Sep 18

Today’s News 18th September 2016

  • What Is A Globalist?

    If you've been following this election at all, you have probably heard the words "globalist" and "globalism" thrown around a lot.

    As The Rebel's Lauren Southern explains, some of the people using it are nationalists, or patriots (they see globalism as a threat to the sovereignty of their nation… whichever nation that happens to be). Others argue that the term "globalism" is just a scary catch-all word invented by Trump supporters, or the alt right. A word that means nothing at best, and is a racist code at worst.

    The reality is that globalism means something very specific, and very dangerous, if you value democracy, individualism, or any of the values of Western civilization.

  • IED Explodes In New York City; 29 People Injured, 1 In Serious Condition

    Update 2: Fox News is reporting a second explosion on 27th street.  The NYPD reportedly moved the media to safety before the blast indicating that it may have been a controlled explosion by police.  The device is believed to be a “pressure cooker” device similar to the one used in the Boston Marathon bombing with a cell phone and wires attached.   

     

     

     

    * * *

    Update 1:  The NYPD has potentially located a 2nd device on 27th Street in Manhattan.

    * * *

    An explosion occurred at 8:30PM this evening in New York City at 135 23rd Street (between Sixth and Seventh Avenue).  Early reports suggested the explosion came from an improvised explosive device (IED) stuffed inside a dumpster. 

    Mayor De Blasio confirmed at a press conference earlier that the explosion was believed to be an “intentional act” though noted there are no known links to any terrorist organizations at this time.

    The NYPD has confirmed that 29 people have sustained injuries and 1 is in serious condition.

    The NYPD Counterterrorism Unit has arrived at the scene and is conducting searches for other devices.  At least two buildings were evacuated in the vicinity of the incident.

    Earlier today a pipe bomb exploded in Seaside Park, New Jersey, as about 5,000 people were set to run a 5k Marine charity race (see: “Pipe Bomb Explodes At Marine Charity Run In New Jersey“).  It is unknown at this time if the two events are linked. 

     

     

     

     

     

     

     

     

     

     

  • This 40 Sq. Ft. New York Apartment Could Be Yours For $450 Per Month

    Ever feel like you just don’t have enough space to entertain guests or otherwise enjoy your New York City apartment?  Well don’t complain to this guy.

    Meet Jack Leahy and his 40 square foot apartment in Williamsburg, Brooklyn.  According to the New York Times, Leahy pays $450 per month for his pad, or $11.25 per square foot.  The apartment is 9 feet in length and 4.5 feet wide which is just enough room for a twin-sized futon mattress.  And standing room is not included throughout with the ceiling measuring only about 5 feet high on one end of the apartment. 

    NYC Aparment

     

    While $450 per month may seem like a bargain to most New Yorkers we think Leahy may have been taken for a ride.  We found some “nice” 700 square foot pads just across the bridge in Greenwich Village for $9.25 per square foot and they even come with a bathroom.  Though we suspect Leahy’s not too worried about the math, he’s just “happy to be in New York.”

    “I think I was happy to be in New York and that I actually had a place,” Mr. Leahy said. “It was just kind of comical. It is comical. Whenever I show people where I live, they always laugh.”


    NY Apartment

     

    Leahy also loves hanging out with the 7 other “artists and creative types” in his building which is fantastic news given that he shares 1 kitchen and 1.5 bathrooms with them.

    He awakens many mornings to the sounds of experimental theater: strange clanging, performers speaking in gibberish, chants. The space is ovenlike in the summer, cozy in winter.

     

    And though he doesn’t see much of them, he likes his quasi-roommates: seven other artists and creative types who live in the warren of more traditional rooms at the back of the building. “Though I’m always jealous when I see them sitting on chairs in their rooms,” he admits.

    We’re not contractors, but something tells us that Leahy’s apartment may not meet all of New York’s building codes (e.g. the need for two exits in case of a fire) and he may have just sacrificed his living space for his 15 minutes of fame.

  • On The Process Of Awakening

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    We cannot help but feel a hunger for authenticity, honesty, spiritual solace and human connection, but these are precisely what is scarce in our social and economic structure.

    There is a tremendous amount of pain in our society. There are many sources of this pain: the emotional desertification of dysfunctional families, the knowledge that we don't fit in and never will, a widening disconnect between the narratives we're told are true and our experience, and a social and economic structure that tosses many of us on the trash heap.

    The lifestyle we're told we need to be happy is unattainable to many, and disconcertingly unsatisfactory to the top 10% who reach it.

    We cannot help but feel a hunger for authenticity, honesty, spiritual solace and human connection, but these are precisely what is scarce in our social and economic structure.

    The process of awakening has many paths. For some, the path starts with the incoherence of official explanations and narratives. For others, it's the inner search for truth via psychotherapy or spiritual practice.

    For some, it's an investigation into the way our economic and political hierarchy function. For others, art is the starting point: a film, a novel, a comic, a song.

    For many of us, it begins with this simple but devastating realization: I don't fit in. I don't fit in, have never fit in and never will fit in. I play along because it's easier on me and everyone I interact with to do so, and I value my independence which means I have to find a way to support myself. That is difficult, as what I like to do has little to no value in our economy.

    What interests me is how the epidemic of pain and alienation that characterizes our society is the direct result of how our economy and social order is structured. Incoherence, self-destruction, pain and alienation are the only possible outputs of the system we inhabit.

    I have explored this dynamic in my books, starting with Survival+ in 2009 and working forward to my latest book, Why Our Status Quo Failed and Is Beyond Reform. (My other books are: A Radically Beneficial World: Automation, Technology and Creating Jobs for All; Get a Job, Build a Real Career and Defy a Bewildering Economy; The Nearly Free University and the Emerging Economy: The Revolution in Higher Education; Resistance, Revolution, Liberation: A Model for Positive Change; Why Things Are Falling Apart and What We Can Do About It and An Unconventional Guide to Investing in Troubled Times.)

    I recently had an amazing free-form 1:50 hour conversation on these topics with New Zealand talk-show host Vinny Eastwood. Any conversation that stretches from the erosion of community to loneliness to Daniel Ellsberg to Marx to Taoism to alienation to Michelangelo Antonioni and on to the process of awakening is amazing in my view.

    Here's Vinny's page with listening/viewing/downloading options, and the program on Youtube (please ignore my goofy expressions): The magic of bitcoin and cryptocurrencies (1:49:54)

    My conclusion may strike many as radical, but to me it is self-evident: the primary source of the rot, insecurity, inequality and alienation of our society is the way we create and distribute money, which is the conduit for creating and distributing political power.

    I explain why this is so in my books A Radically Beneficial World: Automation, Technology and Creating Jobs for All and Why Our Status Quo Failed and Is Beyond Reform.

    If we don't change the way money is created and distributed, we change nothing. Money = power. If we don't devise a form of money that is beyond the reach of central banks and states, all "reform" is just window-dressing, simulacra of "change" that simply solidifies the system's bogus claim of being reformable.

    Cryptocurrencies are in their infancy. There will be many more iterations of Cryptocurrencies beyond bitcoin and Ethereum; recall that bitcoin went public in 2009.

    There are security challenges with cryptocurrencies, and the potential for central-state meddling via backdoors in computer operating systems. But once we understand that community and the potential for a less toxic society and economy are crippled by the centralized structure of the state and its money, then there is no way forward but to develop structures of money, work, community, purpose and meaning that are outside the direct control of the state and central bank.

    This sort of "crazy talk" is unwelcome. As I noted earlier this week on my chart of the Ministry of Propaganda, in the status quo, skepticism is always a conspiracy or a hoax.

    So instead we consider an exploding opiate epidemic, an epidemic of obesity and metabolic illnesses, a discourse of inchoate rage and a Grand Canyon-sized gap between what we're told is true and what we experience as true "normal." These things are not normal; they are manifestations of a system that can only generate one output: self-destruction.

    * * *
    My new book is #6 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the book's website.

  • String Of Deadly Arsons Strike Chicago Leaving 1 Dead And Dozens Homeless

    The level of crime in Chicago these days is more on par with certain violent third-world countries than other U.S. cities.  In fact, we recently pointed out that Chicago has recorded more homicides so far in 2016 than Los Angeles and New York, combined, despite having a fraction of the population (see “Chicago Records “Most Violent Month In 20 Years“). 

    With 3 days left in the month of August, the city of Chicago has recorded 84 homicides making it the deadliest month since October 1996 when 85 homicides were committed.  In fact, as the Chicago Tribune points out, YTD through August, Chicago has recorded more homicides than New York City and Los Angeles, combined.  So far Chicago has recorded 487 homicides in 2016 compared to 222 in New York and 176 in Los Angeles.  This staggering data comes despite the fact that Chicago’s total population is roughly 20% the size of New York and Los Angeles.

    The latest wave of violent crime came on Friday when an arsonist set 7 fires in the Lower West Side neighborhood of Chicago.  The fires killed at least one man and has left as many as 40 people homeless according to The Chicago Tribune and ABC.

     

    At least seven separate fires were reported around 3 a.m., apparently set in alley trash cans that spread to garages and homes.  Around 100 firefighters from across the city were required to help extinguish the flames.

    Chicago

    Chicago

    Chicago Arson

     

    According to The Chicago Tribune, residents were slow to respond to the fires after dismissing “noises” from the flames as firecrackers from a nearby celebration of Mexican Independence Day. 

     

    The latest round of arsons come just days after Reginal Hester appeared in court for a blaze he set in the city’s South Chicago neighborhood that killed 4 people and injured two others.  According to ABC, Hester torched an apartment building after one its residents borrowed $10 and refused to repay him with sexual favors.

     

    Alas, we’re sure the Black Lives Matters folks will dismiss these recent arsons as just another unfortunate side effect of Chicago’s “racist” police force.

  • "Why Don't They Trust Her": A Look At One Of Hillary Clinton's Early Scandals

    In recent months the mainstream media has worked itself into a frenzy trying to defend Hillary from the various scandals surrounding her campaign.  There is seemingly no end to the “plumes of smoke” emanating from the Clinton camp including questions over Benghazi, missing emails, pay-for-play at the Clinton Foundation, strange “medical episodes”, etc, etc, etc.  All the while, the press simply can’t bring themselves to understand why voters never quite view her as a trustworthy candidate. 

    The problem, says Peggy Noonan of the Wall Street Journal, is that the Clinton’s have been embroiled in so many scandals dating all the way back to the 1970’s that their name has been branded into the American psyche as being synonymous with the word “scandal” itself.  While millennial voters are most familiar with the recent scandals (and we all know how well that is playing out for her, see: “Hillary’s Growing “Millennial Problem” Forces A Reset“), older voters have been hearing about the Clinton escapades for over a quarter century since they first entered public life on the national level in the early 90’s. 

    As such, the Wall Street Journal took a walk down memory lane by recounting one of Hillary’s early scandals that emerged shortly after she entered the White House and came to be known afterward as “Travelgate.”  It was out of this first scandal that Hillary’s critics said she first “revealed the soul of an East German border guard.”

    Then she—not he—messed it up. It was the first big case in which she showed poor judgment, a cool willingness to mislead, and a level of political aggression that gave even those around her pause. It was after this mess that her critics said she’d revealed the soul of an East German border guard.

    It all started less than four months after the Clinton’s moved to D.C. when 7 men working in the White House travel office were suddenly fired.  The same people had been running the White House travel office for 30 years and had successfully served multiple Presidents of both parties along the way.

    Hillary

     

    Needless to say, the press at the time was very surprised by the move to brutally fire non-political, career White House staff so early into Bill’s term.  Under pressure to answer for the firings, the White House initially offered up multiple stories that seemed to evolve daily.  Per the Wall Street Journal:

    Under criticism the White House changed its story. They said that they were just trying to cut unneeded staff and save money. Then they said they were trying to impose a competitive bidding process. They tried a new explanation—the travel office shake-up was connected to Vice President Al Gore’s National Performance Review. (Almost immediately Mr. Gore said that was not true.) The White House then said it was connected to a campaign pledge to cut the White House staff by 25%. Finally they claimed the workers hadn’t been fired at all but placed on indefinite “administrative leave.”

    Sound familiar?  It’s just a cough…no, it’s just allergies…no, it’s heat and dehydration…no, it’s pneumonia…

    Hillary even alleged that Bill Dale, a 30-year veteran of the travel office, was embezzling funds and called into the FBI to investigate.  While the FBI initially balked at the case due a lack of any evidence, they eventually relented and indicted Dale on embezzlement charges.  The trial lasted two weeks but it only took the jury two hours to acquit Dale of all charges. 

    Then, suddenly new details emerged from the notes of a White House staffer that suggested Hillary’s plan all along was to privatize the White House travel office and put it out for “competitive bid” to private companies.  And, as it turns out, Hillary had already identified the perfect winner of the “competitive” bidding process as none other than Harry Thomason, who just happened to be a long-time friend and fundraiser for the Clintons and had provided travel services for their 1992 campaign. 

    It emerged in contemporaneous notes of a high White House staffer that the travel-office workers were removed because Mrs. Clinton wanted to give their jobs—their “slots,” as she put it, according to the notes of director of administration David Watkins—to political operatives who’d worked for Mr. Clinton’s campaign. And she wanted to give the travel office business itself to loyalists. There was a travel company based in Arkansas with long ties to the Clintons. There was a charter travel company founded by Harry Thomason, a longtime friend and fundraiser, which had provided services in the 1992 campaign. If the travel office were privatized and put to bid, he could get the business.

    As the scandal grew, Hillary repeatedly denied any knowledge of the the firings, claiming under oath that she had “no role in the decision to terminate the employees” and that she did not “direct that any action be taken by anyone.”  Unsurprisingly, Hillary also had a difficult time remembering the specifics of her conversations with various staffers connected to the scandal.  Perhaps she fell and bumped her head back in the early 90’s as well?

    Of course, after 3 years passed an investigation by the GAO found that, in fact, Hillary did play a direct role in the firing of the 7 travel office employees.  Moreover, a memo originally written by White House Chief of Staff, David Watkins, surfaced which directly connected Hillary to the event saying “there would be hell to pay” if staffers did not conform “to the first lady’s wishes.”

    But, of course, by that time, the scandal had passed, the press had moved on and Hillary was able to simply dismiss any new questions as a futile effort of right-wing conspiracy nuts to raise doubts about a scandal that had been put to bed long ago.  A plan that the Wall Street Journal dubbed the “Clinton Scandal Ritual”:

    “Clinton Scandal Ritual: lie, deny, revise, claim not to remember specifics, stall for time. When it passes, call the story “old news” full of questions that have already been answered. ‘As I’ve repeatedly said . . .'”

    Seemingly not much has changed over the past 25 years….

  • DoNaLD TRuMP SLaYING THe MaNY HeaDeD MeDiA MoNSTeR…

    TRUMP SLAYS THE MANY HEADED MONSTER

  • Previewing Next Week's Main Event: What Will The BOJ Do? (Spoiler Alert: Probably Nothing)

    One week after we explained not once but twice that next week’s main central bank event is not the Fed – which won’t do anything – but the Bank of Japan, even CNBC has finally figured it out, observing with about a 7 day delay that “Everyone’s waiting for the Federal Reserve in the week ahead, but the real action may be coming out of Tokyo.” Well, thanks for that.

    But while it’s clear that Yellen won’t dare shock the market (which now trades with a 20% probability of a September rate hike and as we showed a year ago, the Fed has never hiked unless the market is already pricing in at lest 60% odds), the question remains – just what will Kuroda and the BOJ do, especially since as we wrote last week, not even the BOJ knows what it will do, and has instead flooded the market with news report trial balloons covering every possible, even contradictory, possibility. Which also makes the BOJ’s decision that much more important.

    As DB points out, “this week will be the litmus test for whether central banks are in shift mode as regards ongoing accommodative monetary policy. Investor consensus revolves around the notion that monetary policy has run its course and it “needs” to be supplanted by fiscal policy or at least combined with fiscal policy, via helicopter money, to be effective. The potential for a BoJ move on short rates and a shift in QE plus a Fed insistence on hiking despite market expectations (including a “hawkish” hold for September) might be considered to be consistent with a steeper curve.”

    Here is what DB’s Dominik Constam, one of Wall Street’s best credit strategists expects the BOJ will reveal on Wednesday:

    The BoJ is conducting a comprehensive review of monetary policy. It is fair to say that there is substantial uncertainty as to what they may choose to do but recent policy speak has suggested that further cuts in the deposit facility rate are possible as well as a shift in the duration target away from the 7-12 year sector towards the 3-5 year sector. The proposed logic would be to steepen the yield curve, offering extra NIM to banks whilst also alleviating pressure on the entitlement industry. Some Fed officials meanwhile have also chimed in regarding the concern for financial stability that emanates from low long yields that in turn have compressed risk premia across asset classes as part of a “hunt for yield”. The implication is that if long rates stay artificially low, there may be a case for earlier moves higher in short rates to compensate even if the data itself was less compelling for such a move, all else equal. In both cases the potential for a BoJ move on short rates and a shift in QE plus a Fed insistence on hiking despite market expectations (including a “hawkish” hold for September) might be considered to be consistent with a steeper curve. Even the ECB could be added to this mix after the recent “disappointment” around not committing to an extension of its QE program nor adjusting the parameters.

    In other words, in line with what we predicted ten days ago, Japan may engage in a reverse Twist, where it cuts short end rates while slowing down purchases of longer maturities to force the JGB curve steeper. Citigroup’s Brent Donnelly caught up to this idea this over the past week, and added the following notable color:

    there is an interesting and lively debate going on here at Citi and elsewhere about the JPY impact of the recently-touted BoJ actions. If they cut front end rates and reduce 30-year purchases in a Twist-type operation, is that good or bad for USDJPY? I feel it is 100% terrible for USDJPY but there are enough smart people disagreeing that I’m not fully confident. I think it is negative USDJPY because:

    1. It’s not great for Japanese banks (see Chart1, note they gapped lower overnight after the rate cut story came out in NY time).
    2. The last time the BOJ cut (and the last time the ECB cut) the currency ripped. There is no empirical evidence that rate cuts below zero are bad for a currency. There is a small body of evidence that rate cuts below zero are good for a currency.
    3. When the US did Twist, the currency ripped and equities tumbled aggressively as you can see in the next two charts.

    Overall I think what the market wants from the BoJ is pretty simple: Incremental stimulus. The composition of current stimulus, the shape of the yield curve and all that is just noise. If the BoJ buys foreign assets, USDJPY will explode higher and if they do not, it will go down. I really think trading the BoJ meeting is that simple… Note one important point made by Deegs this morning: US Twist flattened the curve and Japanese Twist would steepen the curve so it’s not unreasonable to guess the reaction in the currency would be opposite. That’s not my view but it’s certainly a reasonable view.

    So while DB and Citi agree on what the BOJ may (or may not do) with Japan’s interest rate (cut from -0.1% to -0.2%), and shifts to QE (fewer purchases on the long end, perhaps shifting the focus from 7-12 to  7-10 to 5-10 year bonds), others like CLSA take aim at a different aspect of the BOJ’s monetary lunacy, namely the ongoing nationalizaton of the stock market.

    According to Bloomberg, CLSA’s Nicholas Smith says he’s “absolutely certain” the Bank of Japan will stop buying exchange-traded funds tracking the Nikkei 225 Stock Average amid criticism its use of the measure is distorting the market.

    The central bank will make the change at its meeting next week, shunning ETFs following the price-weighted stock gauge in favor of those linked to more modern indexes, Smith said. He says he’s been talking to BOJ officials within the last three days, while declining to name them. BOJ board members have made no public indication of an impending shift in the ETF program ahead of announcing their monetary policy review on Sept. 21.

     

    The Nikkei 225 gives undue influence to certain stocks because it determines its rankings by the price of one share, rather than market capitalization. Fast Retailing Co., for example, accounts for 8 percent of the gauge, versus just 0.3 percent of the Topix. That means it benefits disproportionately from the central bank’s Nikkei 225 purchases. Since the BOJ almost doubled its annual budget for ETFs on July 29, the issues associated with the Nikkei 225 have become more pronounced, Smith said.

     

    “I am absolutely certain that they will shift their buying to pretty much Topix-based,” Smith, a Tokyo-based strategist at the brokerage, said by phone Friday. “The Nikkei 225 is a Flintstones index from the abacus era,” he said. “It’s been a laughing stock for a long time.”

    Perhaps he is right, although adjusting ETF purchases would be peanuts in the grand scheme of things, where the BOJ needs to inject trillions instead of trifling with billions in stocks here and there.

    * * *

    Finally, the most comprehensive assessment of the BOJ’s “comprehensive assessment” due next week, comes from Goldman’s Naohiko Baba, who has a rather unexpected conclusion: don’t expect much if anything, at all.

    Here is Goldman’s full report:

    Final update on BOJ’s “comprehensive assessment”

    At the next Monetary Policy Meeting (MPM) on September 20-21, the Bank of Japan (BOJ) will conduct a “comprehensive assessment” of trends in economic activity and prices under the current policy framework, as well as the policy impact, with a view to achieving its 2% price stability target at the earliest possible time. We gave our take on this in our August 5 Japan Views and September 7 Japan Views, and our overall view remains essentially unchanged. Below we provide a final update of our view in a Q&A format ahead of next week’s MPM, focusing on the most common queries we have fielded, particularly from overseas investors, since our last report.

    Key points

    • We believe the BOJ’s comprehensive assessment has four main objectives: (1) reiterate the positive aspects of its easing policy (quantitative/qualitative easing with a negative interest rate); (2) switch from quantitative easing to a negative interest rate policy (NIRP) as its primary policy tool; (3) correct the excessive impact of the easing policy on the yield curve; and (4) curve excessive market expectations of additional easing by extending the policy timeframe.
    • We expect the BOJ to retain its 2% target due to the risk of severe yen appreciation if scrapped.
    • The BOJ will highly likely move towards negative interest rates as its primary policy tool, as quantitative and qualitative easing are approaching the limits of their effectiveness. The BOJ also sees negative rates as an effective tool for combating the strong yen.
    • We think possibilities of both helicopter money and foreign bond purchases by the BOJ as extremely unlikely.
    • Although taking interest rates deeper into negative territory is likely to be seriously discussed at the policy meeting next week, we expect the BOJ ultimately to opt to push back the rate cut until a later date.

    Q1: What are the purposes of the BOJ’s comprehensive assessment?

    A1: We believe the BOJ’s review has four main objectives: (1) reiterate the positive aspects of its three-dimensional monetary easing policy (quantitative/qualitative easing a with negative interest rate); (2) switch from quantitative easing to a negative interest rate policy (NIRP) as its primary policy tool; (3) correct the excessive impact of the easing policy on the yield curve; and (4) dampen excessive market expectations of additional easing by extending the policy time-frame.

    Below we touch on each of these points.

    1. We believe the BOJ will attribute its inability to reach the 2% inflation target so far to deflationary pressure from external factors beyond its control, including lower crude oil prices, a slowdown in emerging market economies, and greater-than-expected downward pressure on the economy following the consumption tax hike, and explain how this impact has spread to backward-looking inflation expectations. In other words, we expect the BOJ to stress that its QQE with NIRP policy would have had sufficient clout to achieve its objective if not for the impact of such factors out of its control, and that this policy could still be effective moving forward.
    2. The BOJ faces various issues relating to its “quantitative” easing (QE) policy, such as (1) the likelihood that it will eventually reach a physical limit to its large-scale JGB purchases, (2) excessive flattening of the yield curve due to the combination of large-scale JGB purchases and the NIRP, and the concerns this has generated for financial intermediation, and (3) the drying up of liquidity in the JGB market. As such, we believe the BOJ has a strong desire to shift from QE to the NIRP as its primary policy tool (see Q3 below). At the same time, we think the BOJ seeks to remove uncertainty over the future direction of policy by clearly defining the fulcrum of its policy framework. In a recent speech, BOJ Governor Haruhiko Kuroda said that “in order to ensure the effectiveness of monetary policy…the important thing is…to maintain consistent and predictable policy responses.”[1]
    3. The excessive decline in interest rates, particularly in the super-long zone, has raised concerns over the potential impact on life insurance and pensions, and thus we believe the BOJ could well shorten the maturity of JGBs it purchases. However, we believe it will not shift its annual purchase target from ¥80 tn to a more flexible range of ¥70-¥90 tn, for example, as has been suggested by some observers (Sankei newspaper, August 9), given the risk of further yen appreciation should the market focus only on the lower figure of ¥70 tn.
    4. We expect the BOJ will effectively scrap its two-year time-frame for achieving its 2% inflation target in favor of the less defined and more ambiguous wording, “at the earliest possible timing.” This is not just because 3.5 years have passed already since the launch of the easing program, but because we believe the BOJ also aims to curb excessive market expectations for additional easing by redefining the QQE with NIRP as a long-term strategy, strengthening the bias towards status quo, rather than a quick-fix policy.

    Q2: Will the BOJ stick to its 2% inflation target?

    A2: We expect the BOJ to retain its 2% target due to the risk of severe yen appreciation if scrapped.

    The BOJ originally chose 2% as its inflation target primarily focusing on the impact on the exchange rate. The widely held view is that long-term exchange rate trends are formed based on purchasing power parity (PPP: a comparison of inflation levels between two countries). In many developed economies, such as the US, long-term inflation (or inflation expectations) is viewed as anchored around the 2% level, whereas in Japan, inflation levels were markedly lower. This is perceived to have formed the long-term trend in yen appreciation, from a PPP perspective. For this reason, the BOJ has had to make a strong commitment to achieving 2% inflation, an international norm, in order to reverse the long-term trend of yen appreciation. If it were now to scrap its 2% inflation target, forex market expectations could reverse completely as the BOJ would be viewed as tolerating a severe appreciatory yen trend. Also, we expect the BOJ not to adopt a more flexible band target such as between 1% and 3% at least at this stage.

    Q3: Why is the BOJ likely to choose the NIRP as its primary policy tool?

    A3: Within the current policy framework, QQE is approaching the limits of its effectiveness, so we think the BOJ wants to place the NIRP as its primary policy tool before this occurs. Another important reason is that the BOJ sees negative rates as an effective tool for combating the strong yen.

    We touched on the “quantitative” aspect of easing in Q1 (2) above. The “quality” aspect of the current policy, which centers on the purchase of equity exchange-traded funds (ETFs), has already seen purchases balloon out to ¥6 tn annually, and there is strong recognition now of three potential side-effects (see our August 3, 2016 Japan Economics Analyst).

    First, there is the possibility of across-the-board rises in share prices, including for companies that should be exiting the market or else languishing at low valuations due to poor earnings prospects. Second, stocks that are substantially overvalued by the market may become even more so on the influx of funds. Third, from a corporate governance perspective, we think the market’s surveillance function could be diminished. This last point, in particular, would appear to run contrary to the Abe administration’s corporate governance reform efforts.

    Furthermore, a simple estimate of potential risk from the BOJ’s equity holdings suggests this will likely surpass the BOJ’s capital even for a 1-year holding period. Under the current BOJ Act, the BOJ is prohibited from receiving loss compensation from the government. Because erosion of a central bank’s balance sheet could undermine confidence in the value of the currency, further expanding ETF purchases could be difficult. 

    We believe there is a strong willingness at the BOJ to move the focus on to its NIRP not only because its QQE options are approaching their limits, but also because the BOJ considers the NIRP to be an effective means of countering the strengthening yen.

    In a recent speech, Governor Kuroda stated that “The basic mechanism of monetary policy … is to drive the real interest rate higher or lower than the “natural rate of interest”. In normal times, this can be achieved by adjusting short-term rates; namely, simply lifting or lowering them.” He went on to say, “Any additional monetary easing entails ‘costs’ which negatively affects some sectors. That said, we should not hesitate to go ahead with it as long as it is necessary for Japan’s economy as a whole; namely, if its ‘benefits’ outweigh its ‘costs’”[2]. We think both statements can be seen as very supportive of the NIRP.

    Q4: What is the likelihood of helicopter money and foreign bond purchases by the BOJ?

    A4: We think both possibilities are extremely unlikely.

    Both helicopter money and foreign bond purchases are in a legal gray zone and therefore cannot be ruled out entirely (see our July 15 Japan Views, and August 30 Japan Views). With helicopter money, however, we see a major risk of the BOJ having difficulty exiting such a policy once it has been set in motion. This is because of the high possibility that giving the government a really convenient tool, namely monetary financing, would cause it to lose fiscal discipline. Given Governor Kuroda is a notable proponent of fiscal consolidation, we think the likelihood of him agreeing to such a policy is extremely low.

    With foreign bond purchases, we think they cannot be dismissed if positioned as a means of expanding the monetary base and not for the purpose of influencing foreign exchange rates. However, even if foreign bond purchases were positioned as a means of monetary base expansion by the BOJ, they would almost certainly be seen by the international community as an attempt to influence foreign exchange rates, in our view. We think foreign bond purchases would be very difficult, especially in light of the US Treasury including Japan on its new currency monitoring list in April 2016.

    Q5: What is the likelihood of the BOJ easing further at the September MPM (next week)?

    A5: If the BOJ were to position the NIRP at the center of its easing policy, we think that it would be only a matter of time before it takes interest rates deeper into negative territory, and that there will be serious discussions on the topic at the September MPM next week. However, we expect the BOJ ultimately to opt to push back additional easing until a later date.

    If the comprehensive assessment was to result in negative interest rates becoming the central pillar of the BOJ’s efforts to achieve its 2% inflation target, it may be natural to think the BOJ would then seek to immediately show a strong commitment to the NIRP, and therefore a deeper negative rate at the September meeting is a possibility. At the next meeting, however, we believe the BOJ will ultimately opt to stand pat and is likely to postpone a deeper interest rate cut for the following three reasons.

    First, in its July Outlook Report, the BOJ sharply raised its GDP growth forecast for FY2017 (to +1.3%, from +0.1%), and kept its bullish inflation forecast (+1.7%) for the same period. Behind this are two main measures on the fiscal front, including a postponement of the second consumption tax hike, and the formation of an economic stimulus package. By the time of the September MPM, however, the only additional macro data available to the BOJ since the July-end Outlook Report will be that for July. While the figures are mixed, we think macro data are unlikely to be weak enough to warrant a major downgrading of the overall economic assessment (see our September 5 Japan Economic Flash).

    The BOJ identified overseas economic developments as the largest downside risk to the economy and prices, but we note that the turmoil in the wake of the Brexit decision has eased, and Chinese macro data, among others, have somewhat improved. Based on the BOJ’s most fundamental approach, we believe that it would see no need to urgently implement additional easing measures if there was no basis for downgrading its economic assessment. 

    Second, because the September MPM and the US FOMC meeting will be held on the same day, the BOJ will need to make its monetary policy decision half a day ahead of the FOMC due to the world time differences. This means that, even if the BOJ were to decide to cut interest rates further, there is a risk of the FOMC decision nullifying the impact on the markets (especially the foreign currency market) of any additional BOJ easing. Considering the possible side-effects and the limited number of chances the BOJ has to take negative interest rates deeper, we believe it will need to think very carefully about the optimal timing when making its next move.

    Third, we believe there is considerable risk in the BOJ cutting rates further before ensuring a more stable steepening of the yield curve. While the yield curve has steepened significantly of late on anticipation of more flexibility on the maturity of JGB purchase, we think this mainly reflects expectations running ahead and that the curve may not stabilize based solely on any news of a more flexible purchase maturities. Rather, with market expectations driving wild fluctuations in yields, we think an actual decision could invite more volatility. If the yield curve fails to steepen in a stable manner in spite of the BOJ taking the negative rate deeper, we think this could have consequences for the financial intermediation function. Consequently, we expect the BOJ to adopt a phased approach, and to consider the timing of future rate cuts only after adjusting the maturity of its JGB purchases first.

  • Alabama, Tennessee, & Georgia Declare States Of Emergency As Gas Shortages Loom After Pipeline Leak

    As Native Americans protesters face arrest in North Dakota for blocking the construction of the Dakota Access Pipeline, TheAntiMedia's Carey Wedler reports a gasoline pipeline spill is currently unfolding in the South. The leak has prompted Alabama Gov. Robert Bentley, Tennessee Gov. Bill Haslam, and Georgia Gov. Nathan Deal to declare states of emergency.

    The Colonial Pipeline, which runs from Houston to New York, began leaking on September 9, spilling 250,000 gallons of gasoline, or 6,000 barrels. The pipeline was built in 1962, and the current leak in Helena, Alabama, is the largest one Colonial Pipeline has experienced in 20 years, Reuters noted.

     

     

    AL.com reported that according to the Colonial Pipeline company’s spokesperson, Bill Berry, the pipeline could still be leaking:

     

    “The leaking pipeline was shut down [last] Friday after the leak was discovered, but Berry said there may be additional gas still inside the pipeline. The leaking section of pipeline hasn’t been excavated yet due to safety precautions, so Berry said the condition of the pipeline and cause of the leak is still unknown.”

     

     

    Hundreds of employees and contract workers face health risks from inhaling vapor as they work overtime to clean up the spill, which the company says is contained to a mining retention pond. AL.com reports “the leak was discovered at the inactive mine site by employees of the Alabama Surface Mining Commission.”

    The governors of Georgia, Tennessee, and Alabama have declared states of emergency, not due to environmental concerns, but over the gas shortage that will result from the leak. After Colonial Pipeline announced Thursday there would be a delay in restarting the pipeline because “work activity was intermittent overnight due to unfavorable weather conditions that caused gasoline vapors to settle over the site,” the price of gasoline futures rose six percent… even as crude futures prices tumbled…

     

    As CNN reports, The major pipeline, one pipe of which has been severed, provides gasoline for an estimated 50 million people on the East Coast each day, according to company estimates. The cause of the leak has yet to be determined, according to the company's most recent statement.

    The pipeline's operator has said full service will not be restored until at least next week. The closure has set off an industry-wide scramble as suppliers seek alternative ways to transport gasoline to the East Coast.

     

    According to reports, the leak will likely start affecting drivers in the nearby states of Georgia, Tennessee, North Carolina and South Carolina within a matter of hours and may spread in coming days. Colonial Pipeline Co., which transports some 40% of the gas along the I-95 corridor says at least 250,000 gallons of gasoline have already been lost.

     

    Senior petroleum analyst Patrick DeHaan warned that some stations may run out as primary gasoline transportation shipping routes along the East coast have been temporarily closed.

     

    Not every station will be able to get the gasoline it needs, he said.

     

    “You’re going to see some places without gasoline,” he said. “It’s like a mini-hurricane.”

     

    The pipeline operator said that based on its current projections, parts of Georgia, Alabama, Tennessee, North Carolina and South Carolina will be the first markets to suffer potential supply disruptions.

    And sure enough the price of East Coast gasoline is soaring relative to the slide in West Coast… (4month highs for East Coast vs 1-month lows for West Coast)

    Gas prices typically fall at this time of year. Thursday was the day that stations in most of the country could start using the cheaper winter blend of gasoline rather than the summer blend, which is formulated to combat smog. But East Coast gas prices are spiking already…

     

    As SHTFPlan's Mac Slavo notes, the massive pipeline leak in Alabama is threatening widespread gas shortages and significant price hikes on the East Coast of the United States. Though the leak reportedly poses no danger to the public, officials say it stands to affect drivers all along the I-95 corridor from Florida to Maine.

    If you live in any of the aforementioned states then you may want to head to your local gas station and fill up the tanks. Though any shortages will be temporary, not being able to get gas for several days or a week could prove troublesome to the 50 million residents served by the Colonial pipeline. The shortage may also impact grocery store deliveries, so if you have anyessential items you absolutely must have it may be a good idea to pick those up before trucks stop delivering.

     

    The declared states of emergency highlight the fragility of just-in-time delivery systems that include critical goods like gasoline, food and medicine. As we’ve previously noted, even a small emergency could wreak havoc on a local, state or nationwide basis with immediate and catastrophic consequences for the populace.

    Mansfield Oil, a fuel distributor, has warned its customers to take fuel savings measures and to place their orders early. The company said the supply of gasoline is currently very thin along the closed pipeline, and that it was trucking in supplies from the coast to meet demand. The company said it was treating the situation "with the same importance and urgency as a natural disaster."

Digest powered by RSS Digest

Sep 17

Today’s News 17th September 2016

  • The Existential Madness Of Putin-Bashing

    Submitted by Robert Parry via ConsortiumNews.com,

    Official Washington loves its Putin-bashing but demonizing the Russian leader stops a rational debate about U.S.-Russia relations and pushes the two nuclear powers toward an existential brink.

    Arguably, the nuttiest neoconservative idea – among a long list of nutty ideas – has been to destabilize nuclear-armed Russia by weakening its economy, isolating it from Europe, pushing NATO up to its borders, demonizing its leadership, and sponsoring anti-government political activists inside Russia to promote “regime change.”

    This breathtakingly dangerous strategy has been formulated and implemented with little serious debate inside the United States as the major mainstream news media and the neocons’ liberal-interventionist sidekicks have fallen in line much as they did during the run-up to the disastrous invasion of Iraq in 2003.

    Russian President Vladimir Putin addresses UN General Assembly on Sept. 28, 2015. (UN Photo)

    Russian President Vladimir Putin addresses UN General Assembly on Sept. 28, 2015. (UN Photo)

    Except with Russia, the risks are even greater – conceivably, a nuclear war that could exterminate life on the planet. Yet, despite those stakes, there has been a cavalier – even goofy – attitude in the U.S. political/media mainstream about undertaking this new “regime change” project aimed at Moscow.

    There is also little appreciation of how lucky the world was when the Soviet Union fell apart in 1991 without some Russian extremists seizing control of the nuclear codes and taking humanity to the brink of extinction. Back then, there was a mix of luck and restrained leadership, especially on the Soviet side.

    Plus, there were at least verbal assurances from George H.W. Bush’s administration that the Soviet retreat from East Germany and Eastern Europe would not be exploited by NATO and that a new era of cooperation with the West could follow the break-up of the Soviet Union.

    Instead, the United States dispatched financial “experts” – many from Harvard Business School – who arrived in Moscow with neoliberal plans for “shock therapy” to “privatize” Russia’s resources, which turned a handful of corrupt insiders into powerful billionaires, known as “oligarchs,” and the “Harvard Boys” into well-rewarded consultants.

    But the result for the average Russian was horrific as the population experienced a drop in life expectancy unprecedented in a country not at war. While a Russian could expect to live to be almost 70 in the mid-1980s, that expectation had dropped to less than 65 by the mid-1990s.

    The “Harvard Boys” were living the high-life with beautiful women, caviar and champagne in the lavish enclaves of Moscow – as the U.S.-favored President Boris Yeltsin drank himself into stupors – but there were reports of starvation in villages in the Russian heartland and organized crime murdered people on the street with near impunity.

    Meanwhile, Presidents Bill Clinton and George W. Bush cast aside any restraint regarding Russia’s national pride and historic fears by expanding NATO across Eastern Europe, including the incorporation of former Soviet republics.

    In the 1990s, the “triumphalist” neocons formulated a doctrine for permanent U.S. global dominance with their thinking reaching its most belligerent form during George W. Bush’s presidency, which asserted the virtually unlimited right for the United States to intervene militarily anywhere in the world regardless of international law and treaties.

    How Despair Led to Putin

    Without recognizing the desperation and despair of the Russian people during the Yeltsin era — and the soaring American arrogance in the 1990s — it is hard to comprehend the political rise and enduring popularity of Vladimir Putin, who became president after Yeltsin abruptly resigned on New Year’s Eve 1999. (In declining health, Yeltsin died on April 23, 2007).

    Russian President Boris Yeltsin.

    Russian President Boris Yeltsin.

    Putin, a former KGB officer with a strong devotion to his native land, began to put Russia’s house back in order. Though he collaborated with some oligarchs, he reined in others by putting them in jail for corruption or forcing them into exile.

    Putin cracked down on crime and terrorism, often employing harsh means to restore order, including smashing Islamist rebels seeking to take Chechnya out of the Russian Federation.

    Gradually, Russia regained its economic footing and the condition of the average Russian improved. By 2012, Russian life expectancy had rebounded to more than 70 years. Putin also won praise from many Russians for reestablishing the country’s national pride and reasserting its position on the world stage.

    Though a resurgent Russia created friction with the neocon designs for permanent U.S. world domination, Putin represented a side of Russian politics that favored cooperation with the West. He particularly hoped that he could work closely with President Barack Obama, who likewise indicated his desire to team up with Russia to make progress on thorny international issues.

    In 2012, Obama was overheard on an open mike telling Putin’s close political ally, then-President Dmitri Medvedev, that “after my election, I have more flexibility,” suggesting greater cooperation with Russia. (Because of the Russian constitution barring someone from serving more than two consecutive terms as president, Medvedev, who had been prime minister, essentially swapped jobs with Putin for four years.)

    Obama’s promise was not entirely an empty one. His relationship with the Russian leadership warmed as the two powers confronted common concerns over security issues, such as convincing Syria to surrender its chemical-weapons arsenal in 2013 and persuading Iran to accept tight limitations on its nuclear program in 2014.

    In an extraordinary op-ed in The New York Times on Sept. 11, 2013, Putin described his relationship with Obama as one of “growing trust” while disagreeing with the notion of “American “exceptionalism.” In the key last section that he supposedly wrote himself, Putin said:

    “My working and personal relationship with President Obama is marked by growing trust. I appreciate this. I carefully studied his address to the nation on Tuesday. And I would rather disagree with a case he made on American exceptionalism, stating that the United States’ policy is ‘what makes America different. It’s what makes us exceptional.’

     

    “It is extremely dangerous to encourage people to see themselves as exceptional, whatever the motivation. There are big countries and small countries, rich and poor, those with long democratic traditions and those still finding their way to democracy. Their policies differ, too. We are all different, but when we ask for the Lord’s blessings, we must not forget that God created us equal.”

    Offending the Neocons

    Though Putin may have thought he was simply contributing to a worthy international debate in the spirit of the U.S. Declaration of Independence’s assertion that “all men are created equal,” his objection to “American exceptionalism” represented fighting words to America’s neocons.

    Carl Gershman, president of the National Endowment for Democracy

    Carl Gershman, president of the National Endowment for Democracy

    Instead of engaging in mushy multilateral diplomacy, muscular neocons saw America as above the law and lusted for bombing campaigns against Syria and Iran – with the goal of notching two more “regime change” solutions on their belts.

    Thus, the neocons and their liberal-interventionist fellow-travelers came to see Putin as a major and unwelcome obstacle to their dreams of permanent U.S. dominance over the planet, which they would promote through what amounted to permanent warfare. (The main distinction between neocons and liberal interventionists is that the former cites “democracy promotion” as its rationale and the latter justifies war under the mantle of “humanitarianism.”)

    Barely two weeks after Putin’s op-ed in the Times, a prominent neocon, Carl Gershman, the longtime president of the U.S.-government-funded National Endowment for Democracy, issued what amounted to a rejoinder in The Washington Post on Sept. 26, 2013.

    Gershman’s op-ed made clear that U.S. policy should take aim at Ukraine, a historically and strategically sensitive country on Russia’s doorstep where the Russian nation made a stand against the Tatars in the 1600s and where the Nazis launched Operation Barbarossa, the devastating 1941 invasion which killed some 4 million Soviet soldiers and led to some 26 million Soviet dead total.

    In the Post, Gershman wrote that “Ukraine is the biggest prize,” but made clear that Putin was the ultimate target: “Ukraine’s choice to join Europe will accelerate the demise of the ideology of Russian imperialism that Putin represents. Russians, too, face a choice, and Putin may find himself on the losing end not just in the near abroad but within Russia itself.”

    To advance this cause, NED alone was funding scores of projects that funneled hundreds of thousands of dollars to Ukrainian political activists and media outlets, creating what amounted to a shadow political structure that could help stir up unrest when the Ukrainian government didn’t act as desired, i.e., when elected President Viktor Yanukovych balked at a European economic plan that included cuts in pensions and heat subsidies as demanded by the International Monetary Fund.

    When Yanukovych sought more time to negotiate a less onerous deal, U.S.-backed protests swept into Kiev’s Maidan square. Though representing genuine sentiment among many western Ukrainians for increased ties to Europe, neo-Nazi and ultra-nationalist street fighters gained control of the uprising and began firebombing police.

    A screen shot of U.S. Assistant Secretary of State for European Affairs Victoria Nuland speaking to U.S. and Ukrainian business leaders on Dec. 13, 2013, at an event sponsored by Chevron, with its logo to Nuland’s left.

    A screen shot of U.S. Assistant Secretary of State for European Affairs Victoria Nuland speaking to U.S. and Ukrainian business leaders on Dec. 13, 2013, at an event sponsored by Chevron, with its logo to Nuland’s left.

    Despite the mounting violence, the protests were cheered on by neocon Sen. John McCain, U.S. Ambassador Geoffrey Pyatt and Assistant Secretary of State for Europe Victoria Nuland, the wife of neocon stalwart Robert Kagan, a co-founder of the Project for the New American Century, which was a major promoter of the U.S. invasion of Iraq.

    In a speech to Ukrainian business leaders on Dec. 13, 2013, Nuland reminded them that the United States had invested $5 billion in their “European aspirations.” By early February 2014, in an intercepted phone call, she was discussing with Pyatt who should lead a new government – “Yats is the guy,” she declared referring to Arseniy Yatsenyuk. Nuland and Pyatt continued the conversation with exchanges about how to “glue this thing” or “midwife this thing,” respectively.

    A Western-backed Putsch

    The violence worsened on Feb. 20, 2014, when mysterious snipers opened fire on police and demonstrators sparking clashes that killed scores, including police officers and protesters. Though later evidence suggested that the shootings were a provocation by the neo-Nazis, the immediate reaction in the mainstream Western media was to blame Yanukovych.

    Though Yanukovych agreed to a compromise on Feb. 21 that would reduce his powers and speed up new elections so he could be voted out of office, he was still painted as a tyrannical villain. As neo-Nazi and other rightists chased him and his government from power on Feb. 22, the West hailed the unconstitutional putsch as “legitimate” and a victory for “democracy.”

    The coup, however, prompted resistance from ethnic Russian areas of Ukraine, particularly in the east and south. With the aid of Russian troops who were stationed at the Russian naval base in Sevastopol, the Crimeans held a referendum and voted by 96 percent to leave Ukraine and rejoin the Russian Federation, a move accepted by Putin and the Kremlin.

    Nazi symbols on helmets worn by members of Ukraine's Azov battalion. (As filmed by a Norwegian film crew and shown on German TV)

    Nazi symbols on helmets worn by members of Ukraine’s Azov battalion. (As filmed by a Norwegian film crew and shown on German TV)

    However, the West’s mainstream media called the referendum a “sham” and Crimea’s secession from Ukraine became Putin’s “invasion” – although the Russian troops were already in Crimea as part of the basing agreement and the referendum, though hastily organized, clearly represented the overwhelming will of the Crimean people, a judgment corroborated by a variety of subsequent polls.

    Ethnic Russians in eastern Ukraine also rose up against the new regime in Kiev, prompting more accusations in the West about “Russian aggression.” Anyone who raised the possibility that these areas, Yanukovych’s political strongholds, might simply be rejecting what they saw as an illegal political coup in Kiev was dismissed as a “Putin apologist” or a “Moscow stooge.”

    While Official Washington and its mainstream media rallied the world in outrage against Putin and Russia, the new authorities in Kiev slipped Nuland’s choice, Yatsenyuk, into the post of prime minister where he pushed through the onerous IMF “reforms,” making the already hard lives of Ukrainians even harder. (The unpopular Yatsenyuk eventually resigned his position.)

    Despite the obvious risks of supporting a putsch on Russia’s border, the neocons achieved their political goal of driving a huge wedge between Putin and Obama, whose quiet cooperation had been so troublesome for the neocon plan for violent “regime change” in Syria and Iran.

    The successful neocon play in Ukraine also preempted possible U.S.-Russian cooperation in trying to impose an Israeli-Palestinian peace agreement that would have established a Palestinian state and would have stymied Israel’s plans for gobbling up Palestinian territory by expanding Jewish settlements and creating an apartheid-style future for the indigenous Arabs, confining them to a few cantons surrounded by de facto Israeli territory.

    Obama’s timid failure to explain and defend his productive collaboration with Putin enabled the neocons to achieve another goal of making Putin an untouchable, a demonized foreign leader routinely mocked and smeared by the mainstream Western news media. Along with Putin’s demonization, the neocons have sparked a new Cold War that will not only extend today’s “permanent warfare” indefinitely but dramatically increase its budgetary costs with massive new investments in strategic weapons.

    Upping the Nuclear Ante

    By targeting Putin and Russia, the neocons have upped the ante when it comes to their “regime change” agenda. No longer satisfied with inflicting “regime change” in countries deemed hostile to Israel – Iraq, Syria, Libya, Iran, etc. – the neocons have raised their sights on Russia.

    Billionaire currency speculator George Soros. (Photo credit: georgesoros.com)

    Billionaire currency speculator George Soros. (Photo credit: georgesoros.com)

    In that devil-may-care approach, the neocons are joined by prominent “liberal interventionists,” such as billionaire currency speculator George Soros, who pulls the strings of many “liberal” organizations that he bankrolls.

    In February 2015, Soros laid out his “Russia-regime-change” vision in the liberal New York Review of Books with an alarmist call for Europe “to wake up and recognize that it is under attack from Russia” – despite the fact that it has been NATO encroaching on Russia’s borders, not the other way around.

    But Soros’s hysteria amounted to a clarion call to his many dependents among supposedly independent “non-governmental organizations” to take up the goal of destabilizing Russia and driving Putin from office. As a currency speculator, Soros recognizes the value of inflicting economic pain as well as military punishment on a target country.

    “The financial crisis in Russia and the body bags [of supposedly Russian soldiers] from Ukraine have made President Putin politically vulnerable,” Soros wrote, urging Europe to keep up the economic pressure on Russia while working to transform Ukraine into an economic/political success story, saying:

    “…if Europe rose to the challenge and helped Ukraine not only to defend itself but to become a land of promise, Putin could not blame Russia’s troubles on the Western powers. He would be clearly responsible and he would either have to change course or try to stay in power by brutal repression, cowing people into submission. If he fell from power, an economic and political reformer would be likely to succeed him.”

    But Soros recognized the other possibility: that a Western-driven destabilization of Russia and a failed state in Ukraine could either bolster Putin or lead to his replacement by an extreme Russian nationalist, someone far-harder-line than Putin.

    With Ukraine’s continued failure, Soros wrote, “President Putin could convincingly argue that Russia’s problems are due to the hostility of the Western powers. Even if he fell from power, an even more hardline leader like Igor Sechin or a nationalist demagogue would succeed him.”

    Yet, Soros fails to appreciate how dangerous his schemes could be to make Russia’s economy scream so loudly that Putin would be swept aside by some political upheaval. As Soros suggests, the Russian people could turn to an extreme nationalist, not to some pliable Western-approved politician.

    Protecting Mother Russia

    Especially after suffering the depravations of the Yeltsin years, the Russian people might favor an extremist who would take a tough stance against the West and might see brandishing the nuclear arsenal as the only way to protect Mother Russia.

    U.S. Secretary of State John Kerry, flanked by Assistant Secretary of State for European and Eurasian Affairs Victoria "Toria" Nuland, delivers his opening remarks to Russian Foreign Minister Sergey Lavrov at the outset of a bilateral meeting on July 15, 2016, in Moscow. [State Department photo]

    U.S. Secretary of State John Kerry, flanked by Assistant Secretary of State for European and Eurasian Affairs Victoria “Toria” Nuland, delivers his opening remarks to Russian Foreign Minister Sergey Lavrov at the outset of a bilateral meeting on July 15, 2016, in Moscow. [State Department photo]

    Still, Official Washington can’t get enough of demonizing Putin. A year ago, Obama’s White House – presumably to show how much the President disdains Putin, too – made fun of how Putin sits with his legs apart.

    White House spokesman Josh Earnest cited a photo of the Russian president sitting next to Israeli Prime Minister Benjamin Netanyahu. “President Putin was striking a now-familiar pose of less-than-perfect posture and unbuttoned jacket and, you know, knees spread far apart to convey a particular image,” Earnest said, while ignoring the fact that Netanyahu was sitting with his legs wide apart, too.

    Amid this anything-goes Putin-bashing, The New York Times, The Washington Post and now Hillary Clinton’s campaign have escalated their anti-Putin rhetoric, especially since Republican presidential nominee Donald Trump has offered some praise of Putin as a “strong” leader.

    Despite the barrage of cheap insults emanating from U.S. political and media circles, Putin has remained remarkably cool-headed, refusing the react in kind. Oddly, as much as the American political/media establishment treats Putin as a madman, Official Washington actually counts on his even-temper to avoid a genuine existential crisis for the world.

    If Putin were what the U.S. mainstream media and politicians describe – a dangerous lunatic – the endless baiting of Putin would be even more irresponsible. Yet, even with many people privately realizing that Putin is a much more calculating leader than their negative propaganda makes him out to be, there still could be a limit to Putin’s patience.

    Or the neocons and liberal hawks might succeed in provoking a violent uprising in Moscow that ousts Putin. However, if that were to happen, the odds – as even Soros acknowledges – might favor a Russian nationalist coming out on top and thus in control of the nuclear codes.

    In many ways, it’s not Putin who should worry Americans but the guy that might follow Putin.

    *  *  *

    Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).

  • New Study Finds Taxpayers Are Fleeing New York, Illinois and California

    A new demographics study, posted on newgeography.com, found that more tax filers are fleeing the state of New York than any other state in the country.  Frankly, we’re shocked people wouldn’t want to live in a state with the highest cost of living, highest home prices, highest state income tax rate and highest property tax rate…what about the cultural benefits?  We guess the bankers and hedgies have finally figured out that they can conduct their business from pretty much any location with an internet connection and then visit New York when/if necessary.  Per the same study, Illinois lost the second highest number of taxpayers and California was not far behind in third. 

    Does anyone think it’s purely a coincidence that the darkest areas of the following maps seem to overlap and represent the states that people are fleeing at the highest rates?  If so, we assume you probably also think it’s a coincidence that those very same states have been Democratic strongholds for decades.

    Cost of Living

    Source:  Economic Policy Institute.

     

    State Tax Rate

     

    Actually, the Albany Times Union was able to find at least one person who thought that people were fleeing from NY for reasons other than oppressively high costs of living and burdensome tax rates.  Ironically, that person was non other than Richard Azzopardi, of Governor Cuomo’s office, who said:

    “The fact is that under this administration, New York has a record number of private sector jobs, an unemployment number below the national average, and passed reforms that led to the lowest middle class taxes in 70 years, the lowest corporate tax rates since 1968 and the lowest manufacturing tax rate since 1917 and a property tax cap.”

