “mild” trade-weighted depreciation (against the CFETS basket, the CNY has depreciated 4.5% since then). But capital outflow pressures have remained, particularly in the context of US dollar strength. Despite the government’s official focus on a trade-weighted currency basket, higher $/CNY fixings are still a powerful signal that can easily re-ignite capital flight, as households and firms anticipate a faster pace of depreciation.

     

     

    Indeed, the PBOC’s FX reserves fell US$69bn to US$3,052bn in November, the largest decline since January. The US election has reinforced these dynamics given the strengthening dollar and potential for trade frictions, motivating tighter restrictions on capital flows. Global markets have so far taken these developments in stride, but the risk of a repeat of related equity market volatility remains, which could impact the pace of Fed tightening and dollar strength.

    What to look for in 2017 (and beyond):

    A potential resurgence in Chinese growth fears early next year, but more broadly, a continued bumpy deceleration. We expect sequential GDP growth to decelerate into 1Q17 to c.5.5% annualized on recent tightening measures. But we expect a rapid pivot back to stimulus should the growth target look at risk, especially given next year’s leadership transition.

     

    Continued concerns about China credit growth. Although policymakers have introduced tightening measures to reduce the risk of asset price bubbles, China’s reliance on credit growth, which undermines financial stability, remains a key risk.

     

    RMB downside, posing potential risk to the stronger US dollar and global stock markets. We forecast a $/CNY fix of 7.00, 7.15 and 7.30 in 3, 6 and 12 months, respectively, and long $/CNY is one of our 2016 Top Trades. The pace of capital outflows and the evolution of the fix warrant monitoring; in our view, as long as the fix simply offsets dollar strength and capital outflows are contained, global risk appetite should hold up.

    China remains a key risk to watch.

  • College Student Earns 4.0 GPA, Then Drops Out: "You Are Being Scammed!"

    Submitted by Lance Schuttler via TheMindUnleashed.com,

    Billy Williams just finished his first college semester and did so with the all-impressive 4.0 GPA. Instead of celebrating his accomplishments with friends and family, he decided to drop out of college entirely.

    willson

    Billy made a facebook post that is now going viral in which he explains his reasoning for dropping out:

    “Now that I’ve finished my first semester I think it’s safe to say… FUCK COLLEGE. Now before all you of you go batshit crazy… I have a few points to make.

     

    1. Yes I have dropped out after finishing my first semester (with a 4.0 GPA). And it’s one of the best choices I’ve ever made. Not because I am averse to learning, but actually the exact opposite.

     

    2. YOU ARE BEING SCAMMED. You may not see it today or tomorrow, but you will see it some day. Heck you may have already seen it if you’ve been through college. You are being put thousands into debt to learn things you will never even use. Wasting 4 years of your life to be stuck at a paycheck that grows slower than the rate of inflation. Paying $200 for a $6 textbook. Being taught by teacher’s who have never done what they’re teaching. Average income has increased 5x over the last 40 years while cost of college has increased 18x. You’re spending thousands of dollars to learn information you won’t ever even use just to get a piece of paper. I once even had an engineer tell me “I learned more in my first 30 days working than in my 5 years of college.” What does that tell you about this system? There are about a million more ways you’re being scammed into this.. just watch the video i’m gonna comment if you want to see more.

     

    3. Colleges are REQUIRING people to spend money taking gen. ed. courses to learn about the quadratic formula (and other shit they will never use) when they could be giving classes on MARRIAGE and HOW TO DO YOUR TAXES.

     

    4. Gosh there are so many more reasons I could add, but just comment if you disagree or have reasons to add. I’d love to add to the discussion. TAG a friend in college, Tag your parents, share this if you agree, disagree. Let’s just talk about it. Heck post a picture of yourself flipping off something you think is unjust in our society.”

    Billy is right too that the price of college continues to soar.

