Jun 01

Today’s News 1st June 2016

  • Ron Paul Rages "Government Can't Help… It Can Only Hurt"

    Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

    Three recent stories regarding three government agencies — the IRS, the Transportation Security Administration (TSA), and the Department of Veterans Affairs (VA) — show why we should oppose big government for practical, as well as philosophical, reasons.

    In recent months, many Americans have missed their flights because of longer-than-usual TSA security lines. In typical DC fashion, the TSA claims the delays are because of budget cuts, even though Congress regularly increases the TSA’s funding!

    The TSA is also blaming the delays on the fact that few Americans have signed up for its “PreCheck” program. Under PreCheck, the TSA considers excusing some Americans from some of the screening process. Those who wish to be considered must first submit personal information to the TSA and pay a fee. Only a bureaucrat would think Americans would be eager to give the TSA more information and money on the chance that they may be approved for PreCheck.

    The TSA is much better at harassing airline passengers than at providing security. TSA agents regularly fail to catch weapons hidden by federal agents testing the screening process. Sadly, Congress will likely reward the TSA's failures with continued funding increases. Rewarding the TSA’s incompetence shouldn’t surprise us since the TSA owes its existence to the failure of government to protect airline passengers on 9/11.

    If Congress truly wanted to protect airline passengers, it would shut down the TSA and let airlines determine how best to protect their passengers. Private businesses have a greater incentive than government bureaucrats to protect their customers and their property without stripping their customers of their dignity.

    The head of the VA also made headlines last week when he said it is unfair to judge the VA by how long veterans have to wait for medical care, since no one judges Disney World by how long people have to wait in line. Perhaps he is unaware that no one has ever died because he waited too long to go on an amusement park ride.

    For years socialized medicine supporters pointed to the VA as proof that a government bureaucracy could deliver quality health care. The stories of veterans being denied care or receiving substandard care demolish those claims.

    If Congress truly wanted to ensure that veterans receive quality health care, it would stop forcing veterans to seek health care from a federal bureaucracy. Instead, government would give veterans health-care vouchers or health savings accounts and allow them to manage their own health care. Congress should also dramatically reduce the costs of providing veterans care by ending our militaristic foreign policy.

    Another story last week highlights the one thing government does do well: violate our rights. The House Judiciary Committee held a hearing on impeaching IRS Commissioner John Koskinen over his role in the IRS's persecution of conservative organizations.

    Those who value liberty and constitutional government should support impeaching Koskinen. However, truly protecting Americans from IRS tyranny requires eliminating the income tax. Despite the claims of some, a flat tax system would still require a federal bureaucracy to ensure Americans are accurately reporting their income. Since the income tax is one of the foundations of the welfare-warfare state, it is folly to think we can eliminate the income tax without first dramatically reducing the size and scope of government.

    The TSA, VA, and IRS are just three examples of how government cannot effectively provide any good or service except authoritarianism. Individuals acting in the free market are more than capable of providing for their own needs, including the need to protect themselves, their families, and their property, if the government gets out of the way.

  • Appeals Court Delivers Devastating Blow To Cellphone-Privacy Advocates

    Authored by Jenna McLaughlin via TheIntercept.com,

    Courts across the country are grappling with a key question for the information age: When law enforcement asks a company for cellphone records to track location data in an investigation, is that a search under the Fourth Amendment?

    By a 12-3 vote, appellate court judges in Richmond, Virginia, on Monday ruled that it is not — and therefore does not require a warrant.

    The 4th Circuit Court of Appeals upheld what is known as the third-party doctrine: a legal theory suggesting that consumers who knowingly and willingly surrender information to third parties therefore have “no reasonable expectation of privacy” in that information — regardless of how much information there is, or how revealing it is.

    Research clearly shows that cell-site location data collected over time can reveal a tremendous amount of personal information — like where you live, where you work, when you travel, who you meet with, and who you sleep with. And it’s impossible to make a call without giving up your location to the cellphone company.

    “Supreme Court precedent mandates this conclusion,” Judge Diana Motz wrote in the majority opinion. “For the Court has long held that an individual enjoys no Fourth Amendment protection ‘in information he voluntarily turns over to [a] third part[y].’” The quote was from the 1979 Supreme Court case Smith v. Maryland.

    The 5th, 6th, and 11th circuits have reached the same conclusion.

    However, there’s been a lot of disagreement within the lower courts and among privacy advocates that the third-party doctrine is consistent with the way people live their lives in the digital age — primarily on their cellphones.

    A three-judge panel of the 4th Circuit in fact first ruled last August that getting cell-site records in bulk did constitute a search, triggering a warrant requirement. In the case, United States v. Graham, the government obtained 221 days’ worth of records belonging to a robbery suspect in Baltimore.

    The panel’s opinion relied heavily on a separate legal theory, called mosaic theory, to come to that conclusion: the argument that even if one instance of evidence gathering doesn’t count as a search, asking for a large number of data points can eventually amount to one.

    For a while, it looked like there might be a split in the lower courts that would require the Supreme Court to reconsider the third-party doctrine.

    But now that the 4th Circuit has ruled, that seems less likely.

    Privacy advocates were disappointed:

     

     

    The three judges in the minority wrote a strongly worded dissent.

    “Only time will tell whether our society will prove capable of preserving age-old privacy protections in this increasingly networked era. But one thing is sure: this Court’s decision today will do nothing to advance that effort. I dissent,” Judge James Wynn wrote, joined by Henry Floyd and Stephanie Thacker.

    “This is a sign that lower courts are still following the third-party doctrine,” Orin Kerr, a law professor at George Washington University Law School, wrote in an email to The Intercept. “I think the 4th Circuit correctly applied Supreme Court law. But that doesn’t tell us what the Supreme Court might do.”

    While this case “removes the circuit split,” he wrote, a Supreme Court consideration of third-party doctrine issues “will probably happen eventually.”

    Nate Wessler, a staff attorney with the American Civil Liberties Union’s Speech, Privacy, and Technology Project, said he remains hopeful.

    “In virtually every one of these cases, there have been very strong dissents. That in itself is a very strong message to the Supreme Court,” he said.

    He also pointed out that many judges in the majority on these cases have signaled that it may be time for the Supreme Court to revisit the issue. And in several of the appellate cases, judges have called on Congress to do something about it.

    Congress is poised to consider the privacy implications of searching stored emails, Wessler said, pointing to popular reform in Congress of the Electronic Communications Privacy Act, which passed the House unanimously, requiring law enforcement to get a warrant to search old emails.

    “Hopefully they can muster the same for location information,” he said.

     

  • Hong Kong Retail Sales Plunge 7.5% YoY, Fall For 14th Consecutive Month

    Hong Kong's retail sales fell for the 14th consecutive month in April, plunging 7.5 percent from a year ago. April was slightly less severe than a revised estimate of a 9.8 percent YoY contraction in March.

    April sales of jewellery, watches, clocks and valuable gifts fell 16.6 percent in value terms, a 20th consecutive month of decline, while durable consumer goods fell the most at 31.6 percent, followed by electronics and photographic equipment which fell 23 percent. Consumers seem to be drinking more alcohol and buying more groceries however, as supermarket sales and alcoholic drinks and tobacco were up 2.4 percent and 5 percent respectively.

    The slowing economy in mainland China continues to have a significant impact, as tourists from mainland China, which make up 73.8 percent of the total, fell 4 percent from the prior year.

    From Reuters

    "Many types of retail outlet still recorded notable falls in sales, reflecting the continued drag from the slowdown in inbound tourism as well as the more cautious local consumer sentiment amid subpar economic conditions," the government said in a statement.

     

    Hong Kong is struggling with mounting economic challenges from the prospect of rising U.S. interest rates, which has stepped up capital outflows, and from China's economic slowdown.

     

    Mainland tourists are avoiding the city amid political tensions with China and growing calls from radical activists for greater autonomy from Beijing.

     

    "The near-term outlook for retail sales will continue to depend on the performance of inbound tourism," the government added.

    With China's manufacturing PMI contracting for a 14th straight month in April as well, the difficult times that Hong Kong is experiencing don't look to be ending any time soon. Also, as we have discussed many times and as Reuters mentions above, as the Fed discusses further rate hikes, fears of a significant currency devaluation have sparked capital outflows, which will also continue to hurt Hong Kong.

  • Abenomics "Death Cross" Strikes As Japan PMI Plunges To 40-Month Lows

    Since Abenomics was unleashed on the world (with QQE starting in April 2013), things have not worked out as the smartest men in the Japanese rooms predicted. In fact, with April's final manufacturing PMI printing at 47.7, operating conditions in Japan worsened at the sharpest pace in 40 months… since Abe began his three arrows. Output tumbled at the fastest pace in 25 months and new orders are the worst since Jan 2013. This is the death cross for Abenomics…

     

    The weakest Japanese manufacturing PMI since the start of Abenomics…

    Commenting on the Japanese Manufacturing PMI survey data, Amy Brownbill, economist at Markit, which compiles the survey, said:

    “The aftermaths of the earthquakes in one of Japan’s key manufacturing regions continued to weigh heavily on the manufacturing sector. Both production and new orders declined sharply midway through the second quarter of 2016. A marked fall in international demand also contributed to the drop in total new orders, as exports declined at the fastest rate since January 2013.”

    Flashing the "death cross" of Abenomics three arrows…

    As it is now clear that the massive expansion of the Bank of Japan balance sheet has done nothing… in fact worse than nothing… for the Japanese economy.

    Time for some more 'depends'.

  • Special Forces Insider Warns Of Serious Civil Unrest This Summer: "Everything Is Right For Things To Go Very Wrong"

    Submitted by Mac Slavo via SHTFPlan.com,

    riots1

    In the lead up to the Presidential election we’ve seen pockets of riotous behavior across America. Whether supporting Trump, Sanders, Hillary or Cruz, average Americans appear to be ready to go to war with their government or with each other. This sentiment, coupled with continued economic degradation and a general feeling of a populace that has for decades been marginalized by the political machine in the United States, is showing all the signs of serious civil unrest on the horizon.

    In the following interview with Infowars.com special forces commando Tim Kennedy weighs in, describing the current situation as a trench having been dug and filled with accelerants just waiting to be ignited.

    Kennedy is a continuity of government expert, which means he’s well versed in not only how the powder keg of civil unrest could potentially explode, but what The-Powers-That-Be will do once it does.

    For civil unrest to happen you have to have a bunch of little things that set up for the perfect situation. You have to have a reason.

     

    People are so emotionally involved in this Presidential election right now… and finally for the first time realizing there is something wrong with our country… the eyes are open… we know that something’s not right.

     

    Even though we have a President saying ‘I’m trying to break down borders‘ we’ve never had so much hate between different racial segments… what’s even more scary is that we know all of these things individually  are setting up the perfect opportunity for serious civil unrest…

     

    Now that we’re moving into summer… we’re moving into the Presidential election… we’re sending troops into Iraq… we’re looking at groups and segments of people who are supporting specific Presidential nominees…

     

    We have a perfect conducive environment for some serious problems… you think riots in Missouri were bad? Just wait until July… wait until August.

     

    The trench has been dug and it is full of accelerants… everything is right for things to go very wrong.

    Kennedy warns that once civil unrest happens on a nationwide scale, you’d better have taken steps to prepare, because just as we saw in Venezuela, Argentina and elsewhere during such tense periods, essential goods disappear from the shelves almost overnight.

    And while such events are often dismissed by Americans as improbable, your concerns over the possibility are not without merit.

    As an individual you have to get ready.

     

    Don’t care if people think that you’re crazy… don’t think that you’re being a fanatic… that you’re being a prepper.

     

    I’m only responsible for my family… My family is going to have food… My family is going to have water… We are going to be safe.

     

    And if you think I’m crazy because I want to make sure my family is protected, fine, that’s the way it is.

     

    But as an individual you need to look and research about ways to prepare in whatever city you live in.

    In short, should widespread civil unrest, whether this summer or at any point in the future, spread across America and be followed by military and law enforcement intervention, you absolutely cannot depend on the government to be there to provide any meaningful assistance.

    That means you need to take steps to prepare your own personal continuity plan.

    In her best-selling book The Prepper’s Blueprint, Tess Pennington succinctly summarizes the reality of the situation:

    Disasters do not discriminate. In the aftermath of the event, you will be on your own, left to provide for your family with the supplies and knowledge you have accrued. If you are prepared with the mental and spiritual foundation to overcome disaster, then you will transition into survival mode more quickly.

     

    …When you plan for extended disasters you must take into account that you could be on you own for up to a month or longer. To carry you through this unpredictable time, you must add additional layers to your preparedness foundation so that it incorporates essential knowledge and additional supplies.

     

    Excerpted from The Prepper’s Blueprint: The Step-By-Step Guide To Survive Any Disaster

    By preparing for the possibility of a widespread civil unrest scenario you’d also be readying yourself for other potentially deadly events, thus focusing on core supplies and knowledge is key.

    • Emergency Food Supplies will be absolutely critical. Even during a snowstorm or hurricane that are often forecast well in advance we see panic in grocery stores in the lead up, often leaving store shelves razed and completely empty. Stockpiling easy-to-cook, highly nutritious meals will be critical. Such supplies can be acquired in grab-and-go buckets or family packages for multi-day or multi-week emergency scenarios.
    • Portable food supplies may come in handy should you be caught in the middle of civil unrest and riots. These come in the form of high-calorie-food bars that can be hidden in a backpack, your car, or supplement existing food storage supplies. At a whopping 3600 calories per bar, five of these are enough for a week’s worth of emergency survival nutrition.
    • Emergency Water will be essential in a scenario where city governments are overwhelmed with rioting or looting. A number of disaster scenarios could lead to water in an entire city being either too dangerous to drink or simply turned off at the source. Having a gravity water filter at home will allow you to stay hydrated during times of crisis. If you’re caught out in the open, keeping a portable water filtertration system like the Katadyn Hiker Microfilter or Micropur Water Treatment Tablets in your back pack could be a life saver.
    • Nuclear, Biological, Chemical (NBC) Protective Equipment is an additional safety measure, especially in riot scenarios where poisonous gases could be used by both law enforcement or rioters. Moreover, such gear is the last line of defense in the event of a serious NBC disaster that could include the release of poison gases in crowded, tightly confided spaces like subways, or in a worst case scenario, an attack on a domestic nuclear power plant.
    • Firearms, Ammunition and Body Armor will be essential. People will panic. People will become violent. And people are going to get hurt. Be armed with enough ammunition to keep your family safe and secure, and know how to use your equipment. But remember, if you have to shoot at a threat, there is a strong possibility they will be shooting back. As such, consider body armor as a means of protection in extremely volatile and potentially violent situations.
    • First Aid and Trauma Supplies will be essential to your safety. In a serious emergency there will be no hospitals and you will need to become the doctor. Collapse doctor Joe Alton has written The Survival Medicine Handbook for just this reason. You’ll want to have a first aid kit, but we also strong encourage you to consider trauma kits for serious injuries. And it’s always a good idea to have antibiotics to prevent infection in the event you can’t get to an emergency room.
    • Barter and Trade could come into play as well, especially when store shelves are empty. And while the above supply list could be used for barter, so too can silver bullion like coins and bars. Hard currency has been used in Zimbabwe, Argentina and Greece when either currencies collapsed or banks were closed down due to emergencies.

    The above supply list includes some of the very basics one should have in their preparedness supplies. For extensive supply lists and scores of disaster scenarios we encourage you to read Tess Pennington’s highly acclaimed The Prepper’s Blueprint.

    Whether it’s civil unrest this summer or as the result of an economic collapse in the future, or any number of other disaster scenarios, having at least a 30 day supply of essential necessities will mean the difference between life and death. At the very least, they will help make a very uncomfortable situation a bit more bearable.

    As Tim Kennedy has highlighted, the trenches have been dug and the accelerant has been poured.

    All we’re waiting for now is the spark.

  • Philippines' New President Endorses Murdering Corrupt Journalists

    If the US media delights in its every day interactions with Donald Trump, who not only refuses to follow the conventional playbook, but has torn it apart and burned it for good measure, it would have an absolute field day with the Philippine president-elect Rodrigo Duterte.

    The reason is that earlier today, Duterte who takes over the local presidency on June 30, said that corrupt journalists were legitimate targets of assassination and should be killed, as he amped up his controversial anti-crime crusade with offers of rewards for killing drug traffickers.

    As AFP reminds us, Duterte won this month’s elections by a landslide largely due to an explosive law-and-order platform in which he pledged to end crime within six months by killing tens of thousands of suspected criminals.

    It’s not just corrupt journalists that are the target of Duterte’s wrath: the “foul-mouthed politician” has launched a series of post-election tirades against criminals and repeated his vows to kill them – particularly drug traffickers, rapists and murderers.

    In a press conference called on Tuesday to announce his cabinet in his southern hometown of Davao, Duterte said journalists who took bribes or engaged in other corrupt activities also deserved to die.

    “Just because you’re a journalist you are not exempted from assassination, if you’re a son of a bitch,” Duterte said when asked how he would address the problem of media killings in the Philippines after a reporter was shot dead in Manila last week.

    Something tells us Trump would empathize; although there are mitigating factors. As AFP notes, the Philippines is one of the most dangerous nations in the world for journalists, with 174 murdered since a chaotic and corruption-plagued democracy replaced the dictatorship of Ferdinand Marcos three decades ago.

    On the other hand, Duterte’s blunt solution has an eerie sense of vigilante justice: “Most of those killed, to be frank, have done something. You won’t be killed if you don’t do anything wrong,” Duterte said, adding that many journalists in the Philippines were corrupt.

    Duterte also said freedom of expression provisions in the constitution did not necessarily protect a person from violent repercussions for defamation. “That can’t be just freedom of speech. The constitution can no longer help you if you disrespect a person,” he said.

    Duterte raised the case of Jun Pala, a journalist and politician who was murdered in Davao in 2003. Gunmen on a motorcycle shot dead Pala, who was a vocal critic of Duterte. His murder has never been solved.

    “If you are an upright journalist, nothing will happen to you,” said Duterte, who has ruled Davao as mayor for most of the past two decades and is accused of links to vigilante death squads.  “The example here is Pala. I do not want to diminish his memory but he was a rotten son of a bitch. He deserved it.“

    * * *

    What jumps out here is the question of just what the president-elect believes makes a journalist “non-upright”: considering the country’s history with journalistic violence and murders and regressive retaliation, one would assume that something as innocent as writing an investigative piece exposing the corruption of the existing government, or perhaps even the president, would be sufficient grounds for putting said journalist on the “assassinate” list.

    One of the world’s deadliest attacks against journalists took place in the Philippines in 2009, when 32 journalists were among 58 people killed by a warlord clan intent on stopping a rival’s election challenge. More than 100 people are on trial for the massacre, including many members of the Ampatuan family accused of orchestrating it.

    Duterte has named Salvador Panelo, the former defense lawyer for the Ampatuans, as his presidential spokesman, a nomination criticized by the victims’ families and journalists’ organizations.

    The president-elect also hopes to crack down in dramatic fashion on country’s big drug problem.

    Duterte, who will assume office in one month, also said he would offer bounties to law enforcement officers who killed drug traffickers. He said three million pesos ($21,000) would be paid to law enforcers for killing drug lords, with lesser amounts for lower-ranking people in drug syndicates.

    Outlining some of his other plans for his war on crime, Duterte said he would give police special forces shoot-to-kill orders and send them into the main jail in Manila where prisoners run drug trafficking operations.

    So… a country full of Judge Dredds who have virtually unchecked power over whom to kill. Surely, what can go wrong.

    Finally, Duterte would also root out corruption in the police by largely the same means: he would enlist junior soldiers to kill corrupt top-ranking police officers who were involved in the drug trade.

    “I will call the private from the army and say: ‘Shoot him’,” Duterte said.

    Finally, in a line that would lead to unprecedented media ratings if it was uttered by Trump, Duterte also urged police not to wait until he assumed the presidency, and start killing criminals immediately. “Now, now,” he urged them.

    Police earlier confirmed killing 15 people in a series of drug raids across the country over the past week, which Amnesty International described as a sharp and sudden escalation in the long-standing problem of questionable deaths by Filipino security forces.

    * * *

    Finally, there was this:

    The first ever, self-administered powersharing arrangement with the army in modern history?

    To be sure, the new Philippino approach to fixing a crime-ridden society will be different from anything tried before (and perhaps after). It may even work. if so, we wonder how many other somewhat “radical” leaders will adopt Duterte’s approach of enabled vigilantism, whose outcome will be very binary: either the complete eradication of crime, which we find unlikely, or total social de-evolution and rampant, and even more violent crime.

  • Wikileaks Asks If This Is The "Smoking Gun" Email That Will Bring Down Hillary

    All along Hillary Clinton has pled that when it comes to her violation of Federal regulations, she was at worst naive, hardly malicious and – as of recently – merely doing what each of her state department predecessors has done; and she has been very careful to make it clear that she never purposefully and intentionally “stripped” confidential data in order to send it through her unsecured server as such an act would imply not only a breach of email retention policy, but a willful abuse of confidential documents.

    Well, moments ago Wikileaks unveiled what it believes may be the FBI’s “smoking gun” in its case against Hillary. In a tweet, Wikileaks highlights one specific email and asks “Is this email the FBI’s star exhibit against Hillary Clinton (“H”)? “

    The email in question (link)

     

    The full email chain is below (link):

  • Largest US Health Insurer Exits California, Illinois Obamacare Markets

    Just over a month ago, we reported that in addition to Georgie, Arkansas, Michigan and Oklahoma, the largest US health insurer UnitedHealthcare announced it would also depart the following “Affordable” Care Act state exchanges: Connecticut, North Carolina; Nebraska, Pennsylvania and Texas. That, however, was just a preview of what’s to come, because on April 19, UnitedHealthcare made its divorce with Obamacare complete when it announced plans to exit most of the Affordable Care Act state exchanges where it currently operates by 2017. And earlier today, United continued executing on this warning, when it first announced that it would stop offering Affordable Care Act plans in Illinois in 2017 followed promptly by news UnitedHealthcare was abandoning California at the end of the year as well.

    As PBS reports, while United announced in April it was dropping out of all but a handful of 34 health insurance marketplaces it participated in, the company had not discussed its plans in California. UnitedHealth’s pullout also affects individual policies sold outside the Covered California exchange, which will remain in effect until the end of December.