    While we appreciate the data from Azzopardi, we’re not sure that linking New York’s excessive tax rates to its own historically higher excessive tax rates is the right comparison.  Our guess is that your citizens (or ex-citizens) probably consider New York’s current tax rates versus the current tax rates of other states as the more relevant comparison.  But that’s just a hunch. 

  • Why East Coast Gas Prices Are About To Explode

    As Native Americans protesters face arrest in North Dakota for blocking the construction of the Dakota Access Pipeline, TheAntiMedia's Carey Wedler reports a gasoline pipeline spill is currently unfolding in the South. The leak has prompted Alabama Gov. Robert Bentley, Tennessee Gov. Bill Haslam, and Georgia Gov. Nathan Deal to declare states of emergency.

    The Colonial Pipeline, which runs from Houston to New York, began leaking on September 9, spilling 250,000 gallons of gasoline, or 6,000 barrels. The pipeline was built in 1962, and the current leak in Helena, Alabama, is the largest one Colonial Pipeline has experienced in 20 years, Reuters noted.

     

     

    AL.com reported that according to the Colonial Pipeline company’s spokesperson, Bill Berry, the pipeline could still be leaking:

     

    “The leaking pipeline was shut down [last] Friday after the leak was discovered, but Berry said there may be additional gas still inside the pipeline. The leaking section of pipeline hasn’t been excavated yet due to safety precautions, so Berry said the condition of the pipeline and cause of the leak is still unknown.”

     

     

    Hundreds of employees and contract workers face health risks from inhaling vapor as they work overtime to clean up the spill, which the company says is contained to a mining retention pond. AL.com reports “the leak was discovered at the inactive mine site by employees of the Alabama Surface Mining Commission.”

    The governors of Georgia, Tennessee, and Alabama have declared states of emergency, not due to environmental concerns, but over the gas shortage that will result from the leak. After Colonial Pipeline announced Thursday there would be a delay in restarting the pipeline because “work activity was intermittent overnight due to unfavorable weather conditions that caused gasoline vapors to settle over the site,” the price of gasoline futures rose six percent… even as crude futures prices tumbled…

     

    As CNN reports, The major pipeline, one pipe of which has been severed, provides gasoline for an estimated 50 million people on the East Coast each day, according to company estimates. The cause of the leak has yet to be determined, according to the company's most recent statement.

    The pipeline's operator has said full service will not be restored until at least next week. The closure has set off an industry-wide scramble as suppliers seek alternative ways to transport gasoline to the East Coast.

     

    According to reports, the leak will likely start affecting drivers in the nearby states of Georgia, Tennessee, North Carolina and South Carolina within a matter of hours and may spread in coming days. Colonial Pipeline Co., which transports some 40% of the gas along the I-95 corridor says at least 250,000 gallons of gasoline have already been lost.

     

    Senior petroleum analyst Patrick DeHaan warned that some stations may run out as primary gasoline transportation shipping routes along the East coast have been temporarily closed.

     

    Not every station will be able to get the gasoline it needs, he said.

     

    “You’re going to see some places without gasoline,” he said. “It’s like a mini-hurricane.”

     

    The pipeline operator said that based on its current projections, parts of Georgia, Alabama, Tennessee, North Carolina and South Carolina will be the first markets to suffer potential supply disruptions.

    And sure enough the price of East Coast gasoline is soaring relative to the slide in West Coast… (4month highs for East Coast vs 1-month lows for West Coast)

    Gas prices typically fall at this time of year. Thursday was the day that stations in most of the country could start using the cheaper winter blend of gasoline rather than the summer blend, which is formulated to combat smog. But East Coast gas prices are spiking already…

     

    As SHTFPlan's Mac Slavo notes, the massive pipeline leak in Alabama is threatening widespread gas shortages and significant price hikes on the East Coast of the United States. Though the leak reportedly poses no danger to the public, officials say it stands to affect drivers all along the I-95 corridor from Florida to Maine.

    If you live in any of the aforementioned states then you may want to head to your local gas station and fill up the tanks. Though any shortages will be temporary, not being able to get gas for several days or a week could prove troublesome to the 50 million residents served by the Colonial pipeline. The shortage may also impact grocery store deliveries, so if you have anyessential items you absolutely must have it may be a good idea to pick those up before trucks stop delivering.

     

    The declared states of emergency highlight the fragility of just-in-time delivery systems that include critical goods like gasoline, food and medicine. As we’ve previously noted, even a small emergency could wreak havoc on a local, state or nationwide basis with immediate and catastrophic consequences for the populace.

    Mansfield Oil, a fuel distributor, has warned its customers to take fuel savings measures and to place their orders early. The company said the supply of gasoline is currently very thin along the closed pipeline, and that it was trucking in supplies from the coast to meet demand. The company said it was treating the situation "with the same importance and urgency as a natural disaster."

  • Nassim Taleb Exposes The World's "Intellectual-Yet-Idiot" Class

    Authored by Nassim Nichaolss Taleb via Medium.com,

    What we have been seeing worldwide, from India to the UK to the US, is the rebellion against the inner circle of no-skin-in-the-game policymaking “clerks” and journalists-insiders, that class of paternalistic semi-intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-driven education who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for.

    But the problem is the one-eyed following the blind: these self-described members of the “intelligenzia” can’t find a coconut in Coconut Island, meaning they aren’t intelligent enough to define intelligence and fall into circularities?—?but their main skills is capacity to pass exams written by people like them. With psychology papers replicating less than 40%, dietary advice reversing after 30 years of fatphobia, macroeconomic analysis working worse than astrology, the appointment of Bernanke who was less than clueless of the risks, and pharmaceutical trials replicating at best only 1/3th of the time, people are perfectly entitled to rely on their own ancestral instinct and listen to their grandmothers (or Montaigne and such filtered classical knowledge) with a better track record than these policymaking goons.

    Indeed one can see that these academico-bureaucrats wanting to run our lives aren’t even rigorous, whether in medical statistics or policymaking. They cant tell science from scientism?—?in fact in their eyes scientism looks more scientific than real science. (For instance it is trivial to show the following: much of what the Cass-Sunstein-Richard Thaler types?—?those who want to “nudge” us into some behavior?—?much of what they call “rational” or “irrational” comes from their misunderstanding of probability theory and cosmetic use of first-order models.) They are prone to mistake the ensemble for the linear aggregation of its components as we saw in the chapter extending the minority rule.

    The Intellectual Yet Idiot is a production of modernity hence has been accelerating since the mid twentieth century, to reach its local supremum today, along with the broad category of people without skin-in-the-game who have been invading many walks of life. Why? Simply, in many countries, the government’s role is ten times what it was a century ago (expressed in percentage of GDP). The IYI seems ubiquitous in our lives but is still a small minority and rarely seen outside specialized outlets, social media, and universities?—?most people have proper jobs and there are not many opening for the IYI.

    Beware the semi-erudite who thinks he is an erudite.

    The IYI pathologizes others for doing things he doesn’t understand without ever realizing it is his understanding that may be limited. He thinks people should act according to their best interests and he knows their interests, particularly if they are “red necks” or English non-crisp-vowel class who voted for Brexit. When Plebeians do something that makes sense to them, but not to him, the IYI uses the term “uneducated”. What we generally call participation in the political process, he calls by two distinct designations: “democracy” when it fits the IYI, and “populism” when the plebeians dare voting in a way that contradicts his preferences. While rich people believe in one tax dollar one vote, more humanistic ones in one man one vote, Monsanto in one lobbyist one vote, the IYI believes in one Ivy League degree one-vote, with some equivalence for foreign elite schools, and PhDs as these are needed in the club.

     

    More socially, the IYI subscribes to The New Yorker. He never curses on twitter. He speaks of “equality of races” and “economic equality” but never went out drinking with a minority cab driver. Those in the U.K. have been taken for a ride by Tony Blair. The modern IYI has attended more than one TEDx talks in person or watched more than two TED talks on Youtube. Not only will he vote for Hillary Monsanto-Malmaison because she seems electable and some other such circular reasoning, but holds that anyone who doesn’t do so is mentally ill.

    The IYI has a copy of the first hardback edition of The Black Swan on his shelves, but mistakes absence of evidence for evidence of absence. He believes that GMOs are “science”, that the “technology” is not different from conventional breeding as a result of his readiness to confuse science with scientism.

    Typically, the IYI get the first order logic right, but not second-order (or higher) effects making him totally incompetent in complex domains. In the comfort of his suburban home with 2-car garage, he advocated the “removal” of Gadhafi because he was “a dictator”, not realizing that removals have consequences (recall that he has no skin in the game and doesn’t pay for results).

    The IYI is member of a club to get traveling privileges; if social scientist he uses statistics without knowing how they are derived (like Steven Pinker and psycholophasters in general); when in the UK, he goes to literary festivals; he drinks red wine with steak (never white); he used to believe that fat was harmful and has now completely reversed; he takes statins because his doctor told him so; he fails to understand ergodicity and when explained to him, he forgets about it soon later; he doesn’t use Yiddish words even when talking business; he studies grammar before speaking a language; he has a cousin who worked with someone who knows the Queen; he has never read Frederic Dard, Libanius Antiochus, Michael Oakeshot, John Gray, Amianus Marcellinus, Ibn Battuta, Saadiah Gaon, or Joseph De Maistre; he has never gotten drunk with Russians; he never drank to the point when one starts breaking glasses (or, preferably, chairs); he doesn’t know the difference between Hecate and Hecuba; he doesn’t know that there is no difference between “pseudointellectual” and “intellectual” in the absence of skin in the game; has mentioned quantum mechanics at least twice in the past 5 years in conversations that had nothing to do with physics; he knows at any point in time what his words or actions are doing to his reputation.

    But a much easier marker: he doesn’t deadlift.

    Not a IYI

  • On This Day In Financial History

    8 years ago, Lehman’s bankruptcy exposed the reality of the global financial system and equity markets collapsed. While the events of that weekend are still in many memories, we suspect few remember the events of September 16th 1929…

    As S&P’s chief investment strategist, David M. Blitzer explains, On September 16th 1929, The Standard & Poors 500-stock index (calculated retroactively) hits 31.86, its peak for the Roaring Twenties bull market.

     

    It does not close above that level until September 22, 1954.

     

    When you hear that stocks always outperform in the long run, do you realize how long long can be?

    h/t Jason Zweig

  • A Dire Warning: "Someone Is Learning How To Take Down The Internet"

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    When Bruce Schneier writes a post titled, Someone Is Learning How to Take Down the Internet, you better listen.

    Read his post below and share widely:

    Over the past year or two, someone has been probing the defenses of the companies that run critical pieces of the Internet. These probes take the form of precisely calibrated attacks designed to determine exactly how well these companies can defend themselves, and what would be required to take them down. We don’t know who is doing this, but it feels like a large nation state. China or Russia would be my first guesses.

     

    First, a little background. If you want to take a network off the Internet, the easiest way to do it is with a distributed denial-of-service attack (DDoS). Like the name says, this is an attack designed to prevent legitimate users from getting to the site. There are subtleties, but basically it means blasting so much data at the site that it’s overwhelmed. These attacks are not new: hackers do this to sites they don’t like, and criminals have done it as a method of extortion. There is an entire industry, with an arsenal of technologies, devoted to DDoS defense. But largely it’s a matter of bandwidth. If the attacker has a bigger fire hose of data than the defender has, the attacker wins.

     

    Recently, some of the major companies that provide the basic infrastructure that makes the Internet work have seen an increase in DDoS attacks against them. Moreover, they have seen a certain profile of attacks. These attacks are significantly larger than the ones they’re used to seeing. They last longer. They’re more sophisticated. And they look like probing. One week, the attack would start at a particular level of attack and slowly ramp up before stopping. The next week, it would start at that higher point and continue. And so on, along those lines, as if the attacker were looking for the exact point of failure.

     

    The attacks are also configured in such a way as to see what the company’s total defenses are. There are many different ways to launch a DDoS attack. The more attack vectors you employ simultaneously, the more different defenses the defender has to counter with. These companies are seeing more attacks using three or four different vectors. This means that the companies have to use everything they’ve got to defend themselves. They can’t hold anything back. They’re forced to demonstrate their defense capabilities for the attacker.

     

    I am unable to give details, because these companies spoke with me under condition of anonymity. But this all is consistent with what Verisign is reporting. Verisign is the registrar for many popular top-level Internet domains, like .com and .net. If it goes down, there’s a global blackout of all websites and e-mail addresses in the most common top-level domains. Every quarter, Verisign publishes a DDoS trends report. While its publication doesn’t have the level of detail I heard from the companies I spoke with, the trends are the same: “in Q2 2016, attacks continued to become more frequent, persistent, and complex.”

     

    There’s more. One company told me about a variety of probing attacks in addition to the DDoS attacks: testing the ability to manipulate Internet addresses and routes, seeing how long it takes the defenders to respond, and so on. Someone is extensively testing the core defensive capabilities of the companies that provide critical Internet services.

     

    Who would do this? It doesn’t seem like something an activist, criminal, or researcher would do. Profiling core infrastructure is common practice in espionage and intelligence gathering. It’s not normal for companies to do that. Furthermore, the size and scale of these probes — and especially their persistence — points to state actors. It feels like a nation’s military cybercommand trying to calibrate its weaponry in the case of cyberwar. It reminds me of the US’s Cold War program of flying high-altitude planes over the Soviet Union to force their air-defense systems to turn on, to map their capabilities.

     

    What can we do about this? Nothing, really. We don’t know where the attacks come from. The data I see suggests China, an assessment shared by the people I spoke with. On the other hand, it’s possible to disguise the country of origin for these sorts of attacks. The NSA, which has more surveillance in the Internet backbone than everyone else combined, probably has a better idea, but unless the US decides to make an international incident over this, we won’t see any attribution.

     

    But this is happening. And people should know.

    As an aside, the observations noted above are consistent with some of what we have seen here at Liberty Blitzkrieg over the past year or so.

    For prior articles by Schneier highlighted here, see:

    Bruce Schneier: “The Internet is a Surveillance State”

    “This is No Longer Fiction” – The Era of Automatic Facial Recognition and Surveillance Is Here

    Top Computer Security Expert Warns – David Cameron’s Plan to Ban Encryption Would “Destroy the Internet”

  • #MaybeTrumpAfterAll

    A funny thing happens when the polls go the other way…

    This is happening… 

     

    And so is this…

    #MaybeTrumpAfterAll

    Source: Townhall.com

  • Jessica Alba Laughs Last After $1 Billion Offer For Her "Honest" Company

    While we would never wish ill will upon anyone, particularly someone with Jessica Alba’s particular “talent”, earlier this year we must admit that we derived some comfort from a WSJ article alleging that Alba’s “Honest Company” hadn’t really been that honest in disclosing which chemicals were used to make their “non-toxic” diapers and detergents.  It’s not that we took any delight in Alba’s potential failure, but we were at least relieved that future investors might be spared additional investing “opportunities” in America’s latest mania-driven bubble.  Back in March we wrote the following:

    Back in the summer of 2014, roughly a year and a half before the second bubble of profitless, “story”, aka “tech”, companies had burst, we wrote in dismay, that “the true indicator of just how bubbly the second coming of the dot com era has become comes courtesy of none other than Jessica Alba’s, yes the actress, own startup: a company launched in 2012 and which makes “non-toxic” diapers (as opposed to toxic diapers?), called the Honest Co., has raised $70 million at a valuation just shy of $1 billion in preparation for an IPO.”

    As we noted then, it looked as if the Alba bubble may have burst (as frightening as that may sound) when the WSJ released an article alleging that Alba’s company may have been using chemicals in their products that they had claimed to shun. 

    What isn’t as easily explained is that since we profiled Alba’s “Honest Company”, its valuation has grown by another 70%, and according to the WSJ it is now $1.7 billion with total funding raised more than $200 million “thanks to its marketing of cleaning supplies, diapers and other consumer products that it says are safer and more ecologically friendly than other brands.”

     

    But what Alba herself will have a very difficult time explaining is why, just like in the case of Theranos, her company it not only grossly misnamed, but may also be another fraud, because according to a just released WSJ expose, “one of the primary ingredients Honest tells consumers to avoid is a cleaning agent called sodium lauryl sulfate, or SLS, which can be found in everyday household items from Colgate toothpaste to Tide detergent and Honest says can irritate skin.

    Honest

    Alas, Jessica Alba and her “Honest Company” may get the last laugh, according to the Wall Street Journal, as Unilever, maker of Dove soaps and Axe body sprays, is in talks to acquire Alba’s company for $1 billion.  That said, we weren’t totally wrong as Unilever’s contemplated purchase price is over 40% less than the $1.7BN valuation placed on Honest in it’s latest fundraising round.  Per the Wall Street Journal:

    Unilever PLC is in talks to acquire Honest Co., the consumer-products retailer co-founded by actress Jessica Alba, according to people familiar with the matter.

     

    Unilever, maker of Dove soaps and Axe body sprays, is discussing a deal valued at over $1 billion but significantly less than the $1.7 billion valuation that was placed on Honest in a fundraising round last year, the people said. The talks are at an early stage, and Honest hasn’t ruled out going for an initial public offering instead, one of the people said.

     

    Honest has raised more than $200 million from outside investors since the Santa Monica, Calif., company’s founding in 2011, according to FactSet data. Those investors include venture-capital firms General Catalyst Partners and Lightspeed Venture Partners as well as money managers Fidelity Management & Research Co. and Wellington Management Co. In the event of a sale, Honest has pledged to pay some investors double their investment.

    According to the WSJ, the Honest Company generates roughly $300 million in annual revenue which pegs Unilever’s bid at 3.3x revenue.  While a few short years ago that may have seemed like an outrageous valuation for a consumer staple business, today it’s right in line with the likes of P&G and Clorox which bubbled over as pension funds have begun trading consumer staple equities and their dividends as the equivalent of investment grade bonds.  Similar risk profile, right? 

    But, for our many readers who couldn’t give a rip about the Honest Company or it’s valuation but just clicked on this post because you liked the teaser image…we leave you with this parting gift:

    Alba

    Alba

  • How About Presenting The Facts & Letting Voters Decide Who's "Fit To Serve"?

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    This simple two-step process would greatly diminish the Ministry of Propaganda's influence.

    Here's a radical idea: how about presenting the facts and letting voters decide who is "fit to serve"? Consider the context of this presidential election and the judgment call as to who is "fit to serve":

    1. Americans' Trust in Mass Media Sinks to New Low (Gallup)  "Americans' trust and confidence in the mass media 'to report the news fully, accurately and fairly' has dropped to its lowest level in Gallup polling history."

     

    2. Both the Republican and Democratic candidates have highly unfavorable ratings; they may well be the most disliked nominees in American history.

     

    3. The status quo in which voters are supposed to rubber-stamp the decisions made at the top of the wealth/power pyramid is falling out of favor.

     

    4. Personal physicians are not disinterested parties; they serve the candidate, not the voting public. Their public claims of "fit to serve" suffer from irreconcilable conflicts of interest.

    To best serve the interests of the nation and the voters, I propose that all candidates for the presidency submit to a thorough medical exam at an Army or Navy hospital that immediately releases the full results to the public. The attending physicians' names will be drawn from a pool of qualified staff at the start of the exam, making it impossible for anyone to threaten or buy off the attending physicians prior to the exam.

    The exam will include chest x-rays, CT scans, neurological tests and the usual blood work.

    The examinations will be overseen by healthcare/medical journalists to insure that the exams adhere to stardard practice and the results are posted immediately without any tampering.

    The principles at work here are:

    1. The public has a right to know the facts relating to each candidates' health.

     

    2. Each candidate is given the exact same tests and treated exactly the same.

     

    3. The public will decide who is "fit to serve" after reviewing the facts of the matter.

     

    4. If you have nothing to hide, you have nothing to fear.

    If any candidate prefers to keep the results of the health exam private, they can do so by exiting the race for the presidency.

    In addition to the medical exam, each candidate will hold a two-hour press conference every week until election day. Representatives of the entire media, not just the handful of mainstream networks and newspapers, will be invited to attend. To secure the room, the public will not be admitted.

    Candidates will be invited to sit in comfortable chairs and answer any and all questions on any subject. They will not be allowed to wear sunglasses or be attended by aides. Since the room will be secured (all media reps will be screened for weapons, all entrances properly sealed, etc.), there is no need for Secret Service personnel to hover over the candidates.

    Why should any candidate object to these very transparent and uncontroversial demands? Why should any candidate object to a routine battery of medical tests and a weekly press conference?

    If you have nothing to hide, you have nothing to fear.

    This simple two-step process would greatly diminish the Ministry of Propaganda's influence. It isn't that hard to understand, people: the voters should be able to review the candidates' medical exam results (i.e. the facts of the matter) so they can decide who's "fit to serve" in an informed fashion. Isn't that the core of democracy?

     *  *  *

    My new book is #6 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the book's website.

     

Digest powered by RSS Digest

Sep 16

Today’s News 16th September 2016

  • Electile Dysfunction: From Landslide To Loser

    Authored by Alan Dershowitz via The Gatestone Institute,

    This is the strangest presidential election in my memory. Despite the polls, the outcome is utterly unpredictable. This was true even before Hillary Clinton's recent health issue. Just consider this: it was only a month ago that the Washington Post declared a landslide victory for Hillary Clinton,

    "[A] dispassionate examination of the data, combined with a coldblooded look at the candidates, the campaigns and presidential elections, produces only one possible conclusion: Hillary Clinton will defeat Donald Trump in November… Three months from now, with the 2016 presidential election in the rearview mirror, we will look back and agree that the presidential election was over on Aug. 9th."

    On August 24, Slate, a liberal online magazine owned by the Washington Post, similarly declared, "There is no horse race: it's Clinton by a mile, with Trump praying for black swans" — only to "predict" one week later "Trump-Clinton Probably Won't be A Landslide." A few days ago, in a desperate attempt to analyze the new polls showing Trump closing in on Clinton, Slate explained sheepishly, "Things realistically couldn't have gotten much worse for Trump than they were a few weeks ago, and so it's not a shock that they instead have gotten a little better of late." Some current polls even show Trump with a slight lead.

    The reality is that polling is incapable of accurately predicting the outcome of elections like this one, where so many voters are angry, resentful, emotional, negative, and frightened. In my new book, Electile Dysfunction: A Guide for the Unaroused Voter" I discuss in detail why so many voters now say they won't vote at all, or will vote for a third-party candidate. As the New York Times reported, "Only 9% of America Chose Trump and Clinton as the Nominees." Or to put the voter's frustration with the candidates more starkly, "Eighty-one percent of Americans say they would feel afraid following the election of one of the two polarizing politicians."

    (Image source: Gage Skidmore/Flickr)

    Despite their perceived lack of agency, these voters may, of course, end up voting for one of the two major candidates when Election Day comes around.

    This may depend in part on whether the Johnson-Weld ticket does well enough in the polls to be included in the presidential and vice presidential debates. The rules require that a third-party candidate reach 15 percent in five national polls. This number is difficult to achieve because many of the polls do not include third-party candidates. But it is not impossible, and if it were to occur, and if the Johnson-Weld ticket outperformed or held its own against Clinton and Trump, then people who had decided not to vote or who couldn't make up their minds might cast ballots for the Libertarian candidates.

    It is unlikely that the Stein/Baraka ticket will be included in the debates or that it will garner any significant number of voters in key states, because the candidates are so extreme in their views and so out of the mainstream of American political beliefs. However, if a significant number of voters do vote for a third or fourth party, this could impact the election, as the votes for Ralph Nader in 2000 may have determined the Florida outcome, which in turn determined the general election outcome.

    The bottom line is that in a bizarre election like this one — with so many variables and so much emotion — polls may well under- or over-predict votes for the two major candidates. Think about the vote on Brexit. Virtually all the polls — including exit polls that asked voters what they had voted for — got it wrong. The financial markets got it wrong. The bookies got it wrong. The 2016 presidential election is more like the Brexit vote in many ways than it is like prior presidential elections. Both Brexit and this presidential election involve raw emotion, populism, anger, nationalism, class division, and other factors that distort accuracy in polling. So anyone who thinks they know who will be the next president of the United States is deceiving themselves!

    To be sure, the Electoral College vote is sometimes less difficult to predict than the popular vote, because it generally turns on a handful of closely contested critical states, such as Ohio, Florida, Pennsylvania, and Virginia. But in this election, there could be surprises in states that are usually secure for one party or the other. So even the electoral vote will be more difficult to predict than in previous elections.

    One reason for this unique unpredictability is the unique unpredictability of Donald Trump himself. No one really knows what he will say or do between now and the election. His position on important issues may change. Live televised debates will not allow him to rely on a teleprompter, as he largely did in his acceptance speech or in his speech during his visit to Mexico City. He may once again become a loose cannon. No one can predict what he will say or do next. This may gain him votes, or it may lose him votes. Just remember: few, if any, pundits accurately predicted how far Trump would get when he first entered the race. When it comes to Donald Trump, the science of polling seems inadequate to the task.

    Hillary Clinton is more predictable, but her past actions may produce unpredictable results, as they did when FBI Director James Comey characterized her conduct with regard to her emails as "extremely careless." It is also possible that more damaging information about her private email server or the Clinton Foundation may come from WikiLeaks or other such sources (whether these "revelations" are actually incriminating seems to be beside the point for those 54% of voters who, without first-hand knowledge of the investigation, suspect that the FBI engaged in a preferential treatment by not seeking criminal charges against Clinton.) Finally, it is difficult to assess what impact, if any, her recent health issues may have on voters.

    Another unpredictable factor that may impact the election is whether there are terrorist attacks in the lead-up to the voting. Islamic extremists would almost certainly like to see Trump beat Clinton, because they believe a Trump presidency would result in the kind of instability on which they thrive. If ISIS attacks American targets in late October, that could turn some undecided voters in favor of the candidate who says he will do anything to stop terrorism. If voters were to change their votes based on terrorist acts, that would only encourage more terrorism in the run-up to elections.

    A final reason why this election is so unpredictable is because voter turnout is unpredictable. The "Bernie or bust" crowd is threatening to stay home or vote for the Green Party. Young voters may do here what they did in Great Britain: many failed to vote in the Brexit referendum and then regretted their inaction when it became clear that if they had voted in the same proportion as older voters, Brexit would likely have been defeated. Some Clinton supporters worry that black voters who voted in large numbers for Barack Obama may cast fewer votes for Clinton in this election. Voters who usually vote Republican but can't bring themselves to pull the lever for Trump may decide to stay home. Turnout is unpredictable, and the effect of low voter turnout is also unpredictable.

    So for all these reasons and others, no one can tell how this election will turn out. It would be a real tragedy and an insult to democracy if the election were to be decided by those who fail to vote, rather than by those who come out to vote for or against one of the two major candidates.

  • Deutsche Bank Slapped With $14 Billion Fine By DOJ Over Mortgage Probe

    Blowback? Just a few weeks after the EU slapped Apple with a $14 billion bill for "back taxes," the U.S. has apparently responded with a $14 billion fine of their own to Deutsche Bank to settle an outstanding probe into the company's trading of mortgage-backed securities during the financial crisis. 

    Shareholders are not happy…

     

    According to the Wall Street Journal, the proposed settlement would be largest fine paid by any of the banks related to similar charges.  Unfortunately for DB, the fine is roughly equal to it's entire market cap and the stock is plunging nearly 8% in after hours trading.

    The U.S. Justice Department proposed that Deutsche Bank AG pay $14 billion to settle a set of high-profile mortgage-securities probes stemming from the financial crisis, according to people familiar with the matter, a number that would rank among the largest of what other banks have paid to resolve similar claims and is well above what investors have been expecting.

     

    The figure is described by people close to the negotiations between Deutsche Bank and the government as preliminary, and they said it came up in discussions between the bank and government lawyers in recent days. It hasn’t been previously disclosed. Deutsche Bank is expected to push back strongly against it, the people said, and it is far from clear what the final outcome will be.

     

    It is also unclear how much of that amount is proposed to be paid in cash, and how much could be in consumer relief, as past deals have been structured.

    A DB spokesman confirmed back in July that negotiations had been initiated with the DOJ though no estimates had been provided on the size of any potential settlement before today.  That said, the Wall Street Journal notes 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

     

    The size of the proposed settlement is also bad news for other European banks that remain under investigation by the DOJ including Barclays, Credit Suisse, UBS and RBS.  Lawyers working with other banks have indicated that DB's settlement would likely set the precedent for what other Euro banks might be expected to pay. 

    Just when you thought DB was safe…

  • Chaos Has Never Been Closer: "Obama May Suspend Election" If She Is Too Sick

    Submitted by Mac Slavo via SHTFPlan.com,

    The events are all lined up, and the system is geared for chaos. At any moment, a despotic leader could take control.

    But how could it ever happen in America?

    With economic collapse again on the horizon, and a basket of issues coming to a head, several factions of the population are tipping towards revolution. Much of it has played out in the election cycle; the establishment has lost all credibility, and the people are seeking anti-establishment voices. Alternate means of maintaining control are implemented.

    Homeland Security is taking control of the election process, making a  fair election completely impossible. Optics and careful PR is used to script the election, and maintain a favorable narrative – and one that is explosive enough to produce radical and unexpected results that might drive anger over the edge.

    Millions of people have been driven by the media to violently oppose Trump, and may well start riots across the country if he wins the election, that is, if Obama doesn’t stop the elections first. Likewise, if Hillary is elected and take office, it could spawn a civil war, of words… or worse.

    Any number of pretexts could theoretically come into play, but no scenario has become more likely than Hillary dropping from the race and stirring, well, a shitstorm like politics has never before seen.

    If Hillary is too sick, President Obama could opt to suspend the election, and it could make any number of groups unleash, giving way to civil unrest.

    The police state is ready to contain economic/food riots, and are also poised to use martial law to maintain order, using an iron fist.

    Chaos and order will repeat in cycle, and everything will become unstable, decline and render the population depraved and vulnerable.

    Radio host and political expert Michael Savage appeared on the Alex Jones Show and warned that the new Hillary card could be the unexpected reason for one of the most dangerous scenarios on the books.

    If these events came to pass, would the Constitution and rule of law ever be restored?

    Michael Savage: Hillary Is In Free-Fall, Obama May Suspend Election

     

    Steve Quayle has also been watching for the type of emergency events that could be used to alter reality and cancel the elections, or allow a martial law scenario to take hold. He, too, sees an uncertain election ahead.

    Steve Quayle: Election May Not Take Place

    What do you think is going to happen to this country in the next two months?

    Stay vigilant, and get ready for literally almost anything.

  • Former Treasury Secretary Warns Banks Riskier Now Than In 2008 Crisis

    Submitted by Simon Black via SovereignMan.com,

    “Sir. SIR! This your bag,” the TSA agent barked at me last week, more as a statement than a question.

    “It is.”

    “Are you carrying any liquids?”

    I knew immediately; I had forgotten about the bottle of water that I had shoved in my briefcase before checking out of my hotel.

    They opened my bag and confiscated the water bottle immediately with an extra harrumph to make sure I knew that I had wasted their time.

    Yeah, I get it. I broke the rule. But it’s such a ridiculous rule to begin with.

    Are we really supposed to pretend that Miami International Airport is any safer because there’s a brand new, unopened Dasani bottle in the TSA wastebin?

    You may recall how Istanbul’s Ataturk Airport was attacked on June 28th by men armed with automatic weapons and explosives.

    Ataturk was already one of the most security-conscious airports in the world– you actually have to go through a security checkpoint just to enter the building, followed by a second security checkpoint on your way to the gate.

    And yet, despite all of this extra security, 41 people were killed and hundreds more wounded in an attack that shows just how ineffective airport security really is.

    Airport security isn’t real security. It’s merely the illusion of security– a bunch of busybodies in uniforms enforcing pointless rules to make people believe that they’re safer.

    Candidly, our financial system has borrowed the same principle. There’s no real safety in our financial system– merely the illusion of safety.

    Leading up to the 2008 financial crisis, most people thought the banks were safe.

    After all, we’ve been told our entire lives that the banks are rock solid. What could go wrong?

    This turned out to be an illusion. Banks had loaded up their balance sheets with toxic assets, rendering themselves completely insolvent. They started dropping like flies.

    Bear Stearns, Lehman Brothers, Merrill Lynch, Washington Mutual, Wachovia… some of the most established banks in the US collapsed. Poof.

    Ever since then, the banks, the US government, the Federal Reserve, and other financial regulators in the United States have been working to rebuild the illusion of financial safety.

    Most notably came a bunch of laws and regulations like the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, designed to make the banks safer…

    … or at least give the appearance that banks are safer. As you can imagine, these regulations have merely created another illusion of bank safety.

    Today, former US Treasury Secretary Lawrence Summers published a new paper that slams these regulations for not having made the US banking system any safer:

    “To our surprise, we find that financial market information provides little support for the view that major institutions are significantly safer than they were before the crisis and some support for the notion that risks have actually increased.”

    This is important. Most people have handed over their entire life’s savings to financial institutions that are far, far riskier than we are led to believe.

    Ask yourself– does it really make sense to keep 100% of your savings in a financial system that goes through great pains to deliberately conceal the truth?

    Why take the risk? Especially when all you really gain is a whopping 0.01% interest?

    There are better options for your money.

    We’ve talked about holding physical cash and precious metals– which, in combination, is a great way to hedge risks in the banking system as well as the overall monetary system.

    If these banking system risks ever do erupt into another financial crisis, having some physical cash means that at least a portion of your savings will be immune to the consequences.

    Should that crisis turn into a full-fledged currency crisis, having some physical gold will shield you from those consequences as well.

    And even if neither of those scenarios unfolds, it’s hard to imagine you’ll be worse off holding cash and gold.

    Again, when interest rates are this low, there’s almost zero opportunity cost in holding cash.

    And gold remains one of the only major asset classes recognizable and marketable around the world, yet still FAR below its all-time high.

  • Spot The (Book Review) Difference

    With health concerns mounting, email leaks hurting, and poll numbers tumbling, Hillary Clinton has had a tough couple weeks (poor thing)… but the news just got a little worse as Hillary’s newest book, “Stronger Together,” which provides a policy blueprint for where she hopes to take the country if she is elected president, sold just 2,912 copies in its first week on sale, according to Nielsen BookScan.

    As The New York Times reports, both Mrs. Clinton and her running mate, Senator Tim Kaine, have promoted the book on the campaign trail, but the sales figure, which tallies about 80 percent of booksellers nationwide and does not include e-books, firmly makes the book what the publishing industry would consider a flop.

    “Stronger Together,” whose cover shows Mrs. Clinton and Mr. Kaine waving, arrived closer to Election Day than most of these types of books.

     

    Named after the campaign’s slogan, “Stronger Together” offers readers, according to the book jacket, “specific and practical solutions, while also articulating a bold and expansive vision of change and renewal.”

     

    Its roughly 250 pages intersperse bullet-point policy ideas, like “launch a national initiative for suicide prevention” and “humanely address the Central American migrant crisis,” with photographs of Mrs. Clinton and Mr. Kaine on the campaign trail, charts in the campaign’s signature chunky font and highlights from Mrs. Clinton’s speeches.

    But, it appears, from a cursory glance at Amazon.com, that even the 2912 people that read the book were unimpressed by its contents (with 83% giving it 1 Star)… slightly different from Donald Trump’s “Great Again” book’s reviews…

    Some of the 1-Star reviews…

    As ‘UrbanLegend’ wrote…

    I have to start by saying I am a registered independent voter, and more importantly, a life-long independent thinker. I have voted for more D’s than R’s in my life, as well as several third-party candidates. This is the lamest, weakest, most politically-absurd book ever written, as far as I know. Save your money for food for your family just in case she is elected.

    As Daniel B noted…

    I was going to read this book…..I really was. But just as I got started, I found myself under sniper fire, passed out, and fell and hit my head. After that I got double vision and had to wear glasses that were so damn thick I couldn’t even see to read. Then I had an allergic reaction to something and started coughing so hard I spit out what looked like a couple of lizard’s eyeballs, my limbs locked up, and I passed out and fell down again, waking up only to find out I had been diagnosed with pneumonia 2 days earlier. It’s a good thing I was able to make a small fortune making this random small trade in the commodities market (cattle futures or some such thing) and then, miracle of all miracles, a few banks offered me a few million to just talk to their employees for a few minutes – and all that really helped out because I swear I was dead broke and couldn’t figure out how I was gonna come up with the 6 bucks to pay for this book, let alone pay the $1,500 for my health insurance this month. I still want to read it, but, hell, what difference at this point does it make? I hear it sucks anyway.

    Paul A. Bedish’s review was short and sweet…

    What a horrible book. I got brain damage after 4 pages and lost my shoe

    And finally “Amazon Customer” concluded…

    How are we to believe that the book was written by Mrs. Clinton and Mr. Kaine? They’ve been a bit busy lately. Obviously ghost-written campaign drivel. If she really believes we’re “stronger together” perhaps she should stop dividing us. Not calling her opponent’s supporters “deplorable” might be a good start.

    There were some 5-Star reviews…

    From Bestatchess…

    This is a great book. The chapters on “How to screw up everything you touch with hubris” “How to write the perfect doctor’s note” and “D**ing bimbos at home” were worth the price of admission.

    And finally…“I would give this book 10 stars if I could!”

    Why? Because it’s a fantastically well-written, witty, insightful and informative book that was written by a person who is easily the most important female political leader since Queen Elizabeth I. And her impact on world history is liable to be much, much greater. Please do yourself, your children, grandchildren and great-grandchildren a favor and beg, borrow, or steal this book, but whatever you do – READ IT!!! In it you will find Hillary’s plan for making this world of ours a much better place – more peaceful, more prosperous, more just, more environmentally sustainable. And as an aside, way, way more fun! This book is in fact so chock full of great ideas that if it contained any more, they would literally leak out the sides! I always felt that, compared to anyone else on the scene, Hillary Clinton was a modern day Colossus of Rhodes, but now I’m more inclined to think of her as the political equivalent of the Great Pyramid. They just don’t come any better! After her eight years in office are finished, I predict the only remaining controversy will be which one of those dead guys immortalized on Mount Rushmore should have his features rearranged in her image. (I vote for Alexander Hamilton – way overrated if you ask me.) But I digress. In sum, if you don’t read this book, you will regret it – maybe not today, but soon, and for the rest of your life. Please, don’t make that tragic mistake!

  • Infrastructure Spending Does Not "Grow The Economy"

    Submitted by Patrick Trombly via The Mises Institute,

    In a new twist, the presidential nominees from both major political parties have fallen for (or hope that the voters have fallen for) a time-worn fallacy, and have proposed government spending on infrastructure “to grow the economy and create jobs.” As David Stockman has shown, infrastructure in the United States is not “crumbling,” nor is spending on infrastructure disappearing.

    What is equally important to our analysis, though, is the fallacy that government spending, on infrastructure or anything else, creates jobs or economic growth in the aggregate. This fallacy and related myths need to be dispensed with before anyone begins to take them seriously. Murray Rothbard addressed the issue in great detail in his article “The Fallacy of the ‘Public Sector.’” Below I seek to summarize, in simple terms that even Donald Trump and Paul Krugman can understand: there is no such thing as the Infrastructure Fairy that takes government spending and magically turns it into economic growth. 

    Government Spending: A Zero-Sum Game

    The money to be spent on infrastructure would have to be borrowed, taxed, or printed (a tax not called a tax) out of the non-government economy. One minus one equals zero. That’s not conservative economics or liberal economics. It’s not Democrat economics or Republican economics. It’s just economics.

    Once upon a time, politicians used to promise to “bring home the bacon.” Voters upset at the system would bemoan the fact that the system took funds from the whole country so that politicians from different districts could fight over how much of that money they could bring back to their districts to spend on things that the voters probably would not have bought with the money had they been allowed to keep it. But, given the realities of taxation, it seemed that the only choice available was to hold one’s nose, play the game, and try to vote your representative or senator back to Washington to bring back more “bacon” than was being taxed from your state to begin with. 

    But, the political class is now telling us that our money, taken from us and then spent by them, will actually grow the economy. We’ve come to expect this sort of thing from politicians, but many economists inside and outside of DC are more than happy to give the political class intellectual respectability under the new version of alchemy that is the “multiplier effect.” 

    If we dig deeper into the realities behind government spending, however, we can see that an “infrastructure stimulus program” would probably make matters worse than they are. After all, private investment is done at least with the goal of producing something that consumers want to buy, at a price that will generate a profit. These activities, if successful, would enable continued reinvestment in the same enterprise, and continued employment of the individuals therein.

    The government, via taxation, produces something that the consumers have not already chosen to buy. If they were already producing and buying such things, no government intervention would be “necessary.” Thus, whenever the government spending program — on infrastructure or anything else — ends, we end up with workers who took the “stimulus” jobs instead of the jobs that would have been created by the private economy’s spending or investing the same money. Those workers will have invested their time and energy in the development of skills not actually in demand by the consumers. This is a form of malinvestment, and it impacts employees of these firms in a manner similar to the workers who were misled by Fed-created malinvestment booms into the home construction fields in the 2000s or the oil drilling fields in the 2010s. Of course, workers need not worry about other employment if interest groups can convince politicians to keep pouring billions into these industries indefinitely, even though the taxpayers couldn’t be bothered with voluntarily investing in those industries to the same degree. 

    The Myth of Stimulus

    Nevertheless, old lies about stimulus spending never quite seem to go away. It is telling that there is only one example of “fiscal stimulus” that is popularly believed to have been successful — the myth that “World War Two brought us out of the Depression.” This sole empirical example held up to justify taking and spending more of your money on politicians’ donors’ priorities is also a fallacy. During World War Two, the government not only spent more money, it conscripted half the male population into the army and navy, sending them halfway around the world to kill people — and to be killed. Obviously, you no longer count as unemployed if you’re dead. Even among the living, a command economy cannot be maintained perpetually, whether for war or any other purpose. War simply does not add value, but rather subtracts value. Centralized war planning cannot be considered an improvement over a free economy, at least if the goal is meeting consumer demand. “GDP” includes all economic activity, though, whether consumer needs are being met or not. Thus, war-related “GDP growth" cannot be considered “economic stimulus.”

    Moreover, the post-war growth in GDP often cited by stimulus proponents wasn’t a refutation of Bastiat’s Broken Window Fallacy, as is commonly thought. To continue Bastiat’s analogy: we had simply spent the 1940s breaking everyone else’s windows, which created a temporary advantage for American glaziers. This advantage peaked in the 1960s and in all probability came at the expense of other potential avenues of growth more closely aligned with meeting consumers’ actual demand. After all, if Europeans were spending their money on new windows, they couldn’t spend that money to buy other things the Americans produced. Remember that we also eliminated, in the late 1940s, some of the war-time rations and price controls, and paid down government debt — undoing things that the government had been doing for years to stifle private sector growth.

    The “World War Two” case is often argued in conjunction with the related myth that the war-related expenditure was “needed” to combat a “liquidity trap,” which, the infrastructure fairy advocates contend, exists again today.

    But, there is no “liquidity trap” and never has been one. In the 1930s, after the leveraging up of the 1920s, the most popular phrase was “brother can you spare a dime.” Now, after the leveraging up of the 2000s, 40 percent of Americans don’t have enough put aside to cover a surprise $500 expense. An extremely high percentage of millennials live with their parents and those parents are working to a later age to make up for low retirement savings and the meager return on what savings they have. The “liquidity” problem is and was that everyone found himself to be illiquid after a credit-expansion-driven boom-bust cycle. Even the “liquidity” now held by the banks is just central bank “Quantitative-Easing” money, printed after 2008. The “stress tests” are passed only because the central banks believe that enough of their funny money remains on reserve to cover the losses that will ensue when the central banks’ latest bubbles burst. And the supposed $3 trillion of non-financial-corporation “cash on the sidelines” adds up to one sixth of the federal debt. This is a low cash position relative to the rest of the economy’s balance sheet, even without considering unfunded federal obligations, state and city debt and unfunded obligations, and corporate and household debt. The idea that we are so flush as to be too flush is just not true.

    Ultimately, spending on infrastructure no more “creates wealth” than any other kind of government spending. Like all other government spending, it’s a matter of taking money from some people to give to others. The money taken from the taxpayers must be subtracted from the money spent, and we’re left with no net gain. Of course, after the politicians and the government contractors take their cut, they’ll do pretty well. The rest of us won’t be so lucky.

  • YouTube Has Quietly Begun "Censoring" Journalists Who Criticize Government

    Submitted by Alice Salles via TheAntiMedia.org,

    Earlier this month, YouTube, the behemoth video-sharing website was accused of censoring users.

    Claiming some of their videos had been barred from making money through the company’s ad services, YouTube hosts like Philip DeFranco spoke out against the policy, claiming over “a dozen of his videos had been flagged as inappropriate for advertising, including one dinged for ‘graphic content or excessive strong language.’“

    In a video entitled “YouTube Is Shutting Down My Channel and I’m Not Sure What To Do,” DeFranco called YouTube’s policy “censorship with a different name,” since users touching on what the company considers to be controversial subjects end up losing money. “If you do this on the regular, and you have no advertising,” DeFranco added, “it’s not sustainable.”

    While YouTube has already confirmed its policy regarding what it considers unfit for monetization hasn’t changed, the issue might lie elsewhere now that the company seems more efficient in enforcing its own rules. As a matter of fact, the content policy changed in 2012, when YouTube first introduced its “ad-friendly” guidelines.

    But while an algorithm is allegedly used to spot and “de-monetize” videos that break the company’s rules, many continue to accuse the company, currently owned by Google, of having “vague” descriptions of what its leadership considers ad-friendly.

    YouTube rolled out its monetization tool in 2006, when ads consisted of videos that would pop up at the bottom of the user’s screen. If the user did not click on it, it would roll for about ten seconds before going away. But as ad executives pressured YouTube to “to do a better job at promoting its creators,” the relationship with its advertisers changed. As better and even more intrusive ads were added to YouTube videos, the company allegedly became more concerned with the content.

    Those who are affected often complain about copyright claims, but some complain about another type of targeting — one that involves power players.

    YouTube Content Creators Speak Out

    Derrick J. Freeman, the host of FR33MANTV, told Anti-Media that he monetizes all of his videos, “and every day some video — even much older ones — gets slapped with some kind of warning or another because of music playing in the background somewhere. Usually a public place.”

    While Freeman’s work is often political in nature, he hasn’t seen any of his videos being flagged for breaking YouTube’s rules concerning subjects related to war or political conflicts.

    Mat Bars, another YouTube user, also complained about copyright claims.

    Asked about the alleged censorship problem, Bars told Anti-Media that “what it really most likely comes down to is advertisers not wanting their ads to be associated with certain things.” To the YouTube host, the company is “mostly blameless in this. The site isn’t even profitable, so letting advertisers push them around like this suits their best interests.” Instead of complaining about censorship, Bars added that what affects him personally is “the copyright system.”

    But to more radical political figures who gather a considerable number of followers on YouTube, things are slightly differently.

    To Luke Rudkowski, the man behind the popular channel We Are Change, YouTube’s policy of nixing monetization on some of his most popular videos has been a problem for a long time.

    “For years,” he told The Anti-Media, “I have monetized and still get f*cked from it.” Especially, he continued, “[when I launch a video about] Hillary, or war and foreign policy.” When his videos touch on drugs or guns, however, he says ads remain in place.

     

    “When the videos only have ‘Hillary Clinton’ they do fine,” he added, “however, when we add ‘FBI’, that’s when YouTube” springs into action.

    Anti-Media journalist and senior editor Carey Wedler got her start on Youtube and has had a similar experience with her channel.

    She explained the first time she realized the site had singled out her videos was “a couple of weeks” after she “posted a video about how America’s culture of militarism is an underlying contributor to domestic mass shootings.”

    She continued:

    “The video was released shortly after the Orlando shooting, which occurred in June. By July 6, I had received an email saying the video was not ‘advertiser friendly.’ Two days later, I received another email about a video I released at the beginning of June — before I released the mass shooting video. This video, which pointed out inconsistencies in Bernie Sanders’s record and questioned his ‘revolutionary’ status, was also stripped of monetization.”

    While the mass shooting video’s monetization has been restored without her appealing the company’s decision, her Sanders video remains ineligible. The Sanders video focused largely on his record of supporting war and the military-industrial complex.

    Her other videos affected by YouTube’s policy include “What Every American Needs to Know About Radical Islam,” a video “that challenged rampant Islamophobia and jingoism right after the Paris terror attacks last November,” and “Why I’m “Ready for Hillary!,” which the creator claims to be an “extremely sarcastic indictment of Hillary Clinton published before she announced her candidacy early last year.”

    Other videos by Wedler that suffered the same fate include “How America ‘wins’ the wars in Syria & Iraq” and “How I became a “self-hating Jew.” All of the de-monetized videos contain anti-war sentiments.

    According to the prolific writer and vlogger, YouTube only bothered to email her notifications regarding the changes in monetization for the Sanders and the mass shooting videos:

    “I noticed the [other] videos had all been stripped of monetization when I logged into Youtube to check out the two that had been officially flagged. However, when I checked my settings following receipt of the two emails regarding mass shootings and Bernie, my overall monetization setting had been switched off — meaning none of my videos were monetized.”

    She claims to have “never selected that option” prior to learning about the issues with the videos mentioned previously, yet when she turned the monetization option back on, “the monetization reactivated — but only for videos that hadn’t been specifically flagged.”

    “I also noticed that my videos before the self-hating Jew video hadn’t been rejected for monetization at all,”  she said.

    In cases involving YouTube’s decision to flag her videos that included notifications, Wedler added, YouTube failed to give her “a specific reason as to why the videos were stripped of monetization. I’ve seen some screenshots of those emails from other Youtubers … and some contain reasons. Mine didn’t, though it’s pretty clear to me that in my case, it’s because they are considered ‘controversial.’ Some discuss war and some contain images of war, and they are always questioning military violence.”

    While Wedler agrees that this type of policy is “not direct censorship … it does amount to an implicit attempt to discourage me and others from saying controversial things.”

    She added that while YouTube is a “privately owned company that can decide which content is appropriate for its advertisers, … if they are deciding [which of] my videos shouldn’t be allowed to generate revenue, they are effectively removing much of my incentive to continue producing content on the platform.”

    Despite the company’s policy, Wedler vows to continue making these videos simply because the message is what matters.

    Google and Its Addiction to Buying Influence

    As Wedler stated, YouTube is a private company and it has the right to set its own policies. But it’s undeniable that the site’s owner, Google, has, on a number of occasions, shown its favoritism through lobbying, prompting many to highlight the company’s appearance of favorable bias toward Democratic Presidential candidate Hillary Clinton.

    Google went from spending $80,000 on lobbying in 2003 to over $16 million in 2014. After 2014, Google, Inc. became Alphabet, and in 2015, Alphabet invested over $16 million in lobbying. To date, the company has spent over $8 million on Washington politicians.

    Alphabet’s top recipient this election cycle is, unsurprisingly, Hillary Clinton.

    But despite its knack for influence buying, Google has, over the years, created relationships with think tanks that would have criticized the tech giant’s crony capitalist ways under different circumstances.

    According to the Washington Post, Google has embarked on a quest to woo free market organizations by populating “elite think-tanks such as the Cato Institute, the Competitive Enterprise Institute and the New America Foundation” with its fellows, including “young lawyers, writers and thinkers paid by the company.”

    From the Post:

    “To critics, Google’s investments have effectively shifted the national discussion away from Internet policy questions that could affect the company’s business practices. Groups that might ordinarily challenge the policies and practices of a major corporation are holding their fire, those critics say.”

    Claiming to be defenders of privacy, Google successfully waged an aggressive lobbying campaign within Washington to defeat a congressional effort that could have put Google in the middle of a very nasty antitrust fight.

    After supporting the European Union’s antitrust prosecution of Microsoft, Google found itself the target of the same type of scrutiny, being accused of unfairly discriminating against users.

    With the excuse of going after companies like Google for antitrust law violations, Congress came up with the Stop Online Piracy Act (SOPA), a bill disguised as an anti-online piracy fix that would have allowed the federal government to target “illegal copies of films and other forms of media hosted on foreign servers.” The bill would have hurt Google the most because the search engine would have several results deleted from its database, requiring “ISPs to remove URLs from the Web, which is also known as censorship last time I checked,” Google chairman Eric Schmidt said.

    Just one month before SOPA was unveiled by Rep. Lamar Smith (R-TX), Schmidt appeared before Congress during a Federal Trade Commission (FTC) hearing where a Republican senator “accused the company of skewing search results to benefit its own products and hurt competitors.” As this hearing took place and Google was grilled by lawmakers, the U.S. Chamber of Commerce and the Motion Picture Association of America lobbies pushed Congress to pass harsh anti-privacy legislation, accusing companies like Google of giving users access to pirated music and movies.

    Afraid of the backlash caused by the hearing, Google feared the Hollywood lobby would end up hurting many of its partners, as well as smaller organizations directly tied to Google. But the search engine giant had a way out — its aggressive lobbying and partnership building skills.

    As SOPA appeared poised for passage, Google and several other tech firms stood in opposition and the bill finally failed.

    While SOPA was, indeed, a farce — and privacy advocates in Washington were happy the bill didn’t see the light of day — it’s important to note how hard Google worked to keep it from becoming a reality, putting the Silicon Valley giant closer to powerful institutions that, in theory, are against crony capitalism.

    But after SOPA, the FTC went back to the drawing board, threatening to investigate Google’s alleged antitrust violations further. At the time, the “company’s rivals, including Microsoft and Yelp, were aggressively pressing arguments that Google was exploiting its dominance in the search business.”

    Reaching out to another partner, George Mason University’s Law & Economics Center, Google and the university put together “the first of three academic conferences at the GMU law school’s Arlington County campus,” which, according to the Washington Post, helped to shape the FTC’s approach to the Google probe from then on.

    At the third academic conference held at GMU, Google remained present as a silent partner. As “[a] strong contingent of FTC economists and lawyers were on hand for the May 16, 2012, session,” the Washington Post reported, research financially backed by Google was presented by GMU lawyers and economists. And “[i]n January 2013, after an investigation that spanned more than a year and a half, the FTC settled the case with Google, which agreed to give its rivals more access to patents and make it easier for advertisers to use other ad platforms.”

    From the publication:

    “But when it came to the charges that Google biased its search results to promote its own products, the five FTC commissioners all voted to close the investigation, saying there was no evidence the company’s practices were harming consumers.”

    As Google became more involved with politics, other lobbying opportunities would arise.