    Ray Franke, a professor of Education at the University of Massachusetts, Boston said:

    “If you look at the long-term trend of college tuition, it has been rising almost six percent above the rate of inflation. That’s brought immense pressure from the media and general public, asking whether college is still worth it.

    In 2015, Harvard’s annual tuition and fees (not including room and board) would cost a person $45,278, which is more than 17 times the 1971-72 cost. If annual increases of tuition had simply tracked the inflation rate since 1971, 2016’s tuition would be just $15,189.

    According to CNBC, college enrollment peaked in 2011, and has been decreasing ever since. This is no doubt in part to a family’s ability to pay the tuition, room and board and other related expenses. For example, in order to pay for a year of college at Harvard today would take the median household income nearly one year of paychecks. Back in 1971, it would have taken about 13 weeks of paychecks per the household median income.

    Today the student debt is over $1.26 trillion dollars with over 44 million Americans in debt from student loans. 2016’s graduates on average are over $36,000 dollars in debt, which is up 6% from just one year ago.  

    What can be done to alleviate this situation? Why do banks get bailed out (2008 Lehman crisis) for cheating the world, while students must continue to pay a debt? Why is a private institution (The Federal Reserve) in charge of this nation’s money and finances? How will students continue to be able to go to college when the price continues to skyrocket as the federal minimum wage stays stuck at $7.25 an hour? At some point soon, the masses won’t take it anymore from the banking cartel. The education system is in for some major changes very soon.

  • Mysterious Military Flyover Above Manhattan Was A Trump "Emergency Relocation Drill"

    One week ago, New Yorkers were captivated, and unnerved, by a 40-minute long military exercise in which one USAF C-130 and several HH-60 Pave Hawk helicopters could be seen circling at very low altitudes above Manhattan. While the US military kept silent about the overflight, U.S. Air Force Col. Nicholas Broccoli, the vice commander of the Air National Guard’s 106th Rescue Wing, said the aircraft were conducting “standard military training.”  However, one look at the flight pattern of the plane shows there was seemingly little that was “standard” about a C-130 making dozens of circles over midtown Manhattan.

    Today we learn that the overflights were far more than simply “standard military training.” According to DNAinfo, the military airplane and two helicopters doing loops over Midtown last week were conducting an “emergency relocation” planning mission in case they needed to extract President-elect Donald Trump during an emergency or attack.

    Citing sources, DNAInfo said that the flyovers were part of an “emergency relocation drill” designed to identify locations, primarily in Central Park, where a chopper could touch down near Trump’s home inside Trump Tower on Fifth Avenue and 56th Street, and safely evacuate Trump and others from the city.

    “It was the military doing their homework,” one source said. “They were making plans how to remove him, mapping plans and strategizing,” added a second source.

    In the event of an emergency, the president would be whisked by the Secret Service north to the park, and then flown in a helicopter to the nation’s capital or a secret government site in Virginia or West Virginia, sources said. The aircraft models spotted during the exercise can fly long distances without refueling and can also refuel in mid-air if necessary, sources said.

    Surprisingly, the NYPD was given only short notice about the flyovers, and were never informed that the military would be using a plane as large a C-130 with its 130-foot wing span. “They should have told people they were doing recon, and going to fly at low altitudes, instead of keeping it a secret,” a law enforcement source said. “People were scared, and rightly so.”

    “Trump is the president and people would understand that they are doing a recon mission for an emergency,” the source continued.

    One day after the flyover, NYPD Commissioner James O’Neill told reporters that the city was working on improving notification procedures. “Usually when there is a flyover, we get something through our Operations unit. It’s sent out to everybody,” O’Neill said last Wednesday at an unrelated press conference. “That notification is supposed to go out through OEM [the Office of Emergency Management], so I know OEM is working with the military to make sure the proper notifications are made. [OEM Commissioner] Joe Esposito is going to have to make sure he stays in contact with the military for future notifications.”

    “The public should know about that. What’s transpired in New York City over the last 15 years, we need to know that,” O’Neill added.