    “United is pulling out of California’s individual market including Covered California in 2017,” said Amy Palmer, a spokeswoman for the state exchange.

     

    It’s expected that UnitedHealth will continue offering coverage to employers in California and to government workers and their families through the California Public Employees’ Retirement System.

    Amy Palmer, a spokeswoman for the state exchange said UnitedHealthcare policyholders will know their options for 2017 coverage when health plans and rates for next year are announced in July. It is safe to say any “options” will not be cheap.

    Concurrently, the company also announced it will stop offering Affordable Care Act plans in Illinois in 2017. According to the Tribune, the departure of the insurance company will reduce the number of coverage options for consumers in 27 counties. Like in California, Illinois members will have access to their benefits through the end of the year. The change does not affect the company’s group insurance business or Medicare plans.

    Furthermore, on Tuesday, UnitedHealthcare disclosed on a website dedicated to insurance brokers that it plans to offer on-exchange plans in only three states — Nevada, New York and Virginia. A company spokeswoman confirmed that it will withdraw from the Illinois exchange.

    Critics of the Affordable Care Act have seized on the company’s exit, state by state, as further evidence the health-law insurance exchanges aren’t sustainable financially and that premiums will rise even higher for consumers.

    The Obama administration has countered that the number of health plans offering exchange policies has increased since the 2014 launch, and that it expects the individual market will continue to stabilize as adjustments are made.

    Unfortunately, as we showed recently, the critics so far have been spot on, and as the WSJ reported recently, health insurance premiums are set to skyrocket just in time for the election, creating a major hurdle for Hillary days ahead of the election.

     

  • Sweden's Migrant Rape Epidemic Explained

    How did peaceful Sweden go from being a quiet, low-crime country to being the country with the second-highest incidence of rape in the world? Why has Sweden experienced a 1,472% increase in the annual number of rapes?

    Here is Ingrid Carlqvist of is Gatestone Institute to explain…

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May 31

Today’s News 31st May 2016

  • Will We Never Learn? The Economic Lessons From Venezuela's Current Collapse

    Shops are being looted as Venezuela's citizens, who live on top of the world’s largest oil reserves, are literally starving and dying for lack of food and medicine; all while the country’s gold reserves are being sold to finance its debt. With 1.8 million signatures on a petition for a referendum on Nicolas Maduro’s presidency, the country is threatening to become a failed state. 

    Venezuela is in crisis…

     

    So, Ricardo Hausmann, former minister of planning for Venezuela, explains (via Project Syndicate) how too much heteredoxy (read – monetary policy experimentation and central planning and control) can kill you…

    Ever since the 2008 financial crisis, it has been common to chastise economists for not having predicted the disaster, for having offered the wrong prescriptions to prevent it, or for having failed to fix it after it happened. The call for new economic thinking has been persistent – and justified. But all that is new may not be good, and that all that is good may not be new.

     

    The 50th anniversary of China’s Cultural Revolution is a reminder of what can happen when all orthodoxy is tossed out the window. Venezuela’s current catastrophe is another: A country that should be rich is suffering the world’s deepest recession, highest inflation, and worst deterioration of social indicators. Its citizens, who live on top of the world’s largest oil reserves, are literally starving and dying for lack of food and medicine.

     

    While this disaster was brewing, Venezuela won accolades from the United Nations Food and Agricultural Organization, the Economic Commission for Latin America, British Labour Party leader Jeremy Corbyn, former Brazilian President Luiz Inácio Lula da Silva and the US Center for Economic Policy Research, among others.

     

    So what should the world learn from the country’s descent into misery? In short, Venezuela is the poster child of the perils of rejecting economic fundamentals.

     

    One of those fundamentals is the idea that, to achieve social goals, it is better to use – rather than repress – the market. After all, the market is essentially just a form of self-organization whereby everyone tries to earn a living by doing things that others find valuable. In most countries, people buy food, soap, and toilet paper without incurring a national policy nightmare, as has happened in Venezuela.

     

    But suppose you do not like the outcome the market generates. Standard economic theory suggests that you can affect it by taxing some transactions – such as, say, greenhouse-gas emissions – or giving money to certain groups of people, while letting the market do its thing.

     

    An alternative tradition, going back to Saint Thomas Aquinas, held that prices should be “just.” Economics has shown that this is a really bad idea, because prices are the information system that creates incentives for suppliers and customers to decide what and how much to make or buy. Making prices “just” nullifies this function, leaving the economy in perpetual shortage.

     

    In Venezuela, the Law of Just Costs and Prices is one reason why farmers do not plant. For that reason, agro-processing firms shut down. More generally, price controls create incentives to flip goods into the black market. As a result, the country with the world’s most extensive system of price controls also has the highest inflation – as well as an ever-expanding police effort that jails retail managers for holding inventories and evencloses the borders to prevent smuggling.

     

    Fixing prices is a short dead-end street. A longer one is subsidizing goods so that their price remains below cost.

     

    These so-called indirect subsidies can quickly cause an immense economic mess. In Venezuela, subsidies for gasoline and electricity are larger than the budget for education and health care combined; exchange-rate subsidies are in a class of their own. With one daily minimum wage in Venezuela, you can buy barely a half-pound (227 grams) of beef or 12 eggs, or 1,000 liters (264 gallons) of gasoline or 5,100 kWh of electricity – enough to power a small town. With the proceeds of selling a dollar at the black market rate, you can buy over $100 at the strongest official rate.

     

    Under these conditions, you are unlikely to find goods or dollars at official prices. Moreover, since the government is unable to pay providers the necessary subsidy to keep prices low, output collapses, as has happened with Venezuela’s electricity and health sectors, among others.

     

    Indirect subsidies are also regressive, because the rich consume more than the poor – and hence appropriate more of the subsidy. This is what underpins the old orthodox wisdom that if you want to change market outcomes, it is better to subsidize people directly with cash.

     

    Another bit of conventional wisdom is that creating the right incentive structure and securing the necessary know-how to run state-owned enterprises is very difficult. So the state should have only a few firms in strategic sectors or in activities that are rife with market failures.

     

    Venezuela disregarded that wisdom and went on an expropriation binge. In particular, after former President Hugo Chávez was reelected in 2006, he expropriated farms, supermarkets, banks, telecoms, power companies, oil production and service firms, and manufacturing companies producing steel, cement, coffee, yogurt, detergent, and evenglass bottles. Productivity collapsed in all of them.

     

    Governments often struggle to balance their books, leading to over-indebtedness and financial trouble. Yet fiscal prudence is one of the most frequently attacked principles of economic orthodoxy. But Venezuela shows what happens when prudence is frowned upon and fiscal information is treated as a state secret.

     

    Venezuela used the 2004-2013 oil boom to quintuple its external public debt, instead of saving up for a rainy day. By 2013, Venezuela’s extravagant borrowing led international capital markets to shut it out, leading the authorities to print money. This caused the currency to lose 98% of its value in the last three years. By the time oil prices fell in 2014, the country was in no position to take the hit, with collapsing domestic production and capacity to import, leading to the current disaster.

     

    Orthodoxy reflects history’s painfully acquired lessons – the sum of what we regard to be true. But not all of it is true. Progress requires identifying errors, which in turn calls for heterodox thinking. But learning becomes difficult when there are long delays between action and consequences, as when we try to regulate the water temperature while in the shower. When reaction times are slow, exploring the heterodox is necessary, but should be done with care. When all orthodoxy is thrown out the window, you get the disaster that was the Chinese Cultural Revolution – and that is today’s Venezuela.

    *  *  *

    So what should the world learn from the country’s descent into misery? In short, Venezuela is the poster child of the perils of rejecting economic fundamentals.

  • As Short Interest Soars To Record Highs, Chinese Stock Futures Flash-Crash 12.5%

    Shortly after 1042am local, Chinese stock futures (CSI-300) flash-crashed over 12.5% on extreme heavy volume (while the cash CSI-300 remained unch). This move erased 3 months of gains but within 1 minute was back in the green with stocks up over 2.5%. The shocking collapse, exaggerated by a major lack of liquidity, was made more surprising by the fact that the last week has seen a record short position in the major Chinese stock ETF. Simply put, the heavy hand of market-central-planning has erased any and all depth in futures markets and positioning has become so tilted that price vacuums are likely to continue to occur.

     

    As Bloomberg notes, the swing follows a similarly unexplained tumble in Hang Seng China Enterprises Index futures in Hong Kong on May 16, a move that added to nervousness over the prospects for Chinese stocks amid slowing economic growth and a weakening yuan. The CSI 300 has dropped 16 percent this year, versus a 2.2 percent gain in the MSCI Emerging Markets Index.

    “It looks like a fat finger,” Fang Shisheng, Shanghai-based vice general manager at Orient Securities Futures Co., said by phone. “Liquidity in the market is really thin at the moment. So the market will very likely see big swings if a big order comes in. The order looks like it’s from a hedger.”

    And for some context of what that move looks like longer term – it erased 3 months of gains instantly…

     

    Still, positioning in Chinese Stock ETFs (FXI) has soared in the last week as volatility has been utterly suppressed in the major index…

     

    The relative stability of the Chinese stock market in the last few weeks is oddly decoupled from the relative volatility in the Yuan and as Bloomberg notes, While the yuan’s losses have escalated in the past three weeks, the Shanghai Composite has been unmoved. The index has barely strayed from the 2,800 level amid speculation state-backed funds are preventing further losses, helping send 30-day volatility on the gauge to its lowest level since December 2014.

    Some investors may be betting China’s domestic equities, known as A shares, will fall further if yuan losses deepen, according to Sam Chi Yung, senior strategist at South China Financial Holdings Ltd. in Hong Kong.

    “Investors think there is some risk in A shares," the strategist said. “If the yuan keeps falling that would affect the value of Chinese shares."

    But, as the following chart shows, this is a record level of relative short interest…

     

    Seemingly creating the perfect opportunity for a plunge protection team to squeeze stocks higher… proving the Chinese economy is fixed once again (or is this time different, like in 2008 and 2015)

  • The Endless Dodge – Why Washington Doesn't Come Clean On The Downing Of MH-17

    Submitted by Roberty Parry via ConsortiumNews.com (h/t Contra Corner blog),

    A newly posted video showing a glimpse of a Buk missile battery rolling down a highway in eastern Ukraine has sparked a flurry of renewed accusations blaming Russia for the July 17, 2014 shoot-down of Malaysia Airlines Flight 17 killing 298 people. But the “dash-cam video” actually adds little to the MH-17 whodunit mystery because it could also support a narrative blaming the Ukrainian military for the disaster.

    The fleeting image of the missile battery and its accompanying vehicles, presumably containing an armed escort, seems to have been taken by a car heading west on H-21 highway in the town of Makiivka, as the convoy passed by heading east, according to the private intelligence firm Stratfor and the “citizen journalism” Web site, Bellingcat.

    A screenshot of the buk convoy that supposedly downed flight MH-17 traveling eastward from Donetsk on the morning of July 17, 2016.

    However, even assuming that this Buk battery was the one that fired the missile that destroyed MH-17, its location in the video is to the west of both the site where Almaz-Antey, the Russian Buk manufacturer, calculated the missile was fired, around the village of Zaroshchenskoye (then under Ukrainian government control), and the 320-square-kilometer zone where the Dutch Safety Board speculated the fateful rocket originated (covering an area of mixed government and rebel control).

    In other words, the question would be where the battery stopped before firing one of its missiles, assuming that this Buk system was the one that fired the missile. (The map below shows the location of Makiivka in red, Almaz-Antey’s suspected launch site in yellow, and the general vicinity of the Dutch Safety Board’s 320-square-kilometer launch zone in green.)

     

    Another curious aspect of this and the other eight or so Internet images of Buk missiles collected by Bellingcat and supposedly showing a Buk battery rumbling around Ukraine on or about July 17, 2014, is that they are all headed east toward Russia, yet there have been no images of Buks heading west from Russia into Ukraine, a logical necessity if the Russians gave a Buk system to ethnic Russian rebels or dispatched one of their own Buk military units directly into Ukraine, suspicions that Russia and the rebels have denied.

    The absence of a westward-traveling Buk battery fits with the assessment from Western intelligence agencies that the several operational Buk systems in eastern Ukraine on July 17, 2014, were under the control of the Ukrainian military, a disclosure contained in a Dutch intelligence report released last October and implicitly confirmed by an earlier U.S. “Government Assessment” that listed weapons systems that Russia had given the rebels but didn’t mention a Buk battery.

    The Netherlands’ Military Intelligence and Security Service (MIVD) reported that the only anti-aircraft weapons in eastern Ukraine capable of bringing down MH-17 at 33,000 feet on July 17 belonged to the Ukrainian government. MIVD made that assessment in the context of explaining why commercial aircraft continued to fly over the eastern Ukrainian battle zone in summer 2014.

    MIVD said that based on “state secret” information, it was known that Ukraine possessed some older but “powerful anti-aircraft systems” capable of downing a plane at that altitude and “a number of these systems were located in the eastern part of the country,” whereas the MIVD said the ethnic Russian rebels had only MANPADS that could not reach the higher altitudes.

    Ukrainian Offensive

    On July 17, the Ukrainian military also was mounting a strong offensive against rebel positions to the north and thus the front lines were shifting rapidly, making it hard to know exactly where the borders of government and rebel control were. To the south, where the Buk missile was believed fired, the battle lines were lightly manned and hazy – because of the concentration of forces to the north – meaning that an armed Buk convoy could probably move somewhat freely.

    A photograph of a Russian BUK missile system that U.S. Ambassador to Ukraine Geoffrey Pyatt published on Twitter in support of a claim about Russia placing BUK missiles in eastern Ukraine, except that the image appears to be an AP photo taken at an air show near Moscow two years ago.

    Also, because of the offensive, the Ukrainian government feared a full-scale Russian invasion to prevent the annihilation of the rebels, explaining why Kiev was dispatching its Buk systems toward the Russian border, to defend against potential Russian air strikes.

    Just a day earlier, a Ukrainian fighter flying along the border was shot down by an air-to-air missile (presumably fired by a Russian warplane), according to last October’s Dutch Safety Board report. So, tensions were high on July 17, 2014, when MH-17, flying from Amsterdam to Kuala Lumpur, broke apart over eastern Ukraine, believed downed by a surface-to-air missile although there have been other suggestions that the plane might  have been hit by an air-to-air missile.

    At the time, Ukraine also was the epicenter of an “information war” that had followed a U.S.-backed coup on Feb. 22, 2014, which ousted democratically elected President Viktor Yanukovych and replaced the Russian-friendly leader with a fiercely nationalistic and anti-Russian regime in Kiev. The violent coup, in turn, prompted Crimea to vote 96 percent in a hasty referendum to secede from Ukraine and rejoin Russia. Eastern Ukraine and its large ethnic Russian population also revolted against the new authorities.

    The U.S. government and much of the Western media, however, denied there had been a coup in Kiev, hailed the new regime as “legitimate,” and deemed Crimea’s secession a “Russian invasion.” The West also denounced the eastern Ukrainian resistance as “Russian aggression.” So, the propaganda war was almost as hot as the military fighting, a factor that has further distorted the pursuit of truth about the MH-17 tragedy.

    Immediately after the MH-17 crash, the U.S. government sought to pin the blame on Russia as part of a propaganda drive to convince the European Union to join in imposing economic sanctions on Russia for its “annexation” of Crimea and its support of eastern Ukrainians resisting the Kiev regime.

    However, a source briefed by U.S. intelligence analysts told me that the analysts could find no evidence that the Russians had supplied the rebels with a sophisticated Buk system or that the Russians had introduced a Buk battery under their own command. The source said the initial intelligence suggested that an undisciplined Ukrainian military team was responsible.

    Yet, on July 20, 2014, just three days after the tragedy, Secretary of State John Kerry appeared on all Sunday morning talk shows and blamed the Russian-backed rebels and implicitly Moscow. He cited some “social media” comments and – on NBC’s “Meet the Press” – added: “We picked up the imagery of this launch. We know the trajectory. We know where it came from. We know the timing. And it was exactly at the time that this aircraft disappeared from the radar.”

    Two days later, on July 22, the Obama administration released a “Government Assessment” that tried to bolster Kerry’s accusations, in part, by listing the various weapons systems that U.S. intelligence believed Russia had provided the rebels, but a Buk battery was not among them. At background briefings for selected mainstream media reporters, U.S. intelligence analysts struggled to back up the administration’s case against Russia.

    For instance, the analysts suggested to a Los Angeles Times reporter that Ukrainian government soldiers manning the suspected Buk battery may have switched to the rebel side before firing the missile. The Times wrote: “U.S. intelligence agencies have so far been unable to determine the nationalities or identities of the crew that launched the missile. U.S. officials said it was possible the SA-11 [Buk anti-aircraft missile] was launched by a defector from the Ukrainian military who was trained to use similar missile systems.”

    However, after that July 22 briefing — as U.S. intelligence analysts continued to pore over satellite imagery, telephonic intercepts and other data to refine their understanding of the tragedy — the U.S. government went curiously silent, refusing to make any updates or adjustments to its initial rush to judgment, a silence that has continued ever since.

    Staying Silent

    Meanwhile, the source who continued receiving briefings from the U.S. intelligence analysts told me that the reason for going quiet was that the more detailed evidence pointed toward a rogue element of the Ukrainian military connected to a hardline Ukrainian oligarch, with the possible motive the shooting down of President Vladimir Putin’s plane returning from a state visit to South America.

    In that scenario, a Ukrainian fighter jet in the vicinity (as reported by several eyewitnesses on the ground) was there primarily as a spotter, seeking to identify the target. But Putin’s plane, with similar markings to MH-17, took a more northerly route and landed safely in Moscow.

    A side-by-side comparison of the Russian presidential jetliner and the Malaysia Airlines plane.

    Though I was unable to determine whether the source’s analysts represented a dissenting or consensus opinion inside the U.S. intelligence community, some of the now public evidence could fit with that narrative, including why the suspected Buk system was pushing eastward as close to or even into “rebel” territory on July 17.

    If Putin was the target, the attackers would need to spread immediate confusion about who was responsible to avoid massive retaliation by Moscow. A perfect cover story would be that Putin’s plane was shot down accidentally by his ethnic Russian allies or even his own troops, the ultimate case of being hoisted on his own petard.

    Such a risky operation also would prepare disinformation for release after the attack to create more of a smokescreen and to gain control of the narrative, including planting material on the Internet to be disseminated by friendly or credulous media outlets.

    The Ukrainian government has denied having a fighter jet in the air at the time of the MH-17 shoot-down and has denied that any of its Buk or other anti-aircraft systems were involved.

    Yet, whatever the truth, U.S. intelligence clearly knows a great deal more than it has been willing to share with the public or even with the Dutch-led investigations. Last October, more than a year after the shoot-down, the Dutch Safety Board was unable to say who was responsible and could only approximate the location of the missile firing inside a 320-square-kilometer area, whereas Kerry had claimed three days after the crash that the U.S. government knew the launch point.

    Earlier this year, Fred Westerbeke, the chief prosecutor of the Dutch-led Joint Investigative Team [JIT], provided a partial update to the Dutch family members of MH-17 victims, explaining that he hoped to have a more precise fix on the firing site by the second half of 2016, i.e., possibly more than two years after the tragedy.

    Westerbeke’s letter acknowledged that the investigators lacked “primary raw radar images” which could have revealed a missile or a military aircraft in the vicinity of MH-17. That apparently was because Ukrainian authorities had shut down their primary radar facilities supposedly for maintenance, leaving only secondary radar which would show commercial aircraft but not military planes or rockets.

    Russian officials have said their radar data suggest that a Ukrainian warplane might have fired on MH-17 with an air-to-air missile, a possibility that is difficult to rule out without examining primary radar which has so far not been available. Primary radar data also might have picked up a ground-fired missile, Westerbeke wrote.

    “Raw primary radar data could provide information on the rocket trajectory,” Westerbeke wrote. “The JIT does not have that information yet. JIT has questioned a member of the Ukrainian air traffic control and a Ukrainian radar specialist. They explained why no primary radar images were saved in Ukraine.” Westerbeke said investigators are also asking Russia about its data.

    Westerbeke added that the JIT had “no video or film of the launch or the trajectory of the rocket.” Nor, he said, do the investigators have satellite photos of the rocket launch.

    “The clouds on the part of the day of the downing of MH17 prevented usable pictures of the launch site from being available,” he wrote. “There are pictures from just before and just after July 17th and they are an asset in the investigation.”

    Though Westerbeke provided no details, the Russian military released a number of satellite images purporting to show Ukrainian government Buk missile systems north of the eastern Ukrainian city of Donetsk before the attack, including two batteries that purportedly were shifted 50 kilometers south of Donetsk on July 17, the day of the crash, and then removed by July 18.

    Russian Lt. Gen. Andrey Kartopolov called on the Ukrainian government to explain the movements of its Buk systems and why Kiev’s Kupol-M19S18 radars, which coordinate the flight of Buk missiles, showed increased activity leading up to the July 17 shoot-down.

    Necessary Secrets?

    Part of the reason that the MH-17 mystery has remained unsolved is that the U.S. government  insists that its satellite surveillance, which includes infrared detection of heat sources as well as highly precise photographic imagery, remains a “state secret” that cannot be made public.

    Secretary of State John Kerry denounces Russia's RT network as a "propaganda bullhorn" during remarks on April 24, 2014.

    However, in similar past incidents, the U.S. government has declassified sensitive information. For instance, after a Soviet pilot accidentally shot down Korean Airlines Flight 007 over Russian territory in 1983, the Reagan administration revealed the U.S. capability to intercept Soviet ground-to-air military communications in order to make the Soviets look even worse by selectively editing the intercepts to present the destruction of the civilian aircraft as willful.

    In that case, too, the U.S. government let its propaganda needs overwhelm any commitment to the truth, as Alvin A. Snyder, who in 1983 was director of the U.S. Information Agency’s television and film division, wrote in his 1995 book, Warriors of Disinformation.

    After KAL-007 was shot down, “the Reagan administration’s spin machine began cranking up,” Snyder wrote. “The objective, quite simply, was to heap as much abuse on the Soviet Union as possible. … The American media swallowed the U.S. government line without reservation.”