    More recently, Google got involved in yet another powerful lobbying effort, which started when the company hired the former administrator of the U.S. National Highway Traffic Safety Administration to serve as the company’s Director of Safety for Self-Driving Cars, proving the revolving door that presidential candidate Barack Obama promised to nix is still alive and well. The effort paid off, and personal injury attorneys are now concerned that Google may try to push still more regulations, forcing regulators to stick the human driver with the blame for crashes and getting Google’s autonomous driving system off the hook.

    Whether YouTube’s ad policy has anything to do with its parent company’s politics is impossible to determine. But as we analyze Google’s influence in Washington, it’s important to note that, whether you agree with the tech giant on none, some, or all issues, governments create the incentives for companies like Google to continue rent-seeking.

    As the economist David R. Henderson puts it, individuals “are said to seek rents when they try to obtain benefits for themselves through the political arena. … licensed electricians and doctors [for instance] often lobby to keep regulations in place that restrict competition from unlicensed electricians or doctors.” Companies like Google are champions of this practice, which has helped to protect the brand’s popularity by keeping competitors at bay.

    So it’s not a surprise to see many claiming their content is being censored by Google’s YouTube. After all, with the amount of power the company holds in Washington, it’s as if Google – or Alphabet – is an actual wing of the government.

  • Clinton Foundation CEO Admits To Pay-For-Play: "No Question" That "Courtesy Appointments" Were Made

    Yesterday, the CEO of the Clinton Foundation, Donna Shalala, went on MSNBC and openly admitted to engaging in “pay-for-play” activities saying there is “no question” that Foundation donors received “courtesy appointments” during Hillary’s tenure as Secretary of State.  Somehow, Shalala would like for us to believe that so long as appointees weren’t put in a position to impact policy decisions then there is no real issue.  I guess we should just ignore that taxpayers are funding the salaries of those appointees and paying for their government-related travel all over the world while Hillary gets to accrue “political capital” and her Foundation gets to continue raking in the donations?

    Shalala also seems to invoke the Donna Brazile (new DNC Chair) defense who previously told ABC that “someone who is a donor..saying I want access” isn’t an issue and anyone who suggests otherwise is just attempting to “criminalize behavior that is normal” (see out previous post “New DNC Chair Says Outrage Over Clinton’s Pay-To-Play Is Attempt To ‘Criminalize Normal Behavior’“).

    “First of all there is no question there were phone calls made to get appointments for people.”

     

    “There were also business people. There is no question about that.”

     

    “I don’t see evidence that there was policy decisions made as a result of that other than courtesy appointments. And people in public life are used to doing that kind of — that is, making courtesy appointments for people.  I certainly did it as secretary [of Health and Human Services] with requests from Republicans in Congress so I don’t find it unusual. We have to be careful that it’s not linked to policy decisions as opposed to simply seeing prominent people that ask for appointments.”

     

    Of course, according to LifeZette, the Trump camp took issue with the statements with Jason Miller, Trump’s communications adviser, releasing the following statement:

    “It speaks volumes that the Clinton Foundation’s CEO would casually admit on national television that its donors received access and ‘courtesy appointments’ at Hillary Clinton’s State Department.  This is emblematic of the corrupt pay-to-play culture Hillary Clinton and those in her orbit bring to the table, where it so pervasive it is actually uncontroversial to those involved.”

     

    “This is why a special prosecutor needs to be appointed to independently investigate the growing evidence of corruption between the Clinton Foundation and the State Department while Hillary Clinton was serving as secretary of state,”

    But the following morning, Shalala went on CNN and seemingly walked back her previous statements made on MSNBC saying that a “courtesy meeting” request made by Doug Band of Huma Abedin “never happened.”  

    “Guess what. That never happened. Never happened.  I don’t care who asked for what. It never happened. It just did not happen.”

    When asked whether she was comfortable with Clinton Foundation staff requesting favors, even if they were never fulfilled, Shalala stopped short of a blatant confirmation, which she offered on earlier on MSNBC, saying instead that “no one should cross any line.” 

    “Well, you know, no one should cross any line.”

     

    And, just for good measure, here is the clip of Donna Brazile from back in August where she assures us that “someone who is a donor..saying I want access” isn’t an issue and anyone who suggests otherwise is just attempting to “criminalize behavior that is normal.”

     

    Fast forward to the 3:45 mark for the relevant exchange:

     

    Well, we guess there is nothing to see here then.  Just some more smoke people…move along.

  • SHe'S BaCK!

    SHE'S FINE

Digest powered by RSS Digest

Sep 15

Today’s News 15th September 2016

  • European Leaders Discuss Plan For European Army

    Submitted by Soeren Kern via The Gatestone Institute,

    • Critics say that the creation of a European army, a long-held goal of European federalists, would entail an unprecedented transfer of sovereignty from European nation states to unelected bureaucrats in Brussels, the de facto capital of the EU.
    • Others say that efforts to move forward on European defense integration show that European leaders have learned little from Brexit, and are determined to continue their quest to build a European superstate regardless of opposition from large segments of the European public.
    • "Those of us who have always warned about Europe's defense ambitions have always been told not to worry… We're always told not to worry about the next integration and then it happens. We've been too often conned before and we must not be conned again." — Liam Fox, former British defense secretary.
    • "[C]reation of EU defense structures, separate from NATO, will only lead to division between transatlantic partners at a time when solidarity is needed in the face of many difficult and dangerous threats to the democracies." — Geoffrey Van Orden, UK Conservative Party defense spokesman.

    European leaders are discussing "far-reaching proposals" to build a pan-European military, according to a French defense ministry document leaked to the German newspaper, the Süddeutsche Zeitung.

    The efforts are part of plans to relaunch the European Union at celebrations in Rome next March marking the 60th anniversary of the Treaty of Rome, which established the European Community.

    The document confirms rumors that European officials are rushing ahead with defense integration now that Britain — the leading military power in Europe — will be exiting the 28-member European Union.

    British leaders have repeatedly blocked efforts to create a European army because of concerns that it would undermine the NATO alliance, the primary defense structure in Europe since 1949.

    Proponents of European defense integration argue that it is needed to counter growing security threats and would save billions of euros in duplication between countries.

    Critics say that the creation of a European army, a long-held goal (see Appendix below) of European federalists, would entail an unprecedented transfer of sovereignty from European nation states to unelected bureaucrats in Brussels, the de facto capital of the EU.

    Others say that efforts to move forward on European defense integration show that European leaders have learned little from Brexit — the June 23 decision by British voters to leave the EU — and are determined to continue their quest to build a European superstate regardless of opposition from large segments of the European public.

    The Süddeutsche Zeitung reported that it had obtained a copy of a six-page position paper, jointly written by French Defense Minister Jean-Yves Le Drian and his German counterpart, Ursula von der Leyen. The document calls for the establishment of a "common and permanent" European military headquarters, as well as the creation of EU military structures, including an EU Logistics Command and an EU Medical Command.

    The document calls on EU member states to integrate logistics and procurement, coordinate military R&D and synchronize policies in matters of financing and military planning. EU intelligence gathering would be improved through the use of European satellites; a common EU military academy would "promote a common esprit de corps."

    According to the newspaper, the document will be distributed to European leaders at an informal summit in Bratislava, Slovakia, on September 16. France and Germany will ask the leaders of the other EU member states not only to approve the measures, but also to "discuss a fast implementation."

    Specifically, France and Germany will for the first time activate Article 44 of the Lisbon Treaty (also known as the European Constitution). This clause allows certain EU member states "which are willing and have the necessary capability" to proceed with the "task" of defense integration, even if other EU member states disapprove.

    According to Süddeutsche Zeitung:

    "In the wake of the British referendum to leave the European Union, Chancellor Angela Merkel and French President François Hollande have decided to demonstrate the EU's strength and to push the remaining member states to show more unity. Especially in defense policy, many projects were put on hold because Britain vetoed them. Without London, the two EU founding states, France and Germany, hope for swift decisions."

    On September 8, Defense News reported that the creation of a European army was the central focus of an August 22 meeting between the leaders of France, Germany and Italy in Naples, where the three declared "the beginning of a new Europe." That meeting was followed by a meeting of defense ministers from the three countries in Paris on September 5.

    According to Defense News, Italy is lobbying France and Germany to "back a plan for European tax breaks and financing for joint European defense procurement and development programs, as part of a bid to build a European army."

    A confidential draft document circulated by Italy calls for "fiscal and financial incentives to support new EU cooperative programs for development and joint purchases of equipment and infrastructure supporting the EU's Common Security and Defense Policy."

    In a September 8 interview with La Repubblica, the EU's foreign policy chief, Federica Mogherini, called for the establishment of a permanent EU military headquarters in Brussels that would manage all current and future EU military operations. "This could become the nucleus around which a common European defense structure could be built," she said.

    Mogherini insisted that "we are not talking about a European army but about European defense: something we can really do, concretely, starting now." She also stressed that EU defense policy would remain under the control of European governments rather than the European Commission, the powerful executive arm of the EU.

    On September 7, however, The Times reported that Mogherini will present EU leaders attending the summit in Bratislava with a "road map" and a "timetable" for creating EU military structures, which are "the foundation of a European army." According to newspaper, her plans for military structures able "to act autonomously" from NATO have led to fears that "the EU is seeking to rival the transatlantic alliance."

    The Times quoted Mogherini as saying she was taking advantage of the "political space" opened by the Brexit vote:

    "It might sound a bit dramatic but we are at this turning point. We could relaunch our European project and make it more functional and powerful for our citizens and the rest of the world. Or we could diminish its intensity and power. We have the political space today to do things that were not really doable in previous years."

    On May 27, the Sunday Times reported that steps towards creating a European army were being kept secret from British voters until the day after the June 23 referendum:

    "In an effort to avoid derailing the Prime Minister's 'Remain' campaign, the policy plans will not be sent to national governments until the day after Britons vote. Until then, only a small group of EU political and security committee ambassadors, who must leave their electronic devices outside a sealed room, can read the proposal."

    On June 28, just days after the British referendum, Mogherini presented European leaders attending an EU summit in Brussels with the "EU Global Strategy on Foreign and Security Policy." The document explicitly calls for European defense integration, and implicitly calls for the creation of a European army.

    According to the document, the EU strategy "nurtures the ambition of strategic autonomy for the European Union." It adds: "Gradual synchronization and mutual adaptation of national defense planning cycles and capability development can enhance strategic convergence between member states."

    In an interview with The Telegraph, Liam Fox, a former defense secretary who served under former Prime Minister David Cameron, said:

    "Those of us who have always warned about Europe's defense ambitions have always been told not to worry, but step-by-step that ever closer union is becoming a reality. We cannot afford to be conned in this referendum as we were conned in 1975.

     

    "The best way to protect ourselves is to stay close to the US. The US defense budget is bigger than the next 11 countries in the world put together. Europe's defense intentions are a dangerous fantasy and risk cutting us off from our closest and most powerful ally.

     

    "We're always told not to worry about the next integration and then it happens. We've been too often conned before and we must not be conned again."

    The Conservative Party's defense spokesman, Geoffrey Van Orden, said the implications of the EU's defense ambitions are worrying:

    "We can all see that the EU might play a useful role in conflict prevention and in some civil aspects of crisis management. But its ambitions go beyond that. The EU motive is not to create additional military capability but to achieve defense integration as a key step on the road to a federal EU state.

     

    "The US and indeed the UK are being misled if they imagine that such moves will enhance NATO — the key guarantor of our collective defense. On the contrary, creation of EU defense structures, separate from NATO, will only lead to division between transatlantic partners at a time when solidarity is needed in the face of many difficult and dangerous threats to the democracies."

    Mike Hookem, the defense spokesman of the UK Independence Party (UKIP), said his party had been warning about the dangers posed by the EU army concept for years:

    "I'm pleased to see people are finally waking up. An EU army is not some Eurosceptic fantasy, there are many in Brussels hell-bent on making it happen."

    Soldiers from the Eurocorps on parade in Strasbourg, France, on January 31, 2013. Eurocorps is an intergovernmental military unit of approximately 1,000 soldiers from Belgium, France, Germany, Luxembourg and Spain, stationed in Strasbourg. (Image: Claude Truong-Ngoc/Wikimedia Commons)

     

    Appendix

    Select quotes regarding a European army

    European federalists have been calling for the creation of a European army in one form or another since 1950. Although a European army is still a long way away from becoming reality, the ultimate goal of European federalists is full defense integration leading to a European military under supranational control.

    Since the Lisbon Treaty, which forms the constitutional basis of the European Union, entered into force in December 2009, the political momentum toward European defense integration has picked up steam. The drive toward European defense integration has accelerated during the Obama administration, which has often appeared indifferent to Europe and transatlantic relations. Another important obstacle to European defense integration was removed when Britons voted in June 2016 to exit the European Union.

    What follows is a collection of quotes from senior European officials regarding a European army and integrated defense.

    September 9. The EU's foreign policy chief, Federica Mogherini, said:

    "I believe a window of opportunity has been opened to give life to a European defense. I wanted to send the message that, despite the British exit, Europe can and must move forward with the process of integration. The prospect of Brexit offered an opportunity not to be slowed by the country that was always most determinedly opposed to the idea of pooling the instruments of defense."

    August 26. Hungarian Prime Minister Viktor Orbán, a staunch critic of the EU's migration policies, said a joint European army was needed to keep migrants out. At a news conference after a meeting between Central European member states and German Chancellor Angela Merkel in Warsaw, Orbán said: "We should list the issue of security as a priority, and we should start setting up a common European army."

    August 22. Czech Prime Minister Bohuslav Sobotka called for greater European military integration:

    "Our experiences with the last migration wave have shown the importance of Europe's internal borders. In the face of uncontrolled mass migration, even states in the center of Europe have realized that internal borders must be better controlled. Aside from better coordinated foreign and security policy, I also believe that in the long term, we will be unable to do without a joint European army."

    July 23. Hungarian Prime Minister Viktor Orbán said:

    "The withdrawal of the British from the EU has led to a significant reduction in the continent's military strength, and from a military policy perspective we must not remain in this defenseless position… A European army must protect the continent from two sides, from the East and from the South, in terms of protecting against terrorism and migration. Europe cannot even continue to exist without an alliance — a joint EU army."

    July 13. The German Defense Ministry released a white paper outlining the country's future defense and security policies. The document calls for steps leading to the creation of an EU army, such as the integration of military capabilities and defense industries. "We are aiming to establish a permanent European civil-military operational headquarters in the medium term," it says. The white paper also says that citizens of other EU countries could be allowed to serve in the German army. Defense Minister Ursula von der Leyen said:

    "Britain has paralyzed the European Union on the issues of foreign and security policy. This cannot mean that the rest of Europe remain inactive, but rather we need to move forward on these big issues."

    June 28. French Foreign Minister Jean-Marc Ayrault and German Foreign Minister Frank-Walter Steinmeier released a joint document titled "A Strong Europe in a World of Uncertainties." It states:

    "The security of EU member states is deeply interconnected, as these threats now affect the continent as a whole: any threat to one member state is also a threat to others. We therefore regard our security as one and indivisible. We consider the European Union and the European security order to be part of our core interests and will safeguard them in any circumstances.

    "In this context, France and Germany recommit to a shared vision of Europe as a security union, based on solidarity and mutual assistance between member states in support of common security and defense policy. Providing security for Europe as well as contributing to peace and stability globally is at the heart of the European project.

    "France and Germany will promote the EU as an independent and global actor able to leverage its unique array of expertise and tools, civilian and military, in order to defend and promote the interests of its citizens. France and Germany will promote integrated EU foreign and security policy bringing together all EU policy instruments.

    "The EU should be able to plan and conduct civil and military operations more effectively, with the support of a permanent civil-military chain of command. The EU should be able to rely on employable high-readiness forces and provide common financing for its operations. Within the framework of the EU, member states willing to establish permanent structured cooperation in the field of defense or to push ahead to launch operations should be able to do so in a flexible manner. If needed, EU member states should consider establishing standing maritime forces or acquiring EU-owned capabilities in other key areas."

    June 26. In an interview with Welt am Sonntag, the Chairman of the European Parliament's Foreign Affairs Committee, Elmar Brok, called for the immediate creation of a joint military headquarters and for the eventual establishment of an EU army:

    "We need a common military headquarters and a coalition of the willing in accordance with the permanent structural cooperation of the EU Treaty. An EU army could eventually arise from such a group. This could help to strengthen the role of Europeans in the security and defense policy, together better fulfill the responsibility of Europe in the world and also to achieve more synergies in defense spending."

    June 24. French President François Hollande said:

    "Europe needs to be a sovereign power deciding its own future and promoting its model. France will therefore be leading efforts to ensure Europe focuses on the most important issues: the security and defense of our continent, to protect our borders and preserve peace in the face of threats."

    May 29. British Armed Forces Minister Penny Mordaunt said: "A centrally controlled army would be a massive step to the EU's goal of full political integration, but it would be a very dangerous move."

    February 4. German Defense Minister Ursula von der Leyen confirmed an agreement to integrate some 800 German soldiers into the Dutch navy. While in Amsterdam, where she met with the Dutch Defense Minister, Jeanine Hennis-Plasschaert, von der Leyen called the plan a "prime example for the building of a European defense union."

    December 15, 2015. The European Commission proposed creating a European Border and Coast Guard. The proposal, which was put forward in response to the ongoing European migrant crisis, called for a rapid reaction force of 1,500 officers who would be able to deploy even if a member state did not ask for its help.

    October 15, 2015. The president of the European People's Party (EPP), Joseph Daul, said: "We are going to move towards an EU army much faster than people believe."

    September 12, 2015. An unpublished position paper drawn up by Europe and Defence policy committees of German Chancellor Angela Merkel's Christian Democratic Party (CDU) was leaked to The Telegraph. The document sets out a detailed 10-point plan for military co-operation in Europe. It calls for "a permanent structured and coordinated cooperation of national armed forces in the medium term." It adds:

    "In the long run, this process should according to the present German coalition agreement lead also to a European Army subject to Parliamentarian control.

    "In the framework of NATO, a uniform European pillar will be more valuable and efficient for the USA than with the present rag-rug characterized by a lack of joint European planning, procurement, and interoperability."

    June 15, 2015. Michel Barnier, Special Adviser on European Defence and Security Policy to European Commission President Jean-Claude Juncker, wrote:

    "Member States are slow to accept that they need to go beyond a model where defense is a matter of strict national sovereignty…. It is time for a reckoning: traditional methods of cooperation have reached their limits and proved insufficient. European defense needs a paradigm change in line with the exponential increase in global threats and the volatility of our neighborhood. The past has shown that European defense does move ahead if and when there is political will."

    March 9, 2015. In an interview with Die Welt, European Commission President Jean-Claude Juncker said the EU should establish its own army to show Russia it is serious about defending European values:

    "Europe has lost a huge amount of respect. In foreign policy too, we are not taken seriously. A common European army would show the world that there will never again be war between EU countries. Such an army would help us to build a common foreign and security policy and allow Europe to meet its responsibilities in the world. With its own army, Europe could respond credibly to a threat to peace in a member country or in a neighboring country of the European Union."

    German Chancellor Angela Merkel and Foreign Minister Frank-Walter Steinmeier said they support Juncker's proposal for a European army. In an interview with Tagesspiegel, Steinmeier added:

    "The long-term goal of a European army is a major policy objective and has been part of the Social Democratic Party's (SPD) party program for many years. Given the new risks and threats to peace in Europe we now need, as a first step, a rapid adaptation and updating of the common European security strategy."

    March 8, 2015. In an interview with Deutschlandfunk radio, German Defense Minister Ursula von der Leyen said:

    "I think that the German army is ready, under certain circumstances, to be subordinated to the control of another nation. That is the goal, that in the European Union we step by step more firmly establish our cooperation, especially in security policy. This intertwining of armies with a view to having a European army is the future."

    May 15, 2014. Jean-Claude Juncker, the European People's Party lead candidate for president of the next European Commission, wrote:

    "I believe that we need to work on a stronger Europe when it comes to security and defense matters. Yes, Europe is chiefly a 'soft power.' But even the strongest soft powers cannot make do in the long run without at least some integrated defense capacities. The Treaty of Lisbon provides for the possibility, for those Member States who want to do so, to pool their defense capabilities in the form of a permanent structured cooperation."

    December 19, 2013. The speaker of the European Parliament, Martin Schulz, called for the creation of a European army: "If we wish to defend our values and interests, if we wish to maintain the security of our citizens, then a majority of MEPs consider that we need a headquarters for civil and military missions in Brussels and deployable troops."

    November 15, 2009. In an interview with The Times, Italian Foreign Minister Franco Frattini said it is a "necessary objective to have a European army." He added:

    "Every country duplicates its forces, each of us puts armored cars, men, tanks, planes, into Afghanistan. If there were a European army, Italy could send planes, France could send tanks, Britain could send armored cars, and in this way we would optimize the use of our resources. Perhaps we won't get there immediately, but that is the idea of a European army."

    May 6, 2008. German Foreign Minister Frank-Walter Steinmeier called for the establishment of the European army "as soon as possible." He said he had been in talks with his French counterpart to discuss "future structures" of a European army.

    December 10-11, 1999. European officials meeting in Helsinki agreed to develop a European Rapid Reaction Force. Also known as the Helsinki Headline Goal, EU member states pledged that by 2003 they would be able to deploy a European military force of 60,000 troops within 60 days and for a period of potentially one year. This goal has never been met.

    December 3-4, 1988. British Prime Minister Tony Blair and French President Jacques Chirac met at the French port city of Saint-Malo to discuss future EU defense integration. The summit declaration, which laid the political foundation for a common European defense policy, stated:

    "The European Union needs to be in a position to play its full role on the international stage… The Union must have the capacity for autonomous action, backed up by credible military forces, the means to decide to use them, and a readiness to do so, in order to respond to international crises."

    October 24, 1950. The Pleven Plan, named after French Prime Minister René Pleven, was the first plan to create a unified European army. It proposed the "immediate creation of a European army tied to the political institutions of a united Europe." It stated:

    "A European army cannot be created simply by placing national military units side by side, since, in practice, this would merely mask a coalition of the old sort. Tasks that can be tackled only in common must be matched by common institutions. A united European army, made up of forces from the various European nations must, as far as possible, pool all of its human and material components under a single political and military European authority."

    The Pleven Plan was rejected by the French Parliament because it infringed on France's national sovereignty.

     

  • The World Is Turning Ugly As 2016 Winds Down

    Submitted by Brandon Smith via Alt-Market.com,

    I have to say that the negative reverberations in our current economic and political environment are becoming so strong that it is impossible for people to not feel at least some uneasiness in their gut. I imagine this is the same kind of sensation many felt from 1914 to 1918 during World War I and the terrible birth of communism, or perhaps in the early 1930s at the onset of the Great Depression and the rise of fascism. Some global changes are so disturbing that they send shockwaves through the collective unconscious before they ever hit the mainstream. People know that something is about to happen, even if they cannot yet clearly define it.

    At the beginning of August in my article “2016 Will End With Economic Instability And A Trump Presidency” I stated that:

    "I believe a softer downturn will begin before the election (the U.S. presidential election) takes place, most likely starting in September. This will give a boost to the Trump campaign, or at least, that is what the polls will likely say. I would also watch for some banking officials and media pundits to blame this downturn on Trump’s rise in the polling data. The narrative will be that just the threat of a Trump presidency is “putting the markets on edge."

    Unfortunately, it would seem so far that this prediction was correct. Currently global markets have crossed into severe volatility with a vengeance after around three months of eerie calm. Why? Well, as I warned in the same article linked above as well as numerous others since the beginning of this year, the Federal Reserve is determined to continue raising interest rates into a recessionary environment as they almost always do, and equities markets addicted to cheap debt cannot tolerate even one additional rate hike from the central bank.

    So far all evidence suggests that the Fed plans to raise rates again soon; I believe at the end of this month.  The only seemingly "anti-hike" voice at the Fed so far has been board member Lael Brainard, but even her statements promote a false narrative that a America is on track to "recovery".

    Many normally “dovish” members of the Fed have openly suggested that now is the time to hike.  Voting members at the Fed have been vocal about a shift in policy.  The latest example being head of the Bank of Cleveland, Loretta Mester. She argues that rates have remained “too low for too long,” and rejected notions that lower rates are necessary to maintain stability.

    This is the same kind of language Fed members used right before the rate hike in December 2015, the first rate hike in around a decade.  And, to add to the fervor, even JP Morgan Chase head Jamie Dimon is calling for interest rates to rise.

    Get ready folks, because all the naysayers that claimed another rate hike is “impossible" are probably about to be proven wrong yet again.

    My warning on an accelerating Trump campaign being blamed for weak stock markets has also come true. Already, Bloomberg is launching the meme that the idea of Hillary Clinton losing the election to Trump “because of her health” is a “landmine for vulnerable markets.”

    This is some incredible spin by the elitist controlled media, but again, very predictable. The globalists are setting the stage to blame the economic collapse they created on conservative movements. Clinton’s “health issues” are being set up as the scapegoat for a Trump win, which conjures additional social unrest as many on the Left will argue (in the event of a Trump win) that Trump prevailed on a technicality. That is to say, the extreme Left will argue that Trump’s presidency is not legitimate.

    Another scenario is also possible but I think less likely — the potential for Clinton to bow out of the election due to her health, causing a rationale for a postponed election. I do not think a postponed election really serves the interests of the elites, but it would certainly trigger massive chaos if it occurred. Only in the strangest of any election year in American history could this even be thought of as a legitimate danger.

    Another global indicator, oil, is tumbling yet again as all the jawboning from OPEC on a “production freeze” has failed to boost crude prices for more than a week at a time. Frankly, no one is buying the hype anymore. Those who bet on the WTI index shooting past $50 to $60 a barrel this year should have been paying more attention to alternative analysts. The only other factor that has kept oil from crashing down into the $30 range has been random inventory draws. These reports, though, are little more than a stop gap. Companies have been shifting crude to different facilities in order to create the illusion of inventory draws and higher demand. But usually within a week the reports catch up to the real supply and an inventory spike sends oil crashing down again.

    Add to this the latest news that Congress has passed a bill allowing the families of 9/11 victims to sue the Saudi government for their part in the attack, and you have a recipe for a dumping of the dollar as the world’s petrocurrency. Even if Obama vetoes the bill, I believe a two-thirds majority of congress will override that veto. A catastrophe in oil markets is inevitable.

    Whether in oil markets or other sectors of finance and social stability, make no mistake, catastrophe is exactly what national governments are preparing for.

    This is most obvious today in the European Union. The German government in their first revision of their civil defense plan since the cold war has warned the public to prepare for an unspecified event by stockpiling at least 10 days worth of food and five days worth of water. Germany is also debating the idea of placing troops on the streets to “protect against ISIS.”

    And Germany is not alone. French presidential candidate Nickolas Sarkozy has made some highly disturbing statements on security in a recent interview, outlining measures he believes will best protect the public from “militants.” From Reuters:

    France needs to get tough on militants by creating special courts and detention facilities to boost security, the country’s former President Nicolas Sarkozy said in a interview published in Sunday newspaper Le Journal du Dimanche.

     

    “Every Frenchman suspected of being linked to terrorism, because he regularly consults a jihadist website, or his behavior shows signs of radicalization or because is in close contact with radicalized people, must by preventively placed in a detention center,” Sarkozy said in the interview.

     

    Sarkozy, who announced last month his candidacy for the April 2017 presidential election, has said there is no place for “legal niceties” in the fight against terrorism.

    Even in the face of Islamic extremism and terrorism, the concept of “detention facilities” where people are held without charge and without trial on the mere suspicion of being a danger to society should horrify anyone with any sense. The fact of the matter is, these violations of personal freedom and of due process are NEVER used for only one group of people. Totalitarian governments ALWAYS use one group as an excuse for the police state, then over time they expand the police state outwards to oppress everyone.

    This is the kind of rhetoric that liberty movement activists in the U.S. fought against in the National Defense Authorization Act (NDAA); but it is making a resurgence in Europe and in America as well. If you think Sarkozy is a marginal example, I recommend you re-watch this interview with Gen. Wesley Clark, who argues that “radicalized people” who are disloyal to the U.S. government should be placed in internment camps. He suggests that Britain, Germany and France need to take similar measures. It would appear that they are doing just that.

    Never forget that “radicalism” is an arbitrary designation, and the label can be applied to just about anyone for any reason. A trend in police state language is growing in the mainstream in the name of fighting terrorism, but the abrupt urgency in Europe is rather odd. Only a few months ago, EU leaders were using some outrageous mental gymnastics in order to avoid confronting the notion of Islamic terrorism. Now, they are suddenly concerned? Why?

    I believe Europe is about to witness a catalyst for financial crisis, and they are using terrorism as an excuse to preposition martial law resources before this event takes place. They don’t care about stopping ISIS, but they do care about locking down and controlling an angry citizenry in the wake of an economic downturn. If a few more terrorist attacks occur in the meantime, then hey, that only helps the elites in their efforts to pacify the public for the sake of “security.”

    Official preparedness warnings from Germany, for example, are of little use to the public. A supply of a mere ten days of food and five days of water is useless during any sizable crisis. But, the German government can now say that they “tried to warn people.” Sarkozy’s statements are the most blatant call for a police state I have yet seen from an establishment puppet politician, and this should worry people. The fact that he is being so open and honest about the end game indicates to me that a dangerous shift is imminent.

    It would appear, according to EU government behavior, that whatever is about to happen globally is going to hit hardest in Europe first and then spread to the U.S. and the rest of the world. I recommend readers watch the EU very carefully over the next few months. If you have any financial or survival preparations you have been putting off, I suggest you take care of them before the end of this year. From what I see so far, geopolitically and economically the global situation is only going to become more unstable in the near term.

  • 1 In 5 CEOs Are "Successful Psychopaths"

    "We hope to implement our screening tool in businesses so that there’s an adequate assessment to hopefully identify [these successful psychopaths] – to stop people sneaking through into positions in the business that can become very costly…"

    That is the cunning plan of Australian psychologists following a study that found that about one in five corporate executives are psychopaths – roughly the same rate as among prisoners. As The Telegraph reports,

    The study of 261 senior professionals in the United States found that 21 per cent had clinically significant levels of psychopathic traits. The rate of psychopathy in the general population is about one in a hundred.

     

    Nathan Brooks, a forensic psychologist who conducted the study, said the findings suggested that businesses should improve their recruitment screening.

     

    He said recruiters tend to focus on skills rather than personality features and this has led to firms hiring “successful psychopaths” who may engage in unethical and illegal practices or have a toxic impact on colleagues.

     

    “Typically psychopaths create a lot of chaos and generally tend to play people off against each other,” he said.

     

    “For psychopaths,  it [corporate success] is a game and they don’t mind if they violate morals. It is about getting where they want in the company and having dominance over others.”

    The global financial crisis in 2008 has prompted researchers to study workplace traits that may have allowed a corporate culture in which unethical behaviour was able to flourish… ironic indeed as Wells Fargo CEO Stumpf blames 5300 of his employees for 'nasty' behavior and is unable to see any top-down ethical collapse as behind the systemic fraud.

    To help CEOs "self-identify" as psychopaths, here is a quick test…

    How to tell if your boss is psychopathic, Machiavellian, a narcissist or – even worse – all three.

    For each character trait decide whether you strongly agree, agree, feel it applies sometimes, disagree or strongly disagree and give a score from 5 for strongly agree to 1 for strongly disagree.

     

    The higher the score, the more they have combined psychopathic, Machiavellian and narcissistic tendencies.

     

    1. They tend to exploit and trick others for self-advancement.

     

    2. They have used lies and deception to get their way.

     

    3. They have used ingratiation to get their way.

     

    4. They tend to manipulate others for selfish reasons.

     

    5. They tend not to feel regretful and apologetic after having done wrong.

     

    6. They tend not to worry about whether their behaviour is ethical.

     

    7. They tend to be lacking in empathy and crassly unaware of the distress they can cause others.

     

    8. They tend to take a pretty dim view of humanity, attributing nasty motives and selfishness.

     

    9. They tend to be hungry for admiration.

     

    10. They tend to want to be the centre of attention.

     

    11. They tend to aim for higher status and signs of their importance.

     

    12. They tend to take it for granted that other people will make extra efforts to help them.

    * Courtesy of Office Politics by Oliver James (Vermillion)

  • Venezuela's "Death Spiral" – A Dozen Eggs Cost $150 As Hyperinflation Horrors Hit Socialist Utopia

    Submitted by Susan Warner via The Gatestone Institute,

    • The question of whether Socialism can be an effective economic system was famously raised when Margaret Thatcher said of the British Labor Party, "I think they've made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything."
    • There are dire reports of people waiting in supermarket lines all day, only to discover that expected food deliveries never arrived and the shelves are empty.
    • There are horrific tales of desperate people slaughtering zoo animals to provide their only meal of the day. Even household pets are targeted as a much-needed source for food.
    • President Maduro is doubling down on the proven failed policies and philosophies of "Bolivarian Socialism," while diverting attention away from the crisis — pointing fingers at so-called "enemies" of Venezuela such as the United States, Saudi Arabia and others.
    • A dozen eggs was last reported to cost $150, and the International Monetary Fund "predicts that inflation in Venezuela will hit 720% this year.

    For many Venezuelans, by every economic, social and political measure, their nation is unravelling at breakneck speed.

    Severe shortages of food, clean water, electricity, medicines and hospital supplies punctuate a dire scenario of crime-ridden streets in the impoverished neighborhoods of this nearly failed OPEC state, which at one time claimed to be the most prosperous nation in Latin America.

    Today, a once comfortable middle-class Venezuelan father is scrambling desperately to find his family's next meal — sometimes hunting through garbage for salvageable food. The unfortunate 75% majority of Venezuelans already suffering extreme poverty are reportedly verging on starvation.

    Darkness is falling on Hugo Chavez's once-famous "Bolivarian revolution" that some policy experts, only a short time ago, thought would never end.

    In a 2007 study on the Chavez years for the Washington, DC-based Center for Economic and Policy Research, Mark Weisbrot and Luis Sandoval wrote:

    "[a]t present it does not appear that the current economic expansion is about to end any time in the near future. The gains in poverty reduction, employment, education and health care that have occurred in the last few years are likely to continue along with the expansion."

    While it was not so long ago that many people heralded Venezuela as Latin America's successful utopian Socialist experiment, something has gone dreadfully wrong as the revolution's Marxist founder, Hugo Chavez, turned his Chavismo dream into an economic nightmare of unimaginable proportions.

    The question of whether Socialism can be an effective economic system was famously raised when Margaret Thatcher said of the British Labor Party:

    "I think they've made the biggest financial mess that any government's ever made in this country for a very long time, and Socialist governments traditionally do make a financial mess. They always run out of other people's money. It's quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they're now trying to control everything by other means."

    In short: "The trouble with Socialism is that eventually you run out of other people's money."

    When President Nicolas Maduro inherited the Venezuelan Socialist "dream", in April of 2013, just one month after Chavez died, he was facing a mere 53% inflation rate. Today the Venezuelan bolivar is virtually worthless, and inflation is creeping to 500% with expectations of much more. A recent Washington Post report stated:

    " …markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt. It is not easy for a nation to go bankrupt with the largest oil reserves in the world, but Venezuela has managed it. How? Well, a combination of bad luck and worse policies. The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. That may all seem like it's a good idea in general — but only as long as there's money to spend. And by 2005 or so, Venezuela didn't have any."

    Chavez had the good fortune to die just before the grim reaper showed up on Venezuela's doorstep. According to policy specialist Jose Cardenas:

    "What began as a war against the 'squalid' oligarchy in order to build what he called '21st-century socialism' — cheered on as he was by many leftists from abroad — has collapsed into an unprecedented heap of misery and conflict."

    Maduro is doubling down on the failed Chavismo economic and social policies that have contributed to an inflationary crisis not seen since the days of the 1920's Weimar Republic in Germany, when the cost of a loaf of bread was a wheelbarrow full of cash.

    Demonstrations and public cries for food are the unpleasant evidence of a once-prosperous society being torn apart by the very largess that marked its utopian ideals less than a decade ago.

    There are dire reports of people waiting in supermarket lines all day, only to discover that expected food deliveries never arrived and the shelves are empty.

    In desperation, some middle class families have organized online barter clubs as helpless citizens seek to trade anything for diapers and baby food, powdered milk, medicines, toilet paper and other essentials missing from store shelves or available only on the black market for double and triple already impossibly inflated prices..

    There are horrific tales of desperate people slaughtering zoo animals to provide their only meal of the day. Even household pets are targeted as a much-needed source for food. This is a desperate time for a desperate people.

    As things continue to worsen, President Maduro, unfortunately, is doubling down on the proven failed policies and philosophies of "Bolivarian Socialism," while diverting attention away from the crisis — pointing fingers at so-called "enemies" of Venezuela such as the United States, Saudi Arabia and others.

    Efforts to convince Maduro to enlist help from outside have failed, according to a report in the Catholic magazine, Crux:

    Maduro has refused to accept help from international charitable organizations, including the Vatican-sponsored Caritas Internationalis, which through different affiliates has tried to send medicine and food.

     

    "Denying that there's a crisis and refusing to let the world send medicine and food is not possible," said Cardinal Jorge Urosa Savino, archbishop of Caracas.

     

    The prelate believes that Maduro is refusing to accept help in an attempt to hide the "very grave situation of total shortage," which far from improving, he said, continues to deteriorate.

    According to Breitbart:

    "The Venezuelan Episcopal Conference, the organization of the nation's Catholic bishops, issued a scathing statement condemning president Maduro for giving the military full control of the nation's food supply, accusing him of being at the helm of a devastating "moral crisis" and crippling every aspect of life in Venezuela."

    In what some economists have been calling a "death spiral", the government's failed economic policies are at the same time causing and trying to stem a runaway inflation with price-fixing policies which, in turn, are triggering shortages. Maduro is strongly urging businesses and farmers to sell their goods at severe losses, forcing shut-downs when the cost of doing business becomes prohibitive.

    According to a recent Bloomberg report, the black market is thriving because goods are unavailable at prices fixed by the government. There are reports of ordinary people quitting inadequate-paying jobs to set up black market operations, hoping to be able to make enough to sustain life.

    A dozen eggs was last reported to cost $150, and the International Monetary Fund "predicts that inflation in Venezuela will hit 720% this year. That might be an optimistic assessment, according to some local economic analysts, who expect the rate to reach as high as 1,200%."

    According to a Bloomberg report from April:

    "In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

     

    "Venezuela, in other words, is now so broke that it may not have enough money to pay for its money."

    In the midst of this galloping cataclysm, there is no shortage of pundits who simplistically assert that the catastrophe is caused solely by the international collapse of oil prices. However, according to Justin Fox at Bloomberg:

    "The divergence between Venezuela's revenue and spending started long before (the 2014) oil-price collapse. When oil prices hit their all-time high in July 2008, government revenue — 40 percent of which comes directly from oil — was already falling. The main problem was Venezuelan oil production, which dropped from 3.3 million barrels a day in 2006 to 2.7 million in 2011. It was still at 2.7 million in 2014, according to the latest BP Statistical Review of World Energy."

     

    "Venezuela isn't running out of oil. Its proven reserves have skyrocketed since 2000 as geologists have learned more about the heavy crude of the Orinoco Belt. But getting at that oil will take a lot of resources and expertise, both things that Venezuela's state-owned oil company, Petroleos de Venezuela (PDVSA, best known in the U.S. for its Citgo subsidiary), has been lacking in since Chavez initiated a sort of hostile takeover starting in the early 2000s. First he kicked out 18,000 workers and executives, 40 percent of the company's workforce, after a strike. Then he started demanding control of PDVSA's joint ventures with foreign oil companies. One could interpret this in the most Chavez-friendly way possible — he was aiming for a more just allocation of his nation's resources — and still conclude that he made it harder for PDVSA to deliver the necessary tax revenue."

    Cronyism and corruption prevailed under Chavez when oil was selling at almost $200 a barrel — at a time when Venezuela could have put some money away for the inevitable rainy day. But President Hugo Chavez and successor president Maduro, were busy buying votes and consolidating power with free giveaways, according to Michael Klare in The Nation.

    Behind the doom and gloom Venezuela's collapse is the continuing specter of street crime and murder, according to Time.com in a May 2016 report:

    "The country's runaway murder rate is just one of the factors driving opposition to President Nicolas Maduro in a country where shortages of food and basic goods are chronic, inflation is running rampant and the government is jailing political prisoners. But it serves as a bloody illustration of just how close to outright societal collapse Venezuela has come since the end of the 20th century, as gangs, guerrillas and militia defend their turfs and traditional authority structures fall by the wayside."

    Venezuela's crime rate is one of the highest in the world. Called the world's most homicidal nation, Venezuela has more than street crime, thuggery and murder. Drug cartels, black marketeers, narcoterrorists, white collar criminals and money launderers are unfortunate hallmarks of the Chavez/Maduro legacy.

    The ruin of this once prosperous, oil-rich nation might be a harbinger for other nations, such as the United States, which may be tempted into believing that Socialist giveaway policies actually can provide the promise of a free lunch for longer than the next election cycle. Or might that be all many politicians need or want?

    Venezuela's food shortages, hyperinflation, black marketeers, narcoterrorists and money launderers are unfortunate hallmarks of the legacy of Presidents Chavez (left) and Maduro (right).

  • More Akin To Goebbels

    Authored by T.L. Davis, via Christian Mercenary blog,

    The best thing that could happen during this presidential election is happening.  Once and for all, the press is being outed as the traitorous bunch of clowns we have always known they were.  Their absolute devotion to anyone not named Trump is driving them into increasingly ridiculous and contemptible positions concerning Hillary Clinton, her crimes and her rapidly declining health.  Their only hope is to push the corpse across the finish line of the election and rally around Tim Kaine.

    But, millenials are, for all of the bad press about their addiction to video games and their devotion to smoking dope, are growing concerned that the emperoress has no clothes, despite the fawning description of the beautiful attire. Never before has reality so closely reflected a fairy tale as the blind, deaf and dumb press corps accommodatingly ignoring the obvious flaws of a pre-ordained head of state.  There is always an excuse for a Clinton, always a nuanced explanation that is offered and eagerly consumed by the press.

    It depends on what the definition of "heat" is.

    The crux of the issue is that the "press" has been given special privileges through our Constitution to allow it to say anything, to print anything they believe is true.  Unfortunately, it does not bind them to reporting what they believe is a lie. This goes to the heart of our Republic and their willing cooperation with a given political party is nothing other than traitorous. Information that they are Constitutionally protected to reveal is being withheld, shielded from the public, information that is necessary for the Republic to function.

    They either do not realize, or care (either is just as damning as the other) that their political affiliation is being exposed and that they are willing to submit the nation to any degree of poor judgment, criminal activity, or outright corruption in order to secure the election of "one of their own."

    This is not being lost on the Millennials, who do not remember the clout with which Cronkite made his nightly propaganda pitches.  They do not remember the reverence with which Edward R. Murrow broadcast his missives. They are the product of internet information and hold most of our most honored traditions in contempt.  This is the first time they have been able to view the clannish behavior of an outdated "press corps" that does not seem to have a valid function in their eyes.  A tweet is more important than a network broadcast. The media has just dropped trou in front of them and they are taking notice.

    Unfortunately, they do not understand or appreciate that there is a Constitutional question here.  Given the extraordinary access a "free press" has been given to the president, members of congress and the judiciary, it is all designed to allow the people, the voters, the ones who actually decide who the office holders will be, information that could not be gained individually.  It is their duty to provide the voters with information that might make a candidate unsuitable to hold office; to expose lies and report the truth, regardless of who the other contender for the office might be.  The press is, right now, acting as voters, as imposing themselves into the election and making a determination for the rest of society.  That is not their Constitutional role and despite the great contempt the Constitution seems to evoke among these "elites," it is still a duty, a responsibility, to reveal the flaws and inadequacies of any given candidate for any given office from dog catcher to president and while they fully understand their responsibility when it comes to Trump, they seem at a complete loss when it comes to Hillary Clinton.

    I personally am not all that interested in this election; it is a disgrace, a disappointment to consider either candidate as the best we have to offer; as serious representatives of the American people, but that is not my call and I recognize it. I believe the American people are as disserved by these candidates as they are disserved by the people reporting on the election.

    If there is anything to be said about any of it, it is that we always get what we deserve and our lack of principle, our lack of interest in the political process has led to this debacle.  We are the laughing stock of the world and deservedly so.

    The only part of it that I do care about is that our Constitution was written with the intellectual understanding of this possibility: that clowns and criminals might be foisted upon us in the dark of political maneuvers and that the founders, the drafters of the document that brought forth this nation, saw only the "free press" as an antidote to this particular governmental ill and that those entrusted with that responsibility have obliterated their own credibility, voluntarily suspended critical thinking in order to produce a political outcome more suited to their political beliefs.

    What is worse, is that they, with all of their supposed political understanding and knowledge of world history either do not realize, or care, that their actions are identical to those of cheap propagandists more akin to Joseph Goebbels than Edward R. Murrow.

  • Ford Announces Plan To Shift All Small-Car Production To Mexico

    Earlier today Ford announced that it expects operating income to decline in 2017 as the automaker increases investment in electric and autonomous vehicles, before rising again in 2018.  This news came after Ford had just lowered it’s expectations for FY 2016 EBIT to $10.2BN from $10.8BN due to increasing costs associated with an expanded recall related to faulty door latches. 

    So how do you offset rising costs and a top-line that executives recently admitted have “reached a plateau?”  Well you shift more production to low-cost countries, like Mexico of course.  According to Reuters, Ford CEO, Mark Fields, confirmed at the company’s investor day today that all of Ford’s small-car production would be shifted to Mexico over the next 2-3 years.

    “We will have migrated all of our small-car production to Mexico and out of the United States,” over the next two to three years, Fields told Wall Street analysts at an investor conference hosted by the automaker.

    As we wrote about a month ago, Ford is scheduled to open a brand new $1.6 billion plant in Mexico in 2018.  The plant will employee roughly 2,800 workers who will be paid $1.15 – $2.30 per hour which is a mere 97% less that the $70 per hour all-in cost of an United Auto Worker employee performing the same labor in Detroit.  The move is expected to yield savings of $1,300 per vehicle relative to production costs in Detroit.  Per the Wall Street Journal:

    Ford is scheduled to open a new $1.6 billion small-car assembly factory in San Luis Potosí in 2018 and hire 2,800 workers. People familiar with the matter say Ford will produce its Focus there, which is currently built in Michigan.

     

    A contract reviewed by The Wall Street Journal puts factory wages at the facility at about $1.15 to $2.30 per hour, on par with what other auto-assembly plants currently pay in the region. The move to Mexico will yield cost savings of about $1,300 per vehicle, or about $300 million a year, according to manufacturing experts familiar with the Detroit car maker’s finances.

    Wage Divide

     

    As we’ve said before, supporters of minimum wage hikes could learn from the efforts of the United Auto Workers Union which did a masterful job negotiating off-market wage and benefits packages which have ultimately only served to provide their members with permanent job losses.

  • Not Everyone Went Down With The Titanic

    Submitted by Nick Giambruno via InternationalMan.com,

    It’s one of the most dangerous myths most people believe…

    Boobus Americanus thinks cash he deposits into a bank is a personal asset he owns.

    But that’s not true.

    Once a deposit is made at the bank, it’s no longer your property. It’s the bank’s.

    What you own instead is a promise from the bank to repay. It’s an unsecured liability. That’s a very different thing from owning physical cash stuffed under your mattress. Yet, 99.9% of people conflate the two.

    Cash deposited into the bank technically makes you a creditor of the bank. You’re liable to get burned should the bank make a bad bet and get into trouble. The risk is not insignificant. Most banks gamble with their customer deposits on risky investment fads like mortgage-backed securities.

    Government deposit insurance schemes are a false sense of security. With their current reserves, they could only cover less than half a penny for every dollar they supposedly insure.

    People in Cyprus had to find all this out the hard way a few years ago. People awoke on an otherwise normal Saturday morning to the horror that the cash in their bank accounts had vanished.

    It was perhaps the most potent, recent example of the risk of being totally dependent on a single country that suddenly found itself in financial trouble. It also shows why I am such a fan of owning hard assets outside the immediate reach of your government.

    You probably already know it’s a bad idea to put all of your asset eggs in one investment basket. The same goes for holding all of your assets in one country. But how much thought have you put into political diversification?

    International diversification frees you from absolute dependence on any one country. Achieve that freedom, and it becomes very difficult for any group of bureaucrats to control you. The results can be life changing.

    While everyone in the world should aim for political diversification, it’s exponentially more critical for those who live under a government sinking hopelessly deeper into financial trouble. That means most Western governments and the U.S., in particular.

    This brings up an uncomfortable truth for North Americans and Europeans. The way the political and economic winds are blowing, things are about to get much worse.

    Central banks around the globe have created the biggest financial bubble the world has ever seen. Interest rates are the lowest they’ve ever been in 5,000 years of recorded history. In some parts of the world, they’re even negative. We’re living in a financial Alice in Wonderland.

    I think the social and political implications of this bubble bursting are even more dangerous than the financial consequences.

    An economic depression and currency inflation (perhaps hyperinflation) are very much in the cards. These things rarely lead to anything but bigger government, less freedom, and shrinking prosperity. Sometimes, they lead to much worse.

    We’re already getting a small preview of what is to come…

    It seems like each week, there’s a new attack or mass shooting. Racial tensions are on the rise. Europe is experiencing a migrant crisis that’s tearing the continent apart.

    There’s no doubt the world has become a crazier place in the past couple of years. Unfortunately, I think it is only going to get worse… 

    There’s really only one way to remove yourself from all of this unpleasantness.

  • As Vancouver Luxury Home Sales Plunge 65%, Chinese Buyers Move To Toronto

    If there was any doubt about the Vancouver housing bubble bursting, and there really should not have been after our latest update, when we showed 2 weeks ago that the average price of detached Vancouver properties crashed, dropping 17% on the month, and 0.6% on the year, to C$1.47 million ($1.13 million) in August, the lowest price since September 2015…

    … it can be fully laid to rest, with the latest data from Sotheby’s International Realty according to which transactions in Vancouver of at least C$1 million ($759,000) plunged 65% from a year earlier to a paltry 95 units in August, the month that a 15% real estate tax on deals by non-Canadian homebuyers took effect.

    In Vancouver, the tax “injected uncertainty into the market, and is anticipated to moderate sales activity and velocity in the fall,” the brokerage said. The long-term impact of the surcharge remains to be seen and the city remains in an affordability crisis, according to Bloomberg.

    The tax hit Vancouver’s condominium market hardest. Sales of at least C$1 million dropped 49% in August from a year earlier, after rising 29% in 12 months through July. There were no deals for condos priced at C$4 million or more last month, compared with four in August 2015. Sales of Vancouver’s most expensive homes, those priced at C$4 million or higher, fell 46% in August to 14 units, Sotheby’s said.

    However, while the Vancouver housing bubble has now popped, the ravenous Chinese buyers, far from hightailing it out of Canada, have merely decided to shift to Toronto, because at the same time as Vancouver’s real estate sales ground to a halt, luxury-home sales in Toronto and its suburbs doubled to 1,459 units, Sotheby’s said.

    According to the Star, sales of $1-million-plus Toronto-area single-family homes rose 83% year over year in July and August. That’s 3,026 homes, with 55 per cent of them inside Toronto’s borders. 

    That’s not entirely surprising given that the average cost of a detached home in Toronto was about $1.2 million, said Sotheby’s CEO Brad Henderson.

    “While $1 million is still a considerable amount of money, it’s difficult to find a single-family home in the city of Toronto for less than $1 million and it is not uncommon to find homes in the $2-million, $3-million or even $4-million-plus range,” he said.

    Sotheby’s says sales of homes in the $4-million-and-up category rose 74 per cent in the region and 58 per cent in the city in July and August. Sotheby’s said it expects Toronto’s luxury market to take the lead among Canada’s cities, outpacing Montreal, which probably will become a target for investors from Europe, China and the Middle East.

    “What the (Vancouver) tax introduced is . . . some uncertainty as to what other policy issues the city or the province may introduce, which would adversely affect investors,” Henderson said, adding that  investors are looking elsewhere, including cities outside Canada.

    “But, if they are looking in Canada, we believe Toronto will be the most logical place for people to consider. Montreal and Calgary will probably also get a look-see,” Henderson said.

    The good news for Vancouver is that there is finally hope the housing market will soon regain some rationality:  Sotheby’s report forecasts a “more normalized fall market” in Vancouver, based on summer sales there. Others had more harsh words: on Tuesday, the chief economist and strategist at National Bank of Canada predicted Vancouver’s housing market may enter a correction with price declines of at least 10%.

    The bad news is that the Vancouver housing nightmare of the past two years has metastasized to Toronto (to start) and anyone seeking to buy a house there will soon be priced out by Chinese money-launderers. 10% of homes sold in the Toronto region in the first six months of 2016 were $1 million or more, according to Sotheby’s. Sales over $4 million comprised less than .05 per cent of the total transactions, according to Sotheby’s. That number will soon go up fast.

    We give Toronto between 9 and 12 months before the locals wake up in horror and realize that they are now the new favorite parking spot for illegally obtained Chinese cash, and demand a similar 15% tax on foreign purchases, which will simply shift the roving Chinese horde of homebuyers to yet another city, because with $30 trillion in Chinese deposits, the supply of cash is virtually endless, especially when the Chinese population knows that the next devaluation is just around the corner, no matter how hard the PBOC wants to fight it.

  • Desperately Poor Teens In America's Impoverished Inner Cities Are Trading Sex For Food

    Submitted by Michael Snyder via The Economic Collapse blog,

    When people get hungry enough, they will do just about anything for some food.  According to brand new research that was just released this week from Feeding America and the Urban Institute, there are millions of teenagers in America that live in “food insecure” households, and researchers were stunned to learn what some of these teens are willing to do to feed themselves.  Some resort to shoplifting, others deal drugs, and there were a surprising number of participants in the study that actually admitted to trading sex for food.  It wouldn’t be a shock to hear that these kinds of things are going on in an economically-depressed nation such as Venezuela, but this is the United States of America.  We are supposed to be the wealthiest nation on the entire planet.  Sadly, even while the stock market has been soaring in recent years, poverty in America has been on the rise.  For those on the low end of the economic scale, things have gone from bad to worse since the end of the last recession, and millions of children are deeply suffering as a result.

    Let’s start with some of the hard numbers.  The following comes directly from the Urban Institute website…

    An estimated 6.8 million people ages 10 to 17 are food insecure, meaning they don’t have reliable access to enough affordable, nutritious food. Another 2.9 million are very food insecure, and roughly 4 million live in marginally food secure households, where the threat of running out of food is real.