    DNAinfo further adds that according to a federal agent who witnessed the circling aircraft, and who spent most of his career protecting presidents, “the park is the closest place to land, even if they keep a Marine 1 helicopter up here in the city, or in base in New Jersey.” The ex-agent said last week’s aircraft basically conducted a dozen loops from 42 Street west to Riverside Park, then headed to the East River and south back to 42nd Street.

    “I have never seen a military training maneuver in the city,” the agent observed. “That type of rescue work is usually done by the NYPD, the FDNY, or the Coast Guard, not the military.”

    The C-130 which was the airplane confuicting the drills, travels up to 300 mph, is fundamentally a cargo transport plane that can be filled with everything from armed personnel to armored vehicles, including presidential limousines. The plane can also land on short runways.

    Meanwhile, the military continued to deny the purpose of the exercise: a spokesman for the New York State Division of Military and Naval Affairs said last week only that the maneuver was part of a “routine training mission” that originated from the 106th Rescue Wing at the Francis S. Gabreski Airport in Westhampton Beach on Long Island. He reiterated the same today. A spokesman for the US Secret Service in Washington did not immediately respond to a call seeking comment.  As a matter of policy, however, the agency routinely says it does not discuss specifics of Presidential security.

  • Baby Boomers Increasingly Having Social Security Checks Garnished To Cover Student Loan Payments

    According to a new report from the Government Accountability Office, the federal government is increasingly garnishing Social Security benefits to help cover student loans payments owed by baby boomers.  According the Wall Street Journal, a total of $1.1 billion has been garnished since 2001 with $171 million being collected in 2015 alone. 

    The government has collected about $1.1 billion from Social Security recipients of all ages to go toward unpaid student loans since 2001, including $171 million last year, the Government Accountability Office said Tuesday. Most affected recipients in fiscal year 2015—114,000—were age 50 or older and receiving disability benefits, with the typical borrower losing about $140 a month. About 38,000 were above age 64.

     

    The report highlights the sharp growth in baby boomers entering retirement with student debt, most of it borrowed years ago to cover their own educations but some used to pay for their children’s schooling. Overall, about seven million Americans age 50 and older owed about $205 billion in federal student debt last year. About 1 in 3 were in default, raising the likelihood that garnishments will increase as more boomers retire.

     

    “I believe this is the tip of the iceberg of what may be to come if we don’t work harder on this problem,” said Sen. Claire McCaskill of Missouri, the top Democrat on the Senate Special Committee on Aging.

    Student Loans

     

    Of course, the mere suggestion that people should be responsible for repaying debt they’ve incurred was enough to throw Elizabeth Warren into a tailspin as she described the idea of garnishing social security benefits as “predatory.”

    The report showed garnishments left thousands with Social Security checks below the poverty line, prompting Sen. Elizabeth Warren (D., Mass.) to call the practice “predatory.” Both lawmakers said they will push legislation to ban it.

     

    But consumer advocates and some congressional Democrats say the government’s tactics have become too aggressive, targeting many borrowers who are destitute and have no hope of repaying. Most Social Security recipients rely on their checks as their primary source of income, other research shows.

    Meanwhile, the WSJ points out that Obama’s “income-driven repayment” (IDR) plans only serve to make the student loan problem worse.  Since the payment plans only cover a portion of monthly interest payments, debt balances continue to grow over time leaving borrowers with even larger debt balances as they reach retirement age. 

    Daniel Pianko, a managing director of University Ventures, which invests in for-profit and nonprofit schools, says the government may be worsening the troubles of older borrowers by promoting programs that set monthly payments as a share of borrowers’ earnings. Payments under “income-driven repayment” programs frequently cover only part of the interest and not the principal, allowing balances to grow.

     

    In that sense, the income-driven repayment programs have the same effect as payday lenders, trapping poor borrowers in a growing amount of debt.