    On Sept. 6, 1983, the Reagan administration went so far as to present a doctored transcript of the intercepts to the United Nations Security Council. “The perception we wanted to convey was that the Soviet Union had cold-bloodedly carried out a barbaric act,” Snyder wrote.

    Only a decade later, when Snyder saw the complete transcripts — including the portions that the Reagan administration had excised — would he fully realize how many of the central elements of the U.S. presentation were lies.

    Snyder concluded, “The moral of the story is that all governments, including our own, lie when it suits their purposes. The key is to lie first.” [For more details on the KAL-007 deception and the history of U.S. trickery, see Consortiumnews.com’s “A Dodgy Dossier on Syrian War.”]

    Quinn Schansman, a dual U.S.-Dutch citizen killed aboard Malaysia Airlines Flight 17 on July 17, 2014. (Photo from Facebook)

    In the MH-17 case, the Obama administration let Kerry present the rush to judgment fingering the Russians and the rebels but then kept all the evidence secret even though the U.S. government’s satellite capabilities are well-known. By refusing to declassify any information for the MH-17 investigation, Washington has succeeded in maintaining the widespread impression that Moscow was responsible for the tragedy without having to prove it.

    The source who was briefed by U.S. intelligence analysts told me that the Obama administration considered “coming clean” about the MH-17 case in March, when Thomas Schansman, the Dutch father of the only American victim, was pleading for the U.S. government’s cooperation, but administration officials ultimately decided to keep quiet because to do otherwise would have “reversed the narrative.”

    A screen shot of the roadway where the suspected BUK missile battery supposedly passed after the shoot-down of Malaysia Airlines Flight 17 on July 17, 2014. (Image from Australian “60 Minutes” program)

    In the meantime, outfits such as Bellingcat have been free to reinforce the impression of Russian guilt, even as some of those claims have proved false. For instance, Bellingcat directed a news crew from Australia’s “60 Minutes” to a location outside Luhansk (near the Russian border) that the group had identified as the site for the “getaway video” showing a Buk battery with one missile missing.

    The “60 Minutes” crew went to the spot and pretended to be at the place shown in the video, but none of the landmarks matched up, which became obvious when screen grabs of the video were placed next to the scene of the Australian crew’s stand-upper. [See Consortiumnews.com’s “Fake Evidence Blaming Russia for MH-17.”]

    Correspondent Michael Usher of Australia’s “60 Minutes” claims to have found the billboard visible in a video of a BUK missile launcher after the shoot-down of Malaysia Airlines Flight 17 on July 17, 2014. (Screen shot from Australia’s “60 Minutes”)

    Yet, reflecting the deep-seated mainstream media bias on the MH-17 case, the Australian program reacted angrily to my pointing out the obvious discrepancies. In a follow-up, the show denounced me but could only cite a utility pole in its footage that looked similar to a utility pole in the video.

    While it’s true that utility poles tend to look alike, in this case none of the surroundings did, including the placement of the foliage and a house shown in the video that isn’t present in the Australian program’s shot. [For details, see Consortiumnews.com’s “A Reckless Stand-upper on MH-17.”]

    But the impact of the nearly two years of one-sided coverage of the MH-17 case in the mainstream Western media has been considerable. In the last few days, a lawyer for the families of Australian victims announced the filing of a lawsuit against Russia and Putin in the European court for human rights seeking compensation of $10 million per passenger. Many of the West’s news articles on the lawsuit assume Russia’s guilt.

    In other words, whatever the truth about the MH-17 shoot-down, the tragedy has proven to be worth its weight in propaganda gold against Russia and Putin, even as the U.S. government hides the actual proof that might show exactly who was responsible.

  • Mizuho CEO Warns Japan Sales Tax Delay Is "Admission Abenomics Has Failed"

    It has not been a good “second coming” for Shinzo Abe, whose first stint as prime minister of Japan ended in disgrace in 2007 after an allegedly crippling bout of explosive diarrhea forced the then-prime minister to resign. To say that Abenomics has been a dismal failure would be an understatement:  unable to boost inflation, unable to boost wages, plummeting trade with both exports and imports crashing to post crisis lows…

     

    … and lately failing miserably to boost the stock market after Kuroda’s epic debacle with Japan’s NIRP lunacy, Kuroda had one loophole: a tiny fiscal stimulus in the form of delaying the once-already delayed sales tax.

    The only problem: over the past few months, Kuroda had trapped himself when he said that the only conditions under which he would delay the sales tax would be only if “another global economic contraction or Lehman-style market shock jolted the Japanese economy.“

    That explains why Abe was desperate to get the G-7 to warn of the risk of a global economic crisis in the final communique issued as the summit wrapped up last Friday in Japan.

    He failed. In fact, the final statement went the other way and declared that G-7 countries “have strengthened the resilience of our economies in order to avoid falling into another crisis. The global recovery continues, but growth remains moderate and uneven, and since we last met downside risks to the global outlook have increased,” the statement says. “Weak demand and unaddressed structural problems are the key factors weighing on actual and potential growth.”

    Ironically, Abe is actually quite right, and the world remains in a state of post-Lehman shock: after all why would central banks need to engage in a “secret” Shanghai Accord more than 7 years after the global financial crisis to prevent markets from crashing? The answer: because nothing has been fixed and the entire world remains on edge day after day. However, as we also noted citing economist Glenn Maguire, “the G-7 is obviously aware of the ‘announcement effect’ the official communique has” and “in such a situation, warning of negative risks and sentiment can become self-fulfilling.“

    Hence, Abe was snubbed.

    Unfortunately for the Japanese premier, there simply was no other choice, and as leaked repeatedly by virtually all Japanese media sources, Japan’s sales-tax hike scheduled to take place in early 2017 will be delayed after all, with or without a Lehman style shock: for Abe there simply is no other choice.

    This is where the problems for Japan begin, because as the chief of Mizuho Financial Group said over the weekend, Japan risks a credit-rating downgrade if Prime Minister Shinzo Abe delays a scheduled sales-tax increase without explaining how the government plans to cut its deficit. Actually not if, but when; and as we know, the “when” is likely to be as soon as this week, when Abe admits fiscal failure and that Japan simply has no hope of ever containing its ridiculous debt load.

    And here is why Abe was so desperate to get the G-7 to “validate” his worldview as one where things are on the brink: as otherwise it would mean Japan’s economy is in far more dire shape than realized, and it will need to incur much more debt in the coming years.

    Quoted by the WSJ, Yasuhiro Sato, president of Mizuho, Japan’s second-largest bank by assets, said Abe’s framing of such a decision would determine whether it sparked concerns about the government’s credibility regarding its plans for fiscal consolidation.

    “The worst scenario is [the government] will just announce a delay in the tax increase.  That could send a message that Abenomics has failed or Japan is heading for a fiscal danger zone and then it will harm Japanese government bonds’ credit ratings,” Sato said in an interview, referring to the prime minister’s growth program.

    As the WSJ adds, Abe acknowledged for the first time Friday that he was considering delaying an increase in the sales tax to 10% from 8% scheduled to take effect in April next year. He said he would decide before an upper house election to be held in July, but Japanese media have reported that a decision could come this week.

    Abe has delayed the tax increase once, after the rise to 8% in April 2014 derailed an economic recovery. Consumer spending has yet to fully rebound, and some economists say the prospect of another tax increase next year is already weighing on spending.

    Sato acknowledged that raising the tax again would pose a risk to Japan’s economy, although the alternative – admission that Abenomics has failed – is just as bad, which is why Abe is now in a pickle, and why we anticipate his bathroom runs will become increasingly more frequent… just in case a rerun, pardon the pun, of 2007 is in the works and Abe has to quit due to some new scapegoat.

    “There will be a risk in either case of raising the tax or not, so as long as the government demonstrates a clear road map for fiscal reconstruction, Japanese credibility likely won’t be hurt so much,” Sato said, although sadly for Japan, there just is no such road map.

    Some bankers say Japan could damage its international credibility if it fails to raise taxes on schedule. The tax increases are part of long-standing efforts to reach a primary government surplus by 2020. A primary surplus is a balanced budget excluding interest payments on government debt. Japan’s government debt, when including corporate and personal debt, is the largest in the world relative to the size of its economy, standing at over 400% of GDP.

     

    Worse, a dwbt downgrade for Japan will be merely a formality once Abe delays the sales tax. Moody said in a March report that “postponing the next [sales-tax] increase regardless of the reason would pose a big fiscal burden for Japan.” Moody already downgraded Japan’s credit rating by one notch to A1 from Aa3, the same rating it has assigned to Israel and the Czech Republic, after Abe decided in November 2014 to delay the tax increase the first time. It will do so again.

    Standard & Poor’s and Fitch Ratings have also lowered Japan’s credit rating in the past two years, but investors continue to accept near record-low yields on the government’s debt.

    On Sunday, Yasufumi Tanahashi, a senior member of the ruling Liberal Democratic Party, explained why the tax increase might need to be delayed.

    “If tax revenue doesn’t grow despite increasing the tax rate, then from a medium-to-long term perspective it’s necessary to respond flexibly,” he said during a political TV program. Mr. Tanahashi said a delay would require a law to be amended and debate within the ruling coalition to reach a consensus.

    Back to Mizuho’s Sato, who didn’t take a position on whether the tax increase should proceed as scheduled, said Japanese banks’ dollar-funding costs could rise further if a credit-ratings firm downgrades them again.

    “We’ve seen a rise in dollar-funding costs since the second half of 2014,” he said. “There is no way lending will boost our profitability.” To balance weakness in lending, Mizuho has focused on income from fees, including from its M&A advisory and underwriting businesses. Mizuho aims to increase its fee income from 54% to 60% of the total in the three years through March 2019.

    Of course, downgrade or not, what is left unsaid is that as long as the BOJ continues to monetize all net issuance of JGBs, as it does now, yields on Japan’s Treasuries will remain record low, and mostly negative. However, if enough official red flags accumulate against the monetary lunatics in Tokyo – who are merely a decade ahead proxy for the rest of the world as Japan is a decade ahead of everyone in the global race to the bottom but also has the most deflationary demographics to boot – in the form of rating downgrades, not even the BOJ buying up all the Japanese bonds, stocks, REITs and ETFs will prevent a global revulsion to Japanese assets as the world finally realizes, and admits, that Japan is finished. That process could start as soon as this week with Abe’s sales tax delay announcement.

  • Do "Targeted" US Killings Of Militant Leaders Work? Not So Much

    When Taliban leader Mullah Akhtar Mansour was killed recently in a US drone strike, we noted that experts cautioned that it would make local insurgents even less likely to participate in long-stalled peace efforts, and it would likely lead to an escalation of Taliban retaliation efforts.

    Mullah Akhtar Mohammad Mansour, Taliban militants' leader

    Mullah Akhtar Mansour, Taliban militants’ leader

    The key question around the US killings of militant leaders is do they even work? This is something the Wall Street Journal also pondered in a recent piece on just how effective US strikes on leaders of militant groups are in the long run.

    On one hand, it does appear as though the killing of Osama bin Laden has hurt Al Qaeda; on the other, the killing of Mansour may not have much of an impact at all on the Taliban.

    From the WSJ

    Both the 2011 raid on Osama bin Laden’s compound in Pakistan and the targeting of Mullah Mansour on a Pakistani road were major successes for U.S. intelligence and the Pentagon.

     

    Al Qaeda’s central command, a relatively tight international terror network now led by Ayman al-Zawahiri, has been in decline since bin Laden’s death. It has been unable to fully recover from the blow or to mount major attacks against the West.

     

    But the experience is less encouraging for wide-scale insurgencies such as the Afghan Taliban. While such decapitations can provide a short-term gain, they rarely change the course of the conflict—and frequently backfire if not accompanied by a much broader, resource-intensive involvement of a kind the White House has been loath to pursue.

     

    Unlike al Qaeda, the Taliban enjoy support from a significant swath of the Afghan population. The group’s military advances in 2013-15 weren’t impeded by the fact that its leader, Mullah Mohammad Omar, was secretly dead at the time, or by the assassinations of scores of commanders.

     

    In announcing Mullah Mansour’s death, President Barack Obama said his killing “gives the people of Afghanistan and the region a chance at a different, better future.”

     

    That optimistic assessment isn’t shared by many, in the region or in the U.S., who closely follow the Taliban.

     

    “I don’t think it will weaken the Taliban, and it may strengthen them,” said Barnett Rubin, a former U.S. State Department official who worked on peace negotiations with the Taliban and who is now associate director of the Center on International Cooperation at New York University.

    As we warned the death – which carried the added “benefit” of further infuriating Pakistan which accused the US of violating its sovereignty with the mission – will make peace talks next to impossible, while pushing the militants to an even more extreme fringe.

    It is also far from certain that removing Mullah Mansour would make such peace talks—an avowed U.S. goal—any easier to resume.

     

    The minister of aviation in the pre-2001 Taliban government, Mullah Mansour belonged to the original generation of Taliban leaders, was involved in the political outreach, and could influence field commanders. His successor named on Wednesday, Maulavi Haibatullah, is believed to represent a more uncompromising cast.

     

    “After this killing, the Taliban will be more hard-line and the people who think that the war will solve all the problems will be more powerful. This is a blow to peace,” said Waheed Muzhda, a Kabul political analyst who served in the Taliban regime’s foreign ministry before 2001.

     

    U.S. officials have argued that, with Mr. Mansour, there wasn’t any peace process to derail anyway.

    Splinter groups, like ISIS which grew apart from Al Qaeda (with the careful grooming of Saudi Arabia, Qatar and of course, the CIA) prove resilient when it comes to the aftermath of leaders being killed, often times using violence more indiscriminantly than the parent group because of the need to recruit. Unlike killing leaders of the Pakistani Taliban, which helped the Pakistani government engineer further splits, groups such as ISIS will lead to a new cycle of attacks and create greater chaos. 

    That was, in effect, the behavior of Islamic State, which resorted to uninhibited violence as it grew apart from al Qaeda, a process accelerated by bin Laden’s death. The U.S. was successful in killing the group’s founder Abu Musab al-Zarqawi in 2006 and his successor Abu Omar al-Baghdadi in 2010.

     

    But as long as the sectarian tension that originally fueled Islamic State’s growth in Iraq persisted, the organization proved resilient and was able to feed off the Syrian war to capture a sizable chunk of both countries in 2014.

     

    Arguably, the record is better with the U.S. drone killings of the leaders of Pakistani Taliban, Baitullah Mehsud in 2009 and his successor Hakimullah Mehsud in 2013. These strikes and the climate of suspicion that they fomented provoked infighting among various factions of the group, known as Tehreek-e-Taliban Pakistan. That made it easier for the Pakistani military to launch a major ground offensive into the TTP stronghold of North Waziristan in 2014.

     

    “Killing them has helped the Pakistani government to engineer further splits, and to drive the TTP where they are today—fragmented,” said Imtiaz Gul, executive director of the Center for Research and Security Studies in Pakistan.

     

    The attack on Mullah Mansour came at a time when the U.S. military presence in Afghanistan has shrunk to just 9,800 troops, a fraction of the level a few years ago, and when Afghanistan’s embattled security forces struggle to counter Taliban offensives.

     

    His death “would lead to a new cycle of attacks and counterattacks,” cautioned Vali Nasr, dean of the School of Advanced International Studies at Johns Hopkins University and a former U.S. State Department senior adviser on Afghanistan and Pakistan.

     

    “All of this needs a much greater U.S. engagement in Afghanistan than the U.S. has troops for,“ Mr. Nasr said. ”It is extremely risky because it can actually create greater chaos. You cannot deal with a larger insurgency through the tactic of decapitation.”

    While it is difficult to tell whether or not killing a militant group leader will help or hinder efforts to defeat such groups, by now the incontrovertible evidence is that such direct and deadly interventions do much more harm than good. Which may be precisely why the US continues to engage in such missions, knowing full well that selective killings will continue to splinter groups, create further chaos, and unleash the “need” for the “boots on the ground” as was the case in Syria.

    Pardon, did we say, the US government? We meant the US military-industiral complex: after all everyone by now knows who calls the shots in the Pentago. As for the MIC’s facade, rest assured that if the US wants to start a war for any myriad of reasons, it knows precisely how to do just that.

  • US Gold Market Infographic

    The US Gold Market is best known as the home of gold futures
    trading on the COMEX in New York. The COMEX has a literal monopoly on gold
    futures trading volumes worldwide, but very little physical gold is actually
    exchanged between COMEX trading participants, and gold inventories maintained
    in COMEX vaults in New York are extremely low. This COMEX Gold Futures Market
    infographic guides you through the largest gold futures market in the world,
    COMEX.

    New York is also storage location for nearly 6000 tonnes of
    central bank gold stored in the vaults beneath the New York Federal Reserve on
    behalf of customers such as the International Monetary Fund, the central Bank
    of Italy, Germany’s Bundesbank, and over 30 other countries. The infographic
    visually profiles these gold vaults and their operators. Finally, the
    infographic provides a snapshot of the US gold mining industry, centered in
    Nevada.

    Did you, for example, know that only 1 in 2500 contracts on
    COMEX goes to physical delivery whereas the other 2499 contracts are
    cash-settled? This corresponds to a delivery percentage of 0.04% of all gold
    contracts.

    The US government claims to hold a fair bit of gold in
    reserves but how much is it really holding?

    In this infographic you will learn more about the COMEX gold
    futures market considering:

    • COMEX Trading Volumes
    • Fractionally Reserved Futures Trading
    • Cash-settlement of COMEX Gold Futures Contracts
    • Eligible and Registered Gold on COMEX
    • US Treasury Gold Reserves
    • Location of US Treasury Gold Reserves
    • Foreign Gold at the Federal Bank of New York
    • US Gold Mining

    You can learn more about the US Gold Market at the
    BullionStar Gold University    .

     

    US COMEX Gold Futures Market – An infographic hosted at BullionStar.com

    To embed this infographic on your site, copy and past the code below

  • Hey Democrats: A Vote For Hillary Clinton Is Actually A Vote For Donald Trump

    Via TheAntiMedia.org,

    With California finally mattering in an election season, it might be the final state primary before the Democratic race for president is set in stone. Regardless, recent developments have made one thing astoundingly clear: Donald Trump will almost surely defeat Hillary Clinton in a head to head matchup – and that’s why a vote for Hillary Clinton is a vote for Donald Trump.

    It may seem crazy to many, but Donald Trump is now leading — for the first time — in an average of national polls pitting the presumptive Republican nominee against Hillary Clinton. These results come at a time when Trump hasn’t even started aggressively attacking her yet; after all, he just finished fending off over a dozen Republican primary challengers — a feat thought all but impossible by political experts the world over.

    Trump is rising and Hillary is sinking, but this is not a new phenomenon for Clinton — she’s been sinking ever since she joined the race for the presidency. Operating almost exclusively on name recognition and gender identity alone, Clinton has seen her enormous lead in the polls over Bernie Sanders evaporate in the last several months, with some national polls even placing his popularity ahead of hers.

    This should not be all that surprising in hindsight, with an unknown democratic socialist meteorically rising to catch one of the most well-known names in modern American politics. America is fed up with status-quo politics — and Clinton embodies this bad taste, which is now in a majority of Americans’ mouths. But Bernie Sanders and Donald Trump don’t. The all-but-guaranteed Clinton presidency now faces a fight from Bernie Sanders all the way to the Democratic convention.

    Clinton, like Trump, faces a major favorability problem. Well over half of Americans view her unfavorably, and her honesty and likeability ratings are close to record lows. She’s got an ongoing FBI problem (read: email scandal). Trump is running to the left of her on foreign policy, trade, and economy — and to the right of her on immigration. These are all issues that are resonating well for Trump and lackluster for Clinton, who has taken flack for everything from her cozy ties to Wall Street and support of NAFTA to the 1994 crime bill she helped Bill Clinton pass when he was in office.

    Trump has only been the presumptive nominee for a few weeks, but he’s already overtaken Hillary in the national polls. Considering her utter lack of momentum and enthusiasm, it doesn’t take a political scientist to understand this equation looks like a sure defeat for Hillary Clinton.

     

    Even so, experts are weighing in — and many of them are reaching the same conclusion presented here: if Democrats vote for Clinton, they are essentially voting for a Trump presidency. The only effective Democratic challenge to Trump is from Bernie Sanders, who has continuously polled double digits ahead of Trump in a head to head matchup. Democratic superdelegates may want to take note of this reality — or face a sure defeat to the Donald in November.

  • Brazil's New Anti-Corruption Minister Quits After Leak Exposes His Involvement In Corruption Scandal

    Our prediction that the cabinet of Brazil’s new president Michel Temer would not last long received its first validation just 10 days after the impeachment of Dilma Rousseff, when a recording was leaked in which Brazil’s new Planning Minister under Temer, Romero Juca, was overheard explaining how the removal of Rousseff would “prevent the wide corruption probe dubbed Carwash from proceeding.” This prompted many to wonder if Rousseff was indeed correct all along claiming a silent, US-sponsored coup had taken place in Brazil, one in which the cost of sweeping the Carwash scandal under the rug was her own scalp.

    Incidentally, Juca quit shortly thereafter to preserve the new president’s reputation as corruption-free as possible.

    Then earlier today, things for the new, just as corrupt as his predecessor president, Michel Temer got particularly awkward, not to mention painfully ironic, when none other than Brazil’s Transparency and Anti-Corruption Minister, Fabiano Silveira resigned on Monday after leaked recordings suggested he tried to derail a sprawling corruption probe, the latest cabinet casualty impacting interim President Michel Temer’s administration.

    No amount of commentary can do justice to the gruesome farce that Brazilian economics is quickly devolving into. That said, it was perfectly predictable. On May 12, the day Rousseff was removed from power, we asked if Temer “can he avoid ouster himself“?

    Among his documented transgressions, he signed off on some of the allegedly illegal budget measures that led to the impeachment drive against Rousseff and has been implicated, though never charged, in several corruption investigations.

     

    The son of Lebanese immigrants, Temer is one of the country’s least popular politicians but has managed to climb his way to the top, in large part by building close relationships with fellow politicians as leader of the large but fractured Brazilian Democratic Movement Party.

     

    Think Frank Underwood.