     

    Food insecurity takes a tremendous toll on teenagers. Poor nutrition—and the stress of hunger and poverty—can jeopardize their physical and mental health and development and their academic success. But despite the gravity and prevalence of teen food insecurity, we know very little about how these young people experience and cope with hunger.

    The researchers already knew that lots of young people were hungry in America.  But what surprised them were the lengths that many of these youngsters said that they would go to in order to get food…

    Some of the youths said they or someone they know — mostly young men — have turned to shoplifting food, selling drugs or stealing items to sell.

     

    The teens also reported knowing young women who have sold their bodies for food or had sex for money so they could buy food for their families.

     

    Going to jail or failing a class in order to have to attend summer school were also some of the lengths teens went to.

    Could you imagine your daughter or your granddaughter exchanging her body for food?

    For most of us that is absolutely unthinkable, but the truth is that this is taking place on the streets of America every single day.

    And this wasn’t just some blind random phone survey.  The researchers conducted personal interviews with focus groups, and what these kids were willing to admit doing was absolutely astounding.  Here is another excerpt directly out of the report…

    • When faced with acute food insecurity, teens in all but two of the communities said that youth engage in criminal behavior, ranging from shoplifting food directly to selling drugs and stealing items to resell for cash. These behaviors were most common among young men in communities with the most limited job options.
    • Teens in all 10 communities and in 13 of the 20 focus groups talked about some youth selling sex for money to pay for food. These themes arose most strongly in high-poverty communities where teens also described sexually coercive environments. Sexual exploitation most commonly took the form of transactional dating relationships with older adults.
    • In a few communities, teens talked about going to jail or failing school (so they could attend summer classes and get school lunch) as viable strategies for ensuring regular meals.

    Many of these young people understand that what they are doing is wrong.  Just consider what some of them told the researchers…

    A girl in Portland, Oregon told researchers: “It’s really like selling yourself. Like you’ll do whatever you need to do to get money or eat.”

     

    Another comment from Portland: “You’re not even dating … they’ll be like … ‘I don’t really love him, but I’m going to do what I have to do.’”

     

    Many prefer to rationalise what they are doing as dating of sorts. A boy in rural North Carolina said: “When you’re selling your body, it’s more in disguise. Like if I had sex with you, you have to buy me dinner tonight … that’s how girls deal with the struggle … That’s better than taking money because if they take money, they will be labeled a prostitute.”

    When I read the information in this report, I was stunned.  Yes, I write about our economic decline and the rise in poverty all the time, but I didn’t know that things were this bad.

    And the researchers were surprised by what they were hearing as well.  One of them said that the fact that girls are trading their bodies for food “was really shocking to me”, and she believes that things are “just getting worse over time”…

    “I’ve been doing research in low-income communities for a long time, and I’ve written extensively about the experiences of women in high poverty communities and the risk of sexual exploitation, but this was new,” said Susan Popkin, a senior fellow at the Urban Institute and lead author of the report, Impossible Choices.

     

    “Even for me, who has been paying attention to this and has heard women tell their stories for a long time, the extent to which we were hearing about food being related to this vulnerability was new and shocking to me, and the level of desperation that it implies was really shocking to me. It’s a situation I think is just getting worse over time.”

    But aren’t we being told that things are getting better?

    Aren’t we being told that our leaders “fixed” the economy?

    Of course the truth is that America is mired in a long-term economic decline that stretches back for decades.  With each passing year the middle class gets smaller as a percentage of the population, and poverty continues to grow.  Last year the middle class became a minority of the population for the first time ever, and a lot of formerly middle class Americans are now among those that aren’t sure that they are going to have enough food to eat this month.

    Hunger in America is a major crisis and it is growing.  Just because you may live in a comfortable home in a wealthy neighborhood does not mean that this problem is not real.

    Tonight there are millions of Americans that do not know where their next meal is going to come from, and they deserve our love and compassion.

Digest powered by RSS Digest

Sep 14

Today’s News 14th September 2016

  • Dow 100,000? Marc Faber Warns: Central Banks "Will Monetize Everything… Introduce Socialism"

    Submitted by Valentin Schmid via TheEpochTimes.com,

    They call him Dr. Doom and for good reason. Dr. Marc Faber, author, investment adviser, and publisher of the Gloom, Boom & Doom report, usually emphasizes the risks in the financial system and never minces his words.

     

    However, his views are more nuanced than most people think, and his advice for investors is more pragmatic than idealistic.

     

    Epoch Times spoke to Faber about central bank manipulation of financial markets, the reasons for income inequality, and how to invest in this environment.

    Epoch Times: How long can the central banks manipulate markets?

    Mr. Marc Faber: This is an issue that will be decided by central bankers and I don’t have control over the manipulation of central banks. Haruhiko Kuroda of the Bank of Japan (BoJ) expressed the view that there is no limit to monetary inflation. That they can keep on buying assets and they can keep on buying equities and real estate.

    So the madness in the present time may go on. In a manipulated market, it won’t end well, but you don’t know when it will not end well, and how far the manipulation can last.

    Epoch Times: And then at one point, the central banks own everything.

    Mr. Faber: They could essentially monetize everything, and then you have state ownership. And through the central banking system, you introduce socialism and communism, which is state ownership of production and consumption. You would have that, yes, that they can do.

    The BoJ owns more than 50 percent of Japanese ETFs (exchange traded funds), which own large parts of the underlying companies. So indirectly they may own 20 percent of the Japanese companies, and they can go up to a higher level.

    I don’t think the central bankers are intelligent and smart enough to understand the consequences of their monetary policies at present. They focus on inflation but in my view they shouldn’t do anything. They don’t focus enough on what it does to the average standard of living of the people, to the average household income.

    Private ownership and central bank ownership of ETFs in Japan. (Bloomberg)

    Private ownership and central bank ownership of ETFs in Japan. (Bloomberg)

    Asset Price Inflation

    Epoch Times: If the policies are similar, why haven’t we seen hyperinflation like in Zimbabwe or Venezuela?

    Mr. Faber: The developed market central banks can go on for quite some time. If Zimbabwe prints money, the pain is more obvious right away because if you are Zimbabwe, and you print money and the others don’t, and the currency collapses, and you feel the pain much sooner.

    If the major central banks, the Fed, the European Central Bank (ECB), the BoJ, the Bank of England, and the Chinese monetize and print money in concert and agreement with each other, they all talk to each other; then the currencies don’t collapse against each other. There may be fluctuations, but we don’t have a general collapse of a currency.

    Paper money, in general, can then collapse, and it has to a large extent against asset prices like real estate around the world over the last 30 years, against equity prices, against bond prices—which have been rallying since 1981—and against precious metals since 1999.

    Asset price inflation is less obvious to the average person in the street. The average American has no money, so he doesn’t care if prices for paintings and real estate go up—until it touches him.

    (World Economic Forum)

    (World Economic Forum)

    It’s nonsense to claim that inflation is only going up 1 percent per year in the United States. The cost of living of a typical family is going up much more than that—insurance, transportation, schooling are all going up.

    For example, health care premiums for insurance policies [are rising], so the typical household is being squeezed. The central banks don’t care about that; they don’t look at it.

    I suppose the system will collapse before we become like Venezuela. In the West, if they start to print money, the end game will be brief. Within five years, I expect the system to implode.

    Epoch Times: How can we avoid a collapse?

    Mr. Faber: You better ask the bureaucrats what their plans are. They had zero rates since December 2008; soon eight years [passed], and that hasn’t boosted economic activity for the average household, not in Japan nor the United States nor the EU. Now they talk about fiscal spending.

    We already have large deficits but no deficit is large enough for the interventionist, so they will boost fiscal spending. They will finance deficits by issuing government debt, which the central banks will monetize. The Treasury will issue debt, and then the Fed will buy all these debts. Of course, that will not end well, but it will postpone the problem for a while.

    Then they will find some academics who will blame wealth inequality on the evil capitalists who made so much money out of asset bubbles.

    They will blame the economic woes on these people. To some extent this is true. But the rich people did not create the inflated asset values; it was the central banks, by slashing interest rates to zero and negative interest rates in many countries.

    First, you create mispricings through artificially low rates and negative interest rates and you boost the income and wealth of the super-rich. It’s at best the 0.1 percent that really benefit from asset inflation, at the cost of all the people that have no assets and so you have this rising wealth inequality. So we have to tax the rich people and tax them more.

    Taking money from the rich is appealing if you go to voters, and you say to them, “Look, the reason the economy is doing so badly, it’s because of the rich people, the billionaires. We have to take 20 percent away from them and give it to you.” You can be sure that everybody will vote for that because the wealthy are a minority. This is what happens after monetary policies completely fail.

    Some well-connected people will hide their wealth but a lot of people won’t. Even if they take 50 percent from the richest, it’s not going to help. The next step will be to take money from less wealthy people; the interventionists will go all the way.

    Investment Strategy

    Epoch Times: How do you invest in this environment?

    Mr. Faber: Most assets by traditional valuations are overpriced. Now are they overpriced compared to zero interest rates or negative interest rates? If you take the 10-year German bonds or the 10-year Swiss bonds or the 10-year Japanese bonds, you have no or negative yield. But you can buy equities that give you a dividend yield of 2 percent or more. Then you say stocks compared to negative interest rates are a bargain.

    But they are not cheap by traditional valuation methods.

    However, I think it’s dangerous for someone to say: “We all agree that it will end badly, so we keep 100 percent of our money in cash.” First, you have to decide which cash.

    Number two, we don’t know what the time frame until it ends badly is. And in an extreme money-printing environment, the Dow Jones Industrial Average can go to 100,000.

    An ounce of gold is worth $1,327 on Sept. 11, 2016. (Goldprice.org)

    An ounce of gold is worth $1,327 on Sept. 11, 2016. (Goldprice.org)

    It may likely not go up against precious metals, but it can go up in nominal terms endlessly. It’s not going to help the typical household. I have seen many hyperinflating economies, and in each case, the standard of living of average people declined.

    That will be the case. If I were interventionist—which I’m not, and I do not support the interventionist—if I were a central banker and I said to myself the right policy now is to increase the negativity of interest rates, we go from 0.5 percent negative to 5 percent negative.

    In this particular instance, the people and companies take the money out of the financial system and store it in cash in a vault.

    Condo buildings line the beach in Sunny Isle, Florida, on April 5, 2016. (Joe Raedle/Getty Images)

    Condo buildings line the beach in Sunny Isle, Florida, on April 5, 2016. (Joe Raedle/Getty Images)

    The measure to implement negative 5 percent is not going to work very well, so one way to make it work is to abolish cash. You can still hoard real estate, food, cigarettes, and precious metals, but you can’t hold cash anymore. So that is likely to happen, in my view, if they go all the way.

    Epoch Times: What about gold?

    Mr. Faber: I have made a very compelling case for gold in the late 1990s and silver and platinum. I wrote a book, “Tomorrow’s Gold,” which was not about gold but the rise of Asia. The gold price rose very sharply between 1999 and 2011, and it corrected after September 2011. It probably overshot, and the mining shares overshot on the upside, so they corrected.

    Now, between last October and December, we had major lows in gold stocks and precious metals prices from where the prices will continue to rise.

    They are going to go up tomorrow or in three to five years, I don’t know. If you keep printing paper money, the supply of money increases and assets that are in short supply or limited supply—whether it’s a Ferrari or a Gaugin painting—they are in tight supply, so they will appreciate.

    They will not all appreciate at the same time and to the same extent. There will be bubbles in real estate and collectibles; there will be bubbles in equities, as we have had three times since 1999.

    Epoch Times: But you would not only buy cash and gold mining stocks, right?

    Mr. Faber: I think holding all your assets in cash is very dangerous. I want to be diversified; I hold some cash, bonds, equities, some real estate, and some precious metals.

    The moment you diversify, your returns are suboptimal, but it’s likely to preserve your capital.

  • The Fed`s Theoretical Inflation and Actual Core Inflation Gap is Widening (Video)

    By EconMatters


    When will the mainstream financial media do their job and start calling Fed Officials out for switching from the Core Inflation metric to justify a continuance of ZIRP? The actual Inflation Rate is already above the Fed`s stated target of 2 percent.

     

    © EconMatters All Rights Reserved | Facebook | Twitter | YouTube | Email Digest | Kindle    

  • Your Money Or Your Life: What's Behind The Latest Government Scam To Rob You Blind?

    Submitted by John Whitehead vis The Rutherford Institute,

    “The fact is that the government, like a highwayman, says to a man: Your money, or your life. And many, if not most, taxes are paid under the compulsion of that threat.”—Lysander Spooner, American abolitionist and legal theorist

    It used to be that the Constitution served as a bulwark against government abuses, excesses and wrongdoing.

    That is no longer the case.

    Having been reduced to little more than a historic document, the Constitution now provides scant protection against government abuses, misconduct and corruption.

    Not only are “we the people” painfully vulnerable to the whims of any militarized cop on the beat, but we are also sitting targets for every government huckster out to fleece the taxpayer of their hard-earned dollars.

    We get taxed on how much we earn, taxed on what we eat, taxed on what we buy, taxed on where we go, taxed on what we drive, and taxed on how much is left of our assets when we die.

    Because the government’s voracious appetite for money, power and control has grown out of control, its agents have devised other means of funding its excesses and adding to its largesse through taxes disguised as fines, taxes disguised as fees, and taxes disguised as tolls, tickets and penalties.

    The government’s schemes to swindle, cheat, scam, and generally defraud Americans have run the gamut from wasteful pork barrel legislation, cronyism and graft to asset forfeiture schemes, the modern-day equivalent of highway robbery, astronomical health care “reform,” and costly stimulus packages.

    Now the government and its corporate partners in crime have come 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, and it’s coming at us in the form of a war on cash.

    What is this war on cash?

    It’s 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.

    Much like the war on drugs and the war on terror, this so-called “war on cash” is being sold to the public as a means of fighting terrorists, drug dealers and tax evaders. Just the mere possession of cash is enough to implicate you in suspicious activity and have you investigated. In other words, cash has become another way for the government to profile Americans and render them criminals.

    The rationale is that cash is the currency for illegal transactions given that it’s harder to track, can be used to pay illegal immigrants, and denies the government its share of the “take,” so doing away with paper money will help law enforcement fight crime and help the government realize more revenue.

    Despite what we know about the government and its history of corruption, bumbling, fumbling and data breaches, not to mention how easily technology can be used against us, the campaign to do away with cash is really not a hard sell.

    It’s not a hard sell, that is, if you know the right buttons to push, and the government has become a grand master in the art of getting the citizenry to do exactly what it wants. And if you belong to the growing class of Americans—46% of consumers, approximately 114 million adults and rising—who use your cell phone to pay bills, purchase goods, and transfer funds, then the government is just preaching to the choir when it comes to persuading you of the convenience of digital cash.

    In much the same way that Americans have opted into government surveillance through the convenience of GPS devices and cell phones, digital cash—the means of paying with one’s debit card, credit card or cell phone—is becoming the de facto commerce of the American police state.

    It’s not just cash that is going digital, either.

    A growing number of states—including Delaware and California—are looking to adopt digital driver’s licenses that would reside on your mobile phone. These licenses would include all of the information contained on your printed license, along with a few “extras” such as real-time data downloaded directly from your state's Department of Motor Vehicles.

    Of course, reading between the lines, having a digital driver’s license will open you up to much the same jeopardy as digital cash: it will make it possible for the government to better track your movements, monitor your activities and communications and ultimately shut you down.

    So what’s the deal here?

    First, it’s hard to imagine how a cashless world navigated by way of a digital wallet doesn’t signal the beginning of the end for what little privacy we have left and leave us vulnerable to the likes of government thieves and data hackers.

     

    Second, digital wallets will make it that much easier for government agents to take advantage of civil asset forfeiture schemes. ERAD (Electronic Recovery and Access to Data) devices supplied by the Department of Homeland Security allow police to not only determine the balance of any magnetic-stripe card (i.e., debit, credit and gift cards) but also freeze and seize any funds on pre-paid money cards.

     

    Third, the war on cash is about giving the government the ultimate control of the economy and complete access to the citizenry’s pocketbook.

     

    Fourth, every technological convenience that has made our lives easier has also become our Achilles’ heel, opening us up to greater vulnerabilities from hackers and government agents alike. Digital cash will be no different. In recent years, the U.S. government and a host of financial institutions, retailers and entertainment giants have been repeatedly hacked. And these are the people in charge of protecting our sensitive information?

     

    Fifth, if there’s one entity that will not stop using cash for its own nefarious purposes, it’s the U.S. government. Who could forget the $12 billion in shrink-wrapped $100 bills that the U.S. flew to Iraq only to claim it had no record of what happened to the money.

     

    Sixth, this drive to do away with cash is part of a larger global trend driven by international financial institutions and the United Nations that is transforming nations of all sizes, from the smallest nation to the biggest, most advanced economies.

     

    Finally, short of returning to a pre-technological, Luddite age, there’s really no way to pull this horse back now that it’s left the gate.

    To our detriment, we really have little control over who accesses our private information, how it is stored, or how it is used. Whether we ever had much control remains up for debate. However, in terms of our bargaining power over digital privacy rights, we have been reduced to a pitiful, unenviable position in which we can only hope and trust that those in power will treat our information with respect.

    America’s founders, however, did not believe in trusting government officials or giving them too much power. In fact, they believed those entrusted with power will eventually pervert it into tyranny. As Thomas Jefferson observed, “Let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.”

    Unfortunately, that Constitution has since been shredded.

    Our republic has been transformed into an oligarchy.

    We have come full circle, back to a pre-revolutionary era of taxation without any real representation.

    We the people, once free citizens of a free nation, are now at the mercy of cutthroats and villains masquerading as government agents and elected officials. We continue to be robbed at gunpoint, treated like cattle, tracked incessantly and forced to serve and obey. We continue to be branded rebels and traitors and enemy combatants, shot without hesitation for daring to resist an official order or challenge injustice, and duped into believing all this was done for our “good.”

    In the end, as I make clear in my book Battlefield America: The War on the American People, we are no better than when we first started out more than 200 years ago as indentured slaves to a government elite intent on using us for their own profit and gain.

  • Trump Campaign's Response To Hillary's Collapse (& DNC Leaks)

    ‘Less’ is definitely ‘more’ right now…

     

    Source: Townhall.com

    It’s working… 

  • "I Protected Hillary Clinton In The Secret Service – Here's Why Her 'Fainting' Video Really Scares Me"

    Submitted by Gary Byrne via Independent Journal Review

    Hillary

     

    I protected First Lady Hillary Clinton, President Bill Clinton, and their family while I served in the Secret Service Uniform Division as an officer from 1991-2003.

    By now, you have most likely seen the startling video of Hillary Clinton ‘fainting.’ Through the lens of my 29-year-career in The Service, I can see what a naked-eyed media pundit cannot: There is something seriously wrong with Mrs. Clinton.

    Pneumonia or overheating are highly suspect excuses and I’ll explain why.

    My analysis is not partisan. I cared for and protected the Clintons for many years. It was my duty to guard Mrs. Clinton in the Secret Service and I was so close to the First Family that the Supreme Court subpoenaed me to testify on the details of Bill Clinton’s late-term scandals.

    These are the facts.

    Watch Clinton’s Secret Service’s detail in the video. Their behavior is extremely professional and very telling. Each agent is to be commended.

    At the beginning of the video, Hillary is with a protective detail of Secret Service agents, as well as two female staffers. One staffer stands very close at her back and another is shoulder-to-shoulder and arm-in-arm with Mrs. Clinton to give her balance and prop her up.

    Hillary

     

    Mrs. Clinton leans against a “ballard,” the metal columns we use to stop incoming 5-ton vehicles, and “bicycle racks” (our nickname for the portable metal fences) to restrict pedestrian access to an area.

    As the van pulls up, she has a rigid wavering posture. She awkwardly leans on the ballard and stares straight ahead with her neck craned and extended up as her body is supported at the side and rear by her staffers.

    One agent gets the door, but no one moves to enter. The Secret Service doesn’t like to wait—standing still in the eyes of the Service is waiting for an attack to happen. But the staffer can’t move Mrs. Clinton. Anything that holds up a motorcade is extremely dangerous and anything that ties up a Secret Service agent’s hands from drawing their pistol or intervening a threat is a hazard.

    The female agent at the front of the van is scanning. She sees Mrs. Clinton odd behavior as well. The female agent begins backing up to the entrance of the van to shield both sight and anyone approaching—as is procedure. She keys her mic signaling that the van is about to move. The agent is to be commended for maintaining her blank expression.

    Hillary

     

    The agent who opened the door moves to take the place of the staffer and take Mrs. Clinton’s arm, but as they switch control, she nearly falls completely. The bald agent, who I believe is the shift leader, knows what is going on with Mrs. Clinton and – this oddity is very telling – crosses between her and her exit (the van door).

     

    As Mrs. Clinton jerks back and forth and her legs fold, the bald agent takes her right arm. The staffer also tries to also grab underneath Mrs. Clinton’s armpits to lift Mrs. Clinton.

    Close examination of Mrs. Clinton’s legs reveal her feet and legs have extended and are not holding her weight at all. The toes of her right foot drag and skid on the pavement.

    * * *

    Continued reading at the Independent Journal Review

  • This Is How Much It 'Costs' To Get An Ambassadorship: Guccifer 2.0 Leaks DNC 'Pay-To-Play' Donor List

    After addressing a cybersecuirty conference in London, notorious hacker 'Guccifer' shared over 500Mb of documents detailing 100,000 DNC donors contact info and donations. A large number of the largest donors received senior diplomatic or political positions following thge donations, ranging from UK Ambassador to Assistant Attorney General. The DNC released a statement pre-emptively claiming that this was the work of Russia (and reigniting Trump's links to Putin).

    Probably just coincidence…

    Source: Magafeed.com

    The dcoments contained detailed lists of 100,000 alledged donors, addresses, and phone numbers, and well as amounts donated…

    Source: imgur

    Here is the first cut of the alleged major donors on the leaked documents and the positions they received (via Magafeed.com)

    • #1 Matthew Berzun … Ambassador to UK
    • #2 Julius Genachowski … Former chairman to FCC
    • #3 Frank Sanchez…. Under secretary of commerce
    • #8 Kirk Wagner… Ambassador to Singapore
    • #9 Alan Solomont … Ambassador to Spain
    • #11 John Roos… Ambassador to Japan
    • #12 Nicole Avant… Ambassador to Bahamas
    • #13 Eileen Chamberlain Donahoe … Ambassador to the UN
    • #16 Steve Westly – CFO of California
    • #17 Don Beyer – Ambassador to Switzerland
    • #21 Don Gips – Ambassador to South Africa
    • #22 Howard Gutman – Ambassador to Belgium
    • #24 Cynthia Stroum – Ambassador to Luxembourg
    • #27 Mark Gilbert – Ambassador to New Zealand
    • #31 Norm Eisen – Ambassador to Czech Republic
    • #37 Bruce Oreck – Ambassador to Finland
    • #43 Tony West – deputy Attorney General
    • #45 Bill Kennard – Ambassador to EU

     

    The DNC responded to the latest hack claim Tuesday through its Interim Chair Donna Brazile, who stated that the “DNC is the victim of a crime,” which she blamed on “Russian state-sponsored agents,” while also cautioning that the hacked documents were still being authenticated by the DNC legal team, as “it is common for Russian hackers to forge documents.” DNC pre-emptively published a statement in an attempt to change the narrative…

      Once again blaming Russia   (and Trump)… As RT reports, it's not the first time that the name of Vladimir Putin has been brought up in the US presidential campaign, but this time the US president used this “argument” while openly campaigning for Clinton against Trump. The situation has become “really ludicrous and it borders on the ridiculous,” believes Gregory R. Copley, editor of Defense & Foreign Affairs.

    “In my 50 odd years covering the US government, I have never seen this level of partisanship within the administration where a sitting president actually regards the opposition party as the enemy of the state,” Copley told RT.

     

    The analyst said that the democrats are “blaming the messenger to revert the attention from the message.”

     

    “The message which Donald Trump delivered on RT was unambiguous in his campaign. Just like the fact that WikiLeaks revelation of the hacked emails was very explicit in showing up what the Democratic party itself was doing,” Copley added.

     

    The US establishment is “sacrificing key bilateral relationships in order to win [a] domestic election,” believes Copley. He added that neither Obama nor Clinton are interested in unifying the country, but they are rather “interested in winning and engaging in what modern democracy seems to have become – the tyranny of the marginal majority over the marginal minority.”

     

    “When you think about the number of times that the Clinton campaign has brought up President Putin and the alleged Russian hacking of Hillary Clinton’s service, it makes you wonder just how desperate they are,” Copley noted. “President Obama has lost literally all prestige in an international community…with the loss of prestige he has become desperate.”

    Some of the alleged major donors (via Magafeed.com)

    Richard M. Lobo

    obamarichard

    It appears Richard M. Lobo’s wife, Caren Lobo, donated $716,000 to DNC. Obama then nominated Richard Lobo for Director of the International Broadcasting Bureau.

    From BBG.gov:

    Richard Lobo was nominated by President Obama to be Director of the International Broadcasting Bureau in February, 2010, and was confirmed to the post by the Senate in September of that year.

    You can find Caren Lobo’s donation in this photo.

     

    Pamela Hamamoto

    Pamela Hamamoto

    Pamela Hamamoto paid DNC $605,000 then became the Permanent Representative of the United States of America to the United Nations and Other International Organizations in Geneva.

    More on Pamela Hamamoto

    Jane Hartley

    Jane Hartley

    Jane Hartley paid DNC $605,000 and then was nominated by Obama to serve concurrently as the U.S. Ambassador to the French Republic and the Principality of Monaco.

    More on Jane Hartley

    Crystal Nix-Hines

    Crystal Nix-Hines

    Crystal Nix-Hines paid DNC $600,000 and then was nominated by President Obama to the position of United States Permanent Representative to the United Nations Educational, Scientific and Cultural Organization with the rank of Ambassador.

    More on Crystal Nix-Hines

    Bruce J. Oreck

    Bruce J. Oreck

    Bruce J. Oreck donated $1,136,613 to the DNC and served as US ambassador to Finland 2009 to 2015.

    More on Bruce Oreck

    Robert A. Mandell

    Screen Shot 2016-09-14 at 1.15.05 AM

    Robert A. Mandell donated $1,121,250 to the DNC then President Obama named Mandell the Ambassador to Luxembourg in June 2011.

    More on Robert Mandell

    You can find Robert Mandell’s donation in this photo (as Bob Mandell).

    Julius Genachowski

    Julius_Genachowski

    Julius Genachowski donated $3,494,919 toDNC and served as Chairman of the FCC from 2009 to 2013.

    More on Julius Genachowski

    You can find Robert Mandell’s donation in this photo.

    K3LRK4

     

    Karol Mason

    07b8e3977b1053f50b859b7a10f0f43de8945967

    Karol Mason donated $856,000 to the DNC and Obama appoints her as Assistant Attorney General, Office of Justice Programs.

    *  *  *

    It's probably nothing…

  • The US Military Has "Never Been Fatter"

    The men and women serving in the U.S. military are getting fatter at an alarming rate.  Could this trend be a simple reflection of the fact that pilots sitting in a command center far away from the battlefield flying drones in today’s modern military just don’t require the same level of physical fitness?  Or, perhaps our military leaders, like our college professors, have shied away from committing “micro-aggressions” against our soft-skinned millennial soldiers by asking them to do things like exercise.

    While it may not be exactly clear why it’s happening, according to data published by the Military Times, the fact is that America’s military is packing on the pounds.

    Military Obesity

     

    Military Obesity

     

    As the Military Times points out, compared to the U.S. civilian population, the rate of overweight troops is far smaller.  While that may be true, there’s a reason we don’t ensure our national security to overweight, pampered, unemployed millennials living at home with mom…they probably wouldn’t be very good at it.  But just to confirm the stats, the map below from The State of Obesity, highlights that over 30% of the civilian population in many states is technically obese.

    US Obesity

     

    As Army Command Sgt. Maj. John Troxell points out, while rising obesity rates in the U.S. military don’t yet raise a “readiness concern” the “obesity trends are troubling.”

    “If I have to climb up to the top of a mountain in Nuristan, in Afghanistan, and if I have someone who is classified as clinically obese, they are potentially going to be a liability for me on that patrol,” said Army Command Sgt. Maj. John Troxell, the military’s top noncommissioned officer and the senior enlisted adviser to Joint Chiefs Chairman Gen. Joseph Dunford.

     

    Troxell said today’s force is combat ready, but he believes the obesity trends are troubling, and demand careful consideration from senior leaders. “I don’t think it’s a clear readiness concern right now.  But I think it’s something that needs our attention. And we really have to look across our services at what we’re doing every morning or every day to prepare the men and women for what could be the worst day of their life,” Troxell said in a recent interview.

    As for the reasons for the growing obesity rates, the Military Times points out a number of potential contributing factors including a lack of healthy food on base and a younger generation of soldiers that grew up playing video games on the couch rather than engaging in physical activities outdoors.

    “This is about the national security of the United States,” said retired Army Lt.  Gen.  John  Bednarek, who was the highest ranking American general in Iraq in 2014. “It’s a long term trend and we cannot turn a blind eye. The bottom line is that our commanders and senior enlisted leaders have to take a look at what we are serving, whether it’s in the [dining facility] or aboard a ship in the mess. Are we providing healthy choices? Are we providing fruits and vegetable options up front? As opposed to the first thing they see in the morning is the grill with a 22-grams-of-fat sausage patty?”

     

    Troxell said that he believes the urgent demands created by combat may have led some unit-level leaders to prioritize missions over traditional physical training. “In some cases,” he added, “the first thing that gets cut is the fitness session that was on the training calendar, when actually that is probably the most important thing we do every day.”

     

    Add to that wartime eating habits. “At the dining facilities that we had in Iraq and Afghanistan, it was really four or five times a day. It was unlimited chow of all kinds that service members could indulge in. And all of the sudden it led to some overeating and pretty soon we had people whose body mass was going up to what doctors would say is clinically obese,” Troxell said.

     

    Troxell also said that some of the military’s current fitness challenges reflect the new generation of young people joining the services.

     

    “The men and women that are coming in today weren’t doing the things as they were growing up that I was doing when I was growing up, such as playing outside until dark, racing with my friends from one crack in the cement to another crack in the cement. More and more, young men and women are attracted to things that happen indoors and allow them be on a couch, like playing video games,” Troxell said. “Men and women are growing up differently. There is less physical activities and more mental activities.”

    But, like with the Reuters presidential poll, the easiest way to fix an undesirable result is simply to “tweak” the way the data is collected, measured and analyzed, which the U.S. military intends to do promptly.

    Top military health plan to publish a new policy later this year that could have a sweeping effect on how the military defines and measures health and fitness.

  • Archie Bunker Still Lives Within Some, Many, Or Most Of Us

    Authored by Ben Tanosborn,

    Politicians are human and occasionally they cannot contain themselves, allowing their true sentiments to come out; sometimes in droplets hardly noticed, but sometimes in damaging blurbs.  We, certainly the media, usually point to these blurbs as gaffes.  But in reality they simply represent what these politicians think but are not supposed to acknowledge in a world where we must try, at times force ourselves, to be painfully politically correct in order to achieve some modicum of conviviality.

    Hillary Clinton had her sentiments blurb out, as carefully hidden as they always seem to be, and gave us another slip of the tongue; her very untimely depiction of “Trump’s deplorables,” similar in nature, and of equal magnitude, to Mitt Romney’s “47 percent” gaffe of four years before; September gaffes both, as if precursors to some mythical October surprise.  And, needless-to-say, both were made before their respective elite party audiences and, expectedly, during fundraisers.

    Clinton, a consummate politician, didn’t take long to express her “regret.”

    Since Trump’s entire campaign is a serial-gaffe without apparent consequences, this non-Republican Republican candidate is not expected to regret a single thing he has ever said or might say in the future.  He has been granted a press bull, to say whatever comes to his mind… and remain “bull-holder” immune.

    So Clinton, in the open camaraderie of a fundraiser, came out of her political shell and tainted half of Trump’s followers as bigopats (bigoted patriots)… which she referred to as “deplorables.”  Although quantification, even when generalized, is not recommended in politics, the truth of the matter is that the bright gal from Wellesley College was not only on target but might have been appraisal-short.  [RE: my June 16, 2016 article, “Bigopats: Undocumented Largest Group in American Politics.”]

    However, although Americans readily will admit that the nation is fragmentally divided economically, socially and politically… most prefer to keep this humpty-dumpty (post-fall) status on the QT.  And a quarter of the electorate (24-28 percent by my account in the referred article), although confirmed by voice and action as bigopats, prefer to be tagged as patriots… divested of any intolerance or prejudice that circumvent their lives.  But voicing this out loud, no matter how true, is frowned upon as divisive for us, the citizenry, and truly anathema for American career politicians.

    We, in these United States of America, may feel that “we’ve come a long way, baby,” as the 1968 marketing of Virginia Slims cigarettes proclaimed, but in matters of bigotry the TV character of the 1970’s, Archie Bunker, is alive and well after the past four decades; its soul living in some, many or most of us… white folks.  To QT it or deny it does not and will not serve us well.  Americans are no better or worse than any other people on this planet when it comes to intolerance and prejudice.  But our challenge has been always greater than that of most other nations because of our diversity, erroneously self-depicted as a melting pot… something which had really only applied to Euro-Americans of the 19th and 20th centuries.

    Archie Bunker’s depiction as the archetype of the bigopat had a positive impact in many of us… sort of an American mild version of Mao Zedong’s Cultural Revolution a decade earlier in China, without extreme shocking societal changes; yet, sufficiently strong to shame us to change.  But change comes very slowly as resistance to change endures, particularly when such change implies giving up privilege and power, which in an unjust society must take place.

    So, Hillary Clinton was probably right on the mark in her quantitative assessment of her nicknamed “deplorables,” but way off the mark in expressing such unwelcome truth.

    Only prophets, philosophers and martyrs can express the unadulterated truth; but that is not the case with politicians who always do it at their peril… and expressing regret often proves not to be enough.

  • Doctor Explains Why Hillary's 9/11 "Medical Episode" Is More Consistent With Parkinson's Than Pneumonia

    A few weeks back, Dr. Ted Noel, an anesthesiologist with 36 years of experience, gained notoriety by sharing his opinion on his website, Vidzette, that Hillary likely had Parkinson’s disease.

    Now, Dr. Noel has posted a new video in which he explains how Hillary’s behavior on 9/11 and the subsequent decisions made by her campaign staff and secret service detail are more consistent with Parkinson’s disease than pneumonia.

    Among other things, Noel points out that if Hillary actually was suffering from such a severe case of pneumonia that it forced her to literally collapse on a sidewalk, it’s extremely unlikely that she could make a seemingly full recovery after only 90 minutes at Chelsea’s apartment and feel well enough to great onlookers and snap a selfie with a child.  Per Noel, Hillary’s recovery timing is more consistent with how long it would take her to ingest a dosage of Levodopa and wait for her Parkinson’s symptoms to subside.  Noel also points out that sunglasses with dark blue lenses, like the ones Hillary wore this weekend despite the cloud cover, have been noted by doctors to help treat patients with major motion disorders such as Parkinson’s disease.

    With that preview, here is the full analysis:

     

    And here is Noel’s original video from August 29th:

Digest powered by RSS Digest

Sep 13

Today’s News 13th September 2016

  • Bob Farrell's (Illustrated) 10-Investment Rules

    Submitted by Lance Roberts via RealInvestmentAdvice.com,

    Over the weekend, it was interesting to see the number of advisors/analysts quickly rushing to defend their “buy and hold” investing philosophies following the sharp decline on Friday. As I wrote this past weekend:

    “The downfall of all investors is ultimately ‘greed’ and ‘fear.’

     

    They don’t sell when markets are near peaks, nor do they buy market bottoms. However, this does not just apply to individuals but many advisors as well.

     

    When I read articles from advisors/managers promoting ‘buy and forget’ strategies it is for one of three reasons. They either can’t, don’t want to, or don’t know how to manage portfolio risk. Therefore, the easy message is simply:

     

    ‘You just have to ride the market out. Long-term it will go up. But hey, let me charge you a fee for holding your stuff in an account.’

     

    The reality is that markets do not return 6%, 8% or 10% annually, and spending years making up previous losses is not a way to successfully obtain retirement goals. (Read this)

     

    It is also worth pointing out that those promoting these ‘couch potato’ methodologies are generally out in full force near peaks of bull market cycles, and are rarely heard of near bear market bottoms. This is why, as I discussed in ‘Why You Still Suck At Investing,’ investors consistently underperform over long periods of time.” 

    Dalbar-2016-ReturnComparision-060616

    When markets are at, or near, “record levels” those levels are records for a reason. Throughout history awe-inspiring bull markets have been followed by devastating bear markets. Like “yen and yang,” a bull cannot exist without its forever intertwined counterpart.

    Despite the media, advisor and analysts rhetoric to the contrary, investors DO have the ability to manage the inherent risk in their portfolios.

    Investors can capture returns and grow their “savings” versus just blindly hoping that history will not once again repeat itself. While I can’t tell you exactly when the second half of the full-market cycle will manifest itself, I can assure you it will and the negative impact to retirement goals, and the time lost, will be just as damaging.

    One other question to ponder. While Wall Street tells you to “just hold on and ride the market out,” why are they managing risk, spending billions on trading platforms and algorithms, and in many instances betting against you? 

    With this in mind, I present Bob Farrell’s 10-Investment Rules. While these rules should be a staple for any investor who has put their hard earned “savings” at risk in the market, they are rarely heeded in the heat of bull market. Just as they are being ignored now.

     

    Who is Bob Farrell?

    Bob is a Wall Street veteran with over 50 years of experience in crafting his investing rules. Farrell obtained his master’s degree from Columbia Business School and started as a technical analyst at Merrill Lynch in 1957. Even though Farrell studied fundamental analysis under Gramm and Dodd, he turned to technical analysis after realizing there was more to stock prices than balance sheets and income statements. Farrell became a pioneer in sentiment studies and market psychology. His 10 rules on investing stem from personal experience with dull markets, bull markets, bear markets, crashes, and bubbles. In short, Farrell has seen it all and lived to tell about it.

     

    The Illustrated 10-Rules Of Investing

    1. Markets tend to return to the mean (average price) over time.

    Like a rubber band that has been stretched too far – it must be relaxed in order to be stretched again. This is exactly the same for stock prices which are anchored to their moving averages.  Trends that get overextended in one direction, or another, always return to their long-term average. Even during a strong uptrend or strong downtrend, prices often move back (revert) to a long-term moving average. The chart below shows the S&P 500 with a 52-week simple moving average.

    farrell-meanreversion-091116

    The bottom chart shows the percentage deviation of the current price of the market from the 52-week moving average. During bullish trending markets, there are regular reversions to the mean which create buying opportunities. However, what is often not stated is that in order to take advantage of such buying opportunities profits should have been taken out of portfolios as deviations from the mean reached historical extremes. Conversely, in bearish trending markets, such reversions from extreme deviations should be used to sell stocks, raise cash and reduce portfolio risk rather than “panic sell” at market bottoms.

    The dashed RED lines denote when the markets changed trends from positive to negative. This is the very essence of portfolio “risk” management.

     

    2. Excesses in one direction will lead to an opposite excess in the other direction.

    Markets that overshoot on the upside will also overshoot on the downside, kind of like a pendulum. The further it swings to one side, the further it rebounds to the other side. This is the extension of Rule #1 as it applies to longer term market cycles (cyclical markets).

    While the chart above showed prices behave on a short term basis – on a longer term basis markets also respond to Newton’s 3rd law of motion: “For every action, there is an equal and opposite reaction.” The first chart shows that cyclical markets reach extremes when they are more than 2-standard deviations above or below the 50-week moving average. Notice that these excesses ARE NEVER worked off by just going sideways.

    farrell-50wkma-reversions-091116

    The second chart shows the price reversions of the S&P 500 on a long term basis and adjusted for inflation. Notice that when prices have historically reached extremes – the reversion in price is just as extreme. It is clear that the current reversion in the stock market is still underway from the 2000 peak.

    farrell-sp500-pe-excess-091116

     

    3. There are no new eras – excesses are never permanent.

    There will always be some “new thing” that elicits speculative interest.  These “new things” throughout history, like the “Siren’s Song,” has led many investors to their demise. In fact, over the last 500 years, we have seen speculative bubbles involving everything from Tulip Bulbs to Railways, Real Estate to Technology, Emerging Markets (5 times) to Automobiles and Commodities. It always starts the same and ends with the utterings of “This time it is different”

    [The chart below is from my March 2008 seminar discussing that the next recessionary bear market was about to occur.]

    farrell-bubbles-091116

    As legendary investor Jesse Livermore once stated:

    “A lesson I learned early is that there is nothing new on Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”

     

    4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

    The reality is that excesses, such as we are seeing in the market now, can indeed go much further than logic would dictate. However, these excesses, as stated above, are never worked off simply by trading sideways. Corrections are always just as brutal as the advances were exhilarating. As the chart below shows when the markets broke out of their directional trends – the corrections came soon thereafter.

    farrell-trendbreak-091116

     

    5. The public buys the most at the top and the least at the bottom.

    The average individual investor is most bullish at market tops and most bearish at market bottoms. This is due to investor’s emotional biases of “greed” when markets are rising and “fear” when markets are falling. Logic would dictate that the best time to invest is after a massive sell-off; unfortunately, this is exactly the opposite of what investors do.

    farrell-stock-allocations-091116

    farrell-stock-cash-ratio-091116

     

    6. Fear and greed are stronger than long-term resolve.

    As stated in Rule $5 it is emotions that cloud your decisions and affect your long-term plan.

    “Gains make us exuberant; they enhance well-being and promote optimism,” says Santa Clara University finance professor Meir Statman.  His studies of investor behavior show that “Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks.”

    The index of bullish sentiment shows that “greed” is once again beginning to reach levels where markets have generally reached intermediate-term peaks.

    farrell-bullishsentiment-091116

    In the words of Warren Buffett:

    “Buy when people are fearful and sell when they are greedy.”

    Currently, those “people” are getting extremely greedy.

     

    7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.

    Breadth is important. A rally on narrow breadth indicates limited participation and the chances of failure are above average. The market cannot continue to rally with just a few large-caps (generals) leading the way. Small and mid-caps (troops) must also be on board to give the rally credibility. A rally that “lifts all boats” indicates far-reaching strength and increases the chances of further gains.

    farrell-arms-index-091116

    The chart above shows the ARMS Index which is a volume-based indicator that determines market strength and breadth by analyzing the relationship between advancing and declining issues and their respective volume.  It is normally used as a short term trading measure of market strength. However, for longer term periods the chart shows a weekly index smoothed with a 34-week average. Spikes in the index has generally coincided with near-term market peaks.

     

    8. Bear markets have three stages – sharp down, reflexive rebound and a drawn-out fundamental downtrend

    Bear markets often start with a sharp and swift decline. After this decline, there is an oversold bounce that retraces a portion of that decline. The longer term decline then continues, at a slower and more grinding pace, as the fundamentals deteriorate. Dow Theory suggests that bear markets consist of three down legs with reflexive rebounds in between.

    farrell-3-phases-bear-091116

    The chart above shows the stages of the last two primary cyclical bear markets. The point to be made is there were plenty of opportunities to sell into counter-trend rallies during the decline and reduce risk exposure. Unfortunately, the media/Wall Street was telling investors to just “hold on” until hey finally sold out at the bottom.

     

    9. When all the experts and forecasts agree – something else is going to happen.

    This rule fits within Bob Farrell’s contrarian nature. As Sam Stovall, the investment strategist for Standard & Poor’s once stated:

    “If everybody’s optimistic, who is left to buy? If everybody’s pessimistic, who’s left to sell?”

    As a contrarian investor, and along with several of the points already made within Farrell’s rule set, excesses are built by everyone being on the same side of the trade. Ultimately, when the shift in sentiment occurs – the reversion is exacerbated by the stampede going in the opposite direction

    farrell-expertsagree-091116

    Being a contrarian can be quite difficult at times as bullishness abounds. However, it is also the secret to limiting losses and achieving long-term investment success. As Howard Marks once stated:

    “Resisting – and thereby achieving success as a contrarian – isn’t easy. Things combine to make it difficult; including natural herd tendencies and the pain imposed by being out of step, since momentum invariably makes pro-cyclical actions look correct for a while. (That’s why it’s essential to remember that ‘being too far ahead of your time is indistinguishable from being wrong.’)

     

    Given the uncertain nature of the future, and thus the difficulty of being confident your position is the right one – especially as price moves against you – it’s challenging to be a lonely contrarian.”

     

    10.Bull markets are more fun than bear markets

    As stated above in Rule #5 – investors are primarily driven by emotions. As the overall markets rise; up to 90% of any individual stock’s price movement is dictated by the overall direction of the market hence the saying “a rising tide lifts all boats.”

    Psychologically, as the markets rise, investors begin to believe that they are “smart” because their portfolio is going up. In reality, it is primarily more a function of “luck” rather than “intelligence” that is driving their portfolio.

    Investors behave much the same way as individuals who addicted to gambling. When they are winning they believe that their success is based on their skill. However, when they began to lose, they keep gambling thinking the next “hand” will be the one that gets them back on track. Eventually – they leave the table broke.

    investor-psychology-060616

    It is true that bull markets are more fun than bear markets. Bull markets elicit euphoria and feelings of psychological superiority. Bear markets bring fear, panic, and depression.

    What is interesting is that no matter how many times we continually repeat these “cycles” – as emotional human beings we always “hope” that somehow this “time will be different.” Unfortunately, it never is and this time won’t be either. The only questions are: when will the next bear market begin and will you be prepared for it?

     

    Conclusions

    Like all rules on Wall Street, Bob Farrell’s rules are not meant has hard and fast rules. There are always exceptions to every rule and while history never repeats exactly it does often “rhyme” very closely.

    Nevertheless, these rules will benefit investors by helping them to look beyond the emotions and the headlines. Being aware of sentiment can prevent selling near the bottom and buying near the top, which often goes against our instincts.

    Regardless of how many times I discuss these issues, quote successful investors, or warn of the dangers – the response from both individuals and investment professionals is always the same.

     “I am a long term, fundamental value, investor.  So these rules don’t really apply to me.”

    No, you’re not. Yes, they do.

    Individuals are long term investors only as long as the markets are rising. Despite endless warnings, repeated suggestions and outright recommendations; getting investors to sell, take profits and manage your portfolio risks is nearly a lost cause as long as the markets are rising. Unfortunately, by the time the fear, desperation or panic stages are reached it is far too late to act and I will only be able to say that I warned you.

  • Hillary Breaks Silence; Says Whole Pneumonia, 'Stumble' Thing "Wasn't That Big A Deal", Admits Happened Before

    Hillary Clinton broke her post-9/11 silence tonight with an interview with CNN’s Anderson Cooper. Claiming that she felt dizzy but did not lose consciousness (all video evidence aside), the presidential candidate proclaimed that she didn’t think the pneumonia was “going to be that big a deal,” and is now “feeling so much better.” Cooper did press Clinton on the number of times this has happened – more than once – but Clinton took the opportunity to ironically call out her opponent for his lack of transparency.

    So judge for yourself. This is what happened…

     

    And this is what she told Anderson Cooper…

    As CNN reports, Hillary Clinton said Monday night she’s “met a high standard of transparency” about her health and didn’t think the pneumonia was “going to be that big a deal.”

    Clinton said she felt dizzy and lost her balance Sunday, but did not lose consciousness, and is now “feeling so much better.”

     

    “I was supposed to rest five days — that’s what they told me on Friday — and I didn’t follow that very wise advice,” Clinton told CNN’s Anderson Cooper in a phone interview.

     

    “So I just want to get this over and done with and get back on the trail as soon as possible,” she said.

    But during her interview Monday, Clinton sought to turn criticism of her secrecy over her illness into an attack on Republican rival Donald Trump.

    “Compare everything you know about me with my opponent. I think it’s time he met the same level of disclosure that I have for years,” Clinton told Cooper.

    She said her campaign didn’t publicly reveal her diagnosis because “I just didn’t think it was going to be that big of deal.”

    Finally,  Cooper asked about Bill Clinton’s remark in an interview with Charlie Rose that she has occasionally become dehydrated and gone through episodes like Sunday’s, and how many times that has happened before…

    “I think really only twice that I can recall,” Clinton said.

     

    “You know, it is something that has occurred a few times over the course of my life, and I’m aware of it, and usually can avoid it,” she said.

    So a ‘stumble’ that appeared more like a full drag, leaving a shoe behind… has happened before… but “wasn’t a big deal.” Ok.

  • US Think Tank Warns That Australia Is About 6 Weeks Away From Housing Collapse

    Over the past couple of months, we have written frequently about the impact of Chinese money laundering operations on home prices in a couple of large cities around the globe.  So far, the Vancouver market has seemingly been the hardest hit with homes prices collapsing over 20% in one month after the city passed a 15% property tax on foreign buyers on July 25, 2016 (see "As The Vancouver Housing Market Implodes, The "Smart Money" Is Rushing To Get Out Now"). 

    Now, a U.S. based think tank, International Strategic Studies Association (ISSA), is warning that similar efforts to restrict Chinese investment in Australian real estate could send prices tumbling there as well.  In speaking with news.com.au, Greg Copley, President of ISSA, predicted that Australia has about 6 weeks before real estate prices start to collapse.

    "We estimate that Australia has about six weeks or so to turn this situation around, otherwise there would be a massive hit on property valuations and the building trades."

     

    "The urgency is, I believe, based on the fact that this is about how long it will take for the banks' policies to start switching off a lot of existing and planned contracts for Australian properties."

     

    "The banks clearly believe Australian real estate values will decline, so they are attempting to avoid that risk. They’ve learned from the US collapse that seizing real estate collateral is a no-win scenario when the volume is great and the market slow."

     

    “In so doing, they precipitate the market collapse but are less exposed to it.”

    Real estate prices in Australia's largest housing markets have soared over the past couple of years fueled, in no small part, by demand from Chinese buyers looking for offshore locations to park cash.  The Sydney and Melbourne markets have been the largest beneficiaries of foreign capital with real estate prices up 53% and 51%, respectively, since 2012.  That said, based on data from the Australian Bureau of Statistics it looks like home prices in Australia have already started their descent.

    Australian Home Prices

     

    Back in the spring, Australian banks began cracking down on foreign purchasers of residential properties due to concerns of increasing fraud and money laundering activites.  New rules enacted required borrowers to be Australian citizens and/or legal residents with a valid visa.  Per ISSA, these new restrictions on lending will likely result in many foreign buyers being forced to default on new residential properties.  He argues that many foreign buyers placed down payments on properties under the old banking regulations but now won't be able to secure financing to close once the properties are actually completed.

    Efforts to restrict lending, came in addition to taxes imposed by many Australian cities after foreign demand was found to be pricing local buyers out of many residential markets and killing the “Great Australian Dream” of owning property.  In fact, Sydney prices have risen to record levels and currently rank second only to Hong Kong in terms of major cities with the world’s least-affordable housing. 

    With Vancouver and Australia now cracking down on Chinese money laundering operations the only question that remains is where the next bubble will spring up to take it's place?

  • Supervisor Of "Massive Fraud" At Wells Fargo Leaves Bank With $125 Million Bonus

    There was a burst of righteous populist anger anger last week, when it emerged that Wells Fargo had engaged in pervasive, “massive” fraud since at least 2011, including opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. For this criminal conduct, Wells was fined $185 million (including a $100 million penalty from the CFPB, the largest penalty the agency has ever issued). In all, Wells opened 1.5 million bank accounts and “applied” for 565,000 credit cards that were not authorized by their customers.

    As “punishment” Wells Fargo told CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years.  The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said. What was hushed away is that not a single employee will go to prison, and that ultimately it will be Wells Fargo’s shareholders – such as Warren Buffett – who will end up footing the bill.

    What Wells did not disclose publicly to anyone is that the head of the group responsible for Wells’ biggest consumer fraud scandal in years, is quietly leaving the bank with a $125 million bonus, a bonus which as Fortune’s Stephen Gandel writes today will not see even one cent clawed back as part of the dramatic revelations.

    According to Gandel, Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”— is leaving the giant bank with an enormous pay day, some $124.6 million.


    Carrie Tolstedt

    Tolstedt is walking away from Wells Fargo with a very full bank account, and praise: in the July announcement of her exit, which made no mention of the soon-to-be-settled case, Wells Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.” In light of the record fine levied by the CFPB for the unit which Tolstedt headed, we wonder if Stumpf would like to retract his statement.

    What is just as troubling is that despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, “it does not appear that Wells Fargo is requiring Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay.”

    As a reminder, on Thursday, Richard Cordray, the head of the CFPB, said, “It is quite clear that [the actions of Tolstedt’s unit] are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust.”

    However, cited by Gandel, a spokesperson for Wells Fargo said that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.

    In a statement following the settlement, Wells Fargo said, “Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100% of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

    In other words, this has become yet another instance where bank subordinates were engaged in activity that seemingly none of their supervisors was – mysteriously – aware of, a pattern observed in virtually every major crackdown against a prominent sellside bank, from Goldman’s Fab Tourre to the Libor conspiracy. While Fortune writes that it is not clear how closely Tolstedt was responsible for or even aware of the widespread abusive tactics at the bank, it is a fact that Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011. The CFPB said about three quarters of the unauthorized accounts opened by employees of Wells Fargo were bank deposit accounts. Another 565,000 were unauthorized credit card applications. Tolstedt took over the division in 2008, after Wells Fargo merged with Wachovia during the financial crisis.

    Ironically, Tolstedt was a regular on Fortune‘s Most Powerful Women list. She was replaced on this year’s list by Mary Mack, who is taking over her job at the bank.

    Tolstedt was regularly praised for her unit’s ability to get customers to open numerous accounts. For a number of years, Wells Fargo’s proxy statement, which details executive pay, cited high “cross-selling ratios” as a reason that Tolstedt had earned her roughly $9 million in annual pay. For instance, in Wells Fargo’s 2015 proxy statement, the company said that its compensation committee had authorized Tolstedt’s $7.3 million stock and cash bonus that year, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels, and continued success of mobile banking initiatives.”

    However later in 2015, the L.A. City Attorney’s office sued the bank because of its sales tactics, saying that many of the abusive practices came from intense pressure on Wells Fargo’s employees to get customers to open up numerous accounts. A separate class action of former employees alleges they were fired for not meeting cross-selling goals, or going along with the aggressive sales tactics.

