- 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.
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- 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 reviewWe 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.
- 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.
- 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:
- Britain’s Daily Telegraph: Here’s how World War Three could start tomorrow
- America’s NewYork Times simply entitled: “World War Three”
- Canada’s Global Research: World War III in The Pipeline? US and European Allies Threaten Russia
- Australia News Network: World War 3 Update: US Warns China at G20 Summit
- Russia’s RT: China & Russia’s G20 message: Confrontation with West not our desire
- Iran – Press TV: World War III a coin flip if Hillary elected
- Germany Der Spiegel: War against Russia
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 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.
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”
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 ProjectToday’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?
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.”
Vanderbilt made nametags recently & many included a preferred pronoun section. This is real life: pic.twitter.com/LeT7BCkdmA
— Clay Travis (@ClayTravis) September 6, 2016
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.”
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![U.S. Secretary of State John Kerry, flanked by Assistant Secretary of State for European and Eurasian Affairs Victoria "Toria" Nuland, addresses Russian President Vladimir Putin in a meeting room at the Kremlin in Moscow, Russia, at the outset of a bilateral meeting on July 14, 2016. [State Department Photo]](https://i0.wp.com/consortiumnews.com/wp-content/uploads/2016/07/kerry-and-nuland-b.jpg?ssl=1)
In phase 3 — and this is where we are now in the historical process, somewhere near the end of phase 2 and the beginning of phase 3 — the priest-kings are challenged by a rogue priest in their midst (rare) or an alt-priest coming out of nowhere (common). By “nowhere” I mean that the alt-priest is an Other, whether that’s a foreign religion or a foreign geography or a foreign (i.e., non-priestly) caste. The alt-priest isn’t about tweaking the spell or casting it louder. He’s about doing an entirely different spell, and he’s about accusing the incumbent priests of incompetence or worse. The alt-priest is always a populist, and populism comes easy when the incumbent spells have been failing … and failing … and failing.
The way this all plays out also depends on how deeply the incumbent priest-kings retreat into their fantasy world of tweaking spells and magical thinking, and that’s where I’m most concerned. The fact is that the global economy — particularly the U.S. economy and the Chinese economy — is more robust than the alt-priests tend to let on. Amazingly enough, the U.S. can still grow its way out of the massive debt we’ve taken on. I know … hard to believe. But it’s true. The power of compounding is truly inexorable, and it’s amazing what a steady 3.5% growth rate on a huge economic base can do to make manageable even trillions of dollars in debt. The rest of the developed world? Impossible to grow their way out of debt. They’re finished. Or rather, to use the lingo of my distressed debt friends, Japan and Europe ex-Germany are now “work-out situations”. But if the U.S. could just get out of its own way … if we could stop arguing about who gets to use what bathroom and start arguing about how to increase productivity (i.e., how to make technology a tool for humans doing more stuff rather than a replacement for humans doing stuff at all) … then we could actually come out of this okay.
No, the bigger problem is with us. The bigger problem is that we cannot imagine a solution for our current economic and political problems that does not rely on greater and greater state-directed spell casting. Monetary policy spells not working? Well, golly, I guess our ONLY alternative is to try some fiscal policy spells. Really? That’s the best we can come up with? I understand that this is what the courtiers are going to say. But I expect more from the rest of us. I expect more from myself.
This is a dangerous, myopic game. Because we will get what we ask for. We will get more magical thinking. Only it won’t come just from the status quo magicians. It will also come from the alt-priests, some of whom will represent the absolute worst impulses of humanity. There are really bad ideas lurking on the wings today — there always are — but these really bad ideas about how human society should be organized always resurface and grow more powerful at times like this. Because it’s the old magic, an old magic that the human animal is hard-wired to respond to.
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