     

    However, unlike Underwood, Temer may not last long, for the simple reason that the people who greeted him as a savior from Rousseff’s corruption may very soon turn on him just as fast.

    Silveira, the man Temer tasked with fighting corruption since he took office on May 12, announced his plans to step down in a letter, according to the presidential palace’s media office. No replacement for Silveira has yet been named.

    Silveira and Senate President Renan Calheiros became the latest officials ensnared by leaked recordings secretly made by a former oil industry executive as part of a plea bargain. The same tapes led to the resignation last week of the abovementioned Romero Juca, whom Temer had named as planning minister.

    According to Reuters, in parts of the recordings, aired by TV Globo late on Sunday, Silveira criticizes prosecutors in the probe focused on state-controlled oil company Petróleo Brasileiro SA, known as Petrobras, which has already implicated dozens of politicians and led to the imprisonment of top executives.

    In the conversation, recorded at Calheiros’ home three months before Silveira became a Cabinet minister, Silveira advises the Senate leader on how best to defend himself from the probe into Petrobras.

     

    In the report, Globo TV also said some audio indicated that Silveira on several occasions spoke with prosecutors in charge of the Petrobras case to find out what information they might have on Calheiros, which he reported back to the Senate leader.   Silveira is heard saying prosecutors were “totally lost.”

    For those still wondering if Brazil’s anti-corruption minister just resigned less than three weeks after taking the post becuase he was busted for corruption – on the record – the answer is yes.

    Where it gets better is that nobody knows how many other members of the Temer cabinet will fall as a result of the ongoing leaks of phone recordings.

    The former head of the transportation arm of Petrobras, Sergio Machado, who is under investigation as part of the graft probe and has turned state’s witness, recorded the meeting and conversations with other politicians to obtain leniency from prosecutors. Silveira was a counsellor on the National Justice Counsel, a judicial watchdog agency, at the time of the meeting.

    The reaction was swift: on Monday, Ministry of Transparency staff marched to the presidential palace in Brasilia to demand Silveira’s ouster and restoration of the comptroller general’s office, which Temer renamed to show his commitment to fighting corruption.

    That particular “commitment” is not working out too great.

    All employees with management duties at the ministry resigned their posts to press their demands, according to union leader Rudinei Marques.

    Protesting employees had earlier prevented Silveira from entering the ministry building. They then washed its facade with soap and water to symbolize Temer’s need to clean up his government.

    The only problem is that the corruption in Temer’s government starts with Temer himself, who according to many is far more corrupt than Rousseff ever was.  Which is probably way Reuters adds that Temer will meet with Brazil’s prosecutor general later today to discuss the leaked recordings.

    Several members of Temer’s cabinet are under investigation in the Petrobras probe. Rousseff, facing an impeachment trial in the Senate on charges of breaking budget laws, and others have said Temer plotted her downfall to stifle the investigation.

    Temer has strongly denied the allegation, although with every new scandal and resignation, less and less people believe the false narrative.

    As a result of the recordings, the new government could face declining support for Rousseff’s ouster by the Senate, which needs a two-thirds majority to convict her in a trial expected to last through August.The two-year probe into billions in graft at Petrobras has led to jail time for executives from Brazil’s top construction firms as well as investigations of dozens of politicians, including several members of Temer’s Brazilian Democratic Movement Party, or PMDB, and Rousseff’s Workers Party.

    At the end of the day, everyone in Brazil’s political ruling class is corrupt: as such that is hardly grounds for dismissal as Brazil would simply have no politicians left. The question the people needs to answer is which politician is best suited to get the country out of the unprecedented economic depression it finds itself in less than two months before the Summer Olympics are set to begin in Rio.

    Then again, the choice may already have been made: earlier today, Brazil’s FUP Oil Union, one of the two main oil labor unions in the country, said it plans a one-day national strike on June 10. It workers will protest against acting president Michel Temer, FUP said adding that Temer’s government lacks legitimacy. The FUP workers specifically are worried that they will lose benefits under the new administration, and Petrobras could be privatized.

    The conclusion is that Temer’s honeymoon period has officially ran out, and at this point absent some dramatic shift in his administration, Temer himself may be impeached in very short notice. Perhaps it is not too late for the ambitious former vice president and current president to watch House of Cards from the beginning, just to reminds himself how these things are done… if only on Netflix.

  • Here We Go Again: Wells Fargo Is Trying To Give Mortgages To Low-Income, Debt-Heavy Millennials Living At Home

    Just last week we reported that Wells Fargo was reintroducing 3% down mortgages on its own, without going through the FHA. The reason we said, was that due to Wells' mortgage origination pipeline drying up, the bank was desperate to find new and innovative ways to boost lending.

     

    Now we have direct confirmation that indeed Wells Fargo is desperate, and the plan to boost mortgage lending is to… drum roll… lure millennials out of the comfort of their parents home and into a house of their own.

    The fact that millennials don't make much money and are drowning in debt apparently doesn't bother Franklin Codel, head of home lending for the bank.

    Codel said Wells Fargo is now in a position to capitalize on the "very important" trend of millennials who have been unable or unwilling to buy property. "Demographics, ultimately, will win out and many of these folks will start families and want to become homeowners." said Codel, according to the Financial Times.

    The target for Codel is understandable, with more millennials living at home today than at any other point in time since the great depression it's easy to see what would drive that discussion.

     

    However, what shouldn't be forgotten is the fact that there is a reason that millennials are living at home, often times rent free. Millennials are making less money than prior generations, and student loan debt is so burdensome that it doesn't make it feasible to do otherwise.

     

    Self-Help Ventures Fund decided to partner with Wells Fargo on insuring the 3% down mortgage program – let's hope $1.6 billion in assets is enough to cover what the bank is about to get into, otherwise another taxpayer bailout is going to be needed.

Digest powered by RSS Digest

May 30

Today’s News 30th May 2016

  • The Global Bear Market In Freedom

    Submitted by Erico Matias Tavares via Sinclair & Co.,

    Americans will be celebrating Memorial Day this weekend, to honor those who fought and died for the values they have traditionally cherished the most as a nation: life, liberty and the pursuit of happiness.

    The world has changed dramatically in recent decades. The geopolitical situation is much more complex, with rising powers challenging America's supremacy. The intractable war on terror seems interminable. Old foes appear to spring back to life even more powerful than before. And things at home look dicey in terms of politics and economics.

    As we reflect upon the ultimate sacrifice that others have made‎, it is an opportune moment to consider a very important question: is the US winning the fight for freedom?

    More than other dictatorial regimes, “totalitarianism” represents the opposite of everything America is supposed to stand for. For most people it conjures images of a repressive leader and his minions having total control of a society with very limited freedoms. That’s not too far off from reality, but there’s more to it and a process to get there.

    The term was first coined by Giovanni Amendola in 1923 to describe the emergence of Italian fascism (which was different from other dictatorships). However, it only gained traction in academic research during the 1960s largely based on the work of political scientists Carl Friedrich and Zbigniew Brzezinski. They reformulated the definition to account for the Soviet Union as well as the fascist regimes of the 20th century, where a totalitarian system featured the following mutually-supportive defining characteristics:

    1. An elaborate guiding ideology;
    2. A single mass party, typically led by a dictator;
    3. A system of terror, using such instruments as violence and secret police;
    4. A state monopoly on weapons;
    5. A state monopoly on the means of communication; and
    6. Central direction and control of the economy through state planning.

    As far as we can tell this definition has not been materially updated since it was first proposed, perhaps because the topic has lost academic interest following the collapse of the Soviet Union. One critique is that many totalitarian regimes do not exhibit all these characteristics at‎ the same time, and not with the same intensity. Initially they may even be welcomed and perceived as necessary by the general population, only to become more radical and pervasive over time, particularly as a result of a political or economic crisis.

    We could also argue that in today’s globalized world the ability to restrict the emigration of citizens has become an important component. After all, the “total” aspect of it becomes less relevant if everyone can get out of Dodge.

    Be that as it may, we will broadly employ these six characteristics to summarily analyze the shifts that have been occurring in the main geopolitical blocks across the world.

    The pattern that emerges should concern freedom lovers everywhere.

    The Islamic World

    “Muhammadan [Islamic] law did not derive directly from the Koran but developed… out of popular and administrative practice under the Umaiyads, and this practice often diverged from the intentions and even the explicit wording of the Koran…. Norms derived from the Koran were introduced into Muhammadan law almost invariably at a secondary stage.” –
    Joseph Schacht, The Origins of Muhammadan Jurisprudence

    Centuries ago Muhammad founded Islam, which translated from Arabic means “submission”. The literal interpretation of that word, his life and his teachings, at times taken to extremes, historically has created societies with a bias towards the restriction of freedoms. For one, slavery (white but especially from Africa) had been a recurring feature of Islamic commerce and society, even well after it was abolished in the West.

    All this was aggravated with the collapse of the Ottoman Empire after World War I, the subsequent (disastrous) redrawing of the Middle East map by the victors, the power vacuum left behind post European colonialism and the never ending sectarian conflict within Islam.

    Despite several attempts at secularism and democratic reform, today the Arab world is a wasteland of freedom. Add Iran and virtually all major Islamic states in the region operate under the definition of totalitarianism, especially when political Islam (sharia) is adopted as the law of the land.

    Out of the 157 countries surveyed by the Cato Institute in its 2013 Human Freedom Index study, no country with a Muslim population greater than 60% ranked in the top-50. Turkey, the first one on the list, ranked #61 (more on that shortly), followed by tiny Brunei at #64 and Indonesia at #70. Twelve of the bottom-20 countries fitted this criterion, with major Islamic countries like Saudi Arabia, Egypt and Iran ranked #144, #146 and #155, respectively.

    In several instances this race to the bottom has been a relatively recent phenomenon, going back a generation or so. Compare the pictures of women in Afghanistan and Iran in the 1970s, indistinguishable from their peers in the West, to today, where many are covered up from head to toe. Do the same for the graduation ceremony at Cairo University in Egypt over the most recent decades.

    The Arab Spring which started in 2011 as a protest against this lack of freedom unfortunately led to more radicalization, violence and war in many countries (the West shares some of the blame). At one point the nefarious Muslim Brotherhood was even elected to power in Egypt, immediately striving to turn the country into a hardcore Islamic state complete with full sharia law. Only the emergence of yet another military dictatorship was able to put a stop to all the mayhem and murder that followed.

    The most recent example in this shift towards fundamentalism is Turkey, once considered an inspiring example of a successful transition from an Islamic into a secular democratic society. After narrowly securing the majority of the votes in a tight election months ago, President Recep Tayyip Erdogan has been busy rolling back these reforms to create a fully-fledged Presidential system with a clear Islamic inspiration.

    In today’s Turkey, minorities are persecuted and in the case of the Kurds killed or placed under curfew, journalists and political opponents are jailed indefinitely, the media is being brought under state control, the military (the most powerful in the Middle East) is gaining political prominence under the pretext of the “fight against terrorism” and war refugees are used as a bargaining chip against Europe.

    All these are hallmarks of totalitarianism. Perhaps revealing his true intentions, Erdogan even went as far as praising Adolf Hitler’s governance model. The freedom loving part of Turkish society now has a real problem on its hands, along with Europe given the deepening commercial, financial and even political ties between the two regions.

    Astonishingly, some geopolitical analysts view Erdogan’s policies as a positive development, providing the muscle and determination to ensure stability in a very volatile part of the world. It is worthwhile remembering that Hitler too was propped up by the West in the 1930s as a deterrent against the Soviet Union.

    We sincerely hope that people in Muslim nations can find the peace, freedom and prosperity that they have aspired for so long. But the trend in this case is clearly not their friend.

    The Sino-Russian Axis

    “Everyone imposes his own system as far as his army can reach.” –
    Joseph Stalin

    Up until the 1980s both China and Soviet Russia were clearly totalitarian regimes, easily fulfilling all six characteristics.

    In the case of China, the world was reminded of this political reality during the tragic events of Tiananmen Square in 1989, when a popular uprising protesting for democracy was brutally crushed by the military. However, the leadership at the time recognized that things did need to change, especially if they wanted to generate a minimum level of prosperity for their citizens to avoid future unrest.

    Soon after private enterprise was encouraged to take a greater role in the economy; critical foreign investment and know-how were welcomed in certain areas of the country; the leadership proclaimed that “to get rich is glorious”. We all know the rest of the story: China has achieved unprecedented growth over a relatively short period, and is now a major player in global economic and political affairs.

    But has China abandoned totalitarianism?

    Terror may no longer be an obvious state tool, but it still lurks in the background, especially when persecuting religious minorities or those who do not follow the prevailing ideology – which at least on the outside is state supremacy under a modified Marxist ideology. Means of communication are broadly controlled, including censorship of the internet. Control of the military has been tightened under President Xi Jinping. And many parts of the country operate under a de facto police state.

    So other than private enterprise gaining a greater degree of freedom, more work is required to spread these gains across Chinese society. And in international affairs China certainly favors pragmatism over human rights. North Korea, its propped-up regional minion, remains undoubtedly under totalitarian control, even after the rise to power of Western educated Kim Jong-un.

    Russia had a rather more tumultuous transition to its current governance model. By the end of the 1990s it was clear that the market reforms adopted after the collapse of communism failed to produce the desired outcome, to put it mildly. A series of events – including a disastrous financial crisis in 1998 – eventually led to Vladimir Putin rising to power, who promptly tightened his grip over political and economic affairs. He still calls the shots to this day, we could say irrespective of his political title and election results.

    Despite this concentration of political power the Russian state has adopted a more conciliatory position towards its citizens, at least on the surface. There’s a good reason for this: Russia’s population is projected to decrease significantly over the next thirty years. And a serious repression of personal freedoms is not exactly conducive to having babies (unfortunately for Putin, Marx did not proclaim “workers of the world, reproduce!”)

    As an example of a shift towards a more tolerant and open society, Orthodox Christianity, which had been virtually eradicated after the Bolshevik revolution, has been making a comeback. The atrocities which took place under the Soviet regime are also the topic of public debate.

    But serious challenges remain. Corruption at all levels of government remains pervasive. Local and regional mafias tend to absorb any power that is relinquished by the state over such a vast territory. And Putin’s confrontation with the West, which has led to the imposition of economic sanctions by the international community, means that the influence of the military apparatus is likely to remain strong over the years to come.

    As such, based on the foregoing we could say that Russia today is much more autocratic than totalitarian, certainly much more than democratic, although its governance model incorporates elements of all three.

    Here’s an important note about communist totalitarianism. Only one former communist country successfully prosecuted its communist leaders for their crimes, and that’s Cambodia (against Pol Pot’s Khmer Rouge). Everywhere else they got a free pass, despite enforcing directly or indirectly an ideology which caused the death of hundreds of millions of people worldwide.

    The fascists on the other hand were put on trial for the entire world to see. This may explain why they are readily demonized, while communists still manage to get elected in many parts of the world (especially in Europe and as we shall see, Latin America). Communism did not die; it is alive and doing very well.

    The Western Hemisphere ex-US

    “And that," put in the Director sententiously, "that is the secret of happiness and virtue — liking what you've got to do. All conditioning aims at that: making people like their unescapable social destiny.” ?
    Aldous Huxley, Brave New World

    Old Europe is the cradle of Western civilization. It has made an undeniable contribution to human progress over the centuries: democracy, human rights (including being the first to abolish slavery, that stain on humanity), widespread education, healthcare and agricultural + industrial revolutions to boot.

    It also came up with some really bad ideas – basically all the social “isms”: communism, fascism, socialism, anti-Semitism and of course totalitarianism. Some brutal wars were fought as a result of these bad ideas.

    The European Union (EU) in large part was created to prevent their reoccurrence, as well as establish a more influential global player by pooling 28 European nations together. Some even view it as an inevitable evolution of the fragmented nation states which had formed the bedrock of Western civilization for centuries.

    With this context, it would seem rather silly to ask if the EU is also a totalitarian state… until we look at the evidence.

    Take Greece. The country went bankrupt in 2010, when unsustainable fiscal policies and inherent flaws in the design of the Euro currency were painfully exposed. Since then that society was turned upside down by successive policies and reforms to rehabilitate the economy.

    The result? Virtual totalitarianism, at least under the definition we’re using: the social and economic policies adopted by the government are the same irrespective of who’s elected or the outcome of any popular referendum; there’s no state terrorism per se, but it’s not exactly pleasant to live under the constant threat of savings and pensions being wiped out if such policies are not duly followed; Greeks, like most other Europeans, are not allowed to contest their government’s monopoly on weapons; and there’s only one accepted guiding ideology – “European Unionism”. Only the great leader is missing (or is that Angela Merkel?)

    The same analysis can be extended to Portugal and other member states that are in a fiscal pickle. Those that aren’t may still breathe some freedom – provided they follow the political orthodoxy from Brussels, or else. Poland and Hungary recently found this out the hard way, as they may be forced to pay heavy fines as a result of their fierce opposition to the EU’s refugee resettlement program.

    Remember that totalitarianism can be a gradual process, and not necessarily overtly repressive at first. In the case of the EU, the political hardening from Brussels appears to be a more recent phenomenon (despite the historical disregard for national referendums and protestations) in light of some pretty obvious failures in dealing with serious issues since 2008. The bigger political integration project needs to stay on track, no matter what. It’s no wonder that in June the UK is voting on a referendum to get out of the EU. And it’s reasonable to assume others might follow suit.

    Latin America, where communism has always had deep roots, has been working at it for longer.

    Shocked by the fall of the Berlin Wall in the late 1980s and the apparent triumph of neoliberal policies across the region, Luiz Inácio Lula da Silva, leader of the Brazilian Workers' Party, and Cuba’s Fidel Castro approached other regional leftist organizations to create a countermovement and eventually bring communism back to power. The result was the creation of the Forum of São Paulo.

    Its first meeting took place in 1990, attended by no less than 48 parties and organizations. Since then, they have implemented their agenda very diligently by gradually infiltrating the media (traditionally left-leaning, and which only publicly acknowledged the existence of this Forum relatively recently), the education system, workers’ unions, politics from the local to the federal level and even the Catholic Church.

    The result was the rise to power in the 2000s of a multitude of “populist” leaders all over Latin America, including Lula in Brazil, Néstor Kirchner in Argentina, Hugo Chavez in Venezuela and Evo Morales in Bolivia – at a time when communism was considered all but dead. All that work to condition the masses, the promise of a more equitable distribution of resources via socialism and a rising wave of anti-Americanism proved irresistible to the electorate in these countries.

    The illusions of renewed prosperity and more equality quickly faded. Not even the bonanza brought about by the spectacular commodities boom could disguise the failure of the leftist economic policies, with indebtedness rising rapidly. When that boom turned into a bust post 2011, confidence in the political system quickly evaporated, compounded by a string of shocking corruption scandals (allegedly committed by those who came to power denouncing them).

    The legitimacy of those governments was quickly called into question, in most cases before they could at long last establish their coveted socialist utopias. Argentina narrowly voted out the leftist government, led by Cristina Kirchner. After many months of vigorous popular demonstrations, Brazil finally impeached Dilma Rousseff, heir apparent (placeholder?) of Lula, a few weeks ago (disentangling her party’s influence in Brazilian society may prove to be rather more difficult).

    But the Venezuelans were not so lucky, and are now facing the totalitarian boot of the government of Nicolás Maduro, the successor of Chavez: political assassinations and intimidation, banning of private gun ownership (already in 2012), media blackouts, loss of individual and economic freedoms, increased military control and all the rest. All this in the country with the largest oil reserves on the planet.

    Cuba of course remains firmly a totalitarian state, despite the recent overtures of US President Barak Obama. No respite for its citizens there either.

    The US

    “If we lose freedom here, there is no place to escape to. This is the last stand on Earth.” – Ronald Reagan

    When it comes to individual freedoms Americans are in a league of their own. Their country was founded by people seeking refuge from persecution, whose leaders were allergic to the concept of big government. Successive generations have fought very hard at home and abroad for the sake of liberty.

    If it were not for the US, Europe would have almost certainly succumbed to fascism or communism. The US Constitution, a marvel on how to limit the power of big government – by definition anti-totalitarian/authoritarian, is older than the constitutions of most advanced European nations.

    All that being said, it is undeniable that personal liberties took a big hit after 9/11, justified by the “war on terror”. And it’s not just from increased government surveillance, as one would immediately think. Today there is a set of powerful dynamics in motion that may fundamentally alter the relationship between Americans and their government.

    Here are a few examples:

    Growing dependency on the government: Self-reliance was once a hallmark of American life. But today the largest single employer in the US is the government. One in seven Americans receive food stamps, meaning that without the government they would go badly hungry. The US bureaucracy spent over $3.6 trillion in 2015, making it the largest enterprise on the planet. As the cost of staples like food, healthcare and education skyrocket, more and more people will push the government to pitch in via the ballot box.

     

    All this creates a self-perpetuating machine increasing the size of government to provide for all these needs. As Milton Freedman warned us, one of the costs of bigger government is the loss of freedom. But some Americans do not seem to care. The following Gallup poll shows the progressive embracing by the younger generations of the role of government and socialism (as of May 4, 2016):

     

     

    The ever expanding government debt: Maintaining this expanding machine costs a bundle. Even if taxes collected have been rising, the US government still comes up short, so borrowing goes up. In the last fiscal year, just the federal debt totaled over $18 trillion, more than 100% of GDP and almost $60,000 for every American adult and child. What is striking is how fast it has been growing, almost doubling over each of the last two presidencies. The graph below shows this staggering increase since 1950 in real terms.

     

    US Federal Debt in Real Terms ($2015): fiscal1950-fiscal2015

     

    Somebody will have to pay for all this at one point, and that’s you dear American reader. Also remember that unlike other developed countries you are taxed on your worldwide income, so there is no escape even if you leave the country. And the more the government owes today the more it will come after you at some point in the future, by whichever means, benevolent or otherwise.

     

    State allocation of resources: As the size of government expands, its influence over the economy and allocation of resources grows with it. And it can do so either directly using public entities or indirectly via big business, meaning large corporations favored by the government (which in turn have every incentive to try to influence that big government in their favor). The fascist dictatorships of Europe in the 20th century provided an extreme example of how this close alliance between politics and corporations controlled society.