    Meanwhile, the awards for Toldstedt continued piling in, and earlier in 2016, when Wells Fargo released its annual proxy statement, it once again said that in order to justify her multimillion dollar bonus, Tolstedt’s division had “achieved a number of strategic objectives.” But this time, for the first time in years, cross-selling wasn’t listed as one of them.

    While one can speculate if Tolstedt decided to leave in advance of the CFPB crackdown on her division, one thing that is certain is how much money she is taking with her: according to Gendell, when Tolstedt leaves Wells Fargo later this year, on top of the $1.7 million in salary she has received over the past few years, she will be walking away with $124.6 million in stock, options, and restricted Wells Fargo shares. Some of that hasn’t vested yet. But Tolstedt gets to keep all of it because she technically retired. Had she been fired, Tolstedt would have had to forfeit at least $45 million of that exit payday, and possibly more. It is safe to assume that had she waited until after the CFPB settlement, that her parting present may have been one third smaller, and that she could have been the bank’s scapegoat, fired to placate regulators.

    Alas, now we will never know what “could”have happened, which means that the only recourse Wells and its shareholders have – if they feel like bothering – is to try to recoup some of her ill-gotten bonus. As Fortune concludes, “the bank’s proxy statement says that the bank has “strong recoupment and clawback policies,” and that the bank will revoke bonus pay if it is found that the conduct of an executive resulted in representational harm to the bank, or that the executive was not able to “identify or manage” risks in his or her division. But there is no sign that Wells Fargo is going to ask Tolstedt to return even a sliver of her stock jackpot.“

    As we pointed out last week, when we observed that yet again nobody is going to prison, Gandel’s parting assessment is similar: “on Wall Street, the carrots are still widely handed out. The sticks, however, remain out of sight.”

    This also means that the biggest crime on Wall Street remains a more prosaic one: getting caught.

  • Hillary Versus Donald: War Or Peace?

    Via AntoniusAquinas.com,

    Although history does not exactly repeat itself, it does provide parallels and sometimes quite ominous ones.  Such is the case with the current U.S. Presidential election and the one which occurred one hundred years earlier.

    The dominating question which hung over the 1916 campaign was whether the country would remain neutral in regard to the horrific slaughter which was taking place on the European battlefields in probably the greatest act of mass insanity ever recorded, World War I.

    President Wilson had maintained that the U.S. would continue a policy of strict neutrality.  By all indications, the nation wanted no part of the war, with the President’s own party at his nomination delivering an emphatic “No” to any foreign intervention.

    Although Wilson maintained a neutral policy through the election and briefly afterwards, his advisors and Cabinet had been lobbying for war and continued to do so even more vehemently after the President’s re-election was secured.  Nearly all of them, including Wilson himself, had deep financial, family, and political ties to J.P. Morgan.  Wilson received considerable Morgan financial backing for his two presidential runs.

    The Morgan operatives within the Administration were pushing for war because the House of Morgan had “invested” heavily in the “Allied” cause and a defeat or a negotiated settlement with any favorable concessions to Germany would be a catastrophe for Morgan financial interests.

    Germany understood the cozy Morgan relationship with the Wilson Administration and the Allied powers as Morgan representatives, especially the sinister Colonel House, had repeatedly rebuffed peace proposals from the Central Powers.  The Allies and their opponents understood that Wilson’s re-election would mean U.S. entry into the conflict.

    Tragically, for the U.S. and for the course of war-ridden 20th century history, Wilson capitulated and brought the U.S. into the battle despite the campaign promise of neutrality and no real German threat.  The House of Morgan’s financial bacon was saved at the cost of a devastated Western world.

    One hundred years later, the U.S. and the world stand at another critical juncture and face a similar choice: the election of a known war criminal who has not only shown no remorse for her murderous policies, but promises, if elected, to continue them; or the election of a candidate who has spoken of negotiating with America’s supposed principle enemy, a possible pull back in the nation’s unsustainable global empire, and the enactment of a legitimate use of federal authority – protection of the country’s borders.

    It is difficult to believe that Donald Trump is not sincere in seeking accommodation and friendly relations with Russia.  It would be far easier for the billionaire businessman and would most likely secure his election if he followed the bellicose policy of the Democrat and Republican Presidents of the recent past who have continued to antagonize and threaten Russia.  The most hopeful sign for peace coming from the U.S. in quite a while has been Trump’s talk of de-escalation of tensions and a pledge to place American interests first in foreign policy, instead of mouthing the global domination designs of the crazed neocons.

    Some of the things he has said about Vladimir Putin and Russia have been, to say the least, quite encouraging:

    I think I would get along with Vladimir Putin. I just think so.

     

    …

     

    It is always a great honor to be so nicely complimented by a man [Putin] so highly respected within his own country and beyond.

     

    …

     

    I have always felt that Russia and the United States should be able to work well with each other towards defeating terrorism and restoring world peace, not to mention trade and all of the other benefits derived from mutual respect.

    Although not a non-interventionist, a President Trump is unlikely to provoke Russia or China into a civilization-ending conflagration and has displayed the instincts of a true peace maker.

    There is, however, little hope for a reduction of global tensions if his sociopathic opponent becomes Commander-in-Chief.  Killary has repeatedly demonstrated that she is a willing tool of the neocons and the global financial forces that will profit mightily from continued U.S.- instigated conflicts.  If she makes it past the finish line, either legitimately or more likely through fraud, she will surely do their bidding.

    For once, politicians and pundits who routinely call every election “the most crucial of a generation” are right.  This year’s Presidential election is the most significant one since at least the fall of the Soviet Union and Eastern Bloc.  If the U.S. electorate wants to avoid the disaster not only to its own land and the world that followed in the wake of the 1916 election, there can be only one choice in November of 2016.

  • It's Time To Bring Back Bernie

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    This tells you everything you need to know about how Hillary will operate as President: there will be no honesty, transparency or truth, ever.

    Hillary's bid for the presidency is no longer defensible; it's time to bring back Bernie Sanders as the Democratic nominee.

    The issue isn't Hillary Clinton's health per se; what is indefensible is her response to legitimate questions of the American public regarding her health.

    Hillary Clinton has disqualified herself to be President of the United States because she is incapable of telling the truth about anything. There is no such thing as truth or transparency in the Clinton persona and campaign; everything is an ongoing experiment in perception management.

    First one narrative is floated; if the narrative shifts the public perception positively, it is defended to the death, and anyone questioning it is instantly accused of being a conspiracy theorist from the "vast right-wing conspiracy" that has been Hillary's favorite defense for 30 years.

    If this tried-and-true attack fails, then the questioners are accused of being sexist, partisan, etc.

    If the first trial balloon narrative doesn't gain public perception traction, it's quickly dropped and another explanation is unleashed on a willing-to-accept-anything-as-"fact"-from-Hillary mainstream media.

    So when the "overheated" explanation in 79-degree weather doesn't get traction, then it is dropped in favor of pneumonia, which mysteriously puts most sufferers in bed but Hillary declares that she feels great.

    This process of replacing explanations and narratives, interspersed with attacks on anyone who questioned the previous narrative, is repeated until the perception management result is satisfactory. Hillary is clearly incapable of honesty–the word has no meaning, because all communication is aimed at concealing or obscuring the facts of the matter and defending what is visibly indefensible as if perception management is the same as the truth. It is not the same, but Hillary is incapable of discerning the difference.

    This reliance on attacking the questioner to delegitimatize what is a legitmate inquiry also disqualifies Hillary. The American public has a legitimate interest in how Hillary Clinton benefited from the Clinton Foundation's hundreds of millions of dollars in contributions from overseas donors during her stint as secretary of state.

    The American public also has a legitimate interest in the health of presidential candidates. John F. Kennedy's poor health was masked by a compliant media in the early 1960s, but that sort of duplicity is no longer condoned. The American public wants an accurate accounting of the candidate's health.

    As you view the clip of Hillary collapsing, study the body language of her multiple handlers. I'm not referring to the Secret Sevice agents; I'm referring to her private handlers and aides. Note their extreme defensiveness about anyone seeing what was happening to Hillary. Their way of propping her up doesn't look like it was the first time they had to prop her up; their actions were practiced, automatic.

    They are accustomed to propping her up and masking her true condition from the public. Study the clip; it's all there, in plain view.

    Their hyper-wary posture was not just an attempt to shield the candidate from anyone seeing a moment of weakness; their over-protective watchfulness for "eyes on the candidate" is 24/7. Their only job is to mask the truth of Hillary's condition, whatever it may be.

    This tells you everything you need to know about how Hillary will operate as President: there will be no honesty, transparency or truth, ever. Life for Hillary boils down to managing perceptions and hiding facts–inconvenient or otherwise. This is not a campaign strategy–it is her default mode of existence, the only way she knows how to operate.

    Hillary's health may or may not be decisive, but what is decisive is how she has banished honesty, truthfulness, candor and transparency. The issue for Hillary and her handlers is not the facts of her health; it's how to manage public perceptions of her health in a satisfactory manner.

    We don't just need to know whether Hillary suffers from conditions beyond allergies and pneumonia. What counts most is whether she is capable of being honest, forthright and truthful about legitimate, important issues. She has clearly proven that she is incapable of being honest and truthful about anything, very likely because she cannot distinguish between plain, simple truth and perception management.

    Let's be honest for a moment, and confess that this is a character flaw that disqualifies the candidate from holding office. The last two presidents who saw their job as hiding the truth and managing perceptions were Richard Nixon during the Watergate era, and Lyndon Johnson during the War on Vietnam.

    Attacking every legitimate inquiry as a "vast right-wing conspiracy" is not governance; it's a paranoia and distrust of the American public that leads inexorably to catastrophes like Watergate and wars of choice that drag on as the bodies and lies pile up.

    It's time to bring back Bernie Sanders, a candidate who can tell the difference between the truth and perception management, someone who isn't an embarrassment to the nation. I understand that Hillary's coronation as Head of the Deep State has already been scheduled by the Powers That Be, but that doesn't mean we too must lose the ability to differentiate between the truth and perception management.

    *  *  *

    My new book is #7 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the book's website.

  • Track All Of Bankrupt Hanjin's "Ghost Ships" In Real Time

    After two weeks of impenetrable legal limbo, there was some good news for owners of cargo stuck in the bowels of container ships belonging to the recently bankrupt South Korean shipping giant, Hanjin Shipping. As Bloomberg reported according to the insolvent shipper, at least some vessels are in line to unload cargo at Long Beach port in California after a U.S. court Friday granted bankruptcy protection, easing a gridlock that disrupted delivery of goods.

    Three more Hanjin ships are waiting at the port to clear their freight once Hanjin Greece, which is currently offloading, clears early Sept. 12 local time, Hanjin said in response to a query. Truck drivers probably will begin moving containers from the Greece on Monday while the vessel prepares to leave late in the day for the Port of Oakland, said Teamsters spokeswoman Barbara Maynard and shipping traffic controllers, cited by Reuters. Port workers began taking Hanjin Greece’s cargo ashore at 8 a.m. local time Sunday, and the Hanjin Gdynia will follow, Noel Hacegaba, chief commercial officer of the Port of Long Beach, said in a telephone interview Sunday.

    However, the Greece, and its two peer ships, carry only a fraction of the $14 billion in goods on dozens of ships owned or leased by the world’s seventh-largest container carrier. Worse, while some of Hanjin’s ships would be free to offload their cargo once they obtain the needed funding, the fate of many other ships is unknown.  Charter owner Seaspan has three ships under charter with Hanjin – the Hanjin Buddha, Hanjin Namu and Hanjin Tabul – which are all due to hit the U.S. West Coast within the next few days. Chief executive Gerry Wang said he was confident the South Korean government would provide sufficient funds to pay port operators and Seaspan by the time those ships arrived to ensure they were unloaded.

    “We’re keeping our fingers crossed, but South Korea is an export economy and the government needs to ensure the flow of goods to consumers,” Wang said. “I don’t think they want that supply chain to be interrupted on a permanent basis.”

    Alas, it may be, if only for the time being: as Reuters notes, creditors have sought an arrest warrant against the Seaspan Efficiency, a ship hauling cargo for Hanjin that was due to arrive in Savannah.

    In the meantime, two weeks after the bankruptcy was filed, most of the company’s “ghost ships” remain in limbo: it is not clear when port operators will bring others to berths in Southern California and elsewhere.  One Hanjin ship off Long Beach, the Hanjin Montevideo, is under the supervision of a court-ordered custodian after two fuel companies obtained an arrest warrant for it over unpaid bills. Hanjin and the fuel providers are trying to work out an arrangement to release the vessel.

    It’s no less chaotic around the globe: in Hong Kong, the Hanjin Belawan arrived from Shanghai on Monday loaded with containers and was anchored a short distance from the city’s Kwai Chung Container Terminal. Terminal operator Hongkong International Terminals, a unit of Hutchison Port Holdings Trust controlled by tycoon Li Ka-shing, has outraged local cargo owners by charging fees of between HK$10,000–HK$15,000 per Hanjin container to release them at the port.

    The delays have concerned importers like Alex Rasheed, president of Pacific Textile and Sourcing Inc in Los Angeles, which has a shipment of clothing in 16 containers on Hanjin ships off Long Beach. “We’re already starting to run out of some colors and some sizes,” Rasheed said, noting Hanjin’s collapse comes as U.S. retailers prepare for the all-important holiday shopping season.

    In Singapore, cargo owner AP Oil International said it had been sending replacement cargos on urgent orders. 

    “On the procurement side, we do also face some issues to receiving raw materials shipped on Hanjin vessels, which of course we are adjusting our supply chain and production to meet and replace the cargo due to the uncertainty of the situation now” Group Chief Executive Ho Chee Hon said.

    * * *

    In total, Hanjin said that as of this morning, it had 93 vessels, including 79 container ships, stranded at 51 ports in 26 countries. Readers who wish to track the fate of Hanjin’s “ghost ships” in real time – as it looks likely that many of them will remain stuck in legal and financial limbo for a long time – can do so courtesy of the following Platt’s interactive map.

  • A Homerun For The Donald – Attack The Fed's War On Savers, Workers And The Unborn (Taxpayers)

    Submitted by David Stockman via Contra Corner blog,

    The central banks have gone so far off the deep-end with financial price manipulation that it is only a matter of time before some astute politician comes after them with all barrels blasting. As a matter of fact, that appears to be exactly what Donald Trump unloaded on bubble vision this morning:

    By keeping interest rates low, the Fed has created a “false stock market,” Donald Trump argued in a wide-ranging CNBC interview, exclaiming that Fed Chair Janet Yellen and central bank policymakers are very political, and should be “ashamed” of what they’re doing to the country…

    He’s completely correct. After all, they are crushing real wages with their 2% inflation targeting; destroying savers with NIRP and sub-zero rates; and burying unborn taxpayers in monumental debts that today’s politicians are pleased to issue with reckless abandon because the short-run carry cost is nil.

    Interest on the Uncle Sam’s $19.4 trillion of debt, for example, is easily $500 billion lower than its true economic cost based on a normal yield after inflation and taxes and elimination of the phony $100 billion per year in so-called Fed “profits” that are booked by the treasury as negative interest expense.

    Alas, when interest rates eventually normalize, the Treasury’s debt service costs will soar by hundreds of billions. At the same time, the entirety of the Fed’s “profits”, which are conjured from thin air because it buys interest-yielding government and GSE debt with printing press liabilities which cost virtually nothing, will disappear. That’s because it will be forced to take reserve charges for giant principal losses on the falling prices of its $4.5 billion portfolio of government and GSE bonds.

    At that moment, the long-abused citizens of Flyover America, who have already been clobbered as savers and wage earners, will get hit with the triple whammy of soaring Federal tax bills. And this is not a matter of if or even when; it’s really just a question of how soon.

    When it comes to the establishment’s monetary lunacy, of course, Mario Draghi’s is always leading the charge. So just consider what has been happening after his inartful punt during last week’s ECB meeting.

    First, the casino cheerleaders have insisted that there is nothing to sweat about with respect to the incredible anomaly that now plagues the euro-bond markets. To wit, socialist Europe has apparently not issued enough qualifying debt (with a yield not below the negative 0.4% threshold) to fill the ECB’s $90 billion per month purchase target.

    The solution is real simple according to Draghi’s acolytes in the casino. In addition to lowering the bond yield threshold as deep into the subzero freezer as necessary, they have proffered an even better solution. Just buy up the stock market, too!

    “The obvious reason for the ECB to buy equities is they have almost run out of German bonds to buy,” said Stefan Gerlach, chief economist at BSI Bank and a former deputy governor of Ireland’s central bank. “The basic idea is that the central bank can put essentially anything on its balance sheet and there is no reason to be straight-laced about this.”

     

    Equities offer a deep pool of assets. The market capitalization of listed eurozone companies was $6.1 trillion at the end of 2015, according to World Bank data.

    And this isn’t just some whacko sell side analyst talking his book. Here’s what one of the world’s alleged leading monetary policy exports added to the mix:

    When policy rates approached zero, central banks in the U.S., the U.K., Japan and the eurozone turned to bond purchases to reduce long-term interest rates. Buying equities would likely yield some of the same effects in terms of encouraging consumption and investment through higher household wealth and lower cost of capital.

     

    “I don’t see a reason not to do this,” said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics. “It isn’t obvious to me why a central bank wouldn’t always want a diversified portfolio, including equities.”

    Actually, it gets even better. According to another casino player, bonds have now gotten so over-valued—-from massive central banking QE purchases, of course—-that European equities are now “under-valued” in relative terms!

    Therefore, the ECB can do no less than plunge into a stock buying bacchanalia in order to set things right.

    ECB stock purchases “would be justified: European equities are undervalued, while there is a bubble—that the ECB continues to inflate—in bonds,” said Patrick Artus, chief economist at French investment bank Nataxis in a research note.

    Besides that, the Swiss National Bank (SNB) and the BOJ have already pioneered the way. Fully 20% of the former’s bulging portfolio consists of equities, including massive holdings of US stocks. And when we say “massive” that’s exactly what we mean.

    The balance sheet of the SNB is up by nearly 7X since the eve of the financial crisis, and now totals $715 billion. That happens to be 108% of Switzerland’s GDP.

    It also happens to mean that in order to fight off the exchange rate impact of Mario’s relentless campaign to trash the Euro, the Swiss monetary central planners have purchased upwards of $150 billion of global equities, making them one of the largest hedge funds in the world.

    Now that the Donald has extended his talk about the “rigged” system run by our unelected financial elites to include the stock market, he surely has a point.

    Switzerland Central Bank Balance Sheet

    Nor is the SNB an outlier. The BOJ also has roughly $150 billion of equities on its balance sheet. Indeed, it already owns 55% of all Japanese ETFs; is now among the top 10 shareholders in 90% of Japan’s 225 largest companies; and is slated to become the top holder in 40 of the Nikkei 225 companies by year-end 2017 at its planned stepped-up ETF purchase rate.

    But the insanity of buying up and thereby falsifying large sections of the stock and bond markets in order to pursue the will-o-wisp of 2% inflation isn’t the half of it. Having done this, the central banks have made themselves hostage to the most reckless fast money speculators in the entire casino.

    That’s because the latter will sell at a moments notice anything they have been front-running via leveraged carry trades if they think the central banks’ buying binge will stop.

    In the case of Japan’s 30-year bond, for example, the yield in the last few weeks has soared from 6 bps to 61 bps on fears that the BOJ may “pause” its madcap bond buying program. Since it has already purchased more than 40% of Japan’s monumental public debt, the mere hint that it might stop caused the price of the 30-year bond to plunge by upwards of 20%.

    But the recent dislocations in the euro-bond market leave nothing to the imagination. Draghi’s failure last Thursday to unequivocally state that the ECB’s $90 billion per month QE program would be extended after its scheduled expirtation next March shows exactly why the central banks have turned themselves into monetary doomsday machines:

    Meanwhile, yields on 10-year German Bunds turned positive for the first time since June 22. Yields were around 0.013 percent at the time of the market close, up from -0.06 percent on Thursday.

     

    “The jolt across bond markets began when ECB president Mario Draghi said the governing council did not discuss extending its asset purchase program. Understandably, bondholders got a little nervous about holding onto a negative-yielding asset which could fall in price if there’s no central banking buying alongside them,” Jasper Lawler, market analyst at CMC Markets, said in a note on Friday.

    There is all the evidence you need that the world’s financial markets are totally and completely rigged. And that’s why Donald Trump was exactly on target this morning when he uncorked another politically incorrect observation about the rigged nature of the Wall Street casino.

    To wit, Yellen is still sitting on interest rates at the zero bound after 93 months for one simple reason. Even in the context of an economic recovery that is now allegedly so complete that we are actually on the cusp of full employment, according to Vice-Chairman Stanley Fischer, she is deathly fearful of a hissy fit on Wall Street, as was foreshadowed by last Friday’s sharp sell off.

    Opined the Donald:

    “She’s obviously political and she is doing what [President Barack] Obama wants her to do,” Trump said in an interview on CNBC. Trump predicted that the market is going to “go way down” as soon as interest rates go up.

     

    “I believe it is a false market because money is essentially free,” Trump said.

    He got that right, but needs to take it a step further. At the same time that the Fed continues placating Wall Street gamblers with an unending stint of free carry trade funding that has self-evidently not generated real breadwinners jobs or higher real incomes in Flyover America, savers and retires continue to be pounded.

    In fact, our unelected monetary politburo is causing upwards of $300 billion per year to be transferred from savers to the banks and the financial system owing to its senseless pursuit of 2.00% inflation via pegging the money market interest rate on the zero-bound.

    Even then, however, the true impact goes far beyond retirees and the modest share of the population that actually attempts to save. To wit, 2% inflation targeting is absolutely the stupidest thing any central bank could pursue in the context of a global economy is which goods and services are freely traded, and in which the US, Europe and Japan have the highest nominal wage rates on the planet.

    What inflation targeting does is cause the domestic price level to rise, rather than fall, in DM economies. It thereby also causes the nominal wage gap with China and its EM supply chain to widen. So the Donald is right on that one, too.

    Indeed, the most potent agency of off-shoring American jobs is not the USTR or bad trade deals, but the central banks. And in the middle and lower ranks of the wage market—-where the China price on goods and the India price on services bears down most heavily—-the Fed’s inflation folly is especially perverse.

    As we have demonstrated with our more accurate “Flyover CPI”, the cost of living faced by main street America—especially for the four horseman of food, energy, medical and housing prices—has risen by 3.1% annually since the late 1980s.  And that is well more than hourly wage gains for production workers.

    So the Fed has delivered to working class Americans the worst of both worlds. Namely, rising nominal wages which have priced them out of the world market, but even higher domestic inflation that has caused their real wages and living standards to shrink.

    Here is the smoking gun. Notwithstanding a near tripling of the nominal wage rate from $9 per hour in 1987 to about $22 per hour today, real wages are lower than they were three decades ago.

    Average Hourly Earnings - Nominal and Real - Click to enlarge

    At the same time, the tripling of nominal wages has caused a relentless export of breadwinner jobs in goods and services to the China price and India price regions of the world. That’s why, in fact, there were still 1.4 million fewer full-time, full-pay breadwinner jobs at $50k per year in August than there were way back when Bill Clinton was packing his bags to shuffle out of the White House in January 2001.

    NonFarm Payrolls Less HES Complex Jobs - Click to enlarge

    In short, the “something for nothing” money printing policies inflicted on Flyover America by our unelected rulers at the central banks, and with the full support of their facilitators and supporters among the Wall Street/ Washington ruling elites, are not only bad economics; they are perverse and unjust beyond measure.

    Indeed, the Fed is waging an insensible and outrageous war on savers, workers and future taxpayers – even as it pleasures the 1% with fantastic financial windfalls from the Wall Street casino.

    Now that is a rigged system. And that is a beltway evil that merits the Donald’s unrelenting attack on behalf of the citizens of Flyover America who have been left behind in their tens of millions.

  • What Happens If Hillary Clinton Has To Drop Out?

    Submitted by Emily Zanotti via HeatSt.com,

    Hillary Clinton’s doctor now says the Democratic presidential candidate, 68, was officially diagnosed with pneumonia sometime on Friday, and has been campaigning with the serious respiratory illness for a week, leading to her “medical episode” at Sunday morning’s September 11th memorial event.

    But what happens if the candidate’s health issues get more serious? Certainly, the Democrats always have the option of propping her up, Weekend at Bernie’s style, until after November 8th, but what if matters get progressively worse? Here’s a quick primer on where the Dems could end up:

    week-end-bernie

    When it comes to candidates (rather than office holders) the rules actually come from the political parties, not the Constitution. For Republicans, if a Presidential candidate dies or drops out, the RNC has to either convene a new convention or take an official poll of the RNC’s state representatives to select a replacement candidate. Most likely, the RNC would move the running mate up to the top of the bill, in order to preserve what fundraising has already been done for the ticket.

    But for the Democrats, it’s not so clear. The Democratic National Committee reserves the right to replace a candidate who dies or drops out, and it doesn’t provide additional details in its by-laws. So presumably the Democrats would have to make up the process up as they go along. The DNC could entrust replacing Clinton to a central DNC brain trust or, more likely, replicate the RNC’s system, handing the vote over to the committee’s state delegates.

    Tim Kaine

    The DNC would likely want to retain the support of major donors who’ve already given to the Clinton-Kaine ticket, and would probably just bump Tim Kaine up from the Veep slot. Kaine would simply slide up the ticket, choose a new running mate, hope the ballots could be reprinted in time, and carry on just as Clinton had.

    But, of course, this is 2016 and anything can happen.

    The Open Slot

    Donald Trump has proven to be a wild card candidate: he’s spent no money, compared to Clinton’s million-dollar ad buys, and raised virtually nothing compared to his Democratic opponents, and he’s still running neck and neck with Clinton nationwide. So the DNC would likely have to consider whether Kaine could retain Clinton’s razor-thin lead, or whether they’d need a more capable candidate.

    The DNC might naturally lean towards Joe Biden who said he didn’t want to campaign, but has never said, openly, that he’d prefer not to be President. Biden is neither Clinton nor Trump, making him an easy favorite in the Presidential contest (though, it’s likely any number of cartoon characters, inanimate objects and D-list celebrities would also easily pull into the lead), and he’d have the backing of President Obama, who could unite the party with a call to action to unite behind his Vice President.

    Also likely contenders: Bernie Sanders and Elizabeth Warren (both progressive candidates with a large swath of support within the Democratic party), New York governor Andrew Cuomo, Virginia’s Jim Webb, even second runner up Martin O’Malley.

    Chelsea Clinton

    There’s a longtstanding tradition in American politics of spouses stepping in after an unexpected death. Take Missouri’s Jean Carnahan, for instance, who stood in for her husband Mel after he died in a plane crash three weeks before the Missouri Senate election. After Mel won posthumously, she served in the Senate for two years. Future Senator Olympia Snowe first entered politics after the death of her husband, a Maine state representative, in a car wreck. Likewise, Mary Bono’s long political career began when her husband Sonny died in a skiing incident.

    Bill Clinton is prohibited by the 22nd Amendment of the Constitution from running. If a Clinton were to step in for Hillary, it would likely be Chelsea, who at 36 is just old enough, in terms of the Constitution, to be president.

    The Filing Deadlines

    Most states’ campaign filing deadlines have already passed – and as some independent candidates, including conservative Evan McMullin are finding, states aren’t normally open to extending the period of time candidates have to file the paperwork necessary to put their names on the Presidential ballot.

    For the Democratic replacement, though, as long as they have the party’s blessing, it’s likely officials could simply replace Clinton name any time up to a month before election day (ballots are usually printed and mailed about three weeks before). It’s also possible that Congress could postpone or move election day, but that would be an extreme step.

Digest powered by RSS Digest

Sep 12

Today’s News 12th September 2016

  • Germany: Beginning Of The End Of The Merkel Era?

    Submitted by Soeren Kern via The Gatestone Institute,

    • The anti-immigration party Alternative for Germany (AfD) surged ahead of Angela Merkel's Christian Democratic Union (CDU) in elections in her home state of Mecklenburg-West Pomerania.

    • The election was widely seen as a referendum on Merkel's open-door migration policy and her decision to allow more than one million migrants from Africa, Asia and the Middle East to enter Germany in 2015.

    • Merkel rejected any course correction on migration policy: "I am very unsatisfied with the outcome of the election. Obviously it has something to do with the refugee question. I think the decisions that were made were correct." She went on to blame German voters for failing to appreciate her government's "problem-solving abilities".

    • Many of the AfD's positions were once held, but later abandoned, by the Merkel's CDU.

    • A September 1 poll showed Merkel's popularity rating has plunged to 45%, a five-year low. More than half (51%) of those surveyed said it would "not be good" if Merkel ran for another term in 2017.

    German Chancellor Angela Merkel suffered a major blow on September 4 when the anti-immigration party Alternative for Germany (AfD) surged ahead of her Christian Democratic Union (CDU) in elections in her home state of Mecklenburg-West Pomerania.

    With 20.8% of the vote, the AfD came in second place behind the center-left Social Democrats (SPD) (30.6%). Merkel's CDU came in third place, with 19% of the vote, the worst result it has ever had in Meck-Pomm, as the state is called for short.

    The election in Meck-Pomm was widely seen as a referendum on Merkel's open-door migration policy and her decision to allow more than one million migrants from Africa, Asia and the Middle East to enter Germany in 2015. The migrant influx has resulted in a notable increase in crime in the country. The growing sense of insecurity has been exacerbated by a series of attacks this summer by Muslim migrants in which ten people were killed and dozens more were injured.

    The CDU debacle in Meck-Pomm yields two main conclusions: 1) Merkel's hopes of winning — or even running — for a fourth term in general elections in 2017 are now in doubt; and 2) the AfD is a force to be reckoned with in German politics. It can longer be simply dismissed as a "fringe party."

    Observers from across the political spectrum seem to agree that the election in Meck-Pomm marks a turning point for Merkel, who has been head of the CDU since 2000 and chancellor since November 2005. Some say her political career may effectively be over if the CDU suffers heavy losses to the AfD in state elections in Berlin on September 18.

    "This was a dark day for Merkel," said Thomas Jaeger, a political scientist at the University of Cologne. "Everyone knows she lost this election. Her district in parliament is there, she campaigned there, and refugees are her issue."

    The CDU's secretary general, Peter Tauber, agreed: "The strong performance of AfD is bitter for many, for everyone in our party. A sizeable number of people wanted to voice their displeasure and to protest. And we saw that particularly in discussions about refugees."

    The leader of the AfD, Frauke Petry, said: "This is a blow for Merkel, not only in Berlin but also in her home state. The voters made a clear statement against Merkel's disastrous immigration policies. This put her in her place."

    German Chancellor Angela Merkel (left) suffered a major blow on September 4 when the anti-immigration party Alternative for Germany, led by Frauke Petry (right), surged ahead of her Christian Democratic Union in elections in her home state of Mecklenburg-West Pomerania.

    Local AfD leader Leif-Erik Holm told supporters: "We are writing history. Perhaps this is the beginning of the end of Angela Merkel's chancellorship. This must be our goal."

    Gero Neugebauer, a professor of political scientist at Berlin's Free University, said:

    "People will see this defeat as the start of the 'Kanzlerdämmerung' (twilight of the chancellor). If a lot of CDU members start seeing this defeat as Merkel's fault, and members of parliament start seeing her as a danger for the party and their own jobs next year, the whole situation could escalate out of control. If the AfD defeats the CDU again in Berlin in two weeks, things could get ugly fast."

    In an interview with Der Spiegel, Ralf Stegner, the vice president of the SPD, said the CDU was in a "state of panic" over the rise of the AfD and that Merkel has become a liability to her party:

    "Merkel has clearly passed her zenith. It is a disaster for her that the CDU has fallen to third place with under 20% in her own state. This is a serious crisis for the CDU and it bears the names of Merkel and Seehofer. Some people now believe that Merkel no longer leads the debate with Seehofer about her 2017 candidacy. Throughout its history, the CDU has been merciless to its chancellors if there was the impression that the party was facing a massive loss of votes."

    Stegner was referring to an August 27 report by Der Spiegel which said that Merkel has postponed an announcement about her candidacy due to opposition from the CDU's Bavarian sister party, the Christian Social Union (CSU), which has been increasingly vocal in its criticism of her migration policy:

    "Angela Merkel will delay until the spring of 2017 her decision whether to run for another term as chancellor of the CDU in the general election next year. The delay was necessary because only then will CSU chief Horst Seehofer decide whether his party will support Merkel again, according to CDU insiders. This is the second time that Merkel has had to postpone the announcement of her plans.

     

    "Actually, her decision should have been announced a long time ago. The original plan was that Merkel would declare her intentions as early as last spring. But then the refugee crisis and the fierce dispute with the CSU got in the way. The Chancellor decided to wait until this fall.

     

    "This time the delay is more problematic for Merkel. In December, the CDU party congress takes place in Essen, where Merkel wants to be elected as party chairman for another two years.

     

    "But she can only be party chairman if she is a candidate in the general election. The party congress should send a signal that the CDU fully supports the Chancellor. This will not work if the party does not know if Merkel wants to continue.

     

    "From Merkel's perspective, the alternative would be more risky: If she announces her candidacy for chancellor without Seehofer's support, it could hurt her politically."

    In a September 6 interview with Süddeutsche Zeitung, CSU leader Horst Seehofer, said the "disastrous" election outcome in Meck-Pomm was a direct consequence Merkel's migration policy. He added that Merkel had ignored "multiple prompts for a course correction" and that her refusal to budge threatens the future of the CDU. "Confidence in the government is dwindling rapidly," he warned. "People do not understand how policy is made in Germany."

    CSU Secretary General Andreas Scheuer reiterated the call for Merkel to change course: "We need a cap on refugees, faster deportations and better integration."

    Bavarian Finance Minister Markus Söder agreed: "The result must be a wake-up call for the CDU. The mood of the people can no longer be ignored. A change of course is needed in Berlin."

    Merkel remains defiant. A day after the debacle in Meck-Pomm, Merkel rejected any course correction on migration policy:

    "I am very unsatisfied with the outcome of the election. Obviously it has something to do with the refugee question. I think the decisions that were made were correct."

    She went on to blame German voters for failing to appreciate her government's "problem-solving abilities" (Lösungskompetenz).

    On September 7, in a fiery address to the German parliament, Merkel said the AfD's anti-immigration stance posed a threat to Germany. "All of us should realize the AfD is a challenge not only for the Christian Democrats… they are a challenge for everyone in this house." She may also have indicated that she intends to seek another term as chancellor when she said: "There is still a lot of work to be done."

    Alternative for Germany (AfD)

    In more ways than one, Angela Merkel is directly responsible for the rise of the AfD. In her more than ten years as chancellor, she has moved the CDU to the left on so many key issues that the party is no longer conservative in any meaningful sense of the word.

    Under Merkel, the CDU's policies on nuclear energy have become essentially identical to those of the Green Party. Merkel has also adopted many of the social policies of the SPD. In terms the open-door migration policy, the CDU's position is virtually indistinguishable from both the SPD and the Greens. This has created an opening for the AfD.

    Launched in 2013, the AfD is now present in nine of Germany's 16 state parliaments. It is poised to enter the federal parliament for the first time in 2017. According to an Insa poll cited by Bild on September 5, if the national election were held today, the AfD would win 15% of the vote, making it the third-largest party in Germany.

    The Insa poll also found that in the Meck-Pomm election, the AfD siphoned off more than 55,000 votes from other parties. More than 22,000 CDU voters cast their ballots for the AfD; 15,000 SPD voters voted for the AfD; and more than 22,000 voters affiliated with other parties gave their votes to the AfD.

    The party was originally founded to protest the German government's handling of the eurozone crisis. Its founding manifesto stated:

    "The Federal Republic of Germany is facing the most serious crisis in its history. The euro currency area has proved to be unworkable. Southern European countries are sliding into poverty under the competitive pressure of the euro. Entire states are on the verge of default.

     

    "Hundreds of billions of euros have already been pledged by the federal government. An end to this policy is not in sight. This is excessive and irresponsible. We, our children and our grandchildren will have to pay for this with taxes, stagnation and inflation. At the same time, this is eroding our democracy. In this situation, the CDU, CSU, SPD, FDP and the Greens know only one answer: Keep it up!"

    In April 2013, the Frankfurter Allgemeine Zeitung revealed that CDU insiders viewed the rise of the AfD as "the end of Merkel's chancellorship." A strategy was set in place to conduct opposition research and paint the AfD as a "national conservative" party driven by proponents of "market radicalism."

    The AfD — similar in many ways to the upstart Tea Party movement in the United States — has suffered self-inflicted wounds as a result of political infighting and internal power struggles. Establishment politicians and the mainstream media have repeatedly seized on outrageous comments made by some within the party to portray it as a "far right" party that poses a threat to German values.

    In an interview with the Guardian, Frauke Petry, the AfD leader, said the party has sometimes felt forced to use outspoken language to get its message across. She said:

    "Well, sometimes, I don't deny, we think we have to use provocative arguments in order to be heard. Because we tried very hard at the beginning of 2013 to be heard with lots of very sensible thinking and arguments, and we simply couldn't get through to anyone. So what do you do? You put forward a provocative argument, and sometimes you are given the chance to explain what you meant. I know it's a difficult choice to make but sometimes, for us, it feels like the only way."

    Petry also said the AfD is not opposed to "real refugees," but it is against the hundreds of thousands of economic migrants who are posing as refugees. "There is enough space for refugees in Germany, but the problem is that we don't distinguish anymore between migrants and asylum seekers," she said.

    A comprehensive party manifesto published in May 2016 called for: limited government; term limits; campaign finance reform; reducing the power of political parties; direct elections for chancellor; devolving power to federal states; a referendum on the euro; reforming the United Nations; a strong military based on the NATO alliance; reintroducing conscription; stronger police enforcement; justice reform; gun rights; protecting German borders; labor market reform; eliminating burdensome bureaucracy; promoting the traditional family; encouraging Germans to have more children rather than resorting to mass migration to fix its demographic problems; protecting the rights of the unborn; promoting German culture rather than multiculturalism; promoting the German language as the basis for German identity and for integration; banning the foreign financing of mosques; eliminating government subsidies for radio and television; and so on. Many of the AfD's positions were once held, but later abandoned, by the CDU.

    Meanwhile, a September 1 poll for ARD television showed Merkel's popularity rating has plunged to 45%, a five-year low, and down from a high of 67% one year ago. More than half (51%) of those surveyed said it would "not be good" if Merkel ran for another term in 2017. If national elections were held today, the CDU would win just 33%, down from 42% one year ago.

    The poll showed one factor in Merkel's favor: the lack of a political rival strong enough to challenge her.

  • AsiaPac Stocks Plunge Most In 8 Months As China Money Market Turmoil Accelerates

    Hong Kong Interbank borrowing rates spiked to 6-month highs as a combination of central-planning-inspired liquidity restriction and global 'risk-off' strikes. 3M HIBOR spiked 95bps to 4.21% – its highest in 6 months; and Chinese stocks are feeling the pain, tumbling most in 3 months. Having reached historical lows in volatility, it appears 'pent-up' anxiety is coming back with fury. The broad-based MSCI Asia APEX 50 index is down 3.5% – the most in 8 months…

    This could be a problem…

     

    And Chinese stocks are displeased…

     

    India is down most in a month…

     

    And Indonesia is down most in 7 months…

     

    "It's probably nothing"

     

    Charts: Bloomberg

  • Samsung Sheds $20BN Of Market Cap In 2 Days After Recalling Exploding Phones

    Turns out spontaneous pocket explosions are not a desirable feature for smartphone consumers…just ask Samsung.  The company was forced to recall 2.5mm phones last week after reports surfaced of the device exploding during or after charging.  That doesn’t look healthy.

     

    Meanwhile Samsung shareholders have suffered the biggest 2-day price drop since Lehman, with the stock shedding nearly $20 billion in market cap.  The recall is expected to cost $1BN but the brand value destruction is obviously much higher with Apple simply having to make phones that don’t spontaneously combust to win over consumers.

    Samsung 2

     

    Samsung 1

     

    Meanwhile the FAA has warned airline passengers not to turn on or charge Galaxy Note 7 devices on board aircraft and not to stow them in any checked baggage.

     

    But the video made it look really cool…

  • 911 and the Lost American Culture

    911 is an event that changed America forever.  Probably that can be said for many such events like Pearl Harbor, the sinking of the Lusitania, or the day the Allies ‘won’ World War 2.  But 911 is a lot more complicated, probably just because it’s an event that was in line with the times, culture, and changing world.  And as we explain in Splitting Pennies – a lot of money was made on Forex trades.  

    Everything that was before 911 was no more.  From the date of 911 until now, America has been preoccupied with war, security, and various emergencies.  It’s no coincidence that this event is known as ‘911’ which is the emergency code Americans dial.  America is in a state of emergency.

    911 was the paradigm game changer of our century.  As we understand this event better, we can better understand markets and the world as it really is, and better ourselves for a brighter more prosperous future.

    Some personal experiences not found in the ether

    911 has been so well analyzed and documented by so many researchers.  Thanks to all of them.  Here’s some subjective experiences no one ever knew.

    In the year 2000 a group of investors had been assembled via Private Placement Memorandum in Palm Beach County to invest 20 Million USD in the development of an intelligent stock trading algorithm, we code named the project ADTS “Automatic Day Trading System” (which was heresy in that time “Program Trading”).  The investors were all committed based on the involvement of an Italian Illuminati Investment Banker with the initials BT (now deceased).  We were fully subscribed in July of 2001 and in August I was personally looking for office space for our startup.  Among the locations I was investigating were the twin towers (one of our backers was an NYSE insider, Wall St. seemed an appropriate place to operate) although practically, we probably would have chosen south Florida, as the majority of the founders were based in Palm Beach County at that time, as well as BT.  

    The morning of 911 I remember waking up with the sun, unusual for me (i’m an alarm clock guy, i can’t wake up with the roosters).  It was a beautiful sunny day in Palm Beach I remember opening all doors on my house and enjoying the nice morning with no clouds.  Later I would learn how all the clouds were sucked out to sea by a hurricane Erin that reversed course strangely, exactly on the morning of 911.  It was headed for NYC almost exactly to where the twin towers were, ironically, before it changed course.  But, it sucked all the bad clouds, gasses, and other atmospheric elements (pressure) into it ensuring a clear game day for a historic, epic black op.

    Those who can remember this day, remember the fear, shock, confusion, anger, and overwhelming emotions even for the most fervent anti-government rebel.  We felt as America was under attack – but from whom?  From what?  How?  We watched TV.  We watched mutliple TVs.  There wasn’t any Zero Hedge in that time, most news websites were copies of their TV programs, and what alternative news there was, lacked the depth of information that they have today.  Today, everyone has an HD camera in their pocket, back then, smartphones hadn’t been popularized yet.  

    So later in the day, I got a call from BT “It was Bin Laden” .. silence.  I thought, what a strange comment.  I didn’t even know who this character was.  After receiving a small lesson about the Mujahadeen, later I was explained that we’ll be soon going to war in Afghanistan, and that we should consider moving our operations for our business to another country  (for a number of reasons but mostly, the non-US investors were afraid of Americas’ stability, and also that the climate of war is not productive for developing intelligent trading systems).  All this info was told to me the same day of the attack.  Now I was by no means an insider, I have no knowledge of who provided this information to BT, but at the time it wasn’t really of any interest to me to ask.  

    The strange email chain

    I’m not sure how I got on this email chain, but it was 2001, a time of chain letters, there was no social media.  I was emailed to a group, all the group was CC not BCC, with video attachments – my limited DSL was slow to download them, don’t remember many details about the videos, but the text of the email I remember clearly.  In all caps, the emailer explained that they have RECORDED SHOOTING DOWN OF AN AIRPLANE WITH HOME VIDEO, MANY MILITARY VEHICLES AND CRAFT.  PLANE POSSIBLY SHOT DOWN BY ANOTHER PLANE, OR IN COMBINATION WITH SURFACE TO AIR MISSILES.  MILITARY BANGING ON DOOR – PLEASE FORWARD THESE VIDEOS TO EVERYONE YOU KNOW.  OUR ADDRESS IS ….. PA OUR EMAIL IS… OUR NAME IS.. OUR PHONE IS.. OUR CHILDREN ARE LOCATED AT…   silence.

    I never saw this email chain or this home video surface years later.  At the time, I had been preoccupied with my own moving to New Zealand and unfortunately don’t have the records of this, it was in hindsight a huge mistake not keeping better records of such things.  But with all the strange mistakes made by the MSM at the time, this seemed like just one of a hundred little ‘quirks.’ 

    But there were a lot of strange things about Flight 93, such as the FBI reports of White Angels, claims that it was shot down (much like the email said), and no physical crash evidence:

    WHERE’S THE PLANE?  LET’S CREATE A MAN-HUNT!

    Pratically speaking, we’ll never know 100% of what happened, because whoever executed this black op destroyed all the evidence, and key people died of mysterious causes.  But due to the honorable and diligent research by millions- there certainly is a MASSIVE GIANT POINTING FINGER

    Open your mind, change your life – with splitting pennies.  Change you reality – buy the book.  Splitting Pennies can do it.  Just read it.

  • Elon Musk: "We Have Not Ruled Out" That UFO Caused Space X Explosion

    Via SputnikNews.com,

    The statement by the vaunted entrepreneur that he couldn’t rule out that UFO hunters were correct that an unidentified object or weapon initiated the explosion has alien enthusiasts out in full force.

    The frenzied excitement for alien hunters hit new heights on Friday when the innovative wunderkind Elon Musk wrote to a commenter on Twitter that "We have not ruled that [a UFO hitting the Space X Falcon 9 rocket] out" with theories ranging from an attack by foreign defense forces to a laser attack by an alien ship quickly cascading through social media.

    The statement comes one week after self-proclaimed UFO hunters pointed to video footage from the SpaceX explosion noting that there was a black object barreling near the rocket only seconds before explosion with YouTube viewers quickly dispatching theories that the flying object was a bird or a bug based on the relative speed of the object – over 1,000 MPH – and its appearance behind riggings that ruled out the possibility that it was a bug in the camera lens.

    The explosion quickly consumed the rocket destroying Facebook’s AMOS-6 internet-beaming satellite and causing unprecedented damage to the launchpad – a fairly unusual incident for a rocket explosion. Musk said the explosion was "really a fast fire" and was unable to point to specific mechanical causes for the failure of the rocket.

    One Twitter user said that the sound at 54 seconds in a video posted "sounds like a metal joint popping under stress" which Elon Musk said was "most likely true" but also said that "we can’t yet find it on any vehicle sensors" pointing to the possibility of some outside sabotage.

    "Important to note that this happened during a routine filling operation. Engines were not on and there was no apparent heat source," said Musk questioning how the rocket could spontaneously erupt in flames. "Particularly trying to understand the quieter bang sound a few seconds before the fireball goes off. May come from rocket or something else."

    One person suggested that it could be a drone, but opined that if it was a drone it was a particularly fast and circular drone that does not match the description of any known existing defense products. Others opined that whatever the flying vehicle that may have given rise to the explosion, it appears it was a "well planned attack from a competitor."

    Although speculation continues to circle around the explosion of the Space X Falcon 9 rockets with the most fascinating theory by far being the potential that space aliens beamed the rocket, many more plausible alternatives exist including a leak of propellant fuel, metal on metal contact sparking just enough initial flame, or a buildup of oxygen. Some commenters are even blaming Vladimir Putin and/or China – which makes maybe less sense than even space aliens.

    The truth is out there…

  • Is A VaR Shock Just Starting: Here Is The Checklist

    Last Thursday, when the S&P was once again surging to within a fraction of taking out its all time high, we warned readers to "Brace For "VaR Shock" – How The Bank Of Japan May Be About To Unleash A Global Selloff." Of particular interest was whether 10Y JGB yields would soar, now that the market was questioning the BOJ's resolve to keep longer rates under control, leading to a risk-contagion scenario like the one seen in 2003, when Japanese bond yields exploded. We then said that "what that selloff – in a time of soaring cross-asset correlations, record quant leverage and virtually non-existent market liquidity – would mean for equities, we don't know, – but thanks to Haruhiko "Peter Pan" Kuroda, we will soon find out."

     

    Well, the timing of the post could not have been better, because we got our answer the very next day when – just as predicted here on Thursday – as a result of crashing bond MTMs – the very definition of a VaR shock – global stocks suffered their first aggressive global selloff in months, the biggest one in fact since Brexit, as trader attention, which has been ignoring pretty much every development and key news update over the past two months assuming instead that central banks "have it covered", finally focused on the sharp selloff in long-dated global bonds leading to cross-asset liquidation and sharp quant deleveraging, as we predicted just hours earlier.

    Friday's selloff, incidentally, also took place just two days after JPM's head quant, Marko "Gandalf" Kolanovic issued a new stark warning: "Volatility Is About To Surge", due to catalysts which – as we explained in the post – included this month's central bank (ECB, BOJ, Fed) meetings, seasonals pushing market volatility higher, and leverage in systematic strategies and option positioning provide fuel for volatility. We bring this up just to silence all those peanut gallery complainers that Kolanovic "has no idea what he is talking about."

    But while Kolanovic's arguments confirm that our prediction of an imminent VaR shock is correct, another influential JPM analyst, Nick Panigirtzoglou, author of JPM's Flows and Liquidity weekly snapshot, is just fractionally more optimistic and says that while a VaR shock is a distinct possibility, he notes that "not all conditions underpinning VaR shocks are currently in place in either equity or bond markets." We disagree, but that's what makes a market. As such, we present his thoughts on the matter, and let readers decide just where in the imminent VaR shock continuum we find ourselves.

    Here is Panigirtzoglou's attempt to mitigate some of the long, long overdue fears of a risk off response to another round of central bank mistakes, and his take on whether September 2016 is set to be this year's major "tantrum" event which first sweep Japanese and European bonds, and then quickly spreads across the global impacting all asset classes.

    * * *

    Market volatility declined further over the past month raising more concerns about complacency. Are investors too complacent currently? Are current market conditions inducive to a VaR shock? And VaR shocks do not necessarily need a fundamental trigger such as policy changes or political events. Examples of fundamental or policy triggered VaR shocks were the taper tantrum of May 2013, the Chinese devaluation of August 2015 and more recently the Brexit vote. VaR shocks can simply occur if, for example, investor positions normalize from previous extreme levels. Examples of such non-fundamental VaR episodes were those that took place in April 2013 in the JGB market or in April 2015 in the Bund market.

    So, according to the Greek JPM analyst (not to be confused with his nemesis on this issue, the Croatian one), how likely are such shocks in the current conjuncture? According to JPM, there are certain conditions underpinning the emergence of VaR shocks:

    1) Low volatility. Low market volatility induces investors, most of whom employ some type of volatility-based risk management framework, to increase the notional size of their positions as volatility collapses. The same investors are forced to cut their positions when hit by a shock, triggering self- reinforcing volatility-induced position shedding. Examples of VaR sensitive investors are hedge funds such as risk parity funds, asset managers, banks that set limits against potential losses in their trading operations by calculating Value-at-Risk metrics. Historical return distributions and historical market volatility measures are typically used in VaR calculations given the difficulty in forecasting volatility. This in turn induces these investors to raise the size of their trading positions in a low realized volatility environment, making them vulnerable to a subsequent volatility shock.

    2) The market to be “trading long”. VaR shocks tend to materialize following an overhang of extreme long equity or duration exposures. How elevated are investor positions currently?  The equity betas we regularly update in Charts A20 and A21 show a rather mixed picture. While systematic hedge funds such as risk parity funds and CTAs have high equity exposures currently, discretionary managers such as Discretionary Macro and Equity Long/Short hedge funds appear to have reduced their equity exposures recently. So not all hedge fund sectors are high in terms of their equity exposures. 

    The picture is also mixed in the bond space. For example in our European client survey, while Euro area single currency investors have still pretty high duration exposure at 0.36 years, multi-currency investors are close to neutral. Both of these position indicators were very elevated at the beginning of 2015, just before the April 2015 Bund VaR shock. By taking into account both the blue and the black line in Figure 2 the picture we are getting is of less extreme positioning in Euro area bonds than in April 2015

    We mentioned banks as typical VaR investors. Are US banks too long duration? The Fed's H.8 release provides some guidance on this for US banks. Each week, the Fed reports the net unrealized gain on banks’ available for sale securities. This is by no means a complete measure  of banks’ duration exposure. It does not include held to maturity portfolios (albeit these are much smaller than AFS portfolios), and importantly does not include the impact of any swap hedges. That said, we can infer banks’ duration exposure by relating  week-to-week changes in unrealized gains to week-to week changes in the yield of our UST 10y yield. Figure 4 shows this beta, estimated over a rolling 3-month window to smooth through the noise in the estimate. It suggests that banks would make MTM losses on their available for sale portfolios of around $15bn for each 1% increase in the 10y yield. Abstracting from the volatility post last August’s episode, the current reading is rather negative i.e. US banks are rather long duration, albeit not far from the middle of its historical range.

    An alternative way of gauging positions is to look at the response of equity and bond markets to economic news. This is shown in Figure 5 and Figure 6 which look at the behavior of equity prices and bond yields to economic surprises. An environment where long equity positions are heavy should see equities responding by more to negative economic news than to positive news. That is, the beta of equity prices to negative news should be higher than their beta to positive news. An environment where long bond duration positions are heavy should see bond yields responding by more to positive economic news than to negative news. That is, the beta of bond yields to positive news should be higher than their beta to negative news. The bond market is currently trading close to “neutral” according to  this indicator, in contrast to the overhang of long positions seen in April/May 2015 during the “Bund VaR shock”. Similarly, the equity market is trading close to “neutral”, in contrast to the overhang of long positions seen in May this year and December last year.

    Taking together, the above indicators do not currently point to overstretched equity or duration positions.