     

    “Every month and every year the loan balances go up, which means by definition this problem will only get worse,” Mr. Pianko said.

    We just wrote about another Government Accountability Office report that blasted the Education Department’s understanding of basic mathematics and accounting concepts after finding the department drastically underestimated the costs of Obama’s student loan forgiveness programs.  The 100-page report entitled “Federal Student Loans:  Education Needs to Improve Its Income Driven Repayment Plan Budget Estimates” found that taxpayers could be on the hook for $137BN of student loans to be forgiven over the coming years as a result of Obama’s executive actions on IDR plans.

    Student Loans

     

    Oh well, what’s another $50 billion or so…we hear a lot of baby boomers vote so better give them what they want.

    Baby Boomers 

  • CalPERS Board Votes To Maintain Ponzi Scheme With Only 50bps Reduction Of Discount Rate

    A few weeks ago we asked whether CalPERS would rely on sound financial judgement and math to set their rate of return expectations going forward or whether they would cave to political pressure to maintain artificially high return hurdles that they'll never meet but help to maintain their ponzi scheme a little longer (see "CalPERS Weighs Pros/Cons Of Setting Reasonable Return Targets Vs. Maintaining Ponzi Scheme").  The decision faced by CALPERS was whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%.  Well, we now have our answer and it seems the board erred on the side of maintaining the ponzi with a decision to reduce the fund's discount rate by only 50 bps, to 7%, to be phased in over 3 years.

    Of course, this decision should come as little surprise to our readers as we concluded our previous post with the following prediction:

    We've seen this battle between math/logic and politicians played out numerous times in states all across the country.  Somehow we suspect that "math/logic" will continue to lose…better to bury your head in the sand for a couple of more years and pretend there is no problem.

    Per The Sacramento Bee, the CalPERS board approved the discount rate adjustment with a vote of 6-1 and the reduction will be phased in over 3 years starting next July. 

    CalPERS moved to slash its official investment forecast Tuesday, a dramatic step that will translate into billions of dollars in higher annual pension contributions from the state, local governments and school districts.

     

    Employees hired after January 2013, when a statewide pension reform law took effect, will also have to kick in more money. Older employees could see higher contributions, too, although that would be subject to contract bargaining.

     

    CalPERS’ Finance and Administration Committee voted 6-1 to lower the forecast from 7.5 percent to 7 percent in phases over three years, starting next July. Although the committee’s vote must be ratified by the entire board Wednesday, most other board members indicated they support the move as well.

     

    It would be the first adjustment to the forecast in four years.

     

    The move is a recognition that investment returns are falling and that the California Public Employees’ Retirement System, which is just 68 percent funded, needs higher contributions from government agencies to solve its long-term problems.

     

    “We’re in a low-growth (investment) environment, and it’s expected to remain that way the next five to 10 years,” board member Henry Jones said.

    While a 50bps decrease to a 7% discount rate will still trigger roughly $1 billion in incremental annual contributions from various California government entities according to Eric Stern of the California Department of Finance, it is still a long way from the fund's estimated returns of just 6.2% over the next decade which happens to match exactly their returns from the past decade.

    Calpers

     

    Of course, mathematical realities have to be weighed against the risk of disrupting the ponzi scheme and forcing several California cities to the brink of bankruptcy.

    But a CalPERS return reduction would just move the burden to other government units. Groups representing municipal governments in California warn that some cities could be forced to make layoffs and major cuts in city services as well as face the risk of bankruptcy if they have to absorb the decline through higher contributions to CalPERS.

     

    “This is big for us,” Dane Hutchings, a lobbyist with the League of California Cities, said in an interview. “We've got cities out there with half their general fund obligated to pension liabilities. How do you run a city with half a budget?”

     

    CalPERS documents show that some governmental units could see their contributions more than double if the rate of return was lowered to 6%. Mr. Hutchings said bankruptcies might occur if cities had a major hike without it being phased in over a period of years. CalPERS' annual report in September on funding levels and risks also warned of potential bankruptcies by governmental units if the rate of return was decreased.