     

    According to the findings of Martin Gilens and Benjamin Page at Princeton University, published in 2014, “economic elites and organized groups representing business interests have substantial independent impacts on US government policy, while average citizens and mass-based interest groups have little or no independent influence”. On top of that, a hybrid public-private entity controls US monetary policy, becoming particularly interventionist since the 2008 financial crisis.

     

    If you think all of this is theoretical, try this one for size. Executive Order 13603 was signed with little fanfare by President Barack Obama in March 16, 2012, authorizing the President to requisition property, force industry to expand production and the supply of basic resources, impose wage and price controls, settle labor disputes, control consumer and real estate credit, establish contractual priorities and allocate raw materials towards national defense; in other words, to obtain absolute control over the economy if deemed necessary (by who?) to protect the nation.

     

    The gun control debate: If you read the daily news you might think that the US has turned into the Wild West, with fanatical gunmen riding into town and shooting everything in sight. While the loss of life from any type of violence is regrettable, the reality is that gun homicides per capita are at generational lows. And yet many politicians and much of the mainstream media portray this as a core problem of American society that can only be fixed by restricting access to guns. If the majority of Americans feel that way obviously it should be subject to a debate. But what is unquestionable is that a state monopoly of weapons, if that is the desired outcome, is a key component of a totalitarian society.

     

    Growing intimidation: Some media commentators have denounced the current Administration’s harassment of the press. We really can’t say much about this, other than it seems to fit into a growing pattern of government intimidation, be it against whistleblowers or using agencies to target certain political groups. But this actually goes beyond the government. There appears to be state-sponsored “consensus” or even ideology forming around certain social and economic issues, which is heavily guarded by social justice warriors (reminiscent of the ideological “brown shirts” in Nazi Germany). Try challenging climate change, open border policies, multiculturalism, transgender bathrooms and a range of other issues and you may find yourself in court and/or being physically attacked.

     

    A Revealing Flyer Recently Posted in Boston, MA

     

    An imbalanced Supreme Court: Here’s a seldom discussed yet hugely important outcome of the 2016 Presidential Election. Commentators who say that Hillary Clinton or Donald Trump might become dictators display a very shallow understanding of how the US political system works. The US Constitution was designed to prevent this, and political representatives along with millions of patriots have sworn to defend it. But ultimately it’s the Supreme Court that decides what’s constitutional and what’s not. If the majority decides that the President should have dictatorial powers during an event like a terrorist attack or war, then all bets are off.

     

    Until the death of Justice Antonin Scalia, the Supreme Court was fairly balanced between conservatives and liberals, in a sense reflecting the broader views of society (in theory the political orientation should not matter, but in practice we are all human). Now Democrats have a unique chance in November to shift key rulings in their favor by appointing one and possibly more Justices who have a more liberal interpretation of the Constitution. Since they are appointed for life, this imbalance will deeply impact a generation if not more of American politics and in our view represents a serious risk to constitutional liberties.

    If we go back to that Cato Institute study on human freedoms, we find something very striking: the US did not make it to the top-10 freest countries in 2013. In fact it barely made it to the top-20, ranking #19 (paradoxically, where the land of the free still leads the world is in putting its citizens behind bars).

    We quickly dismiss and forget trends and statistics like this. After all, the US’ governance model will never change… right? Not quite. The US can become (and in many ways already is) less free.

    This means that citizens all over the world should be concerned. Why? Because Ronald Reagan was right: there is no more freedom if the US loses it.

    Think about it. Who else will lead the fight for individual liberties? Not the Eurocrats, based on the track record of the EU (they aren’t even capable of protecting their own women). Neither will the Russians nor the Chinese, whose patriarchies think they know better than the average citizen. The major Muslim countries are busy dismantling what’s left of freedom at home, while in some cases exporting fundamentalism abroad. And Latin America has a lot of cleaning up to do domestically.

    ***

    In 1630, before setting sail to the Americas, English Puritan leader John Winthrop admonished his fellow future New England colonists that their new community would be “the light of the world as a city upon a hill”, setting an example of communal charity, affection and unity to all other nations. The concept became central to the US’ conception of itself as an exceptional and exemplary nation.

    So far in early innings of the 21st century the US does not appear to be winning that fight for freedom – internationally, and even more disturbingly at home. That light is dimming pretty rapidly.

  • Libertarian Party Chairman Candidate Strips To His Underwear On Stage

    While badly needing an alternative to the fake left-right division plaguing US society, Americans will not get a much needed, credible libertarian “third choice” for at least another year. Here’s why.

    Earlier today, the Libertarian Party nominated former New Mexico Gov. Gary Johnson and former Massachusetts Gov. William Weld as its presidential ticket Sunday, as the party attempts to elevate itself into the mainstream during an election that’s given the small party unprecedented opportunity. Unfortunately, “taking itself into the mainstream” was just not meant to be for a party that earlier today saw a candidate for chairman strip to his underwear and give the entire convention a striptease.

    The pair, both two-term governors, have more executive experience than any other candidate in the race, and they will offer an alternative to two historically unpopular candidates, presumptive Republican nominee Donald Trump and Democratic front-runner Hillary Clinton.

    “This is the best message team going forward,” Johnson, the Libertarians’ presidential nominee, told reporters after Weld won the vice presidential nomination.

    And, as NBC reports, it all came to be in a contested convention. After endless speculation that the Republican Party’s divided primary might end in a contested convention in Cleveland and continued theories that the Democrats’ primary could end in Philadelphia with a floor battle between party insiders, 2016 finally had a contested convention, in Orlando. 

    Johnson won on the second ballot after falling short of a majority by just a few votes — getting 49.5 percent — on the first. However, unlike the democratic or republican races, there were no superdelegates who will make all the difference.

    Unfortunately, it is here that things took a turn for the bizarre. The tense hour between ballots left candidates scheming and delegates making floor deals and chanting for and against candidates. It was the kind of drama political reporters had previously only dreamed about.

    While Johnson locked down enough votes on the second ballot, the drama was far from finished Sunday. Libertarians also allow their party to choose the vice presidential nominee, and Johnson’s chosen running mate — Weld — is not a party favorite, as many question whether he’s really a Libertarian. It didn’t help that he endorsed Ohio Gov. John Kasich for the Republican presidential nomination earlier in the primary cycle.

    Weld fells a couple of dozen votes short on the first ballot, but he won on the second — by just a few votes — and the crowd erupted in boos and cheers.

    And then, the Libertarians showed that when it comes to stealing the stage and making a total farce, Trump is at best an amateur, when a candidate for the chairmanship of the Party decided to unleash in a stripteaser on the stage.

    As The Hill reports, the man took the stage and defended his chosen candidate for the party’s vice presidential nomination, Derrick Grayson, as the results of the second ballot were tabulated, according to reporters on the scene. During that time candidates for chairman of the party were allowed two minutes each to speak. The man stripped down to his underwear, before saying he was doing it for a dare and leaving the stage.

     

    This is what happened at the most important annual event for the US libertarian party:

    Several delegates came to the microphones after the display to complain, with one attempting to revoke the man’s membership from the party.

    To summarize: after eight straight hours of voting, the Libertarian Party had its nominees, America had finally seen a contested convention, and one person got naked. 

    The good news is that if this is a preview to the insanity to come during the republican and democratic conventions, Americans will be greatly entertained this summer…

  • China Sends Yellen Another Warning, Fixes Yuan At Lowest In Over Five years

    We got an early hint of what the PBOC would do tonight on Friday and Saturday, when as we reported, an unprecedented volume burst of bitcoin buying out of China, sent the digital currency soaring to the highest level since 2014.

    To be sure, we had expected sailing would not be smooth for the FX market, when on Friday afternoon, after Yellen’s’ unexpectedly hawkish comments at Harvard, which sent the USD surging, we predicted a stormy sea for the Monday Yuan fix:

    That is precisely what happened when moments ago the PBOC set the official exchange rate of the onshore Yuan lower by nearly 0.5%, from 6.5490 to 6.5794, the lowest fixing in more than 5 years, or February 2011.

     

    Which brings us to a post we wrote last Wednesday, when according to Daiwa, “Round Two Of China Capital Outflows Is About To Begin.” The highlights:

    As Kevin Lai, HK-based chief economist of Asia ex-Japan at Daiwa Capital Markets writes in note released overnight, round two of China capital outflows is about to begin, if second half last year was considered the first round. This is what he believes will happen next:

    • China’s FX reserves may fall below $2t in about a year
    • Downward pressure on FX reserves is most likely to be underestimated as short-term speculative flows are far more ready to leave than real flows
    • Based on estimates, about 49% of PBOC’s FX reserves are made up of flows which are speculative and short-term in nature
    • Expects decline in FX reserves to be more rapid in next 24 months at least
    • Look for further $500b decline to $2.7t by end-2016 and a further $900b decline to $1.7t by end-2017
    • If companies, especially SOEs, face trouble paying back creditors, central government would bail them out
    • Massive bailouts would require government’s monetary policy to turn a lot more aggressive, putting more pressure on yuan
    • Policymakers would have to seriously think about letting CNY slide gradually to a better equilibrium level

    His conclusion: the USD/CNY will hit 7.50 by end-2016, some 15% higher than where it is now.

    Then again, also today Goldman chimed in with a warning that “the end of a temporary sweet spot that China enjoyed with its exchange rate, strength versus the dollar and weakness against trading partners, will spur renewed capital outflows.”

    Since Goldman has become the “Dennis Gartman” of investment banks, this “warning” may just be the confirmation that ongoing Chinese devaluation will not spook FX markets.

    On the other hand, purely statistically, it is about time Goldman got something right, and if this is it, it means that the Fed’s June/July rate hike is about to be derailed, for the reasons laid out previously why with the domestic economy no longer a factor, the only thing influencing the Fed is China, and whether or not EM currencies are turmoiling.

    For the answer keep an eye on the offshore Yuan: if the selling and shorting resumes in earnest without an intervention by the PBOC, the events from August and January are about to deja vu themselves, all over again.

    And, of course, bitcoin. If the Chinese, who know the local financial situtation better than anyone, are openly rushing into the “safety” of a digital currency to avoid imminent devaluation, then we have our answer.

    For now, the local commodity markets are displeased as China’s Iron-Ore futures slide to three month low, lowest since Feb. 22; now down 2.5% at 336.0 yuan/MT, while that other China carry currency, the AUDUSD, is down a comparable to the CNY 0.4%, to 0.7151, and is fast approaching a two month low.

  • "This Is Not The America My Parents Immigrated To In 1957"

    Submitted by 'Stucky' via The Burning Platform blog,

    Not that I remember what America was like in 1957, as I was not yet five years old. Years later, when I was old enough to understand, they told me their story. Briefly, it goes like this.

    Dad was born in Romania (Czernowitz in Northern Bulovina), but he identified (haha) as German because, well, his dad was German, his mom was German, they spoke German and kept German customs, and lived in a German community so, applying the “quacking duck” theory, that’s what he was. Mom was born in Yugoslavia (now, Slovenia), but she identified as German for the same reasons as dad did. The Nazi regime would refer to folks such as my parents as “Volksdeutsche” —- being German as a people or race, regardless of citizenship. More on that  here.

     

    When dad was about seventeen the Deutsche Wehrmacht (army) made a pit stop in his neck of the woods, and forcibly yanked his ass off the farm, and within a few weeks turned him into a bonafide Mortarman (dudes who launch grenades). He might have destroyed or damaged a Russkie tank or two, but was eventually captured by the Russians, and spent the rest of the war, and some time thereafter, in one of their luxurious prison camps. When mom was a pre-teen the Russian army made a pit stop in her neck of the woods, killed most of her family, but spared her life and put her to work as a slave laborer and sex-toy (cuz she was very pretty), in one of their gulags.

     

    Obviously they both survived this ordeal (otherwise I probably wouldn’t be writing this). However, after the war ended, neither parent was allowed back to their ancestral homes. In order to keep Germans from becoming a “problem” again, Eastern Europe (with approval of all the Western powers) decided to enact a program of ethnic cleansing by expelling as many as 14 million Germans. This German Diaspora comprised the largest migration of any European people in modern history. More here. Many died, estimates range from 500,000 to 2,000,000. My parents survived that as well, obviously.

     

    They arrived as Flüchtlinge (refugees) in an Austrian camp for such people … two Germans as refugees in a German country, how weird is that … found each other, did the nasty posthaste, and produced me, at the time a bastard child mostly unwelcome anywhere. (I’m just glad my dad wasn’t some anonymous Russian soldier!). They gave it their best shot living this way. But, even as late as 1957, there wasn’t enough work in Austria. They felt their future would be better elsewhere. So, they came to America … for work.

    You do understand the meaning of that last sentence? It means my parents came to America for a selfish reason, as all immigrants do. Sure, the stated reason for most immigrants may be for economic betterment, to escape political repression, or flee religious persecution, and such. But, the ultimate motivating factor is always for the betterment of one’s self, and/or family. In other words, no immigrant has ever arrived at these shores in order to make America great. On the contrary, they came because they believed America was already great, and a land of opportunity.

    This quest for “opportunity” is one of the key distinguishing characteristics of the “old world” immigrants. Not all, but a great many of the current horde invading this country come not because America is great and offers opportunities, but because America has become the Land Of Entitlements — a concept unknown to old world immigrants. In fact, my dad needed a “sponsor” to guarantee that my father would have a job the moment he arrived. No job? No skills? Stay home! And don’t even think of gaining entry if you, or your loved ones, have some kind of disease. There were zero social backstops. No food-stamps. No free medical visits. No free transportation. No free-housing via Section 8, or some other thieving giveaway.

    And to be honest, those folks back then wouldn’t accept free shit if you handed it to them on a silver platter. For the first couple months in this country my parents lived in an abandoned apartment building in NYC without even running water. Jack, my dad’s employer, offered to let us live in a spare room in his house until dad could get on his feet. Dad refused, saying he came to this country to work, and not to receive charity. Compare that mentality to the current free-loaders who demand “their rights” the moment they set foot here … for example, people who get social-security (and loads of other freebies) without ever having paid even a thin dime into the system. This is criminal in the sense that it is literally theft from the people who are forced to pay for all this ”free” stuff. These people should be ashamed, but they know no shame. Rather, they will shout you down as a racist and bigot for even suggesting the hideous Biblical concept of ‘he who does not work, shall not eat’. It can be argued that immigrants helped build America, or that immigrants are what made us great. But, that was a long time ago, in a different era, under totally different circumstances. Try to remember this; not all immigrants are equal, or beneficial to this country.

    Part of Trump’s plan to make America great again is to build a yuuge wall. That’s a really dumb idea when compared to other alternatives. The best idea is so simple; immediately end all entitlements to people here illegally! I’m fairly certain that act alone will stop the flow almost overnight. Why hasn’t Trump (apparently) not even considered that option? Perhaps because he know that free shit, once given, can never be rescinded? Perhaps because he realizes that those who get free shit are forever beholden to the shit-giver, and therefore they are easily controlled and manipulated …. not to mention a permanent guaranteed voting class? If so, Mr. Trump doesn’t have much chance of making America great again no matter how high he builds his wall.

    Or, how about this? A tit-for-tat immigration policy; enact immigration laws identical to that of Mexico.

     

    What is the meaning of “Make America Great Again!” except that it is both an admission of America in decline, and a boast that only Trump can restore us to our former glory?

    On the one hand, many (such as myself) find that to be a refreshing change of pace from the braggadocio propaganda we’ve heard for about the past twenty years … culminating with the biggest (and least successful) braggart of them all, Obama, informing us almost daily that America is an “exceptional” nation, the “indispensable” country, the “sole” superpower of Planet Earth, …. nay, the greatest power ever in human history, to which every other nation on earth aspires to imitate.

    “Obama has talked more about American exceptionalism than Presidents Reagan, George H.W. Bush, Bill Clinton, and George W. Bush combined: a search on UC Santa Barbara’s exhaustive presidential records library finds that no president from 1981 to today uttered the phrase ‘American exceptionalism’ except Obama.” ——— John Gans Jr., The Atlantic, 2011

    “‘American exceptionalism’ is not a traditional part of presidential vocabulary. According to Schlesinger’s search of public records, Obama is the only president in 82 years to use the term.” – Robert Schlesinger, U.S. News and World Report

    On the other hand, Trump is the first candidate (at least in modern times) to run openly and without apology on a platform of American decline. Let’s take a quick look at how one President talked about America shortly after we arrived here.

    Take a look (or, recall, if you have a good memory) at JFK’s speeches. You simply won’t find them littered with exceptionals, indispensables, and other superlatives … as those words simply weren’t part of the political lexicon back then. American wealth and military might were basically a given, and indisputable. Big dogs simply and quietly go about their business. It’s the small and insignificant Chihuahuas of the world who yap endlessly about their superiority.

    In his inaugural address JFK reflected the character of old world immigrants when he urged all of us to not ask what this country can do for us, but what can we do for our country. His only use of “great” was to invoke the USA / Soviet Union blocs as “two great and powerful groups of nations”. In another speech he spoke of America as “a great power” — but not “the greatest power.” In that same speech he said; — “we must face the fact that the United States is neither omnipotent or omniscient … that we are only six percent of the world’s population … that we cannot impose our will upon the other 94 percent of mankind … that we cannot right every wrong or reverse each adversity … and that therefore there cannot be an American solution to every world problem.” Don’t confuse that “negative” statement with Trump’s assessment of America. JFK’s commentary is one of quiet strength and tremendous wisdom rooted in a deep and abiding confidence of America’s unstated power …. a confidence so unshakeable that there was no need to speak of it.

    While Trump speaks openly about America’s decline, Obama and Hillary acknowledge the same sentiment, albeit unknowingly. Decline is evident when one has to say endlessly and openly what once was too obvious to say. In other words, if you have to brag about it, you no longer have it.

    For a cultural equivalent, call it the Rambo-ization of America. I absolutely loved “westerns” as a kid. The post WWII movie “heroes” of my youth were folks like John Wayne, Burt Lancaster, Chuck Conners, and then as a teen, Lee Van Cleef and Clint Eastwood. Other than their acting abilities, what was remarkable about them? Well …. nothing, really. They were remarkably ordinary looking, like the guy in your office or next-door neighbor, not overly muscled, not possessing other-worldly fighting skills, and their weapons were basically identical to that of their enemies. But, then came America’s defeat (or, was it a “draw”?) in Vietnam to a bunch of guys dressed in pajamas, with rusty rifles, and living in tunnels. Hollywood helped us cope with our malaise and depression by now giving us outrageousness; outrageous muscles, outrageous weapons, and outrageous killing skills whereby now an Army is no longer needed but, rather, just One Guy defeats the gooks. We like our lies, but we really really love outrageous lies. Eventually, mere humans, no matter how muscled, no longer provided enough titillation to dull our senses. Whereby we once were satisfied that Conan enjoyed crushing his enemies and hearing the lamentations of their women, by 1984 we demanded and cheered a virtually undefeatable cyborg from the future with a German accent uttering amazing philosophical pandering such as, “Fuck you, asshole.” And, what heroes do we have today? Spiderman, Thor, Hulk, Superman, X-Men, Iron Man, Ant Man, Captain America, Batman, ad infinitum. How ironic that in an Age of Science and Technology that we find solace and amusement in heroes who defy all known laws of physics … and, sensible dialogue. It seems that the deeper America sinks into chaos, that the more ridiculously obscene our heroes (and, leaders) become.

    [Side Note; Surprisingly (probably to most folks), it is Ronald Reagan who started the ball rolling in terms of being defensive regarding America’s greatness. I do acknowledge that he said this – “Let’s reject the nonsense that America is doomed to decline”. However, Reagan used “again” — long before The Donald did — in his iconic 1984 commercial titled ‘Prouder, Stronger, Better’ where the voiceover says — “It’s morning again in America.” — and later asks, “Why would we ever want to return to where we were less than four short years ago?” — a very Trump-ish admission of America’s decline. Nevertheless, Reagan is hard to pigeonhole as he didn’t lack for superlatives flowing from both sides of his mouth ranging from his “shining city upon a hill” (probably stolen from JFK’s inaugural address) to his unwavering, almost Obama-esque belief in America’s greatness — “ … here in the heartland of America lives the hope of the world … in a world wracked by hatred, economic crisis, and political tension, America remains mankind’s best hope.”.]

    When it’s all said and done, remember to tell your grandchildren about The Year 2016. It’s the official year when the USA!USA!USA! went on record as being a Nation In Decline. Thank you, Donald!

    *  *  *

    The biggest change since our arrival in 1957 is that America has somehow morphed from being a democracy to at best being an oligarchy, at worst, a dictatorship.

    Now, some of you are getting ready to educate me on the error of my ways by pointing out that the United States is a republic. Let’s not quibble over semantics. The key question is whether this country is controlled by an elite aristocracy, or the public. In a democracy/republic the government represents the people, while an aristocracy represents itself. An elite aristocracy is a dictatorship no matter how it is flavored; Nazis in Germany, Commies in Soviet Union, Fascists in Italy, or oligarchs in the United States.

     

    — A massive Health bill affecting about 20% of the US economy is passed despite the overwhelming majority of people against it, and none of the legislators actually aware of what the bill contained until after it was passed. Does this sound like a representative democracy, or dictatorship?

     

    — A town in Vermont, and across America, is forced to accept Muslim refugees (and then forced to pay for all their freebies) without the citizens even being allowed to question the town leaders because that would me “messy” and people would come “out of the woodwork” with all kinds of differing opinions. Does this sound like a representative democracy, or dictatorship?

     

    — The Military Commissions Act, signed by Bush in 2006, abandoned the Geneva Convention, legalized the torture of U.S. citizens, suspended all civil rights for prisoners and allows the President to declare virtually anyone to be an “enemy combatant“. Furthermore, it retroactively granted blanket immunity to all U.S. military personnel who have committed war crimes under the Geneva Convention. Furthermore, the immunity would extend to present and future war crimes as well. Furthermore, it utterly nullifies the courts and makes it illegal for the judicial branch of government to interfere with the imprisonment and torture of anyone. In other words, the United States declared itself immune from any international law, and that it will officially harbor and support war criminals. Does this sound like a representative democracy, or dictatorship?