    3) Stretched valuations. Admittedly this is a harder to assess metric especially on an absolute basis. On a relative basis valuations for JGBs or Bunds looked very expensive during the April 2013 and April 2015 VaR episodes, respectively. One simple way of illustrating this is via a bivariate regression of the 5y5y forward swap rate in Japan or the Euro area on its US counterpart and on the 2y spot rate differential vs. the US. This is shown in Figure 7. The residuals were very negative i.e. valuations were very expensive, for Japanese rates in April 2013 and for Euro area rates in April 2015. According to Figure 7 these residuals look a lot more “normal” i.e. close to zero, currently. In the equity space, a simple visual inspection of 12m forward PE multiples shown in Figure 8 suggests that the previous relative expensiveness of European and Japanese equity markets, the equity markets that corrected the most since August 2015, has more than unwound. In all, not all conditions appear currently in place for a VaR shock as low market volatilities are combined with rather mixed investors positions and valuation signals

    Regarding market volatilities it is also important to remember that while vol is low, it is not cheap. In fact the opposite is true. Volatility is rather expensive as we highlighted in this month's Cross Asset Volatility Strategy publication (Sep 8th). Implied volatilities have indeed declined to levels last seen n August 2015, before the equity market correction. However, realized  volatilities have declined even more sharply. This is also shown in Figure 9 which constructs a cross asset 1- month Realized vol metric based on the same indices and weights as the ones used for our Implied volatility metric. This Realized vol metric currently stands at the lowest level since October 2014! The greater fall in realized vs. implied volatilities means that vol risk premia increased sharply over the past month making vol even more expensive as an asset class. The ratio between our cross-asset Implied and Realized vol metrics stands at well above one, at 1.3x currently. In other words there are hefty risk premia embedded in option markets that are more indicative of skepticism rather than complacency. And this particularly true with retail investors who continue to pour money into VIX ETFs (Figure 10), despite the very negative carry. As a result of the extreme steepness in the VIX futures curve, popular VIX ETFs are currently losing around 10% per month due to negative roll. If no shocks materialize over the coming months, it is likely that negative-carry long- VIX positions are taken off, exerting downward pressure on the steepness of the VIX curve, from currently “bubble” like levels.

    * * *

    And there you have it: on one hand JPMorgan – via Kolanovic – expects a major selloff, potentially as much as 20% should central banks not come to stocks' bailout this time; on the other hand you have JPM – via Panigirtzoglou – explaining that the "other" JPM guy is wrong, and that the conditions for a VaR shock are only modest embedded right now. Which, of course, is good news if only for the bears out there: after all if everyone was expecting an aggressive continuation of Friday's plunge, it would be assured that that would not happen. However, now that JPM's Greek fund flow expert has inject a trace of doubt that the VaR shock may happen, the contrarian selloff may well continue.

    Luckily, there will be a quick and easy way to find out of Panigirtzoglou is wrong: keep an eye on JGB trading overnight. If we the banchmark bond's yield surges, and if the Nikkei is getting whacked, the answer will be obvious: major quant and CTA funds are now deleveraging and until they are finished, there will be no rebound for the market for the time being. In fact, if central banks really think they can extricate themselves from micro managing the market and the economy (with only failure to show for it), then the next leg lower in the S&P500 could make on dizzy.

    In the end, it will all be about what Kuroda – central bank governor of the country that has almost all negative yielding paper in the world – with does and says in the next few hours because if the BOJ reveals yet one more disappointing surprise, all bets may just be off. As to where the 10Y JGB ends up trading, we don't know, however we do know that a lot of investors will be crushed if the "frontrun the BOJ" trade no longer works; in that case the TINA option, or there is no alterative to holding stocks, will promptly be replaced with a "lack of alternative" to holding cash. At least, until, such time as the Ken Rogoff proposal to ban cash is fully implemented and the next and final leg of the monetary policy cycle arrives, the one which ends in hyperinflation and the collapose of the global reserve-based system.

  • Chair of University Engineering Department: Fire Did NOT Cause Collapse of Third Building on 9/11

    Today, the Chair of the Department of Civil and Environmental Engineering at the University of Alaska, Fairbanks, a PhD in structural engineering and one of the nation’s top experts in the cause of building collapses (Leroy Hulsey) publicly announced that – contrary to the government’s explanation – fire did NOT bring down World Trade Center building 7 on 9/11:
      


      

    He joins scores of other structural engineers, civil engineers, high-rise architects, and fire experts who say that the government’s story is false … Building 7 was NOT brought down by fire.

    And see this.

  • Maker Of Drug Fueling Heroin Overdose Epidemic Is Lobbying To Keep Weed Illegal

    Submitted by Carey Wedler via TheAntiMedia.org,

    In 2016, cannabis is still illegal in many parts of the country, and pharmaceutical giant Insys Therapeutics Inc., a manufacturer of fentanyl, just demonstrated much of the reason why.

    Arizona is currently gearing up to vote on legalizing recreational cannabis. Ahead of that vote, Insys just contributed $500,000 in the fight against Proposition 205, U.S. News and other outlets report.

    The Arizona-based pharmaceutical company recently gave the funds to Arizonans for Responsible Drug Policy, an anti-legalization campaign group actively fighting to defeat the ballot measure.

    Insys’s contributions are particularly unsettling considering the company currently markets only one product — a spray version of fentanyl, a powerful opiate.

    Fentanyl has become one of the country’s most dangerous prescription drugs. It is more potent than traditional addictive opiates, which already claim thousands of lives every year and drive addicts to graduate to heroin use. Fentanyl is 50 times stronger than heroin and has been linked to a growing number of deaths in the United States. It is particularly dangerous when sold on the street and cut with other drugs. Fentanyl has been blamed for worsening the sharp rise in heroin overdoses as dealers across the country have begun adding it to heroin to make it stronger.

    Yet Insys and opponents of legalization are more concerned about a plant.

    According to Arizonans for Responsible Drug Policy, “four states and the District of Columbia have already legalized [cannabis] and are seeing disastrous repercussions for their youth, workplaces and communities.”

    Of course, this assessment is incorrect.

    Colorado has lower rates of teen cannabis consumption than the national average, and studies have shown driving while under the influence of the plant is far less dangerous than alcohol, a legal drug. Colorado has seen a spike in tourism, business, and tax revenues as a result of legalization.

    Interestingly, a study by Johns Hopkins university last year found states with medical marijuana had lower rates of overdose from opiates.

    In spite of Arizonans for Responsible Drug Policy’s claims they care about communities, it is completely comfortable taking half a million dollars from a company that produces one of the most toxic and addictive drugs on the market. Unsurprisingly, Insys previously sold a synthetic cannabis product and has already gained approval from the FDA to launch a similar one in the near future. These business ventures provide an even deeper understanding of why they oppose legalization.

    “[W]e are truly shocked by our opponents’ decision to keep a donation from what appears to be one of the more unscrupulous members of Big Pharma,” J.P. Holyoak, chairman of the Campaign to Regulate Marijuana like Alcohol said.

    His statement continued:

    “Our opponents have made a conscious decision to associate with this company. They are now funding their campaign with profits from the sale of opioids – and maybe even the improper sale of opioids. We hope that every Arizonan understands that Arizonans for Responsible Drug Policy is now a complete misnomer. Their entire campaign is tainted by this money. Any time an ad airs against Prop. 205, the voters should know that it was paid for by highly suspect Big Pharma actors.“

    Considering the myriad healing properties of cannabis, it is obvious why a pharmaceutical company in the business of selling powerful painkillers is eager to invest in maintaining prohibition. Legalizing and normalizing cannabis pose a direct threat to pharmaceutical profits considering cannabis is effective at treating pain, anxiety, degenerative diseases, and potentially even cancer. Though much more research is needed to determine the true efficacy of cannabis as medicine, the federal government’s insistence on keeping it illegal stifles further scientific examination.

    There are legitimate concerns about treating cannabis like alcohol — namely, that convoluted regulations make legalization a bureaucratic headache compounded by the substance’s illegal status with the federal government. Nevertheless, powerful interests are aggressively trying to keep cannabis illegal — Insys’s donation is the largest any group associated with Proposition 205 has received.

    Around the country, the pharmaceutical fight against legalization is joined by the tobacco lobby, the alcohol lobby, the private prison lobby, and law enforcement.

    Still, U.S. News reports the ballot measure is gaining popularity among Arizonans. While corporate cash has been known to influence election outcomes, only time will tell if Insys’s desperate attempts to keep a plant illegal will sway voters.

  • DOJ Study Finds "Real And Nearly Unprecedented" Spike In Homicides Around U.S.

    We have frequently written about rising violent crime around the U.S. with an emphasis on the soaring homicides in Chicago which are up nearly 50% YoY (see recent posts here and here).  Now it seems as though others in the mainstream media are starting to take notice.

    The New York Times recently compiled data from around the country and found there were nearly 6,700 homicides reported in the 100 largest cities in 2015, a YoY increase of 950 or roughly 17%, with nearly half of the rise — 480 of the 950 — coming from seven cities.  Their study is tied to a June 2016 report published by the National Institute of Justice in which Richard Rosenfeld, a criminology professor at the University of Missouri-St. Louis, declared that “the [2015] homicide increase in the nation’s large cities was real and nearly unprecedented.”

    Murder rates rose significantly in 25 of the nation’s 100 largest cities last year, according to an analysis by The New York Times of new data compiled from individual police departments.

     

    The findings confirm a trend that was tracked recently in a study published by the National Institute of Justice. “The homicide increase in the nation’s large cities was real and nearly unprecedented,” wrote the study’s author, Richard Rosenfeld, a criminology professor at the University of Missouri-St. Louis who explored homicide data in 56 large American cities.

     

    In the Times analysis, half of the increase came from just seven cities — Baltimore, Chicago, Cleveland, Houston, Milwaukee, Nashville and Washington.

    The map below highlights the cities with the biggest spikes in YoY murder rates from 2014 to 2015.  That said, the data doesn’t speak to the continued rise in violence so far in 2016 with Chicago homicides up nearly 50% YoY.

    National Homicides

     

    And here is a look at the YoY increase in homicides in the top 56 cities of the U.S. courtesy of the National Institute of Justice report from June 2016.

    Top 56 Cities

     

    The chart below helps illustrate just how pervasive the homicide spike across the country is with the most cities reporting a substantial spike in YoY murders since the early 90s.

    National Homicides

     

    Meanwhile the New York Times attributes the spike in violent crime to a variety of issues including poverty, lack of aggressive policing in the wake of protests related to “high-profile police killings of African-Americans”, and increased drug usage.

    In his study, Dr. Rosenfeld said that rising crime might be linked to less aggressive policing that resulted from protests of high-profile police killings of African-Americans. But he said this hypothesis, a version of the so-called Ferguson effect, which has spurred heated debate among lawmakers and criminologists, must be further evaluated.

     

    Some experts attribute the sudden spike in violence largely to a flood of black-market opiates looted from pharmacies during riots in April 2015. The death of Freddie Gray, a young black man who sustained a fatal spinal cord injury in police custody, had set off the city’s worst riots since the death of the Rev. Dr. Martin Luther King Jr.

     

    During the riots, nearly 315,000 doses of drugs were stolen from 27 pharmacies and two methadone clinics, according to the Drug Enforcement Administration, a number much higher than the 175,000 doses the agency initially estimated.

    The “why now” question is something we recently addressed in another post entitled “Milwaukee Homicides Soar – What Is Going On In the Murderous Midwest?“.  While the typical explanations for violent crime (e.g. poverty, unemployment, etc.) may explain why crime is higher in certain cities it certainly doesn’t explain why the sudden spike is occurring now. Thomas Abt of the Harvard Kennedy School of Government thinks the sudden spike is more likely due to the “Ferguson Effect” or a concept he refers to as “legal cynicism.” 

    The key question is why the spike in violence now?  Ask any “expert” to explain the cause of violent crime and you’ll get a range of responses from systemic problems of poverty, unemployment, lack of education of inner city youth, breakdown of the family unit, etc.  The problem is that none of those things explain the sudden changes in violence we’re currently witnessing in the Midwest.

     

    Thomas Abt, senior research fellow with the Harvard Kennedy School of Government, believes the issue is more likely what other political commentators have dubbed “the Ferguson Effect.”  Writing for The Marshall Project, Abt discussed what he thought might be causing the sudden spike in violent crimes in the Midwest:

     

    It is unclear what is driving the problem, but my own hunch – and it is still just a hunch at this point – involves a criminological phenomenon called legal cynicism. Multiple studies have demonstrated that, controlling for other factors, when communities view the police and criminal justice system as illegitimate, they become more violent. When people believe the system is unwilling or unable to help them, they are more likely to take the law into their own hands, creating the cycles of violent retribution that were chronicled so vividly last year in Jill Leovy’s Ghettoside.

    The “Ferguson Effect” explanation does seem to be supported by a substantial and sustained spike in Baltimore homicides after the Freddie Gray death.

    Baltimore Homicides

    Baltimore Homicides

     

    The question is how comments like the ones below from our commander-in-chief  impact whether people “view the criminal justice system as illegitimate”?

    September 2014 Comments at the Congressional Black Caucus Awards Dinner – “Too many young men of color feel targeted by law enforcement, guilty of walking while black, or driving while black, judged by stereotypes that fuel fear and resentment and hopelessness. We know that, statistically, in everything from enforcing drug policy to applying the death penalty to pulling people over, there are significant racial disparities.”

     

    November 2014 Comments Regarding Ferguson grand jury decision – “The law too often feels like it’s being applied in a discriminatory fashion….Communities of color aren’t just making these problems up….These are real issues. And we have to lift them up and not deny them or try to tamp them down.”

     

    May 2015 Comments at Lehman College – The catalyst of those protests were the tragic deaths of young men and a feeling that law is not always applied evenly in this country. In too many places in this country, black boys and black men, Latino boys, Latino men, they experience being treated differently by law enforcement — in stops and in arrests, and in charges and incarcerations. The statistics are clear, up and down the criminal justice system; there’s no dispute.

    We’ll let you be the judge of that.

Digest powered by RSS Digest

Sep 11

Today’s News 11th September 2016

  • Global Economic Overview (Brexit, China, Screwflation, Humility, Patience… ) 
    

     
    

    Global Economic Overview (Brexit, China, Screwflation, Humility, Patience… )
    

     
    

    By Vitaliy Katsenelson, CFA The following is an excerpt from Investment Management Associates’ second-quarter letter to investors (also published on Institutional Investor)
    

    In this letter we are taking up the ambitious goal of painting a picture of the global economic landscape as we see it, in order to walk you through the investment process that we been fine tuning for this less-than-exciting picture.  
    

    The Answer Is Not in Your Econ Book
    

    The Great Recession may be over, but seven years later we can still see the deep scars and unhealed wounds it left on the global economy.  In an attempt to prevent an unpleasant revisit to the Stone Age, global governments have bailed out banks and the private sector.  These bailouts and subsequent stimuli resulted in swollen global government debt, which jumped 75% from $33 trillion in 2007 to $58 trillion in 2014.  (These numbers come from a recent McKinsey study on global debt.  They are the latest numbers we have, but we promise you they have not shrunk since.)
    

    A lot of things about today’s environment don’t fit into economic theory.  Ballooning government debt should have brought higher – much higher – interest rates.  But central banks bought the bonds of their respective governments and corporations, driving interest rates down to… well, today a quarter of global government debt “pays” negative interest.  
    

    The concept of positive interest rates is straightforward.  You take your savings, which you amass by foregoing current consumption – not buying a newer car or making fewer trips to fancy restaurants, and lend them to someone.  In exchange for your sacrifice you receive interest payments.  
    

    With negative interest rates something very different happens: You lend $100 to your neighbor.  A year later, the neighbor knocks on your door and with a smile on his face repays that $100 loan in full by writing you a check for $95.  You had to pay him $5 for foregoing your consumption of $100 for a year.  This is what negative interest rates are!  Try to explain this logic to your kids.  We tried to explain it to ours and failed, miserably.  
    

    The key takeaway is this: negative and near-zero interest rates show central banks’ desperation to avoid deflation, and more importantly they highlight the bleak state of the global economy.
    

    In theory, low and negative interest rates were supposed reduce savings, get consumers off their butts, and stimulate spending.  In practice the opposite has happened – the savings rate has gone up.  As interest rate on their deposits declined, consumers felt that now they had to save more to earn the same income.  Go figure.
    Some countries resort to negative interest rates because they want to devalue their currencies.  This strategy suffers from what economists call the fallacy of composition – the mistaken assumption that what is true of one member of a group is true for the group as a whole.  As a country goes to negative interest rates, its currency will decline against others – arguably stimulating its export sector (at the expense of other countries).  But there is absolutely nothing proprietary about this strategy: other governments will do the same, and in the end all will experience lowered consumption and a higher savings rate.  
    

    The following point is so important we want to repeat it, bold it, italicize it, and underline it: If our global economy was doing great, interest rates would not be where they are today!  
    

    As We Zoom in Things Get Worse
    

    Let’s start with Europe, the world’s second largest economy.  European political (EU) and monetary (EMU) unions were great experiments that made a lot of sense on paper.  Europe, which had roughly the same size population and economy as the US, was at a competitive disadvantage, as dozens of currencies embedded extra transaction costs in cross-border trade, and each currency separately had little chance to compete with the US dollar for reserve currency status.  
    

    There were also important noneconomic considerations. Germans were haunted by their past; they had started two world wars in the 20th century, and a united Europe was their way of lowering the chances of future European wars.
    

    EMU sounded like a very logical marriage of all the significant powers of post–World War II Europe. But the arrangement was never really a marriage; it was more like a civil union. EMU members combined their currencies into one, the euro. They agreed to use the same central bank and thus implicitly guaranteed one another’s debts.
    

    Though treaties put limits on budget deficits (limits that, ironically, Germany was the first to exceed), each country went on spending its money as it wished. Some were relatively frugal (like Germany); others (Portugal, Ireland, Italy, Greece, and Spain) went on spending binges like newly hitched college students who had just gotten their first credit card, with an irresistibly low introductory rate and a free T-shirt.  
    

    The European Union is a collection of states that are vastly different from each other.  They are separated by culture, language (which impedes labor mobility resulting in semi-permanent labor productivity disparity between countries – think Greece and Germany), economic growth rate, total indebtness, and history. (Germany, for instance, suffered through hyperinflation in the early twentieth century and is thus paranoid about inflation.)
    

    Now let’s turn to Brexit – the UK referendum on exiting the EU.  Ironically, the UK doesn’t have half the problems that most EU nations are going through.  Since it is not part of the European Monetary Union, it has retained its currency and its central bank.  
    

    The UK’s main dissatisfaction with EU membership is due to the immigration issue.  Since treaties have turned the EU into a borderless union, when Germany accepted refuges from Northern Africa it basically made a unilateral decision on behalf of all EU members to accept those refuges to all EU countries.  High unemployment, wage stagnation, and Muslim terrorism are now endemic in the EU, and you can see how the UK citizenry might have a problem with this.  
    

    After the Brexit vote, the financial media lit up with opinions on its consequences for the EU and global market economy.  They’ve varied from “Brexit is a non-event” to “This is a Lehman moment for the global economy” (referring to Lehman Brothers going bankrupt and almost bringing the financial system to a halt in 2008).  The arguments on both sides are quite convincing:  
    

    The argument for Brexit being a non-event is simple and straightforward.  The UK maintained its currency; thus dis-joining the EU will bring lower complexity.  The UK and EU will forge new trade treaties.  There is a fear that the EU may impose trade sanctions on UK, not so much to punish the UK as to threaten other EU members that exit will come at a stiff economic cost (effectively turning this voluntary club into a prison).  However, the UK is a net importer of goods from the EU; thus any sanctions will hurt remaining EU members more than the UK.  
    

    Of course, the UK may never exit the EU.  The referendum was not binding; it was there to measure the temperature.  The new prime minister may decide to ignore the will of the people and remain in the EU.  
    

    The Lehman moment argument is less simple, but it is not unimaginable either.  Brexit may provide a spark that will ignite already gasoline-soaked ground.  Though the EU and EMU were supposed to unite Europeans, they may have had the opposite effect – they may have caused a groundswell of nationalism.   
    

    In all honesty, we are concerned more about Italy than the UK.  Italy is the third largest economy in the EU and the second most indebted one.  Its debt to GDP stands at 132% (Greece is at 171%).  Seventeen percent of Italian bank loans are non-current.  In the depths of the financial crisis, that number was 5% in the US.  Italian lenders account for nearly half of bad debt in the EU (source WSJ).  
    

    If Italy was not part of the European Monetary Union (EMU), it would just print lira and bail out its banks.  But it gave up that luxury when it joined the EMU.  To make things worse, in 2014 the EU passed a law that prohibits governments from bailing out their banking systems; thus the shareholders, debtholders, and depositors may bear the brunt of the eventual bailout.  Unless the EU passes a new law that bends the 2014 law – or the Italian government takes matters into its own hands, violating the EU charter – we may see Italian debtholders and depositors hit with the cost of bank bailouts take to the streets and demand “Italexit.”  
    

    Nationalism is a highly emotional, zero-sum, us-against-them sort of business. Add immigration concerns on top of economic ones and it’s not hard to see how Europe has turned into a highly combustible mixture looking for a match.  And since emotions are often anti-logical, future decisions by EU countries may not necessarily be beneficial to the European continent.  
    

    Since the situation in Europe is so complex and combustible, we don’t know whether Brexit will be just another match that simply burns out or the one that starts the fire.  Will it trigger other exits?  Will it slow down EU growth, thus straining an already leveraged system?  We don’t know, and nobody does.  
    

    China is the third largest economy in the world and is living through the largest debt bubble we probably we’ll ever see in our lifetime.  From 2007 to 2014 its debt quadrupled from $7 to $28 trillion (according to McKinsey).  Over the same time period its economy tripled, growing from $3.5 to $10.5 trillion.  These numbers are staggering, and they point to one indisputable fact: all Chinese growth since 2007 came from borrowing.  There was no miracle in it.  
    

    But it gets worse, much worse. The numbers also show that every $1 of new debt brought only cents of GDP growth.
    

    In the absence of skyrocketing debt, the Chinese overcapacity bubble, which was already fully inflated pre-2007, would have burst years ago.  
    

    As the government continues to engineer growth using debt, every yuan of debt will bring less growth. The laws of economics have not been suspended in China.   American economist Herbert Stein’s law states that things that cannot go on forever, won’t.  When its debt bubble bursts, China will turn from being a tailwind for global growth into a headwind.  
    

    This brings us to the world’s fifth largest economy, Japan.  It is the most indebted developed nation in the world – its debt to GDP is over 230%.  Japan is the proof of Herbert Stein’s law – its economy is still suffering a hangover from what at the time seemed an endless real estate party (bubble) that lasted from the mid ’80s into the early ’90s. Japan has been on the QE and endless stimulus bandwagon longer than anyone else and has nothing (well, except a lot of debt) to show for it.  
    

    Japan also has the oldest population in the world – 26% of its population is older than 65 (in contrast to the US, where the figure is only 15%).  Rising debt and an aging population are a double negative for the economy, as debt per capita is rising at an even faster rate than total debt. And since the working population is declining at an even faster rate than the population, debt per working person is growing at an even faster rate.  
    

    From what we just told you, you might think Japan is paying the highest interest rates in the world, somewhere in the high teens.  Wrong! The Japanese ten-year bond yields negative interest.  
    

    We just spilled a lot of digital ink to give you a brief overview of what we see around the world.  We did not do it to increase your consumption of alcohol or anti-anxiety medicine.  
    

    We did it for a few reasons.  First, we wanted to show you that stock market performance has not been driven by the improving health of the global economy.  Just as negative interest rates are not a positive for the continued health of the economy, nor does current stock market performance augur rosy future returns for stocks.  In fact, the opposite is true.  The bulk of the stock market gains are due to one variable: the expansion of the price-to-earnings ratio.  S&P 500 earnings have stagnated since 2014.  
    

    Stock prices have gone up because the Federal Reserve and other central banks have squeezed all investors to the right side of the risk curve.  Stocks, and especially high-quality ones that pay dividends, are looked upon as bond substitutes.  Investors now look at the dividends of those stocks and compare those yields to what they can earn in Treasuries.  This strategy will end in tears, as these bond-substitute stocks are significantly overvalued (see Coke example further on). 
    

    Secondly, we wanted to show you the headwinds we are facing and what we are doing to avoid having them deflate the sails of your portfolio.  Summarizing, these headwinds are:
    The risk of lower or negative global economic growth.  If we get higher economic growth, we’ll treat that as a bonus.
    Something-flation.  Inflation (high interest rates), deflation (low interest rates) or screwflation (higher interest rates and deflation).  We don’t know which of these extremes we’ll see and in which order.  Nobody does.  Despite their eloquence and portrayed confidence, financial commentators arguing one or another extreme point of view on CNBC don’t know, either.  In fact, the more confident they are more dangerous they are.  The difference between us and them is that we know we don’t know and are therefore trying to construct an “I don’t know” portfolio that can handle any extremes.
    And finally, stock valuations will decline.  
    

    This is a time for humility and patience.  Humility, because saying the words “I don’t know” is difficult for us testosterone-laden alpha male money manager types.  
    

    Patience, because most assets today are priced for perfection.  They are priced for a confluence of two outcomes: low (or negative) interest rates continue to stay where they are (or decline further) and above-average global economic growth.  Both happening at once in the future is extremely unlikely.  Take one of them away (only one!) and stock market indices are overvalued somewhere between a lot and humongously (we don’t even try to quantify superlatives).  
    

    Take both away and… 
    

    

    Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of Active Value Investing (Wiley) and The Little Book of Sideways Markets (Wiley).  
    

    His books were translated into eight languages.  Forbes Magazine called him "The new Benjamin Graham".   To receive Vitaliy’s future articles by email or read his articles click here.
    

    

    • 

  • The Great 9/11 Coverup

    

    Authored by Eric Zuesse, originally posted at Off-Guardian.org,
    

    Did you happen to notice that after more than a decade of the ‘news’ media’s demanding publication of “the missing 28 pages” (which turned out actually to have been 29 pages) from the U.S. Congress’s investigation into 9/11, the document’s press-coverage, finally, on 15 July 2016, turned out to have been little-to-none? And did you notice that the little there was, said it contained nothing important? Perhaps you didn’t get to know even this much about the press-coverage of it, because the U.S. Congress, which had been hiding the document ever since 2003, dumped it on a Friday night, in order for it to receive as little press-coverage as possible.
    

    Well, what that document actually showed, and proved (and cited FBI investigators who could then have testified in public, if requested), was the opposite of unimportant: that the Saudi Ambassador to the United States, Prince Bandar bin Sultan al-Saud (who was known in Washington as “Bandar Bush,” because of his closeness to the Bush family), had secretly been paying the Saudi handlers of at least two of the 15 Saudis among the 19 9/11 hijackers, and that Bandar’s wife and other relatives were also paying those hijackers-to-be, and their families — thus enabling the future hijackers to obtain the necessary pilot-training etc., for the 9/11 attacks.
    

    How much news-coverage of this was there in the U.S.’democracy’ that is supposed to be informing the public about such things, instead of continuing the cover-ups of them?
    

    Why do U.S. ‘news’ media hide it — after having demanded for more than ten years that the ‘missing 28 pages’ become published?
    

    But that’s not all there is to the cover-up: As I mentioned and documented in my July 20th news-report on “9/11: Bush’s Guilt and the ’28 Pages’,”  U.S. President George W. Bush was also involved in the 9/11 operation: He had instructed his National Security Advisor Condoleezza Rice to block his obtaining from U.S. government sources any specific information about what the attacks would entail, or about the date on which they would occur. (Presumably, he already knew, via his private communications with Prince Bandar or someone else who was in on the event’s planning, all that he had wanted to know about the coming event.)
    

    When CIA Director George Tenet, on 10 July 2001, was practically screaming to Rice to allow him into the Oval Office, to meet privately with the President to inform him of how urgent the situation had become to take action on it, she said: “We’re not quite ready to consider this. We don’t want the clock to start ticking.” Tenet was shocked, and dismayed. That encounter with Rice was intended to urge the President to establish a hit-team to take out bin Laden, so as to avert the operation — whatever it was, or would turn out to be. The way that Chris Whipple put this, in his terrific report in Politico magazine, on 12 November 2015, titled “The Attacks Will Be Spectacular”, was that, “they did not want a paper trail to show that they’d been warned.”
    

    Apparently, “Bandar Bush” knew the details, but his friend George W. Bush did not — Bush needed “deniability” — it’s not for nothing that he was able to say, after the event, as Condoleezza Rice was to put it when speaking to reporters on 16 May 2002, “This government did everything that it could in a period in which the information was very generalized, in which there was nothing specific to react to … Had this president known of something more specific, or known that a plane was going to be used as a missile, he would have acted on it.”
    

    How does she now square that statement with her having told Tenet, on 10 July 2001, “We’re not quite ready to consider this. We don’t want the clock to start ticking.”? What ‘clock’? Why not? No one asks her — especially not under oath.
    

    Is that the way things happen in a democracy, even 15 years after the event?
    

    On 10 September 2012, Kurt Eichenwald, who had reported for The New York Times, was then issuing his new book on the aftermath of the 9/11 attacks, 500 Days: Secrets and Lies in the Terror Wars, and he headlined an op-ed then in his former newspaper (which thus could hardly have declined to accept it), “The Deafness Before the Storm”, describing the most puzzling aspect of the lead-up to 9/11:
    

    

    It was perhaps the most famous presidential briefing in history.
    

    On Aug. 6, 2001, President George W. Bush received a classified review of the threats posed by Osama bin Laden and his terrorist network, Al Qaeda. That morning’s “presidential daily brief” — the top-secret document prepared by America’s intelligence agencies — featured the now-infamous heading: “Bin Laden Determined to Strike in U.S.” A few weeks later, on 9/11, Al Qaeda accomplished that goal.
    

    On April 10, 2004, the Bush White House declassified that daily brief — and only that daily brief — in response to pressure from the 9/11 Commission, which was investigating the events leading to the attack. Administration officials dismissed the document’s significance, saying that, despite the jaw-dropping headline, it was only an assessment of Al Qaeda’s history, not a warning of the impending attack. While some critics considered that claim absurd, a close reading of the brief showed that the argument had some validity.
    

    That is, unless it was read in conjunction with the daily briefs preceding Aug. 6, the ones the Bush administration would not release. While those documents are still not public, I have read excerpts from many of them, along with other recently declassified records, and come to an inescapable conclusion: the administration’s reaction to what Mr. Bush was told in the weeks before that infamous briefing reflected significantly more negligence than has been disclosed. In other words, the Aug. 6 document, for all of the controversy it provoked, is not nearly as shocking as the briefs that came before it.
    

    

    Those “briefs” still are not published. And now, after the revelation, by Chris Whipple, that Condoleezza Rice was under instruction from her boss not to allow him to be informed too early for “the clock to start ticking,” we can understand why there is still so much that hasn’t yet been released to the public, in our ‘democracy’, about who was really behind 9/11.
    

    On 17 April 2016, Paul Sperry in the New York Post headlined “How US covered up Saudi role in 9/11”, and he reported that his own investigation showed: “Actually, the kingdom’s involvement was deliberately covered up at the highest levels of our government. And the coverup goes beyond locking up 28 pages of the Saudi report in a vault in the US Capitol basement. Investigations were throttled. Co-conspirators were let off the hook.” But isn’t it time, now, to demand that Bush’s role also be explored — not only that the Saud family’s (especially Bandar’s) role in it be prosecuted? After all, Bush was the one who took a Presidential oath.
    

    Or: Is the U.S. not enough of a democracy, for that to happen — for the Constitution to be enforced, by the U.S. President after Bush (the President who will not prosecute his intended successor)? How total must the non-accountability at the top be, before we call the country a “dictatorship” — only a fake ‘democracy’?
    

    Regarding the actions that brought down the three World Trade Center Buildings, WTC1, WTC2, and WTC7, there also is good reason to distrust the official ‘history’. Witness accounts both by firefighters and by the general public were videoed at the time saying that they heard multiple explosions, which indicated controlled demolitions after the two plane-crashes into WTC1 and WTC2. Other witnesses of the WTC7 collapse also heard explosions. Regarding WTC7, there was testimony from the owner of the WTC, Larry Silverstein, saying that he instructed the Fire Department not to go into WTC7 but simply to “pull it.” (And his subsequent statement saying he didn’t really mean that and he meant only to “pull” the firefighters from that building, which actually had none, was debunked.)
    

    Even the government’s “Final Report on the Collapse of World Trade Center Building 7” acknowledged (p. 48) that there had been “(2) a freefall descent over approximately eight stories of gravitational acceleration for approximately 2.25 s[econds]” meaning that that 8-story segment had been blasted so that, throughout those 8 stories, there was zero resistance to the collapsed portion falling through it from above.
    

    This alone constitutes solid and conclusive physical proof of the official lie, though itself published in the official source. And yet on the very next page in that official document is stated, “Blast events did not play a role in the collapse of WTC 7. … There were no witness reports of such a loud noise.”
    

    But there were such witness reports; and, anyway, the very admission (on the prior page) that there was free-fall over an 8-story segment of the building, constitutes acknowledgement of physical proof that there had been controlled demolition on WTC7. Further, there has even been expert testimony that nano-thermite was used to bring down each of these buildings. But clearly, whatever the truth of the matter is, the U.S. Government has been lying, and continues to lie, about 9/11. For at least the past 16 years, we’ve been living in a dictatorship. And the evidence suggests that this has been the case ever since at least 1981.
    

    *  *  *
    

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

    

    

    
                            
    

    

    

    

    • 

  • Why One Hedge Fund Is Once Again Preparing For The End Of The Euro

    

    Our friends at Fasanara Capital have released a new report, which in keeping with the Mayfair fund’s recent trend of gloomy predictions, has looked beyond the current set of adverse socioeconomic development jarring Europe, and looks forward to the “last act of the Euro”, explaining why “whatever it takes” is now over, and why the time to panic about the future of the common currency is once again nigh. 
    

    Here is their latest analysis:
    

    The last act begins for the EUR peg
    

    Why the EUR-peg is likely to break
    Why new QE is deflationary and counterproductive, so it may soon be up for review
    

    We have long been negative on the prospects for the EUR peg to survive the test of global structural deflation and local ineffective policymaking. Back in 2013, we wrote of the instability and unsustainability of a currency construct set for failure. At the time, we highlighted three big problems with it:
    

      

    • Structural Deflation / Secular Stagnation: debt overhangs and chronic over-supply (misallocation of capital), bad demographics (aging population, falling working population), technological disruption (‘Amazon effect’, 4th Industrial Revolution), falling productivity of credit (diminishing marginal impact of new lending, while also credit growth decelerates) all conspire to the deficient aggregate demand, the structural deflation and the liquidity trap, across the globe: a process which began well before the Global Financial Crisis and the Lehman-moment.

      Why does deflation matter that much? Because durable deflation in a period of economic stagnation is like a death penalty for debt-laden countries burdened with high unemployment: no matter how much virtuous they get fiscally their debt-GDP ratio is set to rise over time, i.e. their debt go up in real terms and make a recovery progressively less likely. So they remain trapped in a long period of debt deflation / balance sheet recession. Take the case of Italy, for example, at 132.5% gross public debt-GDP, where at zero inflation even a primary surplus of ~8% would just about manage to prevent debt ratios from rising further. And such surplus would be heavily contractionary, thus a self-defeating strategy. Such is the evil of deflation. No wonders the ECB embarked on unprecedented expansion of the monetary base. But it failed at stopping deflation. Here are our thoughts in 2014 on that.
      

      • 

    • EU mistaken diagnosis: instead of seeing Secular Stagnation for what it is, EU policymakers saw a problem of low productivity caused by a lack of structural reforms and fiscal discipline. The ensuing quest for austerity drove by ‘internal devaluation’ and aggravated the crisis, helping the inner workings of secular stagnation.
      • 

    • Dysfunctional politics: the inability to reach an agreement and put to work sound crisis resolution policies at the EU level has become proverbial. It is still fresh in memory the epic struggle to tackle the restructuring of Greece, which accounts for a ~1% of the bloc’s GDP, while it took over 90 meetings – between EU summits, EU ministers etc – to reach a temporary solution. Gridlock reigns and stands in the way of efficient policymaking. Not so long ago, lack of coordination and a flawed currency construct led to the ‘Black Wednesday’ ERM’s fiasco, with Sterling breaking away disorderly.
      • 

    

    

    The implosion of the EUR may not be such an outlier in financial history: after all, each and every fixed exchange-rate regime in history was let go, sooner or later. However, there was reason for hope this last June. The Brexit referendum sent an unequivocal message in rejection of the current state of affairs of EU policymaking. In addition to issues with migrations flows and income inequality, the anti-elite stance taken against Brussels was hard to miss. The more so as it added to several other indicators of anti-elite discontent all over the world, from the rise of Trump in the US to support for extremists in Austria and Hungary, etc. Brexit was part of a trend, not an isolated data point.
    

    Sure thing, secular stagnation, technological disruption and globalization all conspire to feed on income inequality and stagnant real wages to a point where they can easily serve as scapegoats. But the EU crisis policymaking fell short (unable to avert deflation), if not backfired (new QE is disinflationary), while the EU red tape super-state exacerbated the crisis (further impediment to growth), leading to the political defeat of Brexit. First and foremost, it was a defeat for the EU.
    

    On grounds of logical thinking, it should have worked as the proverbial canary in the coal mine, the last minute wake-up call averting disaster. It did not.
    

    In the aftermath of the Brexit referendum, we thought Europe had the unmissable chance to seize the opportunity for building consensus for deep structural reforms of the EU, acknowledging defeat and learning from past mistakes. Yet, despite the second biggest GDP in the EU opting to drop out, the EU is very much business as usual, much as Brexit never happened. To this day, no grand action plan is in sight, no sense of urgency, except the idea of bullying the UK upon negotiations in an attempt to deter further uprising across Europe.
    

    The list of past mistakes is long and getting longer:
    

      

    • Pushing for fiscal austerity at a time of secular stagnation, mistaking a problem of deficient global aggregate demand for one of lack of structural reforms.
      • 

    • Wasting a most precious monetary expansion through QE without accompanying it with redistributive fiscal expansion. QE was then able to purely buy time and kick the can down the road some more
      • 

    • Failing to complete the Banking Union, providing the safety net of deposit insurance and other structural reforms of the banking system. To the contrary, bail-in rules were introduced, which only led to financial instability and a crisis of confidence in the banking system, further undermining their profitability, thus curtailing bank lending to the real economy and wasting the efforts at the monetary level
      • 

    • Preserving the supremacy of EU bureaucracy over pragmatic crisis policymaking, thus dampening already-scarce animal spirit, and ultimately leading to disaffection for the EU project
      • 

    

    On the other hand, we believe only a dramatic shift in narrative at the EU level could derail the train before it hits the wall, with measures including:
    

      

    • Temporary Suspension of the Fiscal Compact
      • 

    • Banking Union completion via a deposit guarantee, in exchange for fiscal controls post-normalisation of growth rates/inflation
      • 

    • Allowing for State aid of troubled banking sector (e.g. Italy), before State intervention has to occur anyway but at zero-periodic equity valuations
      • 

    • Programming substantial Fiscal Expansion, possibly Helicopter Money down the road (discussed below), as ways of forcing income redistribution policies (Brexit vote had inequality, not just immigration, as key tipping factor). Deflation is the elephant in the room, that needs to be taken care of, or else all bets are off.
      • 

    • Democratic elections for Brussels’ bureaucracy-enabling functions
      • 

    • Diversion of Brussel policymaking away from red tape overdrive, clear endorsement of member states for most matters
      • 

    

    The biggest threat to EU survival is then not so much Brexit but the lack of response that followed. The dramatic warning signal shot by Brexit fell on the deaf ears of inadequate EU policymaking.
    

    We doubt the UK will ever prove weak enough to help the case of the EU current policymaking. If anything, so far it seems like the UK is performing remarkably well, if one is to look at the business and consumer confidence surveys of late. The GBP is weaker than any QE by Mervyn King/Mark Carney could ever achieve/dream of. But is surely too early a time to draw conclusions, Article 50 has not even been triggered yet. Chances are, though, that the UK will do ok even after that, relative to the rest of Europe. We expect a mild recession, if any, and a rebound afterwards. And that is just more problem for Europe (see also Fasanara Interview at CNBC: Brexit: don’t think UK is ‘standing on the cliff of a disaster’). The UK doing well will send another unequivocal message to struggling EU countries: there is life after the EU.
    

    Professor Joseph Stiglitz has recently reaffirmed his view that the EUR will break, as ‘the cost of keeping the Eurozone together probably exceeds the cost of breaking it up’. Earlier this year, former BoE’s Governor Mervyn King predicted the collapse of the Eurozone. Russia’s President Vladimir Putin recently said that Russia holds 40% of its FX reserves in EUR, while he thinks the Union may comprise fewer stronger countries in the future (see BBG interview), thus leading to an appreciating EUR. The time for treating the EUR-peg as a taboo may soon be past us, and an open discussion become the dominant narrative, in pursuit of a long-term durable solution to economic stagnation, in an attempt to save the European Union, so to orderly drive the process as opposed to end up being overwhelmed by the trending course of events.
    

    Timeline for a EUR de-peg
    

    In terms of timing the de-peg, other than saying that whatever is unstable and unsustainable will necessarily have to come to an end, that no fixed currency regime ever survived the test of time, the next obviousness is to say that it is impossible to know what precise trigger will precipitate events. However, one can look at the steady growth of EUR-sceptics across Europe, and interpolate from there to get some rough idea.
    

    At present, when looking through populist parties and EUR-sceptics, an estimated 30%-40% of the European electorate would stand to vote against staying in the Monetary Union (which does not necessarily mean leaving the EU). That number shrunk somehow after the Brexit vote, in fear of disaster hitting the shores of the UK. One year from now, it may be evident that the UK is doing just fine, while some parts of Europe further crumbled. At that point, the 30%-40% will have become 50%-60%, offering the political capital for a regime change. That may trigger the change in course for crisis policymaking that might have happened today if only the strong message of Brexit was not wasted. At that point then, the EUR-peg may be going, in one of two ways: orderly sacrificed in an attempt to preserve the EU, or disorderly as momentum/chaos takes the upper hand.
    

    

    So far QE provided the glues and tapes to stick the broken pieces together in Europe. Now though, it seems that QE may be running out of steam.
    

    * * * 
    

    Tomorrow we will present the second part of Fasanara’s analysis looking at why QE no longer works.
    

    

    

    
                            
    

    

    

    

    • 

  • The Disturbing Signs Of Global Conflict Continue To Gather Pace

    

    Submitted by Graham Vanbergen via Stratgic-Culture.org,
    

    The signs are ominous, the rhetoric constant. Whichever way you look at it, the world is slowly descending into an ever greater spiral of conflict. We all know that the current wars raging in the Middle East have the potential to go catastrophically wrong and pull the super-powers into something much bigger.
    

    You also know things are not good when the so-called ‘conspiracy theories’ from alternative media outlets eventually goes mainstream, and there’s no shortage:
    


    To confirm the state of the world today, the Global Peace Index states, and I quote – “There are now only ten countries in the world that are free from conflict”. 
    

    The Independent has a 40 second video (HERE) of these ten countries, it’s worth watching, you’ll be surprised…
    

    

    Some believe World War III has already started, most dispute that. It takes no more than a spark to light the fire and currently there are a lot of sparks flying around. Even political instability in the European Union as a result of a refugee crisis is a cause for concern. Pew Research, published just last month, confirmed that European’s fear a wave of refugees will mean more terrorism and fewer jobs. Violent protests have broken out, politician’s are worried. The VP of the International Relations Committee at Hungary’s parliament, Jobbik Member Marton Gyongyosi was supported by other EU leaders when he has suggested that “physical protection of our borders” is required. He went further –
    

    

    

    

    

    

    

    

    "The US caused this (refugee) problem in the neighborhood of Europe and then leans back criticizing European countries for not dealing with the problem efficiently.” 
    

    

    In that context, a few EU leaders are calling for an EU wide army and its own intelligence service. It seems America and therefore NATO are not as trusted as they once were. The US/EU trade deal TTIP, the largest deal in the history of humanity, is reported as being over. Is this evidence of the widening gap of disagreement, maybe.
    

    The outcome is a changing political landscape. Before the European Union was created by the Maastricht Treaty on November 1st 1993 there were just 25 nationalist political parties. Since the birth of the formalised EU there has been a 150 per cent rise in political parties on the extremes of the political spectrum, now totalling 64. One of them was Ukip that focused on immigration and subsequently produced the ‘Brexit’ protest vote that now threatens to tear the EU project apart.
    

    North Korea is a wild card scenario – anything could happen, but if South Korea was attacked, America would have no option but to step in. And what would China do – it’s anyone’s guess.
    

    

    John Pilger's interview on Going Underground spells out the increasing risk of a global conflicthttps://www.youtube.com/watch?v=ahEdcuxlN1o
    

    John Pilger’s interview on Going Underground spells out the increasing risk of a global conflict
    

    

    Tension has substantially risen around the world over USA and Russia/China relations, the South China Sea, Ukraine and Crimea, multiple Mid-East conflicts, north Africa and South America. One should not forget currency wars, economic and political sanctions adding to the global strain. John Pilger’s interview on the Threat of World War Three leaves the viewer in no doubt as to where he lays blame, and if anyone knows about war, he should, he’s covered most of them since Vietnam.
    


    Even basic resources are a cause for concern. Natural water for one, food scarcity, food security and environmental disasters all add to a backdrop where global terrorism is massively on the rise, global debt is now a third bigger than prior to 2007, mass protests due to political instability, such as South America (Brazil being a new hotspot) all adding to increasing tension.
    

    The geo-political situation is now characterised by ever-increasing militarism across the world, bringing the prospect of another world war closer than at any time since 1939.
    

    Scrutinising the underlying issues and causes for the devastating outbreak of World War I in 1914 which ended up killing 17 million, Leon Trotsky laid bare the startling similarities between the crisis of the world economy at the time and the turn to militarism. Historical records display a relevance for today that should serve as an advance warning of the horrors that extreme neoliberalism and globalisation offers up if we do not make efforts to pull back from the brink.
    

    From WSWS  in an article entitled “Capitalist breakdown and the drive to war,” comparisons are made between the extreme economic conditions just prior to the first world war and today.
    

    

    

    

    

    

    

    

    “The years leading up to the outbreak of World War I, like the period prior to 2008, were marked by stormy economic growth. But by 1913–14, the limits to that growth had been reached and the world economy experienced a fundamental shift. From the middle of the 1890s, Trotsky explained, the basic curve of capitalist development climbed steeply upwards. But this very upswing created the conditions for a breakdown. “In 1914,” Trotsky wrote, “a crisis broke out which marked not merely a periodic oscillation, but the beginning of an epoch of prolonged economic stagnation. The imperialist war was an attempt to break out of the impasse.” Further economic development at the pace of the previous period was “extremely difficult,” as the bourgeoisie “flinched against the limits of the market.” “This created class tensions, made worse by politics, and this led it to war in August 1914.”
    

    

    

    Corrupt bankers represent a threat not only to those they directly rip off but also potentially the entire global financial system, the Governor of the Bank of England has warned.
    

    Corrupt bankers represent a threat not only to those they directly rip off but also potentially the entire global financial system, the Governor of the Bank of England has warned.
    

    

    The parallels are striking, particularly as the financial crisis forced upon us in 2007/8 by an out of control banking system, that benefited a tiny elite, caused wave after wave of economic turbulence, austerity and the dismantling of the social democratic movement that itself was born from the wreckage of World War Two. Peoples across the world are getting angry as inequality worsens.
    

    Mark Carney has written a very strongly worded letter, in his capacity as chair of the Financial Stability Board (FSB) to a global forum of national regulators, financial ministries and central banks – to the G20, which is currently meeting in China.
    

    “The incidence of financial sector misconduct has risen to a level that has the potential to create systemic risks” he says. The message is quite clear. Carney believes there is another systemic crisis centred around financial markets. Even he believes and openly stated that corrupt bankers now represent a threat not only to those they directly rip off but also to the entire global financial system. Last year, just four of Britain’s banks were fined well over £50billion ($67bn) for their egregious acts of criminality. Prison beckoned for no-one, whilst poverty soared. Don’t forget the London riots. Spreading like wildfire, the resulting chaos generated looting, arson, and mass deployment of police and resulted in the death of five people. In just three days, a dozens towns and cities were no-go areas of violence, 3,443 crimes reported, over a thousand arrests – from an unrelated spark.
    

    According to Jim Rickards, the CIA’s Asymmetric Warfare Advisor, the probability of a new global conflict is rising every day. In a startling interview from last year he reveals that all 16 U.S. Intelligence Agencies have begun to prepare for World War III. Richards is predicting the fall of the dollar with the result of “an extended period of global anarchy”.
    

    In the meantime, Russia is preparing to be attacked by NATO and America. Global Research reports that “Colonel General Leonid Ivashov, President of the International Centre of Geopolitical Analysis explained in an interview to KP, that ‘if data on Russia-NATO power balance at the Western direction is analyzed, as well as military activity build-up rate at our borders, scale of combat equipment deployment, if the grade of Russia’s demonization is estimated, one can say that preparation to a real war is taking place, as such acts are usually undertaken at the forefront of a war.’
    

    Russia, so threatened by the West, it is now building huge nuclear bunkers around Moscow to protect itself at a time when financial resources are at best ‘stretched’.
    

    As TIME reports “The South China Sea has instantly become uncharted waters for the globe’s two most-powerful nations. The ruling from the Netherlands, while legally binding, has no mechanism for enforcement. That means negotiations will be required to ease the growing territorial tensions in and around the South China Sea. If talks don’t happen, or go nowhere—and China continues to refuse to back down—a military clash could occur.”
    

    Dr.Paul Craig Roberts quite firmly believes a Third World War is currently being fought. How long before it moves into its hot stage he asks.
    

    

    

    

    

    

    

    

    “Washington is currently conducting economic and propaganda warfare against four members of the five bloc group of countries known as BRICS—Brazil, Russia, India, China, and South Africa. Brazil and South Africa are being destabilized with fabricated political scandals. Both countries are rife with Washington-financed politicians and Non-Governmental Organizations (NGOs). Washington concocts a scandal, sends its political agents into action demanding action against the government and its NGOs into the streets in protests.”
    

    

    

    We have already seen what the New World Order has done with Islam. As Pope Francis says, they have used it to foment a crisis, a clash of civilisations
    

    “We have already seen what the New World Order has done with Islam” As Pope Francis says, “they have used it to foment a crisis, a clash of civilisations”
    

    

    Even The Pope believes the start of World War Three is underway – ““To be clear, when I speak about war, I speak about real war. Not a war of religion. There is a war of interests. There is a war for money. There is a war for natural resources. There is a war for domination of peoples” Pope Francis said, alluding to globalisation and the goals of the so-called New World Order of complete and total control over every human being on the planet.
    

    Already, the world has more displaced people than at any time during the course of either World War One or Two. The fight for resources as a direct result of globalism now threatens peace on every continent in the world.
    

    The Doomsday Clock is an internationally recognised design that conveys how close we are to destroying our civilisation with dangerous technologies of our own making, nuclear weaponry by far our most dangerous experiment, makes the clock tick each year. It puts the current time of war at 23.57 – just 120 seconds left.
    

    The current position of the Doomsday Clock is the closest it has been since 1984 and is actually a few clicks closer to reaching a global extinction event for humans than in 1962 when the Cuban missile crisis had twitchy American and Russian fingers on red buttons. What a cataclysmic ending for humanity, bombed back into the stone age. For what?
    

    

    

    
                            
    

    

    

    

    • 

  • Hillary Calls Trump Supporters A "Racist, Sexist, Homophobic, Basket Of Deplorables"

    

    Several days ago, the WSJ reported that in a change of strategy, Hillary would tone down her personal attacks on Trump to distance herself from an increasingly uglier mudslinging campaign on both sides. It didn’t last long: perhaps after she saw the latest polls which continue to slip away from her favor, and confirm the two candidates are again neck and neck, on Friday night during an LGBT fundraiser for her campaign in New York hosted by Barbara Streisand, Hillary unleashed an unprecedented ad hominem attack on what amounts a quarter of America, calling half of Trump’s supporters a “basket of deplorables.”
    

    Cited by BuzzFeed, Hillary made a statement which 4 years ago effectively lost Mitt Romney the election: “you know, just to be grossly generalist, you could put half of Trump’s supporters into what I call the basket of deplorables.” 
    

    “Right?” she said as the crowd laughed and applauded. “The racist, sexist, homophobic, xenophobic, Islamaphobic — you name it,” Clinton continued. “And unfortunately there are people like that. And he has lifted them up. He has given voice to their websites that used to only have 11,000 people — now have 11 million. He tweets and retweets their offensive, hateful, mean-spirited rhetoric.” 
    


    Clinton said the other half are people struggling who have found hope in Trump’s message. 
    

    “That other basket of people are people who feel that the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures, and they’re just desperate for a change,” she said. “They don’t buy everything he says, but he seems to hold out some hope that their lives will be different. They won’t wake up and see their jobs disappear, lose a kid to heroin, feel like they’re in a dead end. Those are people we have to understand and empathize with as well.”
    

    In other words, Hillary believes that half of America either see its future in a dead end, or is a gruesome caricature of a “racist, sexist, homophobic, xenophobic, Islamaphobic” redneck, something she has recently equated to the “alt right.” In a recent speech Clinton tried to tie her GOP rival in with the so-called alt-right movement, a loose fringe group that exists largely online and often appeals to anti-immigrant, anti-Semitic and white nationalist individuals.  
    

    While we enjoy Hillary’s attempts at broad-stroke stereotyping, what is rather ironic about Hillary’s instant alienation of about a quarter of Americans, is that five months ago the liberal FiveThirtyEight.com website found that Trump voters’ median household income was higher than the median in every state, sometimes by a wide margin; and that 44% of Trump voters have college undergraduate degrees, compared to 29% of US adults. In fact, the median household of a Trump voters is far higher than that of a Hillary supporter.
    

     

    

    

    Meanwhile, Hillary only dominates among the very lowest of income earners in America – which is no surprise since “work is punished” at that level of income, and that is specifically the target demographic desired by most liberals who promise more government handouts and, in general, just more government. 
    

     

    

    

    On Friday Clinton reportedly told the crowd: “If you know anybody who’s even thinking of voting for Trump, stage an intervention.” In other words, wealthier, more educated people, at least if one goes by the facts.
    

    Finally, recall that it was almost exactly four years ago when Mitt Romney’s infamous “47%” recording leaked in which he said that “there are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it — that that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. … These are people who pay no income tax. … [M]y job is not to worry about those people.”
    

    After the media pounced and decimated Romney for that statement, his campaign was over. We wonder just how expansive the silence will be from the mainstream media this time around, when its preferred candidate has effectively just done the same.
    

    Meanwhile, Politico reported that promptly after news of Hillary’s speech leaked, Trump’s campaign demanded an apology for her comments, jabbing Clinton on Twitter for “placing people in ‘baskets'” and insulting “millions of Americans.”
    

    “Treating people as subhuman – irredeemable/deplorable – is no way to run for POTUS,” tweeted Tim Miller, a former Jeb Bush spokesman and fervent Trump opponent. “Dems shld skip the excuses & move straight to mea culpa.”
    