    Meanwhile, Richard Costigan, chairman of the CalPERS finance committee, who vowed that "this is just a start," more or less admits that the decision was politically motivated to allow "municipalities and other government agencies some breathing room before they absorb the impact."

    Board members, however, defended the action as a compromise; it will help stabilize the fund while giving municipalities and other government agencies some breathing room before they absorb the impact. Richard Costigan, chairman of the finance committee, said CalPERS officials will continue to look at the fund’s investment strategies over the next year.

     

    “This is just a start,” Costigan said.

    Now all eyes will turn to the 37.6% funded Illinois pension fund, as well as many others, to see if they follow suit. 

  • Nearly 3,000 US Communities Have Lead Levels Higher Than Flint

    Submitted by Nadia Prupis via TheAntiMedia.org,

    A Reuters investigation this week uncovered nearly 3,000 different communities across the U.S. with lead levels higher than those found in Flint, Michigan, which has been the center of an ongoing water contamination crisis since 2014.

    click image for link to interactive map…

    The investigation found that many of the hot-spots are receiving little attention or funding. Local healthcare advocates said they hope the reporting will spur action from influential community leaders.

    All of the communities Reuters investigated had lead levels at least two times higher than Flint’s; more than 1,000 were four times higher. In most cases, the local data covered a 5- to 10-year period through 2015, the analysis states.

    Areas affected by lead poisoning populate the map from Texas to Pennsylvania, reported Reuters‘ M.B. Pell and Joshua Schneyer. The available data charts 21 states that are home to about 61 percent of the U.S. population.

    Despite the massive drop in lead poisoning rates since the 1970s—when heavy metals were phased out of paint and gasoline—many communities throughout the country are still at risk.

    “The national mean doesn’t mean anything for a kid who lives in a place where the risks are much higher,” said Dr. Helen Egger, chair of Child and Adolescent Psychiatry at NYU Langone Medical Center’s Child Study Center.

    Like Flint, many of the communities are mired in “legacy lead,” Reuters reported—old industrial waste, crumbling paint, or corrosive pipes. But few have received help or attention.

    Contamination in children can cause cognitive difficulties, which in turn can lead to low school performance, few job opportunities, and trouble with the law. That cycle was examined last year when 25-year-old Baltimore resident Freddie Gray died after his spine was severed in police custody. Amid protests against brutality and racism, many noted that Gray experienced lead poisoning as a child while living in an area with persistently high exposure levels.

    But the problem is nationwide and affects a vast spectrum of communities, Reuters writes. Milwaukee, Wisconsin still has “135,000 prewar dwellings with lead paint, and 70,000 with lead water service lines,” and $50 million has already been spent to protect the city’s children. Many families do not have the funds to make the repairs themselves, and laws requiring owners to remove lead from their properties are not consistent state by state.

    “Reporters visited several of the trouble spots: a neighborhood with many rundown homes in South Bend, Indiana; a rural mining town in Missouri’s Lead Belt; the economically depressed North Side of Milwaukee,” Pell and Schneyer write. “In each location, it was easy to find people whose lives have been impacted by lead exposure. While poverty remains a potent predictor of lead poisoning, the victims span the American spectrum—poor and rich, rural and urban, black and white.”

    In St. Joseph, Missouri, one of the most contaminated neighborhoods included in the study, even a local pediatrician’s children had lead poisoning.

    Earlier this month, the U.S. Senate approved a $170 million aid package to repair Flint’s corrosive pipes and fund recovery efforts. But that is 10 times the budget the U.S. Centers for Disease Control and Prevention (CDC) allotted for lead poisoning assistance this year, Reuters notes.

    “I hope this data spurs questions from the public to community leaders who can make changes,” epidemiologist Robert Walker, co-chair of the CDC’s Lead Content Work Group, told Reuters. “I would think that it would turn some heads.”

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