     

    — Obama is pushing for several international trade deals (TTIP, TPP, and/or TISA). Only a handful of people know the full scope of these deals. Most legislators working on these deals are only allowed to see small parts of the deal. What we do know is that these deals will transfer national sovereignty to an international corporate dictatorship. We, the people, aren’t allowed to see any of the details …. until after it is passed. Does this sound like a representative democracy, or dictatorship?

     

    — It is a parade of lies which has led to the death of thousands of young Americans – and tens of thousands physically and psychologically wounded — in Iraq and Afghanistan … not to mention hundreds of thousands, if not millions, of dead and wounded citizens throughout the Middle East. According to the Constitution only Congress can declare wars. But, through the use of Executive Orders, the president can unilaterally declare wars at will. Our sons and daughters used as cannon fodder, our debt piling up, an economy in ruins … and there isn’t a damned thing you can do about it. If you dare protest about such things, you will be targeted as a potential terrorist. Does this sound like a representative democracy, or dictatorship?

     

    — The Supreme Court in their 2010 Citizens United decision enabled unlimited secret money — including foreign money — to pour into U.S. political and judicial campaigns. Let’s see if former President Jimmy Carter thinks this is part of representative democracy: “It violates the essence of what made America a great country in its political system. Now it’s just an oligarchy with unlimited political bribery being the essence of getting the nominations for president or being elected president. And the same thing applies to governors, and U.S. Senators and congress members. So, now we’ve just seen a subversion of our political system as a payoff to major contributors, who want and expect, and sometimes get, favors for themselves after the election is over. At the present time the incumbents, Democrats and Republicans, look upon this unlimited money as a great benefit to themselves. Somebody that is already in Congress has a great deal more to sell.”

     

    — This country is ruled by force, not law. Governmental assassinations of US citizens. A highly militarized police with almost unlimited powers to harass, intimidate, and brutalize with impunity. TSA groping whereby in any other setting would be considered sexual harassment. Overseas detention, torture and assassinations carried out against anyone, including American citizens, without due process … and without recourse if later cleared. Warrantless GPS tracking by the FBI. The IRS targeting religious groups. Some people now actually be charged with pre-crimes. Checkpoints up to one hundred miles inland from all our borders (including the two oceans and Gulf of Mexico) in an area stunningly known as a “Constitution Free Zone”. No Ride / No Fly lists which are extrajudicial, secret, and form a guilty-until-proven innocent framework that subverts freedom instead of protecting it. A See Something/Say Something program which goes beyond the already high-tech surveillance apparatus of the NSA and turns each of us into an unpaid employee of the police state similar to what the East German Stasi did to their citizens. Web cameras and surveillance proliferating like a wildfire, data mining, recording all your phone conversations, all your web searches, all your emails, and all without your consent. An FDA, which has near-total food control and usually renders anything healthy as toxic, and all that is toxic as healthy, and does insane shit like jailing folks who buy raw milk. Literally tens of thousands of regulations which literally invade every facet of society, whereby it has been said that almost all of us commit three felonies per day, and every violation of these laws will be met with the full force and fury of the State which promises fines, penalties, forfeiture of properties, or imprisonment.   Does any of this even remotely resemble a representative democracy, or does it sound more like a dictatorship?

    I’ll stop now, even though I could easily go on for another ten thousand words. Besides, some of you will say this is all anecdotal. Some will attempt to refute each and every point. And others – the especially ignorant – will chime in with a “Well, you have nothing to worry about if you don’t break the laws”. The most retarded of all will opine, “Hey! Shaddup! This is all for our safety and security! And, the children.” OK, you doubters, let’s end this article with some ….. science.

     “Testing Theories of American Politics”

    A single empirical study titled “Testing Theories of American Politics” was published in 2014 in the journal Perspectives on Politics, issued by the American Political Science Association.

    This study investigated answers to 1,779 survey questions asked between 1981 and 2002 on public policy issues. The responses were broken down by income level. Then they researched actual enacted policies and whether or not those policies reflected public preferences … or, conversely, whether the relevant corporate-lobbied positions had instead become public policy. Let’s get to the good stuff, their conclusions. None of the below should be a surprise to you. But, at least there’s now some empirical data to validate your hunches.

    “In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcome. …………… When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. …………… even when fairly large majorities of Americans favor policy change, they generally do not get it …………… Our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts …………… , the opinions of lower-income groups, and the interest groups that represent them, appear to have little or no independent impact on policy …………… however, the preferences of rich people had a much bigger impact on subsequent policy decisions (40% of preferences enacted) ) than the views of middle-income and poor Americans (18% of preferences enacted) …………… [when] policy making is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”

    Let me summarize all that for you, and please excuse my profanity; —- your elected representatives don’t give a rat’s ass shit about you and what you want for this country (except at election time). So, stop kidding yourselves by thinking your vote matters.

    *  *  *

    This is NOT an article about the pros and cons of Donald Trump. Nevertheless, the question must be asked; “what changes if Trump becomes President?” Near as I can tell Trump’s platform is as follows; 1) all our politicians are stupid, but he’s not, 2) nobody knows how to make good deals, but he does, 3) he’s gonna build a yuuge wall, 4) he’s going to create jobs, somehow, 5) we’re gonna have the biggest badass military in the world (isn’t that the case already?), 6) cops are just gr-r-r-reat, and he’s going to take care of them, believe you me. Did I miss anything?

    (BTW, I have even less hopes for the Democrat side of the same coin. Hillary will clearly continue with the status quo … except, as an added bonus, she might start a nuke war with Russia. And Bernie’s socialism will most clearly add to our many undemocratic woes.)

    This article is about the huge issues facing Amerika, and our decline into a dictatorship. What will The Donald do about the issues I raised above, and the ten thousand words I didn’t include? Is he even aware of the issues? Will he bring back the America of my youth? Can he change the regret my aged parents (and, myself) have for coming to this country, and can he restore hope to the weary? I think I know the answers. Except for a few changes (maybe) … it’ll just be more of the same. No one man, at this point in American history, can stop the Coming Shitstorm headed our way. Trust me, it won’t be long before you hear these words from your local servant in blue — “Ihre Papiere bitte” — and the hellish circle will be complete.

    *  *  *

    “Hoffnung”, the German word for ‘hope’, is my dad’s favorite word because it has carried him through many tribulations. I might insist on having “He never lost hope” engraved on his gravestone. Hope sustained him when the Nazis ripped him from his home. Hope lifted his spirits as a prisoner of war. Hope kept him alive when the Russians released him to the British, and he worked in a coal mine under terrible conditions near Scotland for a few years to pay off his “debt”. Hope kept him from falling apart when mom fell down the stairs not so long ago. Hope kept him from depression when he crashed his beloved classic Mercedes last year. Hope is what brought him and his family to America for a better life. I just wonder if he would have left Austria if he knew that 57 years later his very own son would have no hope whatsoever for the America he was about to call home. So sorry, that’s just the way I feel right now, and for the past six months or so. Hoffnung ist tot.

  • Cash-Strapped ISIS Is Selling Sex Slaves On Facebook: Asking Price $8,000 Each

    One month after disturbing reports emerged that the cash-strapped Islamic State regime, which as noted last week is rapidly losing control over territory it had gained during its 2014 blitz offensive in 2014 in Iraq and Syria, has been killing its own fighters in order to sell their organs, as well as paying $50 to fighters for every female sex slave they own, ISIS has now tapped into yet another critical cash-flow stream: selling female sex slaves.

    A recent Facebook posting attributed to an Islamic State fighter who calls himself Abu Assad Almani shows a young woman, around 18, with olive skin and dark bangs that droop onto her face. In the Facebook photo, she attempts to smile but doesn’t look at her photographer. The caption mentions a single biographical fact: She is for sale.

    “To all the bros thinking about buying a slave, this one is $8,000,” begins the May 20 Facebook posting by Almani. The same man posted a second image a few hours later, this one a pale young face with weepy red eyes. “Another sabiyah [slave], also about $8,000,” the posting reads. “Yay, or nay?”

     

    As WaPo adds, after advising his Facebook friends to “get married” and “come to dawlah,” the name for the Islamic State’s territory in Iraq and Syria, Almani then engaged with different commenters in an extensive discussion about whether the $8,000 asking price was a good value. Some who replied to the postings mocked the women’s looks, while others scolded Almani for posting photos of women who weren’t wearing the veil.

    The sex trade conversation then devolved into pure Econ 101: “What makes her worth that price? Does she have an exceptional skill?” one of his correspondents asks about woman in the second photo. “Nope,” he replies. “Supply and demand makes her that price.”

    Technically $8,000 was the ask. It is unclear what if any bids were presented and if any actual trades took place.

    A Yazidi who had been held by ISIS militants as a slave for several
    months sits in a tent outside Duhok, Iraq.

    According to WaPo, the photos were taken down within hours by Facebook; it is unclear whether the account’s owner was doing the selling himself or commenting about women being sold by other fighters.

    The unusual posting suggests that not only is ISIS in desperate financial straits, but obviously hundreds of women who are now ISIS’ sex slaves face an extremely perilous existence. The group’s female captives appear to be sold and traded by cash-strapped fighters, subjected to shortages of food and medicine, and put at risk daily by military strikes, according to terrorism experts and human rights groups.

    Social-media sites used by ­Islamic State fighters in recent months have included numerous accounts of the buying and selling of sex slaves, as well the promulgation of formal rules for dealing with them. The guidelines cover such topics as whether it’s possible to have sex with prepubescent prisoners, yes, the Islamic State’s “legal experts” say, and how severely a slave can be beaten.

    But until the May 20 incident, there were no known instances of Islamic State fighters posting photographs of female captives being offered for sale. The photos of the two unidentified women appeared only briefly before being deleted by Facebook, but the images were captured by the Middle East Media Research Institute, a Washington nonprofit group that monitors jihadists’ ­social-media accounts.

    Not much is known about Abu Almani, the owner of the Facebook account: according to WaPo he is thought to be a German national fighting for the Islamic State in Syria. He has previously posted to social-media accounts under that name, in the slangy, poorly rendered English used by many European fighters who can’t speak Arabic. Early postings suggest that Almani is intimately familiar with the Islamic State’s activities around Raqqa, the group’s de facto capital in Syria. He also regularly uses his accounts to solicit donations for the terrorist group.

    ISIS has had to constantly innovate its sex slave trade marketing. Facebook has been quick to react to terrorists’ use its pages. At the same time, the militants also have become more agile, leaping quickly from one social-media platform to another and opening new accounts as soon as older ones are shut down.

    And while we commiserate with the plight of hundreds of women who are the innocent hostages of yet another proxy war involving the world’s political superpowers, we can’t help but notice how increasingly streamlined and efficient the Islamic State is becoming as a result of its fiscal stress.

    Recall in late April we showed a wage voucher which confirmed that ISIS is now paying soldiers extra cash for each additional family member with the biggest kick for those who have a sex slave in the form of a $50 bonus. The following crinkled wage voucher breaks it down by family member:

    • For each of his two wives, al-Jiburi would receive an extra $50.
    • For each of his six children under age 15, he would get another $35.
    • Any “female captive” – sex slave – would entitle him to an additional $50.

    So “invest” $50 to cultivate each sex slave, and then retain a substantial portion of the ~$8,000 transaction price once said slave is sold on to her future owner. Not a bad IRR for a militant regime whose collapse is now just a matter of time.

  • CEO Of Asia's Largest Commodity Trader Unexpectedly Resigns

    We have tracked the problems of recently junked Noble Group – Asia’s largest commodity trader – extensively over the past year (see “Noble Group’s Kurtosis Awakening Moment For The Commodity Markets“, “Junk Isn’t Very Noble: Asia’s Largest Commodity Trader Responds To Moody’s Downgrade“, “Noble Group’s Cliffhanger“, “Noble Group’s “Collateral Margin Call“, “Noble Group’s “Margin Call” Part II: The Enron Moment“).

    And then moments ago things finally turned serious for the company, which just a few weeks ago finalized a $3 billion credit facility in what according to some was an “all clear” moment. Apparently the only clarity was for long-time company CEO, and former Goldmanite Yusuf Alireza, that the time has come to exit stage left.

    As the company announced moments ago on the Singapore stock exchange, not only is CEO Alireza resigning, to be replaced by William Randall and Jeff Frase as co-CEOs, but the company will also begin the sale process of its Noble Americas Energy Solutions, a deal that will generate “significant cash proceeds”, which is great since Nobel is desperately in need of cash; it also means that the company is losing one more of its star performing assets as it continues to asset strip itself of any potential future growth, and is merely scrambling to preserve solvency and liquidity.

    Randall, based in Hong Kong, is currently President of Noble Group and an Executive Director and will retain his Board Seat. Frase, based in Stamford, Connecticut is currently President, Noble Americas and Head of Oil Liquids and will be invited to join the Board.

    From the press release:

    The Directors of Noble Group announce that they have accepted the resignation of Yusuf Alireza, Chief Executive Officer.

     

    Mr. Alireza has helped guide Noble through a very challenging period, moving the company to an asset light, merchant focused model; he played a pivotal role in the successful sale of Noble Agri to a group of investors led by COFCO, and has also been instrumental in securing the recently announced re-financing, a crucial element in the process of giving the group a stable base from which to develop.

     

    With this transformation process now largely complete, Mr. Alireza considered that the time was right for him to move on. The Board wishes to thank Mr. Alireza for his dedication and commitment to the company over the last four years, and in particular for his huge commitment of time and energy over the past eighteen months, as Noble has navigated some of the most difficult market conditions ever seen in commodities markets.

     

    The Board looks forward to working with Yusuf in the future should the opportunity arise.

     

    A separate announcement will be made about succession to Mr. Alireza

    And in a separate press release the company announced Alireza’s replacements, as well as the major corporate overhaul noted above:

    The Board of Directors of Noble Group wishes to announce the appointment of Mr. William Randall and Mr. Jeff Frase as Co Chief Executive Officers. Will, based in Hong Kong, is currently President of Noble Group and an Executive Director and will retain his Board Seat. Jeff, based in Stamford, Connecticut is currently President, Noble Americas and Head of Oil Liquids and will be invited to join the Board.

     

    In addition, the Board also confirmed today that Mr. Richard Elman will continue in his role as Chairman and Executive Director.

    Richard Elman commented “I am delighted that Will and Jeff will be leading Noble Group’s operations as we embark on the Company’s next chapter. Their complementary commodities expertise and geographical focus will be hugely valuable as we position ourselves for the future.” 

     

    Will, having begun his career with Noble in Australia in February 1997, established Noble’s coal operations, mining and supply chain management businesses. He also served as a Director of Noble Energy Inc. prior to being appointed Global Head of Coal and Coke in 2006, and a member of the Noble Group internal Management Committee Board in 2008. He was appointed an Executive Director and Head of Hard Commodities in 2012, prior to which he had been Head of Energy Coal and Carbon Complex. He holds a Bachelor degree in Business from the Australian Catholic University majoring in international marketing and finance.

     

    Jeff is based in Stamford, Connecticut and is currently President, Noble Americas and Head of Oil Liquids.

     

    Jeff joined the Group from JP Morgan in New York where he was Managing Director and Global Head of Oil Trading. Prior to JP Morgan he spent 17 years at Goldman Sachs where he was a Managing Director and Global Head of Crude Oil and Derivatives Trading.

     

    The Board expects to announce some further additional leadership appointments in due course as the business developments dictate.

     

    In addition, the Board wishes to announce that it will shortly be starting the sale process for Noble Americas Energy Solutions, a transaction which is expected to generate both significant cash proceeds and profits to substantially enhance the balance sheet. This is in addition to fund raising initiative previously announced. Full details will be released in the near future.

    For a rather gloomy, pessimistic, and in light of this latest news, justified, take on how the Noble Group saga ends, please read the following note “The Big N, its Bankruptcy Risk and its Circularity with the Energy Commodity Prices.”

  • ECB Policy-Failure On Display: European Businesses Aren't Planning To Invest

    There once was a time (at least in banished Austrian economic circles) when low market interest rates signaled to entrepreneurs a positive environment in which to make investments in order to grow or create new product. That indicator has long since been broken as central banks muddy the waters and arbitrarily move interest rates wherever they feel 'optimal', including corporate bond rates.

    The textbook intent of NIRP and ZIRP is to incentivize the banks to make loans and increase credit demand by making rates more attractive; however the central banks have not been able to do that, and the central planners now don't know what to do (aside from the inevitable helicopter money path of course) in a debt-saturated world.

    As evidence that the mechanism the central banks rely on to stimulate the economy is broken, we turn to a recent survey done by Intrum Justitia AB, which looked at whether or not negative interest rates were changing the minds of Europe's companies on investment decisions (CapEx) – the answer is a resounding no.

     

    84 percent of the 9,440 companies surveyed in 2016 said that low rates haven't affected their willingness to invest, up from 73 percent just last year. In other words, not only are artificially low rates not spurring businesses to invest earlier than originally planned, companies aren't even considering it anymore.

     

    Intrum CEO Mikael Ericson said "Evidently, the strategy of keeping interest rates low for more than a year has not created the much sought-after stability. A calculation of an investment includes assumptions of the future. To get the calculation to go together those assumptions need to include a belief in stability and prosperity in the future. Perhaps the negative interest rates do not signal that stability at all, rather that we are still in an extraordinary situation."

    With nearly $10 trillion in debt trading at negative yields, it is safe to say we are still in an extraordinary situation. More importantly, the key takeaway here (other than another central planning failure) is that despite an extremely low cost of capital, companies still have no projects worth undertaking that make capital investments attractive – that should be what concerns everyone.

  • Paul Craig Roberts: Killary Will Be The Last US President

    Authored by Paul Craig Roberts,

    As Our Past Wars Are Glorified This Memorial Day Weekend, Give Some Thought To Our Prospects Against The Russians And Chinese In World War III

    The Saker reports that Russia is preparing for World War III, not because Russia intends to initiate aggression but because Russia is alarmed by the hubris and arrogance of the West, by the demonization of Russia, by provocative military actions by the West, by American interference in the Russian province of Chechnya and in former Russian provinces of Ukraine and Georgia, and by the absence of any restraint from Western Europe on Washington’s ability to foment war.

    Like Steven Starr, Stephen Cohen, myself, and a small number of others, the Saker understands the reckless irresponsibility of convincing Russia that the United States intends to attack her.

    It is extraordinary to see the confidence that many Americans place in their military’s ability. After 15 years the US has been unable to defeat a few lightly armed Taliban, and after 13 years the situation in Iraq remains out of control. This is not very reassuring for the prospect of taking on Russia, much less the strategic alliance between Russia and China. The US could not even defeat China, a Third World country at the time, in Korea 60 years ago.

    Americans need to pay attention to the fact that “their” government is a collection of crazed stupid fools likely to bring vaporization to the United States and all of Europe.

    Russian weapons systems are far superior to American ones. American weapons are produced by private companies for the purpose of making vast profits. The capability of the weapons is not the main concern. There are endless cost overruns that raise the price of US weapons into outer space.

    The F-35 fighter, which is less capable than the F-15 it is supposed to replace, costs between $148 million and $337 million per fighter, depending on whether it is an Air Force, Marine Corps, or Navy model. 

    A helmet for a F-35 pilot costs $400,000, more than a high end Ferrari. 

    (Washington forces or bribes hapless Denmark into purchasing useless and costly F-35)

    It is entirely possible that the world is being led to destruction by nothing more than the greed of the US military-security complex. Delighted that the reckless and stupid Obama regime has resurrected the Cold War, thus providing a more convincing “enemy” than the hoax terrorist one, the “Russian threat” has been restored to its 20th century role of providing a justification for bleeding the American taxpayer, social services, and the US economy dry in behalf of profits for armament manufacturers.

    However, this time Washington’s rhetoric accompanying the revived Cold War is far more reckless and dangerous, as are Washington’s actions, than during the real Cold War. Previous US presidents worked to defuse tensions. The Obama regime has inflated tensions with lies and reckless provocations, which makes it far more likely that the new Cold War will turn hot. If Killary gains the White House, the world is unlikely to survive her first term.

    All of America’s wars except the first—the war for independence—were wars for Empire. Keep that fact in mind as you hear the Memorial Day bloviations about the brave men and women who served our country in its times of peril. The United States has never been in peril, but Washington has delivered peril to numerous other countries in its pursuit of hegemony over others.

    Today for the first time in its history the US faces peril as a result of Washington’s attempts to assert hegemony over Russia and China.

    Russia and China are not impressed by Washington’s arrogance, hubris, and stupidity. Moreover, these two countries are not the native American Plains Indians, who were starved into submission by the Union Army’s slaughter of the buffalo.

    They are not the tired Spain of 1898 from whom Washington stole Cuba and the Philippines and called the theft a “liberation.”

    They are not small Japan whose limited resources were spread over the vastness of the Pacific and Asia.

    They are not Germany already defeated by the Red Army before Washington came to the war.

    They are not Granada, Panama, Iraq, Libya, Somalia, or the various Latin American countries that General Smedley Butler said the US Marines made safe for “the United Fruit Company” and “some lousy bank investment.”

    An insouciant American population preoccupied with selfies and delusions of military prowess, while its crazed government picks a fight with Russia and China, has no future.

  • Opportunity Amongst The Entrails Of European Banks

    By Chris at www.CapitalistExploits.at

    In a misguided and desperate attempt to fight the headwinds of deflation (a byproduct ofunsustainable debt which the market has been trying to unwind for the past decade), central bankers have manipulated markets with a range of tools. This ranges from a lot of preposterous jawboning to quantitative easing and slashing interest rates all the way down to levels never experienced before.

    The markets’ belief in central bankers abilities to keep this particular boat afloat has never been higher. We can see this in the futures market where the market is pricing in low (and even negative) interest rates well into the sunset. If you doubt me go take a look at Euribor rates where the market still expects 3-month euro rates to be 0% some 5 years from now.One would only do this if one thought that default risk was non-existent.

    As if that is not enough, central bankers themselves actually are beginning to believe their own rhetoric:

    “But we are magic people. Each time we take something and give to the markets – a rabbit out of the hat.” – Vitas Vasiliauskas, ECB Governing Council member

    We are clearly dealing with delusional people, and market participants are increasingly making decisions based on the absurdities uttered by these people.

    Expecting the very same people who have caused so many of the problems we face today to be able to both identify and then solve those problems is like expecting my dog to be able to solve a quantum mechanics problem, cook my dinner, and restrain himself from chasing a cat. It’s just not going to happen.