    But Merrill, Clinton’s traveling press secretary, defended the remarks as the political furor began to rage online. “She gave an entire speech about how the alt right movement is using his campaign to advance its hate movement,” he tweeted. “Obviously not everyone supporting Trump is part of the alt right, but alt right leaders are with Trump. And their supporters appear to make up half his crowd when you observe the tone of his events.”
    

    In other words, no excuse is coming. In a statement later released by the Trump campaign, senior communications adviser Jason Miller said Clinton’s comments “revealed her true contempt for everyday Americans.” 
    

    “What’s truly deplorable isn’t just that Hillary Clinton made an inexcusable mistake in front of wealthy donors and reporters happened to be around to catch it,” he wrote. “It’s that Clinton revealed just how little she thinks of the hard-working men and women of America.”
    

    We thought that had been made clear when she spent the month of August delivering speeches to various billionaires’ mansions in the Hamptons, while ignoring both the general public and the press. 
    

    But perhaps the biggest irony is that none other than then Sen. Barack Obama made a strikingly similar 2008 comment – again, captured at a donor event – that small-town voters “cling to guns or religion,” which Republicans said showed contempt for ordinary Americans. “The parallel is disdain for the unwashed,” tweeted Washington Examiner columnist Tim Carney, embracing the comparison. 
    

    “You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them,” Obama said then. “And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not. And it’s not surprising then they get bitter, they cling to guns or religion or antipathy toward people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.”
    

    Obama was pilloried for those comments, including by none other than his Democratic primary opponent at the time, Hillary Clinton. She ripped him as “elitist” and cast him as someone who couldn’t possibly fathom the concerns of “working, hard-working Americans, white Americans.”
    

    Fast forward 8 years later, and well, irony strikes again. 
    

    

    

    
                            
    

    

    

    

    • 

  • Visualizing The (Massive) Size Of The US National Debt

    

    When numbers get into the billions or trillions, they start to lose context. As Visual Capitalist's Jeff Desjardins notes, the U.S. national debt is one of those numbers. It currently sits at $19.5 trillion, which is actually such a large number that it is truly difficult for the average person to comprehend.
    

    How big is the U.S. National Debt?
    

    The best way to understand these large numbers? We believe it is to represent them visually, by plotting the data with comparable numbers that are easier to grasp.
    

    

    Courtesy of: The Money Project
    

     
    

    Today’s data visualization plots the U.S. National Debt against everything from the assets managed by the world’s largest money managers, to the annual value of gold production.
    

    

    

    

    

    

    

    

    1. The U.S. national debt is larger than the 500 largest public companies in America.
    The S&P 500 is a stock market index that tracks the value of the 500 largest U.S. companies by market capitalization. It includes giant companies like Apple, Exxon Mobil, Microsoft, Alphabet, Facebook, Johnson & Johnson, and many others. In summer of 2016, the value of all of these 500 companies together added to $19.1 trillion – just short of the debt total.
    

     
    

    2. The U.S. national debt is larger than all assets managed by the world’s top seven money managers.
    The world’s largest money managers – companies like Blackrock, Vanguard, or Fidelity – manage trillions of investor assets in stocks, bonds, mutual funds, ETFs, and more. However, if we take the top seven of these companies and add all of their assets under management (AUM) together, it adds up to only $18.9 trillion.
    

     
    

    3. The U.S. national debt is 25x larger than all global oil exports in 2015.
    Yes, countries such as Saudi Arabia, Kuwait, and Russia make a killing off of selling their oil around the world. However, the numbers behind these exports are paltry in comparison to the debt. For example, you’d need the Saudis to donate the next 146 years of revenue from their oil exports to fully pay down the debt.
    

     
    

    4. The U.S. national debt is 155x larger than all gold mined globally in a year.
    Gold has symbolized money and wealth for a long time – but even the world’s annual production of roughly 3,000 tonnes (96 million oz) of the yellow metal barely puts a dent in the debt total. At market prices today, you’d need to somehow mine 155 years worth of gold at today’s rate to equal the debt.
    

     
    

    5. In fact, the national debt is larger than all of the world’s physical currency, gold, silver, and bitcoin combined.
    That’s right, if you rounded up every single dollar, euro, yen, pound, yuan, and any other global physical currency note or coin in existence, it only amounts to a measly $5 trillion. Adding the world’s physical gold ($7.7 trillion), silver ($20 billion), and cryptocurrencies ($11 billion) on top of that, you get to a total of $12.73 trillion. That’s equal to about 65% of the U.S. national debt.
    

    

    *  *  *
    

    Source: The Money Project – an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.
    

    

    

    
                            
    

    

    

    

    • 

  • The American Golden Calf

    

    Submitted by Bob Livingston via PersonalLiberty.com,
    

    

    

    

    

    

    

    

    As a young boy I enjoyed my family’s bantam chickens that laid very small eggs and hatched very small chicks. Theirs was a small and miniature world.
    

     
    

    One day one of my bantams started sitting on eggs to hatch its chicks. Something happened to her eggs but she continued to sit, so I decided to put a duck egg under her. Duck eggs are at least three times bigger than bantam eggs and take a few days longer to hatch, but she dutifully sat on the egg several days longer. She hatched the duckling and, as you can imagine, it thought that his world was normal and that the bantam hen was his mother.
    

     
    

    The duckling eventually grew into a full sized mallard duck, probably five or six times the size of its bantam mother. The full-grown duck would follow its hen mother around as would normal chicks. It was a funny sight to watch.
    

     
    

    But I remember thinking, even as a small boy, that the duck’s entire reality was that the bantam hen was his mother and that was the way the world worked. He had no need to consider anything else.
    

    

    This is the world of the American people today. Their perceptions of reality control them and they who control their perceptions control the American people.
    

    

    Our perception of America has always been that she is the mother country and ordained by God, good and just and a beacon of freedom. This is hammered into our psyches from our early days.
    

    From pre-school up, we are taught to worship the state. I don’t know if it is still done, but in the public (non)education system, for many years, schoolchildren across the South – and elsewhere, I suppose — recited the Pledge of Allegiance each morning. Political rallies and government meetings are still often begun with a recitation of the pledge.
    

    People say it with patriotic fervor, with their hands placed dutifully on their hearts.
    

    Sporting events, political rallies and other public venues are often kicked off with the playing and/or singing of the Star Spangled Banner. Before the song begins, people are instructed to rise, men to remove their hats; and people place their hands over their hearts. They don’t realize its value as a propaganda tool.
    

    We have come to equate the flag, the pledge and the national anthem with patriotism, and patriotism with government, country and support for government, support for foreign wars and veterans. Anything less is “un-American.”
    

    Beyond its patriot fervor is the almost religious fervor and religious symbolism of the American people’s actions when the pledge and the national anthem begin: the ritual standing, removal of hats, placing of hands and rote recitation. In the book of Daniel, Israelites Hananiah, Mishael and Azariah (Shadrach, Meshach and Abednego) refused to worship the golden image of Nebuchadnezzar contrary to the king’s decree. The king ordered them to be thrown into the furnace after it was turned up to seven times its normal temperature.
    

    NFL player Colin Kaepernick created a stir last week when he refused to stand for the national anthem. He was not subsequently ordered into the furnace by the king, but he was burned symbolically by many football fans who torched their jerseys. Americans fumed that he should “leave” America if he can’t support the flag; and that he had disrespected the flag, the nation and veterans.
    

    What are we saying when we say that someone “disrespected the flag,”  “disrespected the country,” “disrespected the veterans” if he chooses to not stand for the national anthem? What is the flag but a piece of cloth? By the reaction to Kaepernick, it seems it has become more of a golden calf to represent mother country or the god of government.
    

    Our mother has become a witch. Yes, same symbols, same flag, same pledge of allegiance, but a decadent spirit controlling the perceptions of the American people, keeping them on the animal farm (controlling their perceptions) long enough to impoverish and enslave them.
    

    Time and gradualism can change a system all the way from human liberty to slavery (the animal farm) over a few generations without anyone being aware except a very few, those who ask questions.
    

    “America, love it or leave it,” is a tired canard. One cannot leave it except at great cost. Recall that in 1860-1861 11 states attempted to “leave it” in order to preserve their liberty and rights as sovereign states. They were branded as “insurrectionists” and attacked by the War Party and the result was their economic and social destruction, subjugation and the deaths of some 850,000 people (the equivalent of about 8.5 million people today). When one talks of secession today he’s branded as a racist, crazy or a radical and told secession is “illegal.”
    

    One can love his country but hate his government and its actions. I love America but not the people who control America and its government. I love America, but its rulers are alien to individual freedom, its government now anathema to liberty.
    

    If the flag is symbolic of government and that government lies at every turn, enslaves its people, steals from their labor, passes laws that are an execration to their Christian faith, takes from them their liberty, mandates the murder of 1 million babies a year, imports tens of thousands of immigrants to replace American workers and drive down wages, and that makes war on other countries that have not threatened us, why should any acknowledge its presence with more than a sneer?
    

    Wars are not for patriotism and “democracy,” as we are propagandized. And our freedom has not been threatened by outside forces in 200 years. Wars are to kill; i.e., mass ritual murder. Additionally, big business and globalist banksters in league with Satan reap massive profits for the killing and sacrifice of young men (lambs) on all sides of combat.
    

    If the flag is symbolic of the Constitution, that Constitution died long ago — destroyed by a crony railroad lawyer and mercantilist who made war on a sovereign people to benefit monied interests.
    

    If the flag is symbolic of freedom, that freedom no longer exists — stolen long ago by crony corporations and globalist banksters and unaccountable oligarchical black-robed satanists and idol worshippers who usurped their authority created laws out of thin air under the guise of “interpreting the Constitution” a dictate not granted them under the original document.
    

    The phony form of patriotism instilled within the population is strong leverage against independent thinking, keeping people ignorant of the treason by our own government.
    

    America today is a more advanced state of fascism than World War II Germany and Italy. Fascism never identifies itself as totalitarianism. It always calls itself democracy.
    

    Democracy is the politically correct word and cover term for modern American fascism.
    

    American fascism has all the attributes and trappings of benevolent totalitarianism. No, benevolent totalitarianism is not an oxymoron.
    

    The word benevolent in this instance means that the general perception of the population of the American system is that it is benevolent. This is only to say that modern America is full-blown fascism with a pretty face. It is every bit as deadly to human liberty as any tyranny in history and I would add far more sinister because of its propaganda sophistication.
    

    Any regime that can spin tons of fiat paper money with printing presses or electronically is a slave system regardless of what it calls itself or regardless of the general population’s perception of it.
    

    Our mother has been transformed into a witch no matter how much we love her.
    

    h/t Alt-Market's Brandon Smith
    

    

    

    
                            
    

    

    

    

    • 

  • Vanderbilt University Name Placards For Faculty Offices Will Now Include "Preferred Pronouns"

    

    A few weeks back we warned that Princeton University was fed up with people using “gender binary” hate speech like “freshman” (see “Princeton University Kindly Requests You Stop Using “Gender-Binary” Hate Speech Like “Freshman”“) and had released an official guide on how to develop “gender-inclusive” speech.  
    

    Now it seems as though the lunacy of the educated elitists in New England is spreading like an infectious disease to schools south of the Mason-Dixon line.  As pointed out by the Daily Caller, Vanderbilt University’s “Faculty Senate Gender Inclusivity Task Force” recently started posting the following flyers around campus urging students and faculty to announce their “preferred pronouns” when introducing themselves.  
    

    

    

    

    

    

    

    

    Offer your name and pronoun in faculty meetings, committees, and other spaces where students may not be present
    

      

    • “I’m Steve and I use he/him/his pronouns. What should I call you?”
      • 

    • “My pronouns are they/them/theirs. May I ask yours?”
      • 

    

    

    People who “identify” as “gender-fluid” are encouraged to use newly created pronouns “Ze/Zir/Zirs” or “Ze/Hir/Hirs.”  We have absolutely no clue what that means and have exactly 0 interest in trying to figure it out so if you desire more info then you’re on your own.
    

    Finally, students and staff are encouraged to admit when they make a gender assessment mistake and learn from it for the next encounter.
    

    

    

    

    

    

    

    

    Graciously accept correction. Apologize and learn for next time.
    

     
    

    Take initiative. Do not expect others to remind you of their name and pronouns.
    

     
    

    “Thank you for reminding me. I apologize and will use the correct name and pronoun for you in the future.”
    

    

    Couldn’t correcting someone be considered a “micro-aggression” under certain circumstances?  
    

    Vandy
    

     
    

    And while we were trying to holdout hope that this lunacy was somehow reserved to some small fringe elements of campus and didn’t reflect the view of the unspoken majority of sane individuals at Vandy…the following tweet came along, showing that name placards around campus will now include “preferred pronouns”, and crushed our nice, cozy “safe place.”
    


     
    

    What more is there to say?
    

    

    

    
                            
    

    

    

    

    • 

  • Media Slams Gary Johnson's Aleppo Gaffe, Ignores Even Worse One From Hillary

    

    Submitted by Darius Shahtahmasebi via TheAntiMedia.org,
    

    The corporate media’s focus on how presidential candidate Gary Johnson asked, “What is Aleppo?” during an interview on MSNBC’s “Morning Joe” provides a unique opportunity for the mainstream media to ignore all the ridiculous things the other presidential candidates have said — including frontrunner Hillary Clinton.
    

    Thankfully, we have independent media.
    

    As Democracy Now! reported on Thursday, Clinton made the bold and equally ludicrous statement that she would never put boots on the ground in Syria (and Iraq):
    

    

    

    

    

    

    

    

    “We are not putting ground troops into Iraq ever again, and we’re not putting ground troops into Syria. We’re going to defeat ISIS without committing American ground troops.”
    

    

    There’s just one problem: the number of American troops deployed to Iraq has been rising steadily in the past few years and will most likely continue to for a long time. In Syria, the U.S. has made no secret of the fact there are special operations forces on the ground now, some of whom recently came under fire from Syrian warplanes.
    

    It could be the case that Clinton is referring to a specific kind of troop because, as we have learned in recent times, “There are no boots on the ground” actually means “There are some boots on the ground but we aren’t going to discuss it.” This was the case in Libya in 2011, when commandos on the ground helped rebel groups capture and execute Libyan leader Muammar Gaddafi.
    

    Either Clinton is rewriting the rules of what it means to have troops on the ground in the Middle East, or she genuinely thinks Iraq and Syria have no troops on the ground.
    

    Regardless, why is it that the media can let Clinton off scot-free with such a blunder yet insists on focusing on Johnson’s minor gaffe? If you watch Johnson’s interview on MSNBC, it is quite clear that contextually, he wasn’t sure what his interviewers were asking when they referred to Aleppo. Once they clarified it for him, he was able to provide an answer better than what Clinton and Trump have offered regarding the Syrian crisis. Further, it didn’t appear the pundits were able to answer his inquiry about Aleppo without first hesitating, then merely saying Aleppo is in Syria – the epicenter of the refugee crisis.
    

    Is this a blunder worth top headlines around the world? Or is it a clear attempt to denigrate Johnson while ignoring every ludicrously incorrect statement Clinton and Trump make on a regular basis?
    

    Some people say that there is no such thing as bad publicity. Indeed, the media outlets attempting to mock Johnson are putting him on the map. If the public takes the time to listen to the interview, they might realize he has a better understanding of American foreign policy than the rest of the presidential candidates — not to mention the New York Times.
    

    As Johnson said right after he asked his fateful question:
    

    

    

    

    

    

    

    

    “Well, with regard to Syria, I do think that it’s a mess. I think that the only way that we deal with Syria is to join hands with Russia to diplomatically bring that at an end. But when we’ve aligned ourselves with — when we’ve supported the opposition of the Free Syrian Army — the Free Syrian Army is also coupled with the Islamists.
    

     
    

    “And then the fact that we’re also supporting the Kurds and this is — it’s just — it’s just a mess. And that this is the result of regime change that we end up supporting. And, inevitably, these regime changes have led a less-safe world.”
    

    

    Further pressed about his gaffe, he added:
    

    

    

    

    

    

    

    

    “Well, no, I do understand Aleppo, and I understand the crisis that is going on. But when we involve ourselves militarily — when we involve ourselves in these humanitarian issues we end up — we end up with a situation that in most cases is not better, and in many cases ends up being worse.”
    

    

    

    

    
                            
    

    

    

    

    • 



Digest powered by RSS Digest



						
						
						
		

		
			




 


                



		
	

    
    			    	

            

            	Sep
                10
                            

                    

            
		        

			
				Today’s News 10th September 2016            
			        

		
					    
    		
				

			
													
							
												
								
    

  • The "Oh Shit" Guy That Wiped Hillary's Server With BleachBit Was Just Granted Immunity

    

    Last week, after the FBI dropped their Friday before Labor Day weekend bomb on Hillary, we wrote about the various events leading up to the deletion of Hillary’s emails (full details here: “The “Oh Shit” Moment: Hillary Wiped Her Server With BleachBit Despite Subpoena“).  At the end of that post we concluded that the “Undisclosed PRN Staff Member” managing Hillary’s servers on behalf of Platte River Networks had seemingly thrown himself under the bus by admitting to the FBI that he “was aware of the existence of the preservation request and the fact that it meant he should not disturb Clinton’s e-mail data on the PRN server” but then went ahead and deleted the emails anyway.
    

    According to new info from the New York Times, that “Undisclosed PRN Staff Member” is Paul Combetta and apparently his brazen honesty during FBI interviews came only after receiving an immunity deal from the Justice Department. 
    

    For those who “do not recall” the specific timeline leading up to Combetta wiping Hillary’s server, here is a breif recap: 
    

    

    

    

    

    

    

    

    December 2014 / January 2015 – “Undisclosed Clinton staff member” instructs Combetta to remove archives of Clinton emails from PRN server but he forgets.
    

     
    

    March 4, 2015 – Hillary receives subpoena from House Select Committee on Benghazi instructing her to preserve and deliver all emails from her personal servers.
    

     
    

    March 25, 2015 – Combetta has a conference call with “President Clinton’s Staff.”
    

     
    

    March 25 – 31, 2015 – Combetta has “oh shit” moment and realizes he forgot to wipe Hillary’s email archive from the PRN server back in December…which he promptly does using BleachBit.
    

     
    

    February 18, 2016 – Combetta meets with FBI and denies knowing about the existense of the subpoena from the House Select Committee on Benghazi at the time he wiped Hillary’s server.  
    

     
    

    May 3, 2016 – Combetta has follow-up meeting with the FBI and admits that he “was aware of the existence of the preservation request and the fact that it meant he should not disturb Clinton’s e-mail data on the PRN server.”
    

    

    And here are the details from the FBI Notes:
    

    Hillary FBI BleachBit
    

    Hillary FBI BleachBit
    

     
    

    Given this fact pattern, we would be very curious to know exactly when Paul Combetta was granted immunity by the Justice Department.  Perhaps that immunity was granted sometime after February 18, 2016, when Combetta had troubles recalling the issuance of a subpoena, but before May 3, 2016, when he seemed to recover from his unfortunate bout of amnesia.  Just a guess.
    

    Earlier this week, the chair of the House Committee on Oversight and Government Reform sent the following letter to Platte River Networks asking officials to appear before Congress to testify on how Hillary’s email account was set up and how the messages were deleted.  That said, it’s now unclear whether this request for testimony will go anywhere given the new information that Combetta has been granted immunity.
    

    

     
    

    But just in case, Hillary spokesman, Brian Fallon, wants you to know that Paul Combetta went totally rogue and made a unilateral decision to wipe Hillary’s emails without any input from anyone connected to the Hillary campaign.  His decisions to committ several federal crimes were all his own.
    

    

    

    

    

    

    

    

    Brian Fallon, a spokesman for Mrs. Clinton’s presidential campaign, said that the deletions by the specialist, who worked for a Colorado company called Platte River Networks, had already been “thoroughly examined by the F.B.I. prior to its decision to close out this case.”
    

     
    

    “As the F.B.I.’s report notes,” Mr. Fallon said, “neither Hillary Clinton nor her attorneys had knowledge of the Platte River Network employee’s actions. It appears he acted on his own and against guidance given by both Clinton’s and Platte River’s attorneys to retain all data in compliance with a congressional preservation request.”
    

    

    What more is there to say?
    

    

    

    
                            
    

    

    

    

    • 

  • "Anything & Everything Goes" – The Corrupt & Deranged Governance Of America

    

    Authored by Robert Gore via Straight Line Logic,
    

    

    

    

    

    

    

    

    The Burning Platform’s quote of the day sums it all up perfectly: “The further a society drifts from the truth, the more it will hate those who speak it.” George Orwell
    

    

    Contemporary governance embodies corruption within deranged systems resting on foundations of theft and fraud. Corruption makes reform impossible; derangement assures eventual collapse.
    

    “Defense” spending is a misnomer. The US could defend itself at a small fraction of what it spends on its military and intelligence. The US government’s foreign intervention and maintenance of a confederated empire are actually a welfare and transfer payment program. Spending has become the point: maximizing the payoff to military and intelligence contractors, their think tanks and lobbying arms, captured politicians, and the vast bureaucracies. Winning wars doesn’t serve the interests of those beneficiaries, lengthy and inconclusive engagements do.
    

    The war on terrorism is a mother lode. The enemy is whomever the government deems it to be, wherever the government chooses to fight it. The war itself creates more terrorism. Victory cannot be defined; the war will go on as long as the current ideology remains in place. It enriches the military-intelligence-industrial complex, but a war-without-end welfare program is clearly deranged, a fitting target of satire. It will continue indefinitely because its beneficiaries have far more incentive and resources to promote their interests than the rest of us have in promoting peace.
    

    Politicians use other people’s money to line their own pockets and buy votes; recipients accept the largess and become dependent on it. There is no limit to demands that the government fund “needs,” and no limit on the political willingness to meet those demands. It is testament to this lack of limits that the world’s richest countries cannot fund the demand for redistributive largess from their countries’ own resources. Aggregated, they have accumulated the largest debt load in history, far beyond their ability to repay it.
    

    Mounting debt generates its own limit: insolvency. Demographics shaped by the transfer state compound the problem. Stealing the fruits of labor penalizes honest productivity and constricts opportunity. Faced with bleak prospects, many of the young opt out of the financial obligations of starting families, rearing children, or even supporting themselves. Birthrates have dropped far below replacement in most developed countries: fewer people to fund taxes and debt just as the number of putative beneficiaries skyrocket. Pension shortfalls around the world are the canary in this coal mine. The mathematics are inescapable. Present arrangements are unsustainable, but will continue until debt markets and taxpayers rebel.
    

    They will face a counter-rebellion by dependency-warped recipients deprived of that which was never really theirs. Those who can but don’t honestly produce are both dishonest and unproductive. Faced with a cut-off, expect chaos and violence.
    

    Debt and taxes fund governments and enslaves their constituents. They’re the foundation for the second most insidious racket: the banking complex. The Federal Reserve Act of 1913 began the shift from real money (gold) to debt, enshrined the banking cartel, and was, through the establishment of the lender of last resort function, the first major step towards making taxpayers the guarantors of bank liabilities. Later, deposit insurance and Too Big To Fail (TBTF) sealed that guaranty.
    

    Bankers have found heaven on earth, but their paradise has destroyed the economy. TBTF has removed capitalism’s most potent corrective: failure. Government debt issuance, central bank monetization, interest rate suppression, and random, whimsical, and absurd policies provide banks with middleman’s profits, inside information, access to cheap funding for speculation, and, as a particularly vicious policy—the war on cash—gathers steam, captive deposits. They destroy honest saving and investment and burden the economy with an increasingly onerous load of debt and taxes. Even governments and central banks, entities that can conjure their own debt and mandate its acceptance, will for all intents and purposes go broke if spending outruns revenues long enough.
    

    The most insidious racket? While the banking camarilla is nothing to sneeze at, lawyers writing laws and regulations must be reckoned the Mt. Everest of rackets. They write, implement, interpret, and enforce the laws, augmenting their wealth and power every step of the way. Even the bankers ostensibly kowtow to the government (what happens behind the scenes is another matter). The repository of lawful coercive force, government inevitable becomes organized crime and the law nothing more than the means to corrupt ends. Write the law and write your own ticket.
    

    Standards of honesty and integrity crumble in societies based on theft and fraud, replaced by a new standard. Coercive, redistributive “altruism” excuses all manner of corruption among the powerful and the servitude of those who either choose or are forced to produce. Bread, circuses, and moral degeneracy entertain and placate the masses. The bizarre becomes commonplace, but the populace grows sated with each new manifestation, always more “transgressive” (of standards that no longer exist) than the previous one, in progressively shorter spans of time.
    

    Anything and everything goes. Only one standard remains that rouses virtually everyone—rich and poor, powerful and powerless—to righteous indignation: the more pervasive the corrupt derangement, the less acceptable it is to talk about it. In our own time, the obvious conclusion that the warfare and welfare states are morally and fiscally bankrupt, doomed to collapse, remains confined to the fringe.
    

    Here’s a rewrite of the “Emperor’s New Clothes” in light of modern realities.
    

    

    

    

    

    

    

    

    The child points out the Emperor’s nudity.
    

     
    

    The Emperor’s beholden courtiers and the impoverished but thoroughly cowed townspeople immediately threaten and intimidate the child.
    

     
    

    Naively stubborn, he repeats himself until someone claps a hand over his mouth.
    

     
    

    The headline next day: “Child who Questioned Emperor’s Attire Found Dead in Field Outside of Town.”
    

    

    Hillary Clinton wins support not despite her corruption and derangement, but because of it, especially among the establishment. Their rackets need a participant and patron. Donald Trump is hardly a naively honest child, but he has had the temerity to question a few rackets, notably immigration, trade, and the warfare state’s global empire. Questioning that last one—because it’s the largest and most lucrative—has provoked copious quantities of vehement vitriol.
    

    Truth can awaken minds and rouse people to action, posing an obvious threat to the corrupt and deranged. Should Trump win the election, he will assuredly be presented with the same choice as the child in the story: get with the program or die. Odds are he folds, in which case those of us rooting for meaningful change will be left with the hope that the inevitable collapse occurs before we die.
    

    

    

    
                            
    

    

    

    

    • 

  • Descendants Of Slaves Owned By Georgetown University Want $1 Billion

    

    Last week we noted that Georgetown University President, John DeGioia, announced plans to grant preferential admission consideration to descendants of slaves formerly owned and sold by the university in 1838 (see “Georgetown To Grant Admission Preference To Slave Descendants“).  According to a report of a special “Working Group” of the university, two priests who served as president back in 1838 orchestrated the sale of 272 slaves netting the university $115,000 ($3mm in current dollars) which was used to pay off school debts.  The “preference in admissions,” along with an official apology from President DeGioia, was part of the
    
school’s effort to “atone” for profiting from the sale of enslaved
    
people.
    

    As part of our note, we suggested that Georgetown should post their “bid” of “preference in admissions” to the official Reparations website so that an official market could be established (see “There Is Now A Marketplace For White People To Make Reparations Payments“).  Now, less than a week later, we have an official “offer” from the descendants of the slaves formerly owned by Georgetown who want “preference in admission” plus a mere $1 billion.  Up until now, the 15 point spread on the Ford term loan back in October 2008 was about the most egregious bid/ask gap we’d ever seen but this puts that market to shame.  
    

    Per the Washington Post, the descendants of the 272 slaves sold by Georgetown University have already raised $115,000 so they really only need help with the incremental $999,885,000.  
    

    

    

    

    

    

    

    

    The descendants proposed a $1 billion foundation and announced that they had raised $115,000 in seed money, an amount equivalent to the 1838 sales price for the 272 people Georgetown sold to pay off a debt. That amount is equivalent to about $3 million in today’s dollars.
    

     
    

    “The foundation can only be a reality if we can establish a partnership with Georgetown University,” he said. “The foundation is our vision of an opportunity for us to have a partnership with Georgetown University that can take the history that we all now know about and turn it into a greater common good for Georgetown, the Jesuits, the Catholic Church, and humans overall.
    

     
    

    He praised university leaders. “What Georgetown did was step out and away on an issue that has just dragged our whole country and society backward. They have stepped out in front and said, ‘We need to openly deal with this.’ I want to commend them for that. But we want to work with them on a greater vision that’s not dependent on the day-to-day educational mission of Georgetown, a separate foundation that we all have a role in. … We can take that, use it in a positive way to do much better for all of God’s wonderful humanity.”
    

    

    That said, according to the website of the Georgetown University Investment Office the school’s total endowment is only about $1.5 billion.  As such, we suspect that additional negotiations may be required to close the gap between Georgetown’s bid (apology + admission preference) and the current offer (apology + admission preference + $1,000,000,000) before an official settlement can be reached.  
    

    

    

    
                            
    

    

    

    

    • 

  • One "Lifelong Socialist" Norwegian's Perspective On Trump

    

    Authored by 'Ola Nordmann',
    

    Despite Norwegian mainstream media and political establishment support for Hillary Clinton (They also supported Mark Rubio and Bernie Sanders when they were running), I would like to apologize for our politicians and voice my support for Trump. I believe that Americans need to think about what is at stake from lifelong socialists’ perspective.  Despite what people read about Norway being the best place to live, it comes with a price. Everyone needs to mostly agree, not raising concern, even when feeling wronged. Going outside the line leads to ostracization. (It’s like being Amish in some ways.)
    

    We are not that creative. We would like to think so, but compared to Minnesota, our American cousin (similar population, culture, and climate), we are far behind – left in the dust. Minnesota has many diverse and world class companies like 3M (Minnesota Mining and Manufacturing), Polaris (snowmobiles and motorcycles), and Medtronic (Innovative medical equipment).  Our largest companies are mostly resource related: Statoil (state oil company), Telenor (our innovative phone company) and Yara (fertilizer). The government substantially owns many of them, not making them real companies that compete for their daily existence, like their Minnesota counterparts.
    

    If you ever come to Norway, you will find around half the TV shows are American! We have Dr. Phil, NCIS, Cake Boss, Fast and Loud and so on.  Our version of Cops and Storage Wars will put you to sleep. Recently, a major Norwegian media outlet launched a reality show, called Oslo S, about our central train station. The theme is bouncers and bums exchanging pleasantries – Yawn. Other shows come from Australia, Sweden and the UK. I wish we could be more American, in this regard, making our own entertainment to cover all the time slots, instead of importing it.
    

    Our education system teaches conformity and compliance. It does not teach critical reasoning, questioning the system or exploring the media’s agenda.  When you graduate, you will be unable to take charge and make a decision. (Good decisions always disappoint someone. Otherwise, the choice would not need arbitration in the first place) Instead, you will learn that everyone must be included, finding a compromise. This indoctrination process often leaves your team uncompetitive or product useless, falling short of market demands. It’s more important that everyone is happy than to remain profitable, which ensures long-term enterprise survival.  The lack of confidence taught in our education system is crippling.  This insecurity makes us somewhat socially retarded with foreigners. When we go abroad, we travel in groups, sticking to ourselves, not interacting with the locals. It may explain our unfriendly ranking.   
    

    Many well to do Norwegians acknowledge the systems shortcomings, opting for private education. Some even send their kids boarding schools in England and Ivy League universities in America. We have a hard time getting those kids to return home, leading us forward. Instead, they add to America’s vastness and achievements. Recently, private schools in Norway started to pick up.   
    

    Our Economy is equally as boring. After oil (65%), we sell fish and aluminum. Our Central Bank did such a wonderful job devaluing the currency, allowing the Chinese to buy our expensive water company. Many more of our unique companies are now vulnerable to foreign takeover.
    

    Our technology sector will not save the economy after oil’s demise (at least not now).  Although there are some interesting firms, doing cool stuff, they are no comparison to those in California, Boston or New York. We get good people, but America gets the best of the best, driven by a deeply human desire to succeed. 
    

    If we were truly innovative: we would have lured Elon Musk to Norway to make Tesla’s here (we are on a per-capita basis one of the world’s largest consumers of electric cars).  It would have complimented our emission-free hydroelectric industry, which generates 99% of Norway’s power. We should have invested our oil fund money into becoming leaders in 3D metal and alloy printing. This technology would be an ideal complement to our small but highly skilled workforce, losing jobs in the oil industry.  We could have been exporting commercial aircraft and car parts, made to order and on demand, diversifying the economy.  Nevertheless, our leaders in the Central Bank and Politics learned to play it safe, avoiding risk and confrontation, all their life. They never learned that not taking risk is also a risk. We are experiencing that right now – the repercussions of doing nothing.
    

    Our cultural basis comes from the Janteloven. Essentially if we see our neighbor with a new Cadillac, we get jealous, hastily concluding that he stole it instead of sacrificing to earn it. We will never openly express our distaste. We just hold it in and do something passive aggressive like reporting him to the tax office. When the American neighbor sees the luxury car, he gets motivated and works extra hard.  Afterward, he buys a Bentley, one-upping the neighbor. Economies and innovation benefit from competition, not envy and passive-aggressive behavior mixed with feelings of inadequacy.  
    

    If you want to live in Norway, you have to be comfortable with complacency.  Things are “great” because they don’t change, making life predictable. Norway is for those needing direction, protection, and an identity. It is for those who want to take it easy, seeking a steady routine, usually after they made it. For the outliers, ambitious and the hungry– those few who make the greatest contributions for posterity –America is your place.
    

    In the American workplace, in general, respect is earned based on actions and not given. In Norway, we tell such anxious people to relax and not worry so much, subtly suppressing them.  Americans, even if they don’t like you, will at least respect you if you’re productive.
    

    I do not want to see America become Norway. First, it’s impossible. Our history and evolutionary paths are different. Second, the human species, as a whole, would cease to advance.  We will never get the next iPhone, Tesla or action movie.
    

    Below are my observations about Trump and why Americans, and the world for that matter, should consider him.
    

    Trump is more Interesting than the Kardashians
    

    The obnoxious family is popular here, polluting our airwaves daily.  Trump is the first Presidential Candidate (based on observation) to get more press than them. People are talking about Trump, America and what’s wrong. Moreover, they are talking about “why.”  Everyday people, who normally watch sports and reality shows, are having vigorous debates about real topics that affect their lives.
    

    Trump made politics interesting to the entertainment drugged masses! His presidency would mean more democracy, not less. More people will start to pay attention to the government than Kim Kardashian’s backside.  Everything usual will get disrupted.  A new culture of calling things as you see it will rise (or return, depending on how long you have been around.
    

    The media and public will scrutinize Trump’s every move. It will be interesting to know what he is up to. Everyone will be watching his speeches and commenting the day after. It will be far from routine. Democracy needs public participation. Good or bad: as the antics ensue, more outsiders will get energized and inspired, bringing new faces to politics. 
    

    Loathed by Billionaires, Goldman Sachs and Mainstream Media
    

    I find it interesting that the very wealthy are suddenly vocal, vigorously opposing Donald J Trump’s presidency. Mark Cuban, Warren Buffet, Bill Gates and George Soros have all made statements against “The Donald.” Buffet, Gates, and Soros are avid supporters of Hillary Clinton. Goldman Sachs top management are not allowed to donate to Trump’s campaign.
    

    As an average seventy-something Norwegian farmer, looking at American from the outside, I find the vigorous billionaire opposition “interesting.”  Moreover, this is amplified by CNN (which we get here in Norway as part of our standard cable package).  CNN used to be fact based news only. Now they morphed into the Clinton News Network, attempting to shape public opinion, garnering support for globalism.  
    

    Perhaps the billionaire’s enterprises benefit from bloated government spending (this is speculation and worthy of investigation)?  These Billionaires are so rich that the interest earned on their idle cash and investments amounts to tens of thousands of dollars per day. What do they have to lose either way? Why is this so important to them? Maybe it’s to their advantage that the ladder (better known as the American Dream), where people can ascend through the rungs, achieving different levels of success through hard work, is broken?
    

    Don’t Americans find it strange, despite technological advancements and increased productivity, that medical care, education, and housing costs are rising. I thought technology was supposed to make things cheaper, easier and more abundant. Remember when people went from horse and buggy to the Ford Model T – what happened? (A middle mobile middle class was born). Based on what I read about American life, it seems like now, when there is a new technology or innovation to make life easier, things get worse. Jobs become less stable than decades earlier.  People are working longer hours for less.  The housing standard is now a cramped condo instead of a house with a yard. It appears a  lot of people are on edge. 
    

    American’s need to ask themselves, reflecting back one generation (20 years), how billionaires have made their lives better? Billionaires have substantially increased their wealth in the past 20 years, have you? 
    

    American’s have a history of being rebellious, unpredictable, self-reliant and wild, rooting for the underdog. In this case, the underdog is Trump. The world needs this from you: not to become “European,” stuck in discussion while opportunity passes. 
    

    Government & Opportunity 
    

    Unlike Libertarians, I do believe the government has a role in the private sector, ensuring competition exists and industries, serving national interests, are secured. (It would be crazy if the American army bought guns and tanks made in China to save money.) It is important that America secures its’ ability to produce heavy machinery, rockets, automobiles, high-tech, food, and medicine. However, this doesn’t mean the government support monopolies.
    

    In the past, the American government would break up monopolies to ensure competition which also pushed innovation. In the past, they broke up the railroad, oil, and telephone monopolies, leading to innovation in energy, transportation, and communications. Since the failed attempt to break up Microsoft, the US and many world governments seemed to have looked the other way while corporate conglomerates keep on growing. The unchecked growth leads to corruption and stagnation. These mega companies can exert influence over local, state and even national governments who inadvertently put all their eggs in one basket. Even worse, when the mega corporation gets in trouble, they extort governments to bail them out, at taxpayer expense, otherwise threatening a crisis or mass layoffs. 
    

    Hence, governments must act like icebreaker boats, breaking down the massive ice flows so all can pass through the channel, not only the big boats. This observation was especially true with the bank bailouts. When they got in trouble, the big bank CEO’s claimed the fallout would be on the order of a natural disaster. Although Americans have a history of resiliency, bouncing back stronger from disasters, the US Government bailed the failed banks out while the people, owning homes and banking products, lost out. (Many Norwegian towns lost a lot, believing in US Mortgage securities during the 2008 crisis).  The government, supposedly elected by the people, should have let the banks fail and help the victims of the systematic and institutionalized fraud, keeping them in their homes.
    

    The Glass–Steagall Act was enacted in 1933 after the 1929 stock market crash to separate investment and commercial banks. Hence, the act limited the size of the banks and therefore limited the risks to the market. In 1998, Bill Clinton stated that this act was no longer relevant, and Congress repealed it in 1999. Many argue that Glass-Steagall would have averted the 2008 financial crisis.  When Trump proposed to reinstate the act, Wall Street jumped on him. 
    

    American’s should think long and hard about whose side Wall Street is on. 
    

    Right vs. Correct 
    

    The big problem in the World today is the lack of honesty: objective and fact based. Without proper facts, it’s difficult to make good decisions.  Europe, Norway included, has embarked down the Political Correctness (PC) path. So much so that people waste a lot of time deciding how to say something in a polite and “correct” way, often sacrificing the truth. This behavior leads to bad decisions or none at all.  Instead of listening to the raw content, meant to help reach a good decision, PC people focus on the tone and word choice, missing the main point altogether.
    

    Often the liberals will call you a sexist, racist or narcissist, responding to a direct and logical challenge that questions a popular assumption or long held belief.  In Norway, we mandate that corporate boards have a set percentage of women. In technical companies, it is difficult to find qualified women, so ones from outside the profession are assigned. Sacrificing needed knowledge and experience for “correctness,” often leads to sub-optimal performance. If there is a woman on the board of an innovative American company, it’s because she is qualified and not to fill a quota. She worked hard, putting in the hours, getting her to the top. (I recently saw a post where someone posted a list of company ranking them from highest to lowest regarding women on the board. When I asked them to post the margins compared to their global competitors, Someone rebuffed me as a sexist.)
    

    Instead of doing quotas, the government should focus on recruiting more women into the profession and ensure all the barriers are removed. Anyone, regardless of gender or background, should be able to excel in the given profession based on merit. No one should be blocked because of race. In essence. all obstacles should be cleared from the roads so that everyone can get on the highway, reaching their full potential. The focus should be on getting access to those who don’t have it in the beginning and not forcing quotas at the end.
    

    Recently, we had a situation in Norway where a Norwegian Bank employed the services of an Indian IT provider, bringing people onshore to build a payment app. During the development process, the Indians worked outside the regulations, putting in a lot of extra time under duress. The Norwegian managers apparently did not have knowledge that their Indian management counterparts were breaking the law. In my opinion, I believe that the Norwegian managers may have been too afraid to ask difficult questions to the Indians, fearing a PC backlash and being branded a racist.
    

    PC can snuff out the truth, blocking people from doing the right thing. Being correct over being right can suppress expression and push negative sentiment underground. People cannot express legitimate concerns because they are more afraid to offend someone, even if they need it. In a sense, this is discrimination. Is it only white males that get to hear the honest and raw truth while everyone else gets the sugar coated and often distorted version of it? Perhaps this explains the rise of nationalist parties.
    

    Some nationalist parties are extreme and irrational (Golden Dawn in Greece) and others address legitimate concerns (UKIP).  The mainstream media does not differentiate.  Being in a democracy requires a lot of work, on the individuals part, collecting and analyzing the facts for yourself.  Remember that ad revenue powers mass media. Perhaps people should think twice before thinking mainstream media outlets are benevolent.
    

    Focus on success has been America’s edge: greed and the desire to make money trumps personal feelings, race, and gender. American’s simply want the best people on their team, seeing only green. In this sense, greed is fair and democratic, rewarding merit while blind to other factors.  Last time I was in America, I noticed that people go pretty far when they are good at something they enjoy.
    

    The world is counting on the American ideal that “right is might, saying it like it is.” Being right over correct gives us the data in the purest form, free of distraction, allowing for the best possible decision.
    

    Globalism vs. Nationalism
    

    Being proud of your country and voting for politicians who put national interests ahead of global ones is not racist like liberal mainstream media would like you to believe. Racism is when you institute policies to block certain people from opportunity or services, based solely on their genetics, personal beliefs, ethnic background or religion. Sexism is when you do this based on gender.
    

    It is not racism to be opposed to helping those outside your borders when so many inside, who paid into the system, need help (education, medical care, access to basic services, etc.).  BREXIT highlights this prioritization very clearly. Countries can grow, add diversity and obtain skills with a proper immigration and integration policy.
    

    The American’s have done so much to help the world, twice saving Europe from self-destruction. Instead of rebuilding themselves in full force, the rebuilt the conflict perpetrators. 
    

    The American system, based on the premise of strong individuals (families) and weak government, yield self-determination and personal responsibility. Based on my reading of the American system and Constitution, states should take more responsibility for themselves, minimizing the role of the Federal government.  This way the people have more say about the spending of their tax contributions. The further away the money goes (to DC vs. the state capital), the less the taxpayer sees regarding benefits.  It appears that a lot of money “gets stuck” in Washington DC. Many in the EU feel that a lot of money gets stuck in Brussels (Although Norway is not a member of the EU, we still pay the membership fee and follow the rules. We agreed to this to save our fishing and oil industry). 
    

    It’s easier to help others and save the world when your situation is stable. Moreover, stability and prosperity lead to more openness and acceptance of outsiders.
    

    Trump is right to put Americans first, especially if they are paying taxes to the American government.
    

    Failures vs. Success 
    

    Everyone is criticizing Trump about past failures. These are probably the same people that say failure is part of success, which is true. Here is an example of someone who failed a lot and then succeeded as president. He was also considered a bit wacky back in the day:
    

    

    Russian Reality 
    

    I am far from being a Russia fan. I am just stating the facts, hoping the Americans can see this issue from another angle. 
    

    Although Norway’s experience with Russia during WWII was positive, helping us drive out the Germans and then leaving afterward, many do not have a positive view of them because of the media. They did not occupy us, and we later became trade partners, mainly exchanging fish for metal.
    

    However, Trump is right to reach out to Vladimir Putin. We have a terrorist problem in the Middle East caused by faulty American and Western European policy.  The USA, UK, and Russia were allies in WWII, defeating the Nazi’s. The Russians lost the most people in the conflict, created by Europe. Are they really so bad?
    

    The US and Europe created the current situation in Ukraine, making empty promises to the opposition, hanging them out to dry when Russia responded via proxy. Putin hacked NATO by supporting rebels not wearing national uniforms, taking advantage of the EU’s bureaucracy. They are still debating: invasion or insurgency? Europe remains naïve to many things. All the while Ukrainian corruption rages on no matter who is in power. In fact, they cannot get their top leaders to comply with reporting, which is a pre-requisite to a visa-free regime.  
    

    

    Soviet Soldiers are buried in Norway – Memorialized for their sacrifice. 
    

    I am upset that our government blindly follows Obama, regarding this issue. Russia is our neighbor, and we have a long-standing relationship. Ironically the trade sanctions we imposed, on America’s behalf, hurt us more than them. Our exports to Russia fell while theirs to us rose markedly in 2015. Now is bad timing, considering that the American frackers are destroying our offshore oil industry, albeit fair and square by “building a better mousetrap.” 
    

    Norway has to stop being pathetic, acting like an American lap dog. We need to be more “American” in the sense that we make our own decisions and determine our destiny. Norwegians know all about America, but most Americans don’t know we exist. Therefore we must take care of ourselves, not depending so heavily on others for our protection. If the Finns managed to hold back Russia in 1939-1940, we should be able to do the same if an unlikely event were to happen. 
    

    The greater issue is that Europe (EU) needs to grow up.  How does a country (Russia) of 143 million with a GDP of $1.2 trillion nominal (smaller than California) stare down a federation with over 500 million people and a $19 trillion economy?  WTF right? We have not taken responsibility for our own lives, crutching on America.
    

    Trump is right. NATO is outdated and requires re-evaluation. America, being the World’s babysitter, has done so at the cost of their own people and prosperity. By breaking up NATO, perhaps we can organize with Sweden, Finland and Denmark a robust defense alliance. But then for what? Russia has never intended any harm to us.  (The antics with airplanes flying close to the border don’t count. Everyone does that on both sides.) 
    

    The Border Wall 
    

    Trump is right. A nation is defined by borders and rules. There are people in the country who pay taxes and follow a law, expecting security in return. In light of the recent migrant crisis, we also built a wall.
    

    The wall with Mexico is more of a metaphor for an advanced border control system than an actual concrete structure.  The actual wall could be built with drones, robotic and sensor technologies offered by FLIR Systems in America and Kongsberg Gruppen in Norway.  Our defense company is an expert in sensor technologies and remote weapon systems. Our leaders should be getting in good with Trump to line up some business. Participation in the border wall project would stimulate innovation in Norway, which we dearly need.
    

    I personally feel that when the EU parliament and Angela Merkel, unilaterally decided to let in massive amounts of refugees, they inadvertently endorsed dictatorships and terror groups. They allowed ISIS and other dictators to seize abandoned properties, assets, and agricultural lands, strengthening their hold. Maybe like Castro in the Mariel boatlift in 1980, the regimes sending us refugees emptied out their prisons on Europe.  We will never know until it’s too late, manifested as horrific crimes and gang activity.
    

    I want to make it clear that there is nothing wrong with bringing in refugees and immigrants. It just has to be done in a proper and controlled manner, not to overwhelm the system or society. Otherwise, legal immigrants get short changed. The legal immigrants often wait in cues, sometimes for years, having earned outstanding credentials, only to start over when they arrive in a western country.
    

    Western countries have to acknowledge and deal with the ideological conflicts, assimilating the people to western standards. Otherwise, you get Sharia courts and back alley law, enforced by intimidation and risk of family ostracization. If the West really wants to fix the problems, the feminists should fight for the rights of Muslim women in their home countries, many of which are western allies.
    

    

    The American way, teaching people to fish, is better than the European way, giving the fish outright, on refugee integration. Work defines your character, and it is what defines an American regardless of background, belief or gender.
    

    Don’t try to be like us, blindly helping people and giving them a lot of “free stuff.”  Prolonged destitution leads to self-loathing, mutating into resentment against the host. Mixed with idle time and the fact misery loves company, results in the current European situation. Listen to Ronald Reagan instead. 
    

    Trump Care vs. Obama Care
    

    America’s biggest problem is obesity. It’s destroying America from the inside out, more so than any terrorist organization or other external threats. When people don’t feel good physically, they lose it mentally and spiritually.  America’s greatest power, more than flags, history, land, guns, and innovation is its’ spirit. The American soul, defiant, driven, determined, brave and wild is unique. It’s what makes American unmeasurable and surprising.
    

    Fat acceptance is about as sensible as condoning drunk driving. It tells those in question that it’s ok to give up on themselves, endangering their own health. This view may not be “correct” but it’s factually right, regarding public health.
    

    Healthcare is something we get right in Norway. So here is some advice.Public health starts with the lifestyle and eating habits. If Trump wants to solve the American health care crisis, he needs to take on the food industry the same way he took on John McCain and the Republican party, laying them to waste. If government must provide free medical care, then it must, through policy, steer people towards healthy eating and fitness. Recently, retired US military leaders stated that the obesity epidemic poses a risk to national security, making it difficult to recruit qualified people.
    

    Perhaps, Trump Care should invest part of the defense budget into a network of sports facilities, making all the Olympic sports accessible to everyone. Inner city kids could take up rowing or learn cross country skiing. Rural Americans can get more access to swimming pools and Soccer. Not only will America rack up more medals but the Army would have a greater pool which to draw. This initiative would be a far better investment than supporting other nation’s defense programs. I am confident Trump Care could bring the cost of medications for the public through bulk buying like the Canadians do.  The savings from preventative medicine (proper eating and exercise) along with reduced obesity rates would lead to substantially lower private health insurance costs, making emergency room visits possible for everyone without experiencing bankruptcy afterward. 
    

    Norwegians want Americans to live long, healthy and happy lives so they can come and visit us, enjoying our natural wonders.
    

    Conclusion 
    

    Trump could surprise everyone, becoming a great president. He is already turning the American political system upside down. Or, he could be a much-needed stick of dynamite applied to an unmovable obstacle – the political system.  (When explosives are used to remove obstacles, they are consumed in the process. After detonation, the obstacle is cleared and the explosive is gone.)
    

    The worst case is that Trump will be a one term president. However, he will destroy a lot of bad institutions in the process by shaming them on national TV, causing people to take action at the polls, by protesting or through non-compliance – real democracy.  Imagine if Trump started calling out specific government officials, regarding project cost overruns and wasteful spending.
    

    Perhaps Trump will Pardon Edward Snowden and offer Julian Assange free passage to California to spite his rivals? I would like to see them pardoned so they can come to Norway and accept long overdue Nobel Peace Prizes (when the committee comes to its’ senses).
    

    If Trump’s presidency is a catastrophic failure, the collateral damage would also take out the two party system in the process. The US Election of 2020 may well consist of four to five political parties vying for power vs. two, giving Americans more choice.  There is really nothing to lose. This Trump statement applies to everyone not just black people.
    

    Many Europeans, Norwegians included, compare Trump to Hitler. This comparison is nonsense. Trump grew up in a family and went to an Ivy League school, married and fathered five kids. Hitler was an utter failure at life, pushed up on a wave of fascism. Europe is the continent that produced 20th-century dictators, not America.  It is Europeans who blindly follow like lemmings, not Americans. They are, in general, too unruly, varied and wild for a dictatorship to take hold.
    

    Moreover, there are plenty of checks and balances, including his own family and the US Military.  The American military people I have met are very human and have a high standard when it comes to moral law.  They would never enforce Third Reich edicts.
    

    Nevertheless, Trump could learn some diplomacy, perhaps from Nigel Farage (who sounds nice even when insulting people). It will also be impossible to ban people based on religion. Religion is a personal declaration that can be changed. (I once met some Iranians who converted to Christianity, getting baptism papers, successfully obtaining refugee status in America).  Instead, the immigration process should be a uniform and rigorous process, consisting of background checks, psychological exams, and extensive interviews, verifying the applicant's legitimacy and intent. 
    

    America needs to take care its’s own and the world needs to grow up, taking control of their own destiny. Americans need to remember, they as individuals are very powerful, unique and yet compassionate people.  They must not depend on large corporations and mass media but their instincts and values.  It will never be boring with Trump in the White House. Hence, why Kim Kardashian endorsed Hillary Clinton. Is it so bad that people will leave reality TV behind? Is it a bad thing that people find politics interesting, something that affects their life?  
    

    Please ask yourself: do you really want to be like us (socialist)? Then make your decision.  Good Luck in November.
    

    Yours Truly,
    

    Ola Nordmann from Norway.
    

    h/t AG
    

    

    

    
                            
    

    

    

    

    • 

  • 10 Reasons Why The Government Does Not Deserve Your Tax Dollars

    

    Government has plenty of money, and as The Rebel's Lauren Southern explains, the idea that feeding more money into a broken system will somehow fix the system is quite literally insane. Yet to this day we still here politicians lying through their teeth saying they need to raise taxes – and liberals defending their decision.
    

    Government wastes so much of that money that we give them that not a single person can convince me raising taxes is a good idea.
    

    Most people see this glaring incompetence, but if you don't here's a list of 10 ridiculous things the US government spent your money on…
    


    

    

    
                            
    

    

    

    

    • 

  • The War Economy: CNN's Wolf Blitzer Warns About Job Loss If US Stops Arming Saudi Arabia

    

    Submitted by Mike Krieger via Liberty Blitzkrieg,
    

    Ladies and gentlemen, it appears the long anticipated moment of peak mainstream media stupidity may have finally arrived.
    

    This is what passes for journalism in America today.
    

    The Intercept reports:
    

    

    

    

    

    

    

    

    Sen. Rand Paul’s expression of opposition to a $1.1 billion U.S. arms sale to Saudi Arabia — which has been brutally bombing civilian targets in Yemen using U.S.-made weapons for more than a year now — alarmed CNN’s Wolf Blitzer on Thursday afternoon.
    

     
    

    Blitzer’s concern: That stopping the sale could result in fewer jobs for arms manufacturers.
    

     
    

    “So for you this is a moral issue,” he told Paul during the Kentucky Republican’s appearance on CNN. “Because you know, there’s a lot of jobs at stake. Certainly if a lot of these defense contractors stop selling war planes, other sophisticated equipment to Saudi Arabia, there’s gonna be a significant loss of jobs, of revenue here in the United States. That’s secondary from your standpoint?”
    

     
    

    Paul stayed on message.  “Well not only is it a moral question, its a Constitutional question,” Paul said. “Our founding fathers very directly and specifically did not give the president the power to go to war. They gave it to Congress. So Congress needs to step up and this is what I’m doing.”
    

     
    

    Saudi Arabia began bombing Yemen in March 2015, and has since been responsible for the majority of the 10,000 deaths in the war so far. The U.S.-backed bombing coalition has been accused of intentionally targeting civilians, hospitals, factories, markets, schools, and homes. The situation is so bad that the Red Cross has started donating morgue units to Yemeni hospitals.
    

     
    

    The Obama administration has sold more weapons to the Saudis than any other administration, pledging more than $115 billion worth of small arms, tanks, helicopters, missiles, and aircraft.
    

    

    But hey, the Saudis aren’t really that bad, right. No, they’re just one of the most barbaric, inhumane terrorist supporting states on planet earth.
    

    

    Need some proof?
    

    Here you go:
    

    U.S. Government Reaffirms Total Support for Saudi War Crimes in Yemen
    

    Saudi Arabia Forces the United Nations to Remove it from a List of Child Killers
    

    Record Beheadings and the Mass Arrest of Christians – Is it ISIS? No it’s Saudi Arabia
    

    Additional Evidence Emerges That U.S. Government Officials Intentionally Whitewashed the Saudi Role in 9/11
    

    “Getting Things Done” – The Brother of Hillary Clinton’s Campaign Chair is a Major Lobbyist for Saudi Arabia
    

    Saudi Arabia Sentences Journalist to Five Years in Prison for Insulting the Kingdom’s Rulers
    

    German Intelligence Warns – Saudi Arabia to Play “Destabilizing Role” in the Middle East
    

    And yes, I could go on — and on and on and on.
    

    Finally, let’s end with the clip referenced in the article at the top.
    

    

    Great job by Rand Paul. Meanwhile, Wolf Blitzer, you are an embarrassment to your profession and to your country.
    

    

    

    
                            
    

    

    

    

    • 

  • PoSTCaRD FRoM HeLL…

    

    POST CARD FROM HELL
    

    

    • 

  • Germany Prepares For Domestic Troop Deployments As "Catastrophic" Terrorist Attack Deemed "Conceivable, Even Probable"

    

    Merkel continues to publicly defend her "open border" immigration policies despite continued erosion of her popularity amid rising nationalist sentiments in Germany and across the EU.  Meanwhile, Germany is preparing to deploy troops within its borders for the first time since World War II amid growing fears that the potential for a large-scale terrorist attack is "conceivable, even probable," at least according to Lt. Gen. Martin Schelleis.
    

    Concerns of a potential threat come as nearly 30,000 asylum seekers continue to flood the country each month from Syria alone (see chart below).  Overall, Germany took in about 2.1 million immigrants last year and over half of them were refugees. 
    

    Germany - Asylum Seekers
    

    

    

    

    

    

    

    

     
    

    

    Which has resulted in a spike in terrorist attacks….
    

    Germany - Terrorist Attacks
    

     
    

    Plans to utilize soldiers for counter-terrorism efforts within domestic borders is a very controversial concept for a country only seven decades removed from totalitarian rule.  Such efforts weren't even allowed until a court decision in 2012 which expanded Article 35 of the German constitution to allow armed forces to be deployed within domestic borders but only in response to a terrorist attack of "catastrophic proportions."
    

    Per Schelleis, German military assets are critical for providing a quick, effective response to a large-scale terrorist attack.  Per NBC:
    

    

    

    

    

    

    

    

    "What matters in a large-scale terrorist situation is that quick and effective action is taken," he told NBC News. "This calls for the procedures to be coordinated and practiced."
    

     
    

    Schelleis added the military assistance on offer could include low-altitude air space surveillance, checkpoints, explosive ordnance disposal and even advice on nuclear, biological and chemical threat situations.
    

     
    

    "We could also provide mobile laboratory capabilities," Schelleis said. "Our troops are excellently trained. The same applies to medical personnel, who are well versed in treating gunshot and burn injuries."
    

    

    That said, with an active duty force of only 60,000 (compared to 1.4mm for the United States) others within the German military ranks believe that assisting with domestic operations would spread personnel to thin. 
    

    

    

    

    

    

    

    

    The country's armed forces are spread thin while fulfilling peacekeeping missions in Afghanistan, Kosovo, Mali and in the the Mediterranean Sea.
    

     
    

    According to the German Armed Forces Association, many servicemen don't want to be used as "stopgaps at home."
    

     
    

    "We favor the planned training under the leadership of police forces in order to assess a potential role of the armed forces in a large-scale terror scenario," said Lt. Col. André Wuestner, the group's head. "But it should not be our goal to protect train stations."
    

     
    

    Wuestner said his counterparts in France and Belgium have warned that their domestic security duties — such as patrolling city centers — have kept them from training for their main responsibilities, such as missions abroad.
    

    

    We were under the impression that Merkel's plan was simply "we can do this"…did she mean "we can do this with the Bundeswehr?"
    

    

    

    
                            
    

    

    

    

    • 

  • Why Does Propaganda Work? Some People Want It

    

    Submitted by Daniel Lattier viaThe Foundation for Economic Education,
    

    There’s a principle in hypnotism that goes like this: A person cannot be hypnotized against his will. He must be a willing subject. He must be fully cooperative.
    

    So it goes with propaganda. For propaganda to be effective, it requires submissive subjects. As Professor Nicholas O’Shaughnessy wrote, propaganda is a “co-production in which we are willing participants.”
    

    Propaganda is typically defined as the dissemination of particularly biased information in support of a political or ideological cause. In his 1965 book Propaganda: The Formation of Men’s Attitudes, philosopher Jacques Ellul provided us with some of the basic characteristics of propaganda: it thwarts dialogue, it is geared toward the masses, it utilizes various media, it is continuous, it is not intended to make one think.
    

    Disable the Brain
    

    If these are the characteristics of propaganda, then it is no exaggeration to say that we are surrounded by it today. Most news organizations have become partisan shills and propagandists. They provide viewers with a steady stream of videos, audio clips, images, and articles—most lacking nuance and of dubious intellectual merit—that serve the intended purpose of promoting an ideology while fueling disdain for the “opposition”. And they have become very successful doing it.
    

    The reason they are successful, I fear, is that most people today want to be propagandized—though they would never admit it. Most people want to be given ideological marching orders and talking points from an authority. Most people have zero interest, and see little value, in engaging with arguments put forward by those who hold differing positions, unless it’s to ridicule them. Most people want to simply choose the news media organizations that best fit with their selected ideological camps and immerse themselves in their informational streams.
    

    This realization is unfortunate, but not really surprising. Over the past few hundred years we’ve had a massive democratization of public discourse and higher education in the West. A continually larger percentage of the population has gone to school for longer and longer periods of time, and has been given the impression that, as a result of this education, they are enlightened “critical thinkers” whose opinions have as much value as the next person’s.  
    

    Yet, at the same time, we must confront the question raised by Dorothy Sayers in her famous 1947 essay “The Lost Tools of Learning”:
    

    

    

    

    

    

    

    

    “Has it ever struck you as odd, or unfortunate, that today, when the proportion of literacy throughout Western Europe is higher than it has ever been, people should have become susceptible to the influence of advertisement and mass propaganda to an extent hitherto unheard of and unimagined?”
    

    

    The fact is, though everyone goes through the education system today, most are not provided with the building blocks of thought. Most are no longer taught logic. Most are not shown how to engage in rational debate.
    

    Avoiding Complexity
    

    And even if these skills were better taught in today’s schools, I highly doubt that our situation would be that much better. If history and experience are any indicators, the difficult reality is that most people either don’t possess the intellectual chops for doing battle with complex and controversial ideas, or they choose not to undertake the discipline necessary to acquire this skill.  
    

    In the past, when confronted with new or different ideas, people who did not achieve the heights of formal education had the values and traditions embedded in their communities to fall back on. These provided them with a foundation—a “common sense”—by which to assess the merit those opinions that may differ from their own.
    

    But today, hyper-individualism, increased urbanization, the breakdown of the family, and ideological divisions have caused a decline in the formative influence of community, and reduced our access to the “common sense” that it can provide.  
    

    Intellectually insecure and socially uprooted, many people are now desperate for some authority to cling to, someone who will give simple expression to the inklings of thoughts and instincts to which they can neither give adequate voice nor adequately live out.   
    

    Is it any wonder, then, that so many people would seek out propaganda today, and that its providers would be so happy to oblige? 
    

    

    

    
                            
    

    

    

    

    • 



Digest powered by RSS Digest



						
						
						
		

		
			




 


                



		
	

    
    			    	

            

            	Sep
                09
                            

                    

            
		        

			
				Today’s News 9th September 2016            
			        

		
					    
    		
				

			
													
							
												
								
    

  • The "Bomber Harris" Of Central Banks

    

    By Chris at www.CapitalistExploits.at
    

    Market dislocations occur when financial markets, operating under stressful conditions, experience large widespread asset mispricing.
    

    Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all it’s glorious insanity.
    

    kramer
    

    While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.
    

    Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.
    

    Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.
    

    In this week’s edition of the WOW we’re covering the Japanese central bank policies and the recent rise in Japanese interest rates
    

    It was back in mid 2011 that I first began shorting the yen. Specifically, I was long both XAU/JPY (in blue) and USD/JPY (in green and red).
    

    jpy
    

    On the USD/JPY we moved all the way from 72 to 125 in early 2015 which was obviously a profitable run.
    

    Gold, on the other hand, went ballistic through late 2012, then proceeded to collapse into 2013 before bouncing back and settling into a trading pattern (albeit a volatile one) which is pretty much where we stand today.
    

    I’ve been trading around these core positions ever since I first poked fun at the BOJ in March of 2011.
    

    Then the following year (January of 2012) I wrote a satirical piece, suggesting methods the BOJ could use to entice retail investors into the JGB market. Ironically my satire today looks far more plausible than the methods subsequently taken by the BOJ over the last 4 years. Truth truly is stranger than fiction.
    

    Beginning 2016 the USD/JPY positions have experienced significant drawdowns with volatility spiking. Drawdowns only hurt if you’re levered, while volatility is important for that portion of any position held in options contracts. You want to be buying volatility when it’s cheap and selling it when it’s expensive.
    

    I mention these things since I’ve been looking to re-establish and pyramid back in. And so as I sit here today I’m left pondering the BOJ’s next move and how much manoeuvrability they have left.
    

    Japanese government bond rates have been rising sharply towards the zero mark over the past 6 months. A reversal of the downtrend. We can see this in the 10-year JGB chart below.
    

    JGB Chart
    

    This is causing concern amongst the elites at the BOJ. Like market participants such as myself and many of the fund managers (some of the world’s most notable and successful) I regularly speak with, the BOJ may be asking the same question we are: is this the invisible hand of the market beginning to repudiate negative interest rates?
    

    We’ll only know in hind sight and must work with the probabilities in any given scenario. I know of no successful trader or investor who manages risk any other way.
    

    What Will the BOJ Do Next?
    

    In a recent statement Kuroda-san dismissed ideas of calling a halt to their aggressive monetary policy, and while what a central bank says and what a Central bank does are not always the same thing, we do know that the BOJ is in a bit of a pickle.
    

    

    “It is often argued that there is a limit to monetary easing, but I do not share such a view. 
    


    

    Needless to say, there is still ample room for further cuts in the negative interest rate and for an increase in the quantity dimension.”
    

    

    Haruhiko Kuroda
    

    The BOJ Conundrum
    

    Do you remember the Monty Python skit with Colin “Bomber” Harris self-wrestling where he succeeds by defeating himself?
    

    The BOJ is the “Bomber Harris” of the central bank world. It’s gotten to the point where it is wrestling with itself and bound to win, and in doing so bound to lose.
    

    They’ve stated their intent purpose is to create inflation. It’s not specifically to destroy the yen or further layer the country with ever greater debts. It’s to create inflation. They are simply accepting that those are the consequences they must bare.
    

    The process which they’ve used to do so is with a record-setting bond purchase program which has now crept into buying equities and commercial property ETFs.
    

    Consider that the former (bond purchasing) was designed to push interest rates down, forcing capital out of the bond market into the equity markets. Forcing people to essentially spend and invest instead of hoard and save, thus stoking the flames of inflation.
    

    The latter (buying equities and commercial real estate ETFs) has been a panicked attempt to do what the market has largely refused to do in the size deemed necessary as the 2% inflation target still looks a long way off.
    

    This is self-wrestling at its best. As bond yields have plunged below the neckline, destroying the ability of savers to get any sort of return those savers have instead saved more and hoarded money. Deflation is persistent as a result.
    

    Many of you will remember my conversation with colleague Grant Williams early this year where we discussed the market reaction to the BOJ going negative. The Nikkei dropped at the open and the yen rallied. Not at all what the BOJ expected or wanted. Wrestling against themselves.
    

    As I mentioned in a recent issue of World Out of Whack focused on demographics, consumption changes radically when you’re retiring. Needs change and that is a qualitative issue that few seem to grasp, certainly not central bankers.
    

    While these policies continue to fail, the debt pile grows and tensions increase. A consequence of enormous debt is the ability to service these debts. Nobody is talking about this anymore. At negative interest rates who cares, right?
    

    The Three Musketeers
    

    In a world where central bank policy globally is co-ordinated, negative interest rates don’t seem to pose much risk. Provided they’re all in it together. One for all and all for one.
    

    The ECB, FED, and BOJ are of course the three most important central banks in the world and the only real players when it comes to deep liquid capital markets.
    

    It’s ironic that the BOJ is using negative interest rates in an attempt to devalue the yen but can only really be successful if they can devalue against the euro and dollar.
    

    This means of course that a yen devaluation needs to be met with either no or less devaluation by the ECB and the FED, otherwise it simply doesn’t work as they all go down together.
    

    And herein lies the conundrum. Co-ordination between these three musketeers is necessary in order for the bond markets to hold together. Breaking ranks could provide a global shock that markets are wholly unprepared for and as the entire ball of wax grows bigger, any divergences become more and more dangerous. Pretty soon the smallest arbitrage will threaten to tear through the increasingly fragile markets.
    

    Interestingly this is where the qualitative, not quantitative side to economics becomes really, really important. It’s a reason why I’ve been hammering on about the change in the zeitgeist affecting US politics as well as the changes taking place in European politics. These are qualitative behavioural economics issues which, together with the quantitative, need to be understood (a topic I’ll be covering later this week).
    

    Rates or Currencies? Take Your Pick
    

    So on the one hand we have currency risk and on the other we have interest rate risk.
    

    Right now interest rates are negative with the outlier being the US. If the chubby lady hikes, even by 25 basis points (because that’s the most they’d dare to do), then the BOJ will get what they want in a depreciating yen. But the consequences to their already falling bond market (rising rates) could get out of hand and quickly.
    

    Ironically the easiest way to counter that would be for the Fed to slash rates, bringing rate differentials closer together but that would not have the same depreciating affect on the yen.
    

    What is clearer with every passing day is that these guys are less and less data dependent. Monetary policy at the BOJ is now completely reactionary and chaotic. After all, what’s the point at looking at data sets anymore when any reference point that may have had any meaning was left miles offshore a long time ago?
    

    Understanding where institutional capital will flow is always a pretty useful question and so..
    

    Imagine you’re an institution (as some readers are) and have to buy government debt in size…
    

    BOJ-WOW-poll
    

    Cast your vote here and also see what others think
    

    Investing and protecting our capital in a world which is enjoying the most severe distortions of any period in mans recorded history means that a different approach is required. And traditional portfolio management fails miserably to accomplish this.
    

    And so our goal here is simple: protecting the majority of our wealth from the inevitable consequences of absurdity, while finding the most asymmetric investment opportunities for our capital. Ironically, such opportunities are a result of the actions which have landed the world in such trouble to begin with.
    

    – Chris
    

    PS: Know anyone that might enjoy this? Please share this with them.
    

    “Oh what a tangled web we weave, when first we practice to deceive” – Sir Walter Scott
    

    ————————————–
    

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

    get access to free subscriber-only content here.
    

    ————————————–
    

    

    • 

  • Latin America's 'Pink Tide' Crashes On The Rocks

    

    Submitted by Ryan McMaken via The Mises Institute,
    

    Ten years ago, South America was witnessing the rise of what came to be known as the "pink tide." Characterized by an allegedly kinder and softer version of socialism than the "red" communism of Castro's Cuba, the pink tide had begun with the election of Hugo Chavez in Venezuela in 1998, followed by the election of Lula da Silva in Brazil in 2002, and followed by the rise of the Kirchners in Argentina in 2003. The tide continued to roll in with the election of Evo Morales in Bolivia in 2006, and Rafael Correa's election in Ecuador in 2007.
    

    As these new leftist candidates gained traction, their success was said to herald a new era of leftist politics in South America that would bring to an end the "neoliberal" consensus and impose a new, more humane economics on Latin American society.
    

    Eighteen years after Hugo Chavez's inauguration, things haven't gone quite as planned.
    

    The economy of Venezuela is in seemingly terminal decline with riots, shortages, and enforced slave labor imposed in an attempt to force more production out of the population. Meanwhile, the economies of Brazil and Argentina — while not comparable to Venezuela — are among the worst in Latin America, with Brazil heading for its its worst depression since 1901.
    

    As economies worsened, corruption and authoritarian tactics worsened as well. Venezuelans have gotten the worst of it with citizens groaning under the weight of a police state that shuts down small business and persecutes even the smallest entrepreneurs for alleged economic "crimes" such as being a "class traitor." In her final years, Kristina Kirchner became increasingly autocratic and paranoid, going so far as to prosecute and impose fines on economists who made economic forecasts the Argentinian state found to be be unflattering. Meanwhile in Brazil, corruption reached new heights as President Rousseff — the pink-tide successor to da Silva — attempted to save the economy and her political career by showering her political allies with "stimulus" cash.
    

    The Hard-liners Give the Worst of It
    

    Much of the most serious damage has been limited to Venezuela, Brazil, and Argentina, however, as it seems the pink tide was never quite as deep or strong as many suspected it to be.
    

    Correa and Morales, for instance, while spouting Marxist rhetoric, proved to be more pragmatic rather than ideological, opting for more restrained reforms that still left room for the more standard fare of so-called neoliberalism, such as expanded international trade and relatively restrained government budgets.
    

    In contrast, Venezuela's regime committed itself to revolutionary changes in its economic and political systems while the Kirchners clamped down on free trade, manipulated exchange rates, imposed capital controls and persecuted political enemies. Brazil expanded government spending to new highs.
    

    Over the past decade, we saw the rise of two different blocs in Latin America. There were the more market-oriented economies, found in Chile, Colombia, Peru, and Uruguay. In some cases, these countries elected avowed leftists as well. But, even these center-left governments tended to lean toward expanded trade or benign neglect toward informal economies and the business sector.
    

    Some countries — Chile, Colombia, Peru, and Mexico — after years of consistent growth and stable politics, were even christened the "Pacific Pumas" in a play on the "Asian Tigers" moniker of the 1990s.
    

    The general trend continued into 2015, as the two blocs of South America show two very different trajectories:
    

    

    

    

    Of course, this is just a snapshot of a trend that has continued for several years. The committed pink tide countries have foundered while the more pragmatic, restrained, and trade-oriented regimes have seen far better growth trends:
    

    

    

    

    Source: IMF calculations and estimates.
    

    The next graph shows trends in GDP per capita since 1990. In this case, I have taken the same per capita GDP values and indexed them, with a base year of 1990 to give us a view of growth over the past 25 years.
    

    In this case, we find that countries that were less committed to the pink tide experienced the most growth. The top three countries for growth by this measure are Chile, Peru, and Uruguay. Argentina had been keeping pace with Peru, but has gone into decline since 2011, and now is about equal to Colombia in terms of growth. 
    

    Indeed, there has been generally unabated growth for all countries shown here except for Argentina, Brazil, and Venezuela. All three of the leading "pink tide" countries show distinct downtrends in recent years, with no growth at all over the past five years. Venezuela is in the worst position with no net growth at all in 25 years.
    

    

    

    

    For help in reading the graph, here are all countries by index value in 2016, and by percentage growth since 1990 (GDP per capita):
    

      

    • Chile 2.5 (151% growth) 
      • 

    • Peru 2.3 (125% growth)
      • 

    • Uruguay 2.1 (110% growth)
      • 

    • Argentina 1.9 (86% growth)
      • 

    • Colombia 1.8 (77% growth)
      • 

    • Bolivia 1.6 (59% growth)
      • 

    • Ecuador 1.6 (55% growth)
      • 

    • Brazil 1.4 (42% growth)
      • 

    • Mexico 1.4 (41% growth)
      • 

    • Paraguay 1.3 (34% growth)
      • 

    • Venezuela 1 (-1.2% growth)
      • 

    

    Naturally, not everything can be explained simply by the politics of the past decade. There are always other major institutional issues, and even military issues, as in the case of Colombia's recently-ended conflict with FARC rebels. Mexico's War on Drugs continues to be a significant drag on growth. 
    

    Moreover, it is also too simplistic to slap easy left-right labels on regimes, since the brand of socialism practiced in Venezuela is significantly different from that practiced by the Peronists in Argentina. Clearly, political institutions in Brazil are relatively less authoritarian than those in Venezuela. Even worse would be to go off mere political party labels as in the case of the Socialist Party in Chile, which currently controls the presidency in that country. The "Socialist Party" in Chile is best described as mildly center-left by modern standards, and party members should obviously not be lumped together with the Chavismo socialists of Venezuela. 
    

    Nevertheless, whether called Peronista or Chavismo, regimes more committed to populist, third-way, and socialist political action in practice are, not surprisingly, coming up against some of the disastrous economic side effects of their policies. 
    

    Of course, we can't prove anything by demonstrating correlations, which is why we must rely on sound economic theory as well.
    

    

    

    
                            
    

    

    

    

    • 

  • Wells Fargo Fires 5,300 For Engaging In Massive Fraud, Creating Over 2 Million Fake Accounts

    

    For years we have wondered why Wells Fargo, America’s largest mortgage lender, is also Warren Buffett’s favorite bank. Now we know why. 
    

    On Thursday, Wells Fargo was fined $185 million, (including a $100 million penalty from the Consumer Financial Protection Bureau, the largest penalty the agency has ever issued) for engaging in pervasive fraud over the years which included opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. Regulators said such illegal sales practices had been going on since at least 2011.
    

    In all, Wells opened 1.5 million bank accounts and “applied” for 565,000 credit cards that were not authorized by their customers. 
    

    Wells Fargo told to CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years.  The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said. 
    

    How Wells perpetrated fraud is that its employees moved funds from customers’ existing accounts into newly-created accounts without their knowledge or consent, regulators say. The CFPB described this practice as “widespread” and led to customers being charged for insufficient funds or overdraft fees, because the money was not in their original accounts. Additionally, Wells Fargo employees also submitted applications for 565,443 credit card accounts without their knowledge or consent, the CFPB said the analysis found. Many customers who had unauthorized credit cards opened in their names were hit by annual fees, interest charges and other fees.
    

    According to the NYT, regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for drumming up new business. Many current and former Wells employees told regulators they had felt extreme pressure to expand the number of new accounts at the bank.
    

    And, since it is US government policy never to send a banker to prison, they thought that engaging in criminal behavior was not such a bad idea. 
    

    Federal banking regulators said the practices reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks.
    

    “Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” said CFPB Director Richard Cordray. He added that “unchecked incentives can lead to serious consumer harm, and that is what happened here.”
    

    “Consumers must be able to trust their banks. They should never be taken advantage of,” said Mike Feuer, the Los Angeles City Attorney who joined the settlement. 
    

    On its behalf Wells fargo issued a statement saying it “is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement adding that “at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action.”
    

    As the NYT puts it, “this is an ugly moment for Wells Fargo, one of the few large American banks that have managed to produce consistent profit increases since the financial crisis.” Now we know one of the reasons why. 
    

    As CNN redundantly adds, “the scope of the scandal is shocking.”
    

    And since nobody will go to prison, in a few months we will read another such “shocking scandal” perpetrated by another bailed-out bank.
    

    

    

    
                            
    

    

    

    

    • 

  • The Official Story Is Now The Conspiracy Theory: Paul Craig Roberts Warns "The Tide is Turning"

    

    Authored by Paul Craig Roberts,
    

    In a few days it will be the 15th anniversary of 9/11, and this November 22 will be the 53rd anniversary of the assassination of President John F. Kennedy in Dallas, Texas. These two state crimes against democracy destroyed American democracy, accountable government, and the Constitution’s protections of civil liberty.
    

    Years after the damage done by these events the American people no longer believe the official stories. Neither does the government, but the government will never validate the distrust that Americans now share of the oligarchs’ government by acknowledging the truth.
    

    The official explanation of the assassination of President Kennedy never made any sense. Videos of the assassination contradicted the official story, as did witnesses, and many credible people challenged the government’s story.  The CIA was faced with the official explanation becoming unglued and launched its media program stigmatizing doubters as “conspiracy theorists.” 
    

    The CIA’s psych warfare against the public succeeded at the time and for a number of years during which witnesses had mysterious deaths and the trail grew cold. But by the late 1970s there was so much public skepticism of the official story that the US Congress took the risk of being labeled “conspiracy kooks.” The House Select Committee on Assassinations reopened the inquiry into JFK’s murder. The House Committee concluded that the Warren Commission’s investigation was seriously flawed, that there was more than one person firing at President Kennedy and that there was a conspiracy to assassinate JFK.
    

    The corrupt US Department of Justice (sic) contradicted the House Select Committee’s report. However, the American people believed the Select Committee and not the corrupt Justice (sic) Department, which never tells the truth about anything.
    

    By 2013 polls showed that most Americans are “conspiracy kooks” who do not believe the official government line on JFK’s assassination. So with regard to JFK’s assassination, the “conspiracy theorists” are in the majority. The minority are the Americans who cannot escape their brainwashing.
    

    

    In a few days it will be the 15th anniversary of the alleged al Qaeda attack on the World Trade Center and Pentagon, and we are witnessing the fading protection that the charge of “conspiracy theorist” provides for the officlal government story. Indeed, the official 9/11 story is collapsing before our eyes.
    

    Europhysics, the respected publicaton of the European physics community has pubished an article by scientists who conclude that “the evidence points overwhelmingly to the conclusion that all three [World Trade Center] buildings were destroyed by controlled demolition.” Few American scientists can admit this, because their careers depend on US government and military/security complex research contracts. Independent scientists in the US are a vanishing breed, an endangered species.
    

    The scientists say that in view of their findings, “it is morally imperative” that 9/11 “be the subject of a truly scientific and impartial investigation by responsible authorities.”
    

    So now we are faced with a peculiar situation. The scientifically ignorant two-bit punk American presstitutes claim to know more than the editors of the journal of the European physics community and the scientists who did the investigation. Don’t you think it farfetched that ignorant, corrupt, and cowardly American journalists who lie for money know more than physicists, chemists, 2,700 high-rise architects and structural engineers who have called on the US Congress to launch a real investigation of 9/11, firefighters and first responders who were on the WTC scene, military and civilian pilots and former high government officials, all of whom are on record challenging the unbelievable and physically impossible official story of 9/11? What kind of a dumbshit moron does a person have to be to believe that the United States government and its media whores know better than the laws of physics?
    

    The ability of the presstitutes to influence Americans seems to be on the decline. The media ganged up on Donald Trump during the Republican primaries, intending to deny Trump the nomination. But the voters ignored the presstitutes. In the current presidential campaign, Hillary is not the run-away winner that the presstitutes are trying to make her. And despite the propaganda ministry, the legs under the official 9/11 story are wobbly, to say the least.
    

    Indeed, the official 9/11 story already has lost credibility with the American public. Last April a Rasmussen Poll found that “Americans doubt they’ve been told all the facts about the September 11, 2001 terrorist attacks on the United States and strongly believe the government should come clean.” 
    

    A YouGov poll in 2013 found that 50 percent of Americans “have doubts about the government’s account of 9/11,” which shows that the public is far more intelligent and less corrupt than the presstitutes who are paid to lie to the public. This poll also found that as a consequence of the cover-up job performed by the American presstitutes, 46 percent of Americans were not even aware that a third WTC building, Building 7, collapsed on September 11. After viewing films of WTC 7’s collapse, 46 percent saw it as a controlled demolition. By a margin of two to one, poll respondants support a new investigation of Building 7’s collapse.
    

    So, in America today “conspiracy kooks” outnumber those who believe the official lies. As the official lies are themselves conspiracy theories, Americans who disbelieve the official conspiracy theories outnumber Americans who believe official conspiracy theories. The question is: who are the real conspiracy kooks, the majority who disbelieve the official lies or the minority who believe the official lies?
    

    It is curious that the CIA’s psych-op mind-controll has broken down in the cases of the JFK assassination and 9/11, but is still effective in more recently orchestrated events, such as San Bernardino, Orlando, Paris, and Nice. Perhaps this is because not enough time has passed for the public to pay attention to the vast difference between the stories and the evidence.
    

    The Internet offers many refutations of the official accounts. With regard to Nice, France, the Nice police officials themselves are having problems with the official story. The French Anti-Terrorist Sub-Directorate in Paris has ordered the public authorities in Nice to delete the video recordings from security cameras of the “Nice Terror Truck Attack.” The Nice authorities refused on the grounds that this would be destruction of criminal evidence. This story has disappeared from the news. I have asked friends in France how this conflict was resolved and have not heard anything. The French like to live life well and faced with the refugees from Washington’s wars, they seem to be focused on living life well while it can be done. If I hear anything, I will pass it on.
    

    Apparently, the order to delete the video evidence of the “attack” was not sufficient for the French Ministry of the Interior. According to a senior Nice police officer, Sandra Bertin, the Interior Ministry pressured her to falsify her police report on the Nice “truck massacre.” Officer Bertin told the Journal du Dimanche that “he ordered me to put in [the report] the specific positions of the national police which I had not seen on the screen.”
    

    The Interior Minister, Bernard Cazeneuve is suing the Nice police official for “defamation,” as if it is possible to defame any politician anywhere in the corrupt West.   Moreover, why would a senior Nice official make up a story about being ordered to change a report? It doesn’t make any sense, does it? Clearly, the central government is trying to hide the evidence against the official story.
    

    It seems that the French media is disposing of the Nice police official by branding her a rightwing racist opposed to the current government.
    

    Watch this video and ignore the narrator’s four-letter vocabulary.
    


    What you will learn is that all those people you saw running in the presstitute TV reports had no idea why they were running. The presstitutes created the impression that they were running away from the truck. However, as the interviews show, they were running because other people were running, because the police told them “terrorists, run,” and because they heard shots (apparently police firing blanks). Those interviewed reported, “You run with them even though you have no idea what you are running from. You can’t help it, you run with them.” None of those running away ever saw a truck.
    

    According to the foul-mouthed narrator, the film of the people running away was taken prior to the time the truck allegedly mowed down 185 people, killing 85 of them. The narrator appears to be correct if the time stamps on videos are correct. The narrator says the streets needed to be cleared for the crisis actors to put on their show that is used to control our minds about what happened.
    

    I have pointed out that a truck that hit 185 people, killing 85 of them would be covered in blood and that bodies would be splattered all over the street with blood everywhere. Yet, the photos and videos that we are shown show no such evidence. The stopped truck on which police are directing gunfire is as white as snow.
    

    Independently of the vast analysis online of the video evidence of the alleged “Nice attack,” I suspect the Nice “terror attack” for the same reason that the Pentagon attack is suspect. Despite all the contrary evidence against the official stories, the authorities refuse to release the video evidence that, if it shows what the authorities claim, would shut up the skeptics and prove the official story.
    

    When a government claims it has video evidence that proves its official story but refuses to release it, indeed, demands the destruction of the video evidence, we know for an absolute fact that the video evidence totally contradicts the official story. That is the only possible conclusion.
    

    My readers will write to me asking how the government expects to get away with its faked, and in the case of 9/11 false flag, terror orchestrations? The answer, perhaps, is that just as it took a long time for the JFK assassination and 9/11 lies to catch up with the government, the recent orchestrations will also take some time for a slowly awakening public to catch on. In the meantime the orchestrated events will serve the agendas that they are intended to serve, and by the time that the public sees through the orchestrations, a new situation will be in place with new orchestrations.
    

    Keep in mind that the public thinks it is shown evidence. Newspapers need photos to give a visual dimension to their coverage, and TV needs videos of the events. News organizations are under a time pressure, and they have to use what they are handed or what is at hand. There is no time to scrutinize the visual material or to raise questions about it. Most of the public thinks that the photos and videos shown to them are evidence or would not be shown and accepts the visual evidence without question. In an earlier column I linked to the vast array of Nice photos provided in the UK Daily Mail. The photos show a calm situation. There are a few people lying in the street without any sign of bodily damage or blood and there are covered objects that the public assumes are dead people. But the streets are devoid of the splattered blood and mangled bodies that would be the consequence of a truck hitting 185 people. Similarly, we have been shown very few videos and their origin is unknown except for the one attributed to Richard Gutjahr who was apparently pre-positioned to film inconclusively both the Nice and German “terror attacks.” Online analysis of the videos shows that the videos are not evidence for the storyline. The real question is why the French Interior Minister has prevented the release and demanded destruction of the security camera videos that filmed the entire event, an order that brought the central government in Paris in conflict with the public authorities in Nice. There has been no US media interest whatsoever in this very strange event. It is not a “conspiracy theory” to ask why the public cannot see the video evidence that shows what actually happened.
    

    What agenda is served by the Paris and Nice attacks? This is the question everyone should be asking and the media, if we had one, should be investigating. With the information currently available to me, my answer is this. Of all the peoples of Western Europe, the French are the most independently minded. French independence has taken a number of recent hits from Washington:
    

    

    

    

    

    

    

    

    The largest French bank was forced to hand over $9 billion to Washington for doing business with a country on Washington’s disapproval list.
    

     
    

    Washington forced France to cancel a lucrative ship-building program for Russia, to the detriment of French companies and shipyard workers.
    

     
    

    Washington has forced France into a diplomatic conflict with Russia that the French do not want and into a looming military conflict which the French want even less, as the conflict would mean the vaporization of France. As one Russian SS-18 can wipe out three-fourths of the state of New York, how many do you think it would take to wipe France off of the face of the Earth? Not even a handful.
    

     
    

    Keep in mind that in 1966 President Charles de Gaulle pulled France out of NATO on the grounds that it was necessary to preserve French independence in world affairs. France did not again submit to Washington’s control until 2009 when Washington-owned Nicolas Sarkozy, put into the French presidency by Washington’s money, followed his orders and rejoined NATO.
    

    

    The Paris and Nice orchestrated events serve to scare France back into Washington’s arms. Dreams of independence become nightmares when independence leaves the French people at the mercy of both terrorists and Russians. Washington, who owns Sarkozy, who is once again Washington’s candidate for president of France, intends to keep France in NATO.
    

    The article in Europhysics  pointing out the impossibility of the official 9/11 story could possibly lead to a rebirth of skepticism among Europeans. Only a skeptical media willing to investigate government storylines can bring a halt to the staged terror events that serve secret agendas.
    

    Keep in mind that the US government has plentiful video evidence of the 9/11 attack on the Pentagon but refuses to release the evidence that it says support its story. Similarly, the French federal government has prohibited Nice authorities from releasing the security camera videos of the Nice truck attack and has ordered the video evidence destroyed. How can we believe governments that refuse to show us the hard evidence?
    

    

    

    
                            
    

    

    

    

    • 

  • And The Fed Wants To Raise Rates When?

    

    For the sixth year running, exuberant GDP growth projections have been drastically marked down to a new normal low. But this year is different, not only have 2016 GDP growth expectations been marked down to post-crisis lows, but The Fed – in all its wisdom – is determined to raise rates (twice if you believe them) because, in their own words“the economy is in good shape and headed in the right direction…”
    

    

    

    Does this look like the right time raise rates?
    

    

     
    

    The oft-quoted Zero Hedge chart above prompted DoubleLine’s Jeff Gundlach to state “clearly this is a bad time to raise rates” adding that if rate-hike odds remain below 40%, then September is off the table (as The Fed does not want to shock the markets)…
    

    

    Good luck Janet.
    

    

    

    
                            
    

    

    

    

    • 

  • Over 70% Of US Doctors Surveyed Say Hillary's Health Concerns Are "Serious, Possibly Disqualifying"

    

    On a day when Hillary Clinton proclaimed the media biased (against her), labeling the GOP as "sad, misogynistic sexists," a survey of the Association of American Physicians and Surgeons (AAPS) found that nearly 71% of physicians thought concerns about Hillary Clinton's health are "serious – could be disqualifying for the position of President." 
    

    With her lead over Trump tumbling to six-week lows following a poor performance at last night's "commander-in-chief" forum, and a press conference focused on what she was not asked (or didn't answer)…
    

    

    Source: RealClearPolitics
    

    Hillary Clinton's campaign has called "sexism" on the GOP. As The Hill reports,
    

    

    

    

    

    

    

    

    The Democratic nominee, along with top surrogates and allies, has seized on Trump’s recent comment that Clinton does not have a “presidential look,” using the comment to depict him as sexist.
    

     
    

    The former secretary of State also laid into Republican National Committee Chairman Reince Priebus for his tweet that she looked “angry” during an MSNBC presidential forum.
    

     
    

    Clinton didn’t rule out sexism when asked if she was being treated differently in the political race because she is a woman.
    

     
    

    “I'm going to let all of you ponder that last question,” the first female presidential nominee replied with a grin at a press conference.
    

     
    

    “I think there will be a lot of Ph.D. theses and popular journalism writing on that subject for years to come. I don’t take my advice and I don’t take anything seriously that comes from the RNC.”
    

    

    Chelsea Clinton also waded into the debate on Thursday, criticizing Trump’s remarks about a “presidential look.”
    

    

    

    

    

    

    

    

    “Everyone can see that as the sad, misogynistic, sexist rhetoric that I hoped we had moved beyond in the 21st century,” the former first lady's daughter said.
    

    

    This isn’t the first time accusations of sexism have bubbled up during the campaign.
    

    

    

    

    

    

    

    

    Earlier this year, Clinton fired at Trump for saying that if she were a man, “she would get 5 percent of the vote.” The billionaire criticized Clinton at the time for playing the “woman card.”
    

     
    

    “They're pretty quick to yell sexism in a crowded theater … but constantly playing the victim card is not something you do from a position of strength,” said Republican strategist Matt Mackowiak.
    

     
    

    Mackowiak said playing up gender is a “risk that can backfire” especially because “the first to make inroads with the other [demographic] will win.”
    

    

    This 'sexist' call follows a lambasting of any and everyone who even mentions her health as "conspiracy theorists" with a political axe to grind. Ultimately, the media frenzy culminated in an article written by the WaPo's Chris Cilizza who concluded that "the questions about Hillary Clinton's health are absurd"…
    

    

    … a statement which could pass for absurd judging by the Clinton campaign's furious response to demonize any member of the mainstream who dares to even bring them up.
    

    *  *  *
    

    Which means that, according to AAPS, over 70% of US doctors and surgeons are absurd right-wing tin-foil hat-wearers…
    

    

    

    

    

    

    

    

    Concerns about Hillary Clinton's health are "serious—could be disqualifying for the position of President of the U.S.," say nearly 71% of 250 physicians responding to an informal internet survey by the Association of American Physicians and Surgeons (AAPS). About 20% said concerns were "likely overblown, but should be addressed as by full release of medical records." Only 2.7% responded that they were "just a political attack; I have confidence in the letter from her physician and see no cause for concern."
    

     
    

    While more than 81% were aware of her history of a concussion, only 59% were aware of the cerebral sinus thrombosis, and 52% of the history of deep venous thrombosis.
    

     
    

    More than 78% said the health concerns had received "not enough emphasis" in the media, and only 2.7% that there had been "too much emphasis."
    

     
    

    Nearly two-thirds said that a physician who had a concern about a candidate's fitness to serve for health reasons should "make the concerns known to the public." Only 11% said a physician should "keep silent unless he had personally examined the patient," and 10% that the candidate's health was "off limits for public discussion."
    

    

    Eighty-eight respondents submitted comments.
    

    

    

    

    

    

    

    

    One said that "the public interest will ALWAYS override either privacy rights or rights of self-determination in the case of a presidential candidate."
    

     
    

    Another mentioned Clinton's "so called loss of memory claimed during her FBI questioning about her email server."
    

     
    

    Beyond the specific questions, one remarked that "I think that the candidate should be honest with the public about his/her health!" 
    

     
    

    The history of the concussion was concerning: "The public must watch the movie Concussion to realize that such an injury does affect thought process."
    

    

    A poll of 833 randomly selected registered voters by Gravis Marketing showed that nearly half (49%) were not aware of the "well documented major health issues that Hillary Clinton has." Nearly three-fourths (74%) were unaware of Bill Clinton's statement that Hillary suffered a "terrible" concussion requiring "six months of very serious work to get over." The majority (57%) thought that candidates should release their medical records.
    

    

    

    

    

    

    

    

    "Both physicians and other voters think that health concerns are relevant when choosing a presidential candidate," states AAPS executive director Jane M. Orient, M.D.
    

     
    

    "However, more than 40% of physician respondents were unaware of the cerebral sinus thrombosis, and the vast majority of voters were not aware of all of Clinton's problems or their potential serious long-term implications for cognitive function."
    

    

    Now that's a lot of "absurd conspiracy theorists."
    

    

    

    
                            
    

    

    

    

    • 

  • AsiaPac Stocks, Won Tumble After Possible North Korea "Nuke Test"

    

    Reports of an "artificial earthquake" in North Korea sparked a bout of risk off in AsiaPac stocks and the Korean Won as USGS says the 5.3 magnitude quake at zero depth is near past North Kore nuclear test sites.
    

      

    • *S. KOREA DETECTS ARTIFICIAL EARTHQUAKE IN N.KOREA AROUND 9:30AM
      • 

    • *S. KOREA GOVT CALLS FOR TASK FORCE ON POSSIBLE NUKE TEST:YONHAP
      • 

    • *5.3 MAG. EARTHQUAKE CHINA-NORTH KOREA BORDER REGION :EMSC
      • 

    • *USGS CITES 'POSSIBLE EXPLOSION' FOR M5.3 EVENT IN N. KOREA
      • 

    • *USGS: LOCATION NEAR PAST NORTH KOREA NUCLEAR TESTS
      • 

    • *JAPAN SAYS NORTH KOREA LIKELY CONDUCTED NUCLEAR TEST
      • 

    

    

    As Bloomberg reports, the 5.1-magnitude earthquake in a similar location was recorded before North Korea’s fourth nuclear test in January at the site. The news agency said the test was at the same location.
    

      

    • *SUGA: JAPAN SEES POSSIBILITY N.KOREA QUAKE WAS NUCLEAR TEST
      • 

    • *S. KOREA FOREIGN MINISTRY HOLDS EMERGENCY MEETING: YONHAP
      • 

    

    And the initial reaction is selling pressure in local currencies…
    

    

     
    

    And stocks…
    

    

    As AP reports, a second nuclear test this year would be a defiant response to Western pressure on Pyongyang to halt its nuclear ambitions. The country has previously conducted tests every three to four years.
    

    

    

    

    

    

    

    

    Any test will lead to a strong push for new, tougher sanctions at the United Nations and further worsen already abysmal relations between Pyongyang and its neighbors. North Korean nuclear tests worry outside governments because they are seen as moving North Korea's scientists and engineers that much closer to their goal of an arsenal of nuclear-tipped missiles that can reach the United States.
    

     
    

    North Korea is thought to have a handful of rudimentary nuclear bombs and has spent decades trying to perfect a multistage, long-range missile to eventually carry smaller versions of those bombs. After several failures, it put its first satellite into space with a long-range rocket launched in December 2012, and has since launched another such successful launch.
    

     
    

    Experts say that ballistic missiles and rockets in satellite launches share similar bodies, engines and other technology. The U.N. calls the North's long-range rocket launches banned tests of ballistic missile technology.
    

     
    

    Some analysts say the North hasn't likely achieved the technology needed to manufacture a miniaturized nuclear warhead that could fit on a long-range missile capable of hitting the U.S. But there is a growing debate on just how far the North has advanced in its secretive nuclear and missile programs.
    

    

    The question is – what does it take to prompt a retaliation from South Korea (or its big brother 'Murica)?
    

    

    

    
                            
    

    

    

    

    • 

  • The Deep (Left) Pockets Of Black Lives Matter

    

    Authored by Mitchell Shaw, originally posted at TheNewAmerican.com,
    

    While claiming to be a grassroots organization formed in response to the prevalence of police violence, Black Lives Matter (BLM) is actually 100-percent pure Astroturf. With coffers bulging with millions of dollars from George Soros, the Ford Foundation, and other deep-pocketed leftist individuals and groups, BLM is little more than a front organization for these leftists and their agenda to reshape the very fabric of American society, culture, and law.
    

    

    

    As The New American recently reported, Ken Zimmerman, the director of U.S. programs at Soros’s Open Society Foundations (OSF), denied last year that Soros had funded BLM, saying it was just a rumor. That was before hackers with DCLeaks.com published OSF documents showing that the Soros group had already given at least $650,000 directly to BLM. Those same documents reveal the reason for OSF bankrolling BLM: the “dismantling” of America so that it can be recast according to the vision of Soros and his leftist cohorts. As we reported then:
    

    The relevant portion of the report says:
    

    The killing of Freddie Gray in April helped spawn weeks of peaceful protests by Baltimore residents and allies from the #BlackLivesMatter movement that were temporarily interrupted by a period of unrest that lasted less than 48 hours and resulted in some injuries and millions of dollars in property damage to neighborhood businesses. While many lamented the damage done, the overwhelming sentiment is that the uprising has catalyzed a paradigm shift in Baltimore that offers opportunities for major justice reforms.
    

    In particular, recent events offer a unique opportunity to accelerate the dismantling of structural inequality generated and maintained by local law enforcement and to engage residents who have historically been disenfranchised in Baltimore City in shaping and monitoring reform. Building on our existing networks and programs, OSI-Baltimore will focus investments on: 1) creating a culture of accountability for policing in Baltimore, recognizing the pervasive racism, disrespect and lawlessness that gave rise to recent events; and 2) building the capacity of activists in Baltimore to demand and achieve immediate and long-term reforms.
    

     
    

    The sum of $650,000 is quite something for an organization claiming both that it is “grassroots” and that it represents the people being oppressed by an evil, racist society. Grassroots aren’t normally that wealthy, and evil, racist societies don’t normally fund organizations dedicated to throwing off those chains. There is clearly something else at work here and that something is an Astroturf front for racial agitation.
    

    And, as much money as $650,000 is, it is mere drop in the bucket. The Washington Times reports that between OSF and the Center for American Progress, BLM has been the beneficiary of $33,000,000. Through grants to a variety of subversive organizations under the BLM umbrella, OSF and the Center for American Progress are funding a false narrative about racial disparity and police violence with the end-goal of “reforming” local police by federalizing them. By using the looting and rioting as “opportunities for major justice reforms,” Soros and his ilk have fanned the flames of an invented fire for their own purposes.
    

    As bad as all of that would be on its own, even that $33,000,000 is — yet and still — just a drop in the bucket. The Ford Foundation and Borealis Philanthropy have recently formed the Black-Led Movement Fund with a six-year commitment to a pooled donor campaign to the tune of $100,000,000. Race-hustling, it would appear, is a booming industry. After all, you can’t make omelets without breaking a few eggs and you can’t reconstruct a society until you first tear it down. And there is no tool better at tearing down a society that the proven method of divide-and-conquer. $133,000,000 will pay for a lot of #BLM #FTP t-shirts.
    

    So, under the banner and hashtag of “Black Lives Matter” sits a bulging and growing money bag. What is BLM doing with its ill-gotten gains? Have these “leaders” of black America started career training centers in the most impoverished and disenfranchised neighborhoods? No, they have simply demanded higher minimum wages. Rather than help the poor, black residents of the nation’s poor, black neighborhoods learn more valuable job skills, BLM simply demands that entry-level McJobs pay more than the jobs are worth. Have these “leaders” of black America started drug rehabilitation programs to help the poor overcome addictions? No, they have instead demanded that the legalization of drugs which addle the minds of the poor, black Americans in the inner-cities of America. Have these “leaders” of black America launched programs to address the cycle of poverty which necessarily accompanies high illegitimate birth-rates and fatherless homes? No, instead they have demanded that the “sex work” industry (a not-so-veiled reference to prostitution) be legalized. If black lives mattered to these “leaders” in the BLM “movement,” they would seek ways to make black lives better. Instead they use black lives as cannon fodder in their war on police — which is part of a larger war on society.
    

    Take for instance just one of the many subversive organizations which will receive that $100,000,000 from The Ford Foundation and Borealis Philanthropy. The Movement for Black Lives (MBL) advocates for all of the above-mentioned ideas and more. MBL demands reparations including free college and a minimum wage with no requirements for the one receiving the “wage” to perform any work in order to receive it. (Of course, "minimum wage" is not the correct term since the very definition of "wage" is payment received for work performed.) It’s enough to make one wonder what the free college education is for if people will get money for nothing. MBL also demands the legalization (they prefer the term “decriminalization”) of drugs and prostitution. Their demand goes so far as to make such policy retroactive and to include — say it with me — reparations. And, with a wink and a nod to Marx and Engels, MBL demands “economic justice” to include “collective ownership, not merely access.”
    

    The communist-on-its-face nature of these and other demands of the organizations under the BLM umbrella are a clear indicator of the real intent of BLM. The deep-pocketed funding by the likes of Soros, the Center for American Progress, the Ford Foundation, and Borealis Philanthropy show that BLM is the means, not the end. BLM is little more than a tool of social revolutionaries hell-bent on destroying America so they can build their long awaited dystopia which they attempt to pass off as a utopia.
    

    

    h/t Brandon Smith's Alt-Market.com
    

    

    

    
                            
    

    

    

    

    • 

  • 40% Of GDP Per Year: Goldman Calculates The True Growth Rate Of China's Debt

    

    For a long time when it came to Chinese loan creation, analysts would only look at the broadest reported aggregate: the so-called Total Social Financing. And, for a long time, it was sufficient – TSF showed that in under a decade, China had created over $20 trillion in new loans, vastly more than all the “developed market” QE, the proceeds of which were used to kickstart growth after the 2009 global depression, to fund the biggest capital misallocation bubble the world has ever seen and create trillions in nonperforming loans.
    

    However, a problem emerged about a year ago, when it was revealed that not even China’s TSF statistic was sufficient to fully capture the grand total of total new loan creation in China. We profiled this three months ago in a post titled “China’s Debt Is Far Greater Than Anyone Thought“, where, according to Goldman, “a substantial amount of money was created last year, evidencing a very large supply of credit, to the tune of RMB 25tn (36% of 2015 GDP).” This massive number was 9% higher than the TSF data, which implied that “only” a quarter of China’s 2015 GDP was the result of new loans. As Goldman further noted, the “divergence from TSF has been particularly notable since Q2 last year after a major dovish shift in policy stance.”
    

    In short, in addition to everything else, China has also been fabricating its loan creation data, and the broadest official monetary aggregate was undercutting the true new loan creation by approximately a third. The reason for this is simple: China does not want the world – or its own population – to realize just how reliant it is on creating loans out of thin air (and “collateralized” by increasingly more worthless assets), as it would lead to an even faster capital outflow by the local population sensing just how unstable the local banking system is.
    

    Unfortunately for the Beijing politburo, there are ways to find the real number.  This is how Goldman did it: the firm’s approach is not to directly quantify the amount of credit extended, because financial institutions (FIs) do not provide good clarity on the true nature of their assets and hence it is difficult to conclude how much of those are indeed credit to corporates and households. Rather, the firm looks at the mirror image of credit—i.e., “money”, which is a metric related to FIs’ funding side. The basic idea is that credit generation is essentially a money creation process, hence an effective gauge of “money” can give a good sense of the pace of credit. But as the officially reported broad money, M2, has been rendered less relevant by continued financial diversification, so Goldman construct our own money flow measure to fit our purpose.
    

      

    • Quantify the money flow from households and corporates to various financial investments, including i) bank deposits from households and corporates and ii) non-deposit financial investment by households and corporates, including wealth management products (WMPs), investment funds, insurance schemes and collective trust products.
      • 

    • Adjust the money flow measure above for factors that affect the quantity of money but are unrelated to credit generation; These include changes in net government financial balance, FX/RMB conversion by households and corporates, and cross-border RMB flow.
      • 

    • Add entrusted loans (which are company-to-company lending and do not create money) to the adjusted money flow measure to make it comparable to the TSF concept.
      • 

    

     
    

    

     
    

    The table below shows Goldman’s estimates for 2016 Q1-Q2, in addition to its estimates for 2011- 2015 discussed previously. In seasonally adjusted terms, our estimate of credit flow for the first half of 2016 is 35% of GDP. 
    

    

    Here is the good news: compared to late 2015, the record credit creation has slowed down fractionally, and the gap with the TSF total has shrunk. The smaller gap seems to be in line with recent reports that listed banks’ “investment receivables” expanded less rapidly in 2016 H1, and it might partly reflect the regulators’ tougher stance against shadow lending in recent months.
    

    And now, the bad news: this “tougher stance” has not been nearly tough enough, because as the following chart shows on a 1-year moving average, nearly 40% of China’s “economic growth” is the result of new credit creation, or in other words, new loans.
    

    

     
    

    What this really means, is that China’s debt/GDP, estimated most recently by the IIF at 300%…
    

    

    … is now growing between 30% and 40% per year, when one accounts for the unaccounted for “shadow” credit conduits. 
    

    Here is how Goldman concludes this stunning observation: 
    

    

    

    

    

    

    

    

    The PBOC appears to have shifted to a less dovish, though still supportive, policy bias in the last few months. However, given the prospective headwinds from slower housing construction and tighter on-budget fiscal stance in the coming months, there remains a clear need to sustain a high level of infrastructure investment, which is credit intensive, to achieve the minimum 6.5% full-year growth target (see our recent comment here). This poses constraints on how much further the PBOC can keep reining in credit, in our view.
    

    

    Translating Goldman, some time around 2019, China’s total Debt/GDP will be over 400%, an absolutely ridiculous number, and one which assured a banking, if not global, financial crisis. The only saving grace is that for the time being, the PBOC and Beijing have managed to sweep away China’s unfixable problems under the rug, with a series of amazing distractions and the effectively nationalization of the stock, bond and FX markets. Alas, this is also the basis for “recovery” in all other developed nations, which means that as of this moment, it is a race between the world’s central banks not who can devalue the fastest, but who can avoid losoing credibility first, and watch as these Keynesian mountains of debt, never before seen in the history of manking,  come crashing down as JM Keynes “long run” finally catches up with everyone. 
    

    

    

    
                            
    

    

    

    

    • 



Digest powered by RSS Digest