    While we can’t stop or change what these monetary masters of the universe have done (and will likely continue to do), we can look to profit from the global mispricing of assets – a byproduct of their actions.

    The economic and political problems in Europe have seen investors turn on European banking stocks in the same way an ill treated pit bull can turn on its owner, mauling him to death.

    Ask one hundred people where things are headed with European banks and you’ll likely receive an overwhelming majority telling you they’re in trouble and to stay away.

    This is one of the most fearful markets in the world today.

    Quite simply: European banks today are universally feared and hated. I have no doubt that some will disappear over the course of the next decade, if not sooner. But certainly much of the pessimism is baked into the proverbial cake.

    Markets are forward-looking and the market is pricing in serious problems for European banks. But here’s the deal:

    Things don’t actually need to get better. The worst, already priced into the market, just need NOT eventuate. 

    This market is priced for the absolute worst. And while the worst may yet happen, it’s unlikely to happen to all the players.

    This shouldn’t come as a surprise. Any investor who was alive during the last decade harbours a deep-seated hatred of financial institutions. First, they came near bringing down the world economy in 2008 and then they lobbied the political class to ensure they could keep the holiday home on the French Riviera. And it all worked.

    Having spent the beginning of my career in the entrails of investment banks I sympathise. I can name a few people who should have been drowned at birth who inhabit the hallowed walls of these “fine” institutions.

    All that aside, when a market is so unloved I’m instinctively curious. And so into the carnage we go hunting… And while parsing the entrails of financial reports we found something very interesting and we think it’s worth sharing.

    Loving The Dutch

    Anywhere you go in the world I can pretty much guarantee you that when meeting a Dutchman you’re likely to find them amongst the friendliest, most open, and genuine people you’ll meet. Maybe I’ve just been lucky but I’ve just found another reason to love them.

    The opportunity we are investing in is ING, a Dutch banking group (ING on the NYSE or INGVF in Amsterdam).

    ING, like its unusual headquarters, stands out for a number of reasons.

    ING House

    One of the reasons is that ING trades at 80% of tangible book value, sports a price to earnings of 9.8x, and has just increased their dividend to 7%.

    This is easily one of the more compelling opportunities in the market today. It’s no surprise that it is hidden in a sector as bleak and miserable looking as European banking.

    ING Chart

    Digging deeper, we see that their capital levels are one of the highest in the industry and rising. They are also sporting strong loan volume growth and are implementing a deposit repricing rollout to further strengthen their profit margins.

    Embracing Digital

    To understand why ING has managed to significantly increase profitability and growing its customer base while its competitors have languished, we need to look at their cost structure. It is here that we find that, unlike its more traditional peers such as Deutsche Bank and Commerzbank, ING operates without branches.

    Preferring to leverage technology, they have managed to operate and compete with a far lower cost structure and this has allowed them to achieve a 30% return on their equity.

    Take a look at this slide from their 2016 investor presentation:

    ING Presentation

    ING has been tarred with the brush of recent well publicised negative market events such as exposure to the energy sector and Russia. It’s common knowledge that European banks have been financiers of Russian business and so the subsequent collapse in the ruble, together with negative impact of the energy sector, has severely impacted their balance sheets.

    ING’s Russian exposure is approximately 1% of their loan book so we think investors’ fears are way overdone with respect to ING.

    The other well publicised market event has been the Ukraine. But ING’s Ukraine exposure amounts to 0.2% of their loan book.

    And given the fact that ING’s NPL coverage ratio as of last quarter was 66% we think once again that the market is mispricing ING. Certainly two of the most publicised negative market events have brought negative views of European banks regardless of who is actually exposed.

    Considering all of the above, it is not hard to see that throwing the baby out with the bathwater has provided the opportunity to buy a well run company at a nice discount.

    (As a side note, I’d suggest buying ING in Amsterdam for greater liquidity.)

    And while buying ING outright makes a lot of sense, this is not how we’re personally trading this.

    Brad, the head trader at our Asymmetric Opportunities Fund, has prepared a detailed writeup on how exactly we’re playing this: a way to place a small amount of capital at risk and potentially achieve a 1,150% payoff.

    As a subscriber of Capitalist Exploits you’ll automatically receive this tomorrow (and if not, I encourage you to sign up here). Consider it a window into how a successful hedge fund trader approaches such opportunities.

    – Chris  

    “People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices.” – Ray Dalio, founder Bridgewater Associates

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May 29

Today’s News 29th May 2016

  • How Russia Is Preparing For WWIII

    Authored by The Saker,

    I have recently posted a piece in which I tried to debunk a few popular myths about modern warfare. Judging by many comments which I received in response to this post, I have to say that the myths in question are still alive and well and that I clearly failed to convince many readers. What I propose to do today, is to look at what Russia is really doing in response to the growing threat from the West. But first, I have to set the context or, more accurately, re-set the context in which Russia is operating. Let’s begin by looking at the AngloZionist policies towards Russia.

    The West’s actions:

    First on this list is, obviously, the conquest by NATO of all of Eastern Europe. I speak of conquest because that is exactly what it is, but a conquest achieved according to the rules of 21st century warfare which I define as “80% informational, 15% economic and 5% military”. Yes, I know, the good folks of Eastern Europe were just dreaming of being subjugated by the US/NATO/EU/etc – but so what? Anyone who has read Sun Tzu will immediately recognize that this deep desire to be ‘incorporated’ into the AngloZionist “Borg” is nothing else but the result of a crushed self-identity, a deep-seated inferiority complex and, thus, a surrender which did not even have to be induced by military means. At the end of the day, it makes no difference what the locals thought they were achieving – they are now subjects of the Empire and their countries more or less irrelevant colonies in the fringe of the AngloZionist Empire. As always, the local comprador elite is now bubbling with pride at being, or so they think, accepted as equals by their new masters (think Poroshenko, Tusk or Grybauskaite) which gives them the courage to bark at Moscow from behind the NATO fence. Good for them.

    Second is the now total colonization of Western Europe into the Empire. While NATO moved to the East, the US also took much deeper control of Western Europe which is now administered for the Empire by what the former Mayor of London once called the “great supine protoplasmic invertebrate jellies” – faceless bureaucrats à la François Hollande or Angela Merkel.

    Third, the Empire has given its total support to semi-demonic creatures ranging from al-Khattab to Nadezhda Savchenko. The West’s policy is crystal clear and simple to the extreme: if it is anti-Russian we back it. This policy is best exemplified with a Putin and Russia demonization campaign which is, in my opinion, far worse and much more hysterical than anything during the Cold War.

    Fourth, the West has made a number of highly disturbing military moves including the deployment of the first elements of an anti-missile system in Eastern Europe, the dispatching of various forms of rapid reaction forces, the deployment of a few armored units, etc. NATO now has forward deployed command posts which can be used to support the engagement of a rapid reaction force.

    What does all this add up to?

    Right now, nothing much, really. Yes, the NATO move right up to the Russian borders is highly provocative, but primarily in political terms. In purely military terms, not only is this a very bad idea (see cliché #6 here), but the size of the actual forces deployed is, in reality, tiny: the ABM system currently deployed can, at best, hope to intercept a few missiles (10-20 depending on your assumptions) as for the conventional forces they are of the battalion size (more or less 600 soldiers plus support). So right now there is categorically no real military threat to Russia.

    So why are the Russians so clearly upset?

    Because the current US/NATO moves might well be just the first steps of a much larger effort which, given enough time, might begin presenting a very real danger for Russia.

    Furthermore, the kind of rhetoric coming out of the West now is not only militaristic and russophobic, it is often outright messianic. The last time around the West had a flare up of its 1000 year old chronic “messianic syndrome” condition Russia lost 20 (to 30) million people. So the Russians can be forgiven if they are paying a great deal of attention to what the AngloZionist propaganda actually says about them.

    The Russians are most dismayed at the re-colonization of western Europe. Long gone are the days when people like Charles de Gaulle, Helmut Schmidt or François Mitterrand, were in charge of Europe’s future. For all their very real faults, these men were at least real patriots and not just US colonial administrators. The ‘loss’ of Western Europe is far more concerning for the Russians than the fact that ex-Soviet colonies in Eastern Europe are now under US colonial administration. Why?

    Look at this from the Russian point of view.

    The Russians all see that the US power is on the decline and that the dollar will, sooner or later, gradually or suddenly, lose its role as the main reserve and exchange currency on the planet (this process has already begun). Simply put – unless the US finds a way to dramatically change the current international dynamic the AngloZionist Empire will collapse. The Russians believe that what the Americans are doing is, at best, to use tensions with Russia to revive a dormant Cold War v2 and, at worst, to actually start a real shooting war in Europe.

    So a declining Empire with a vital need for a major crisis, a spineless Western Europe unable to stand up for its own interest, a subservient Eastern Europe just begging to turn into a massive battlefield between East and West, and a messianic, rabidly russophobic rhetoric as the background for an increase in military deployments on the Russian border. Is anybody really surprised that the Russians are taking all this very, very serious even if right now the military threat is basically non-existent?

    The Russian reaction

    So let us now examine the Russian reaction to Empire’s stance.

    First, the Russians want to make darn sure that the Americans do not give in to the illusion that a full-scale war in Europe would be like WWII which saw the US homeland only suffer a few, tiny, almost symbolic, attacks by the enemy. Since a full scale war in Europe would threaten the very existence of the Russian state and nation, the Russians are now taking measures to make darn sure that, should that happen, the US would pay an immense price for such an attack.

    Second, the Russians are now evidently assuming that a conventional threat from the West might materialize in the foreseeable future. They are therefore taking the measures needed to counter that conventional threat.

    Third, since the USA appears to be dead set into deploying an anti-ballistic missile system not only in Europe, but also in the Far East, the Russians are taking the measures to both defeat and bypass this system.

    The Russian effort is a vast and a complex one, and it covers almost every aspect of Russian force planing, but there are four examples which, I think, best illustrate the Russian determination not to allow a 22 June 1941 to happen again:

    • The re-creation of the First Guards Tank Army (in progress)
    • The deployment of the Iskander-M operational-tactical missile system (done)
    • The deployment of the Sarmat ICBM (in progress)
    • The deployment of the Status-6 strategic torpedo (in progress)

    The re-creation of the First Guards Tank Army

    It is hard to believe, but the fact is that between 1991 and 2016 Russia did not have a single large formation (division size and bigger) in its Western Military District. A few brigades, regiments and battalions which nominally were called an “Army”. To put it simply – Russia clearly did not believe that there was a conventional military threat from the West and therefore she did not even bother deploying any kind of meaningful military force to defend from such a non-existing threat. By the way, that fact should also tell you everything you need to know about Russian plans to invade the Ukraine, Poland or the Baltics: this is utter nonsense. This has now dramatically changed.

    Russia has officially announced that the First Guards Tank Army (a formation with a prestigious and very symbolic history). This Guards Tank Army will now include the 4th “Kantemirov” Guards Tank Division, the 2nd “Taman” Guards Motorized Rifle Division, the 6th Tank Brigade, the 27th Guards Motor Rifle Brigade Sevastopol and many support units. This Army’s HQ will be located in the Odinstovo suburb of Moscow. Currently the Army is equipped with T-72B3 and T-80 main battle tanks, but they will be replaced by the brand new and revolutionary T-14 Armata tank while the current infantry fighting vehicles and armored personnel carriers will be replaced by the new APC and IFV. In the air, these armored units will be protected and supported by Mi-28 and Ka-52 attack helicopters. Make no mistake, this will be a very large force, exactly the kind of force needed so smash through an attacking enemy forces (by the way, the 1TGA was present at the Kursk battle). I am pretty sure that by the time the 1TGA is fully organized it will become the most powerful armored formation anywhere between the Atlantic and the Urals (especially in qualitative terms). If the current tensions continue or even worsen, the Russians could even augment the 1TGA to a type of 21st century “Shock Army” with increased mobility and specializing in breaking deep into the enemy’s defenses.

    The deployment of the Iskander-M operational-tactical missile system

    The new Iskander-M operational tactical missile system is a formidable weapon by any standard. While technically it is a short-range tactical missile (under 1000km range, the Iskander-M has an official range of 500km), it can also fire the R-500 missile has the capability of striking at an intermediate/operational range (over 1000km, the R-500 has a range of 2000km). It is extremely accurate, it has advanced anti-ABM capabilities, it flies at hypersonic speeds and is practically undetectable on the ground (see here for more details). This will be the missile tasked with destroying all the units and equipment the US and NATO have forward-deployed in Eastern Europe and, if needed, clear the way for the 1TGA.

    The deployment of the Sarmat ICBM

    Neither the 1TGA nor the Iskander-M missile will threaten the US homeland in any way. Russia thus needed some kind of weapon which would truly strike fear into the Pentagon and White House in the way the famous RS-36 Voevoda (aka SS-18 “Satan” in US classification) did during the Cold War. The SS-18, the most powerful ICBM ever developed, was scary enough. The RS-28 “Sarmat” (SS-X-30 by NATO classification) brings the terror to a totally new level.

    The Sarmat is nothing short of amazing. It will be capable of carrying 10-15 MIRVed warheads which will be delivered in a so-called “depressed” (suborbital) trajectory and which will remain maneuverable at hypersonic speeds. The missile will not have to use the typical trajectory over the North Pole but will be capable of reaching any target anywhere on the planet from any trajectory. All these elements combined will make the Sarmat itself and its warheads completely impossible to intercept.

    The Sarmat will also be capable of delivering conventional Iu-71 hypersonic warheads capable of a “kinetic strike” which could be used to strike a fortified enemy target in a non-nuclear conflict. This will be made possible by the amazing accuracy of the Sarmat’s warheads which, courtesy of a recent Russian leak, we now know have a CEP of 10 meters (see screen capture)

    Sarmat MIRV CEP

    The Sarmat’s silos will be protected by a unique “active protection measures” which will include 100 guns capable of firing a “metallic cloud” of forty thousand 30mm “bullets” to an altitude of up to 6km. The Russians are also planning to protect the Sarmat with their new S-500 air defense systems. Finally, the Sarmat’s preparation to start time will be under 60 seconds thanks a a highly automated launch system. What this all means is that the Sarmat missile will be invulnerable in its silo, during it’s flight and on re-entry in the lower parts of the atmosphere.

    It is interesting to note that while the USA has made a great deal of noise around its planned Prompt Global Strike system, the Russians have already begun deploying their own version of this concept.

    The deployment of the Status-6 strategic torpedo

    Do you remember the carefully staged “leak” in November of last year when the Russians ‘inadvertently’ showed a super dooper secret strategic torpedo on prime time news? Here is this (in)famous slide:

    Status6-2015

    What is shown here is an “autonomous underwater vehicle” which has advanced navigational capabilities but which can also be remote controlled and steered from a specialized command module. This vehicle can dive as deep as 1000m, at a speed up to 185km/h and it has a range of up to 10’000km. It is delivered by specially configured submarines.

    The Status-6 system can be used to target aircraft carrier battle groups, US navy bases (especially SSBN bases) and, in its most frighting configuration, it can be used to deliver high-radioactivity cobalt bombs capable of laying waste to huge expanses of land. The Status-6 delivery system would be a new version of the T-15 torpedo which would be 24m long, 1,5m wide weigh 40 tons and capable of delivering a 100 megaton warhead which would make it twice as powerful as the most powerful nuclear device ever detonated, the Soviet Czar-bomb (57 megatons). Hiroshima was only 15 kilotons.

    Keep in mind that most of the USA’s cities and industrial centers are all along the coastline which makes them extremely vulnerable to torpedo based attacks (be it Sakharov’s proposed “Tsunami bomb” or the Status-6 system). And, just as in the case of the Iskander-M or the Sarmat ICBM, the depth and speed of the Status-6 torpedo would make it basically invulnerable to incerception.

    *  *  *

    Evaluation:

    There is really nothing new in all of the above, and US military commanders have always known that. All the US anti-ballistic missile systems have always been primarily a financial scam, from Reagan’s “Star Wars” to Obama’s “anti-Iranian ABM”. For one thing, any ABM system is susceptible to ‘local saturation': if you have X number ABM missile protecting a Y long space against an X number of missiles, all that you need to do is to saturate only one sector of the Y space with *a lot* of real and fake missiles by firing them all together through one small sector of the Y space the ABM missile system is protecting. And there are plenty of other measures the Russians could take. They could put just one single SLBM capable submarine in Lake Baikal making it basically invulnerable. There is already some discussion of that idea in Russia. Another very good option would be to re-activate the Soviet BzhRK rail-mobile ICBM. Good luck finding them in the immense Russian train network. In fact, the Russians have plenty of cheap and effective measure. Want me to list one more?

    Sure!

    Take the Kalibr cruise-missile recently seen in the war in Syria. Did you know that it can be shot from a typical commerical container, like the ones you will find on trucks, trains or ships? Check out this excellent video which explains this:

    Just remember that the Kalibr has a range of anywhere between 50km to 4000km and that it can carry a nuclear warhead. How hard would it be for Russia to deploy these cruise missiles right off the US coast in regular container ships? Or just keep a few containers in Cuba or Venezuela? This is a system which is so undetectable that the Russians could deploy it off the coast of Australia to hit the NSA station in Alice Springs if they wanted, an nobody would even see it coming.

    The reality is that the notion that the US could trigger a war against Russia (or China for that matter) and not suffer the consequences on the US mainland is absolutely ridiculous. And yet, when I hear all the crazy talk by western politicians and generals I get the impression that they are forgetting about this undeniable fact. Frankly, even the current threats against Russia have a ‘half-backed’ feel to them: a battalion here, another one there, a few missiles here, a few more there. It is like the rulers of the Empire don’t realize that it is a very, very bad idea to constantly poke a bear when all you are carrying with you is a pocket-knife. Sometimes the reaction of western politicians remind me of the thugs who try to rob a gas station with a plastic or empty gun and who are absolutely stunned with they get gunned down by the owner or the cops. This kind of thuggery is nothing more than a form of “suicide by cop” which never ends well for the one trying to get away with it.

    So sometimes things have to be said directly and unambiguously: western politicians better not believe in their own imperial hubris. So far, all their threats have achieved is that the Russians have responded with a many but futile verbal protests and a full-scale program to prepare Russia for WWIII.

    As I have written many times, Russians are very afraid of war and they will go out of their way to avoid it. But they are also ready for war. This is a uniquely Russian cultural feature which the West has misread an innumerable number of time over the past 1000 years or so. Over and over again have the Europeans attacked Russia only to find themselves into a fight they would never have imagined, even in their worst nightmares. This is why the Russians like to say that “Russia never starts wars, she only ends them”.

    There is a profound cultural chasm between how the West views warfare and how the Russians do. In the West, warfare is, really, “the continuation of politics by other means”. For Russians, it is a ruthless struggle for survival. Just look at generals in the West: they are polished and well mannered managers much more similar to corporate executives than with, say, Mafia bosses. Take a look at Russian generals (for example, watch the Victory Day parade in Moscow). In comparison to their western colleagues they look almost brutish, because first and foremost they are ruthless and calculating killers. I don’t mean that in a negative way – they often are individually very honorable and even kind men, and like every good commander, they care for their men and love their country. But the business they are in in not the continuation of politics by other means, the business they are in is survival. At all cost.

    You cannot judge a military or, for that matter, a nation, by how it behaves when it triumphs, when it is on the offensive pursing a defeated enemy. All armies look good when they are winning. You can really judge of the nature of a military, or a nation, at its darkest hour, when things are horrible and the situation worse than catastrophic. That was the case in 1995 when the Eltsin regime ordered a totally unprepared, demoralized, poorly trained, poorly fed, poorly equipped and completely disorganized Russian military (well, a few hastily assembled units) to take Grozny from the Chechens. It was hell on earth. Here is some footage of General Lev Rokhlin in a hastily organized command post in a basement inside Grozy. He is as exhausted, dirty and exposed as any of his soldiers. Just look at his face and look at the faces of the men around him. This is what the Russian army looks like when it is in the depth of hell, betrayed by the traitors sitting in the Kremlin and abandoned by most if the Russian people (who, I am sorry to remind here, mostly were only were dreaming of McDonalds and Michael Jackson in 1995).

    Can you imagine, say, General Wesley Clark or David Petraeus fighting like these men did?

    Check out this video of General Shamanov reading the riot act to a local Chechen politician (no translation need):

    Shamanov nowadays is the Commander in Chief of the Airborne Forces (see photo) whose size Putin quietly doubled to 72’000, something I mentioned in the past as highly relevant, especially in comparison with the rather tepid force level increases announced by NATO (see “EU suidice by reality denial”). To get a feel for what modern Russian airborne forces are like, check out this article.

    Vladimir_Shamanov._Cabinet_photo

    It is not my intention here to glorify nuclear war or the Russian Armed Forces. The reason for this, and many other, articles is to try to raise the alarm about what I see is happening nowadays. Western leaders are drunk on their own imperial hubris, nations which in the past were considered as minor stains on a map now feel emboldened to constantly provoke a nuclear superpower, Americans are being lied to and promised that some magical high tech will protect them from war while the Russians are seriously gearing up for WWIII because they have come to the conclusion that the only way to prevent that war is to make absolutely and unequivocally clear to the AngloZionists that they will never survive a war with Russia, even if every single Russian is killed.

    I remember the Cold War well. I was part of it. And I remember that the vast majority of us, on both sides, realized that a war between Russia and the West must be avoided at all costs. Now I am horrified when I read articles by senior officials seriously discussing such a possibility.

    Just read this article, please: What would a war between the EU and Russia look like? Here is what this guy writes:

    To the poetically inclined, the Russian military looks more like a gigantic pirate crew, than a regular army. The ones who rule are the ones with the sharpest cutlass and biggest mouth, typically some scurvy infested mateis who rely on the support of their mates to make any unpopular “officer” walk the plank… Or, more apt, they resemble the members of the cossack horde, run by the brashier warriors… While these troops can be very brave, at times, they are not effective in the field against a well regulated and trained modern military machine. Given this, it is improbably, ney, impossible for ordinary Russian troops to conduct operations of major consequence at more than platoon level against any disciplined armies, especially the US, British, German, or French.

    The dream of the West

    “For our zoo” (old Western dream)

    This kind of writing really scares me. Not because of the imbecilic and racist stupidity of it, but because it largely goes unchallenged in the mainstream media. Not only that, there are plenty such articles written elsewhere (see here, here or here). Of course, the authors of that kind of “analyses” make their money precisely the kind of manic cheer-leading for the western forces, but that is exactly the mindset which got Napoleon and Hitler in trouble and which ended with Russian forces stationed in Paris and Berlin. Compare that kind of jingoistic and, frankly, irresponsible nonsense with what a real military commander, Montgomery, had to say on this topic:

    The next war on land will be very different from the last one, in that we shall have to fight it in a different way. In reaching a decision on that matter, we must first be clear about certain rules of war. Rule 1, on page I of the book of war, is: “Do not march on Moscow”. Various people have tried it, Napoleon and Hitler, and it is no good. That is the first rule.

    So who do you trust? Professional cheerleaders or professional soldiers? Do you really believe that Obama (or Hillary), Merkel and Hollande will do better than Napoleon or Hitler?

    If the AngloZionist ‘deep state’ is really delusional enough to trigger a war with Russia, in Europe or elsewhere, the narcissistic and hedonistic West, drunk on its own propaganda and hubris, will discover a level of violence and warfare it cannot even imagine and if that only affected those responsible for these reckless and suicidal policies it would be great. But the problem is, of course, that many millions of us, simple, regular people, will suffer and die as a consequence of our collective failure to prevent that outcome. I hope and pray that my repeated warnings will at least contribute to what I hope is a growing realization that this folly has to be immediately stopped and that sanity must return to politics.

  • How The Senate Just Took "A Hatchet To American Liberty"

    Last Tuesday the Senate Intelligence Committee approved the annual Intelligence Authorization Act for 2017, which is now set to be considered by the full Senate.

    The bill is used to authorize funding for the intelligence community, sets policy and authorizes resources for intelligence purposes. We bring this up because the only committee member to vote against the bill was Senator Ron Wyden (D-Ore), who later released a statement on why he did not vote for the bill – notably, that the FBI would be allowed to obtain Americans’ email using only a national security letter, meaning it will now be able to access email without a court order.

    While the intrusion of civil liberties is something that everyone lets the government get away with in today’s society (as long as there are ample episodes of Keeping Up With the Kardashians on to keep people’s mind occupied), it’s nice to see that at least somebody is paying attention, let alone cares enough to warn the public about what is taking place.

    Here is the full statement

    Tuesday, May 24, 2016

     

    Washington, D.C. –Sen. Ron Wyden, D-Ore., today voted against the 2017 Intelligence Authorization Act in the Senate Select Committee on Intelligence. The bill includes provisions to expand warrantless government surveillance and takes aim at a valuable independent oversight board.

     

    “This bill takes a hatchet to important protections for Americans’ liberty,” Wyden said following the vote. “This bill would mean more government surveillance of Americans, less due process and less independent oversight of U.S. intelligence agencies. Worse, neither the intelligence agencies, nor the bill’s sponsors have shown any evidence that these changes would do anything to make Americans more secure. I plan to work with colleagues in both chambers to reverse these dangerous provisions.”

     

    Wyden opposes multiple provisions to the bill, including;

     

    –Allowing the FBI to obtain Americans’ email records with only a National Security Letter. Currently, the FBI can obtain email records in national security investigations with an order from the FISA Court. The bill would allow any FBI field office to demand email records without a court order, a major expansion of federal surveillance powers. The FBI can currently obtain phone records with a National Security Letter, but not email records.

     

    -Narrowing the jurisdiction of the Privacy and Civil Liberties Oversight Board (PCLOB), for the second consecutive year. The bill would limit the PCLOB to examining only programs that impact the privacy rights of U.S. citizens.  Wyden has supported the PCLOB’s focus on the rights of US persons.  Wyden opposed this provision, however, since global telecommunications networks can make it difficult to determine who is an American citizen, and this provision could discourage oversight of programs when the impact on Americans’ rights is unclear. Furthermore, continually restricting a small, independent oversight board sends the message that the board shouldn’t do its job too well.

     

    The bill does include one proposal from Wyden, which would allow the PCLOB to hire staff even when the board’s Chair is vacant. Currently the PCLOB is prohibited from hiring staff unless a Senate-confirmed Chair is in place.  This proposal is also included in separate bipartisan legislation introduced by Wyden and Representative Tulsi Gabbard, D-Hawaii.  PCLOB Chairman David Medine is scheduled to step down on July 1.

  • Everyone Is Missing The Most Troubling Part About Hillary's Email Audit!

    Submitted by Rachel Stockman via LawNewz.com,

    Here is the bottom line about the U.S. Department of State’s Office of Inspector General’s Report regarding the use of email by the Secretary of State’s Office: It does not look good for Hillary. Not just in the political sense, but in the legal sense as well.  The pundits seem concerned that Clinton refused to be interviewed by OIG investigators. Sure it’s troubling, but she’s involved in a FBI investigation, and her attorneys likely advised her not to talk. That’s not the issue.

    In addition, conservatives have said over and over again that the difference between Clinton’s email usage and that of former Secretary of State Colin Powell is that she had a private server. But again, the pundits are missing the point. The fact that she kept a server made it worse, but both Clinton and Powell clearly violated federal record keeping rules by not turning over copies of their emails when they left office.

    “Secretary Clinton should have surrendered all emails dealing with Department business before leaving government service, and because she did not do so, she did not comply with the Department’s policies that were implemented in accordance with the Federal Records Act,” the audit report said. Bottom line: Mrs. Clinton violated the Federal Records Act.

    However, what is probably the most troubling about all of this is that, despite these blatant violations, there will be absolutely no legal repercussions for Mrs. Clinton for this offense. She’s off the hook! Why aren’t all the pundits screaming about that?

    As LawNewz.com‘s contributor, Dan Metcalfe, wrote about several weeks ago, anyone who violates this law (and leaves office) will face zero consequences. That’s because it is a civil law, not a criminal law, and penalties only apply to current federal employees. Employees, like Clinton and Powell, who leave office, can skirt punishment.  The Federal Records Act is in place not only to provide the American public with some level of transparency but also “to protect the legal and financial rights of the Government and of persons directly affected by the agency’s activities.”

    “There are absolutely no penalties provided by law for this misconduct,” Metcalfe said. He would know, Metcalfe was the founding director of the Justice Department’s Office of Information and Privacy. He was essentially  “the federal government’s chief information-disclosure ‘guru.’” 

    “This report unsurprisingly finds gross violations of the Federal Record Act’s requirements by then-Secretary Clinton and her personal staff, not to mention inexplicably poor oversight by State’s top records-management officials as they simply let her do as she pleased,” Metcalfe told LawNewz.com,  “Even taking a charitable view, it serves as an indictment of Ms. Clinton’s conduct on the civil side of her ledger, documenting misconduct that would surely lead to dismissal were she still employed there.”

    As Metcalfe pointed out, The Federal Records Act, if violated in this way, does allow action to be taken against a government employee– but only administrative action. Both Clinton and Powell are not in office, so they can’t be punished. As for the Freedom of Information Act, there are sanctions provided under (a)(4)(F)(1), but again, those penalties only apply to someone who is still working for the federal government. While there are consequences if you are found to have intentionally destroyed federal records, the audit did not make a finding that this happened.

    In response to the audit, House Speaker Paul Ryan, R-Wis., said in a statement: “Think about this, the highest ranking diplomat in the United States – the Secretary of State – deliberately broke agency policy to serve her own interests.”

    Clinton’s spokesperson, of course, downplayed the report saying, “the Inspector General documents just how consistent her email practices were with those of other Secretaries and senior officials at the State Department who also used personal email.”

    So maybe that’s true, yes, even Colin Powell violated the rules, but the real problem that neither Ryan nor Clinton will address is that there is nothing to prevent this from happening again!

    This law was put in place to ensure we have a proper record of how our politicians are handling the most important matters that concern every citizen, and, maybe more importantly, to promote transparency.  Ryan is quick to condemn what she did as “deliberately” breaking the rules. But, if it’s so bad, why aren’t politicians like Ryan pushing for sanctions that would hold her (and other politicians) accountable even after they leave office?

  • Edward Snowden Demonstrates How To "Go Black"

    When NSA whistleblower Edward Snowden first exposed the world to just how easily the government could compromise their technology and spy on them, many immediately sought ways to secure their data and protect their gadgets.

    But, as Wired.com reports, Snowden is here to help. “‘Going Black’ is a pretty big ask,” he tells VICE’s Shane Smith, but not impossible, as Snowden shows how to “make sure your phone works for you… instead of working for someone else.”

  • Four Lost Decades: The Bumbling Incompetence Of The Power Elite

    Authored by Bill Bonner of Bonner & Partners (annotated by Acting-Man's Pater Tenebrarum),

    Geniuses in Charge

    Is there any smarter group of homo sapiens on the planet? Or in all of history? We’re talking about Fed economists, of course.

    danger_-_genius_at_work_0-png

    Not only did they avoid another Great Depression by bold absurdity…giving the economy more of the one thing of which it clearly had too much – debt. They also carefully monitored the economy’s progress so as to avoid any backsliding into normalcy.

     

    And where do we get this penetrating appraisal? From the Fed economists themselves, of course. Bloomberg:

    “The U.S. Federal Reserve’s decisions to delay interest-rate hikes helped cushion the economic shocks caused by rapidly rising borrowing costs for U.S. companies from late last year through early 2016, according to economists at the New York Fed.

     

    “By maintaining the federal funds rate lower, the FOMC managed to substantially offset the effect of tightening financial conditions on the economy,” the authors, referring to the rate-setting Federal Open Market Committee, wrote in a blog post on the bank’s website on Wednesday.”

    They’re geniuses. No doubt about it. That’s why they’re in charge and we’re not. They’re the elite. They run the Deep State. They may not pay the piper, but they call the tune anyway. And good on them! Who knows what prices we might discover if we were left on our own?

     

    Debt, debt, GDP and FF rate

    The gap between economic output and the debt accumulated to achieve it continues to widen…while savers are expropriated and capitalists are given an incentive to consume their capital (the “euthanasia of the rentier” propagated by Keynes has finally been achieved) – click to enlarge.

     

    Four Lost Decades

    One of the endearing features of the ruling classes is their abiding faith in their own judgment. Despite inexhaustible evidence that they are bumbling incompetents, the power elite stick to their guns – literally – and to their cushy sinecures.

    We are now seven years into the “recovery” supposedly engineered by the PhDs at the Fed. At a cost variously estimated between $4 trillion and $10 trillion, we have now achieved a growth rate that is about half what it was 40 years ago – before the internet and debt-based money allegedly freed the economy from earthly tethers.

    And thanks to these custodians of the public weal, 99% of the families in the USA now have less wealth than they did before the crisis of ’08 began. But wait – it gets worse. It is now 45 years since the PhDs took control of America’s money. Over those four and a half decades, how much financial progress do you think the average family has made? Approximately zero.

     

    planning-2

    Actually, if they do much more work, “failure to make any progress” may quickly become the least of our worries…

     

    Yes, the Levy Institute has completed a study. It tells us what we suspected already. Nine out of 10 people in the U.S. have roughly the same real earnings today as they did in the early ’70s.

    That makes FOUR LOST DECADES, thanks to the feds, with no advance in the material well-being of the American people (aside from technological marvels) since the new money system came on the scene.

     

    Offenses Against Man and God

    Meanwhile, the security elite, too, has proven it cannot be trusted to protect a convenience store, let alone the nation. Trillions have been spent… thousands of people have been killed… offenses against man and God have been committed aplenty (in one case, the Pentagon water-boarded the wrong man 89 times in one month).

    Perhaps Sanders and Trump are right; maybe it’s time to take a fresh look at the power elite and how they are running the country. That is the hope that is stirring the voters. But it’s rousing the Deep State to action, too.

    “How to defeat rightwing populism” is a headline in the Deep State newspaper of record, the Financial Times, written by Elitist-in-Chief, Martin Wolf. “How to protect the status quo” is his real challenge.

    He readily acknowledges the charges against him and other insiders: “[T]he greed, incompetence, and irresponsibility of elites.” This has “brought great populist rage,” he admits.

     

    Martin Wolf

    Establishment mouthpiece and apologist Martin Wolf, the FT’s chief economic quack. A vociferous central planning advocate who presumably would have felt right at home in the command economies of the Soviet Bloc (except for the lack of comforts…so we guess Western crony socialism is actually the shtick he personally prefers). The man’s economic ignorance is only exceeded by his unbecoming and completely unwarranted arrogance.

     

    But his prayers are not with the millions of people the power elite has harmed. Instead, his dark hours are tormented by a thought so chilling, so revolting, so unthinkably awful, he cannot sleep. What if, he worries, because of the Deep State’s errors… what if the elite should lose control?

    Horrors! “In any country,” he writes, “embrace of the delusions of populism is disturbing.” Yes, especially to the people who caused it!

     

    A Symptom of a Disease

    The elite controlled the money, the wars, the policies, and the programs of the last 40 years. It is they who are responsible for $200 trillion of debt worldwide…  ISIS… The Bern… and The Donald.

     

    bernald

    The initial reaction to a failing statist system…

     

    Blame them for ZIRP and NIRP, for $8 trillion worth of income stolen from savers,  for the vulgar rich flush with cash, for China’s breathtaking growth and its wobbly tower of  debt, for Four Lost Decades, and for America’s longest (and most unwinnable) war.

    Mr. Wolf is not concerned about correcting any of these abominations. Instead, he just hopes to manage the problem so the elite stay in control. Trumpism, he claims, “is a symptom of a disease. We must now find more effective ways to cure it.”

  • Obama Steps In To Defend Hillary: DOJ Fights To Block Clinton Deposition

    If there was any doubt, or suspense on which side of the Hillary email scandal the “impartial” Department of Justice stands, the suspense was lifted and all was revealed yesterday when as The Hill reported, the Obama administration stepped into the ongoing Judicial Watch lawsuit and is fighting to prevent former SecState Hillary Clinton from being deposed.

    Late Thursday evening the Justice Department, under US attorney general Loretta Lynch, first appointed in 1999 by none other than Bill Clinton,  filed a court motion opposing the Clinton deposition request from conservative legal watchdog Judicial Watch, claiming that the organization was trying to dramatically expand the scope of the lawsuit.

     

    As a reminder, as revealed last night, in the first deposition from the ongoing Judicial Watch lawsuit – which has obtained or seeks depositions from all SecState staffers close to Hillary – we learned thanks to State Department veteran Lewis Lukens, that not only did Hillary not know how to use a computer but that her email actually had no password protection.

    It is these kinds of revelations that the Department of Justice, in its quest for “justice”, is seeking to prevent from seeing the light of day, only in the official filing the DOJ was a little more circumspect. Judicial Watch is “seeking instead to transform these proceedings into a wide-ranging inquiry into matters beyond the scope of the court’s order and unrelated to the FOIA request at issue in this case,” government lawyers wrote in their filing, referring to the Freedom of Information Act. The lawyers wrote that the request to interview Clinton “is wholly inappropriate” before depositions are finished in a separate case also concerning the email server.

    In light of the recent report by the State Department Inspector General, with which Hillary also refused to cooperate, one could say it is entirely approprirate for her to be deposed.

    As a reminder, the Judicial Watch FOIA case began as a way to seek documents about talking points related to the 2012 terror attack on U.S. facilities in Benghazi, Libya, but has since grown to encompass wider questions about Clinton’s use of a personal server while working as secretary of State. 

    Last week, Judicial Watch asked the court to interview Clinton and five other current and former State Department officials about the server, after it received a judge’s permission to move ahead with the process. The case is the second in which Judicial Watch has been granted approval to depose witnesses to gather evidence about Clinton’s email setup. In the other case, interviews of current and former Clinton aides have already begun.

    For now, Hillary is not scheduled to answer questions as part of that case, through a federal judge has warned that she could be called upon in the future. It is this potentially destructive deposition, that the DOJ is seeking to hide.

    In the government’s filing late Thursday, the Justice Department said that Judicial Watch’s request is “overbroad and duplicative.” It claimed the group should complete the depositions in the other case first before demanding an interview of Clinton and the other officials.

    In other words, the DOJ is stalling for time to prevent a Hillary deposition until some time in July by which point Clinton should at least wrapped up have the democratic nomination.

    However, the department did say that it would not oppose a request to subpoena Jake Sullivan, a former senior State Department official and current top aide in Clinton’s presidential campaign, as long as questions were “on the limited topic” of officials using personal email accounts at the department.

    Finally, the DOJ said it would be willing to provide an unnamed witness to provide answers on behalf of the State Department in response to narrow questions about the FOIA request at the heart of the case. In other words an untainted surrogate who would provide answers in lieu of Hillary.

    That solution, government lawyers claimed, would “avoid the burden and expense” of going through a deposition process “that replicates activities already underway in another, overlapping case between the parties.”

    Finally, tecall that in July 2015, the inspector general for the State Department announced that as a result of the classified emails found in Clinton’s personal server, that the inspectors general had sent a non-criminal “referral” to the Justice Department over the matter. As a result, US Attorney General Loretta Lynch and her department, would have to determine whether to open a criminal investigation into Clinton’s affairs.

    As a further reminder, recall that before becoming attorney general, Lynch served as U.S. Attorney for the Eastern District of New York. It was her second time in the position, having been first appointed by President Bill Clinton in 1999. 

    At the time, Lynch declined to say whether her connection to the Clintons creates a conflict of interest for her. We finally have the official answer.

  • Iceland Has Offered Foreign Bondholders A "Choice": Sell Now, Or Have Cash Impounded Indefinitely

    Iceland has had a difficult past few months politically, as its Prime Minister Sigmundur David Gunlaugsson became the first casualty of the Panama Papers.

    Economically however, the story is more upbeat, as the country has rebounded since the financial crisis. The Icelandic Krona has stabilized against the Euro, the rate of change in inflation has slowed, and the country has recorded year-over-year growth in GDP each year since 2011. 

     

    However, in a shocking turn of events, a law passed on May 22 by Iceland's parliament is offering the foreign holders of about $2.3 billion worth of krona-denominated bonds a choice of either selling out in June at a below-market exchange rate, or have the money they receive upon maturity be impounded indefinitely in low interest bank accounts. In other words, Iceland is trying to kick out foreign investors.

    For now, investors aren't interested in the deal and wish to stay invested in Iceland, even as officials are clearly trying to push foreign investors out.

    From the WSJ

    Investors, including Boston-based mutual-fund companies Eaton Vance Corp. and Loomis Sayles & Co., a unit of Natixis SA, don’t want to go. They say they will reject the government’s offer.

     

    “We would like to stay invested,” said Patrick Campbell, a global bond analyst at Eaton Vance.

     

    The dispute is the result of a wholesale turnaround in Iceland’s relationship with foreign investors.

     

    The country became synonymous with financial alchemy after its banks ballooned by borrowing in bond markets and attracting foreign depositors with high interest rates. That system imploded in 2008 when depositors made a run on the banks just as their bonds fell due, causing the krona to sharply devalue against the euro.

     

    Yet a growing number of fund managers are now buying Icelandic government bonds, including those that were marooned on the island when it applied capital controls. The country is now one of the few offering a combination of high interest rates and strong economic growth prospects.

     

    Eaton Vance and another holder of the legacy debt, also called “offshore” debt, hedge fund Autonomy Capital LP, have been courting the government for months to allow them to keep their cash on the island, even offering to swap their holdings into long-term bonds that they would pledge to hold on to.

     

    But the country isn’t interested. Instead, officials behind the law say they aim to keep the $16.7 billion economy of the island with a population of 327,386 from being swamped anew by the ebb and flow of offshore funds.

     

    “We don’t need the money,” said Mar Gudmundsson, governor of Iceland’s central bank. “These are remnants from the last boom and bust, and we are not going to repeat that mistake.”

    Iceland has had formal capital controls since it barred conversions of krona to foreign currencies during the 2008 crisis, boxing in foreign bondholders at that time as well. While the controls are still in place, the country has made the first step in easing some of the controls, as it recently negotiated a deal with creditors that paved the way for payments to be made to those holding distressed bank debt left over from the crisis.

    Investors deciding to stay invested with Iceland are playing a dangerous game of chicken with the government on whether or not capital controls will be lifted in any reasonable amount of time. It has taken nearly seven years for creditors to get money out of the country after the financial crisis, and although the krona has stabilized since its plunge and the economy is back on firmer footing, nobody can know for certain just how long investor cash will be tied up in Iceland's low yielding bank accounts before controls are finally lifted.

  • US Default Risk Hits 8-Month Highs

    While still relatively low, USA sovereign CDS spreads have risen to 8-month highs, surging off early March lows. The reasons are likely numerous though we suggest the 4 surges in the last 3 months appear to line up with notable ‘events’…

    While correlation does not imply causation, it does waggle its eyebrows suggestively and gesture furtively while mouthing “look over here.”

    Note: Sovereign CDS represent a combination both default and devaluation risks.

     

    Could it be that Trump’s honest comments on the creditworthiness of the USA are beginning to resonate with market participants as the probability of his winning in November rises?

  • Sweden: Is Islam Compatible With Democracy?

    Submitted by Ingrid Carlqvist via The Gatestone Institute,

    • It is not a secret that democracy can be used to abolish democracy.

    • It may have finally begun to dawn on the people that Swedish Sweden will soon be lost forever, and in many areas replaced by a Middle Eastern state of affairs, where different immigrant groups (mainly Muslims) make war on each other as well as on the Swedes.

    • According to Dr. Peter Hammond, in his book Slavery, Terrorism and Islam: The Historical Roots and Contemporary Threat, the goal of Islam is not to convert the whole world, but rather, to establish sharia law all over the world.

    • There is no country where Islam is dominant that can be considered a democracy with freedom of speech and equal justice under law.

    In Sweden's last census in which citizens were asked about their religious beliefs, in 1930, fifteen people said that they were Muslims. Since 1975, when Sweden started its transformation from a homogenous, Swedish country into a multicultural and multi-religious one, the number of Muslims has exploded. Now, approximately one million Muslims live here — Sunni, Shia and Ahmadiyya from all the corners of the world — and Mosques are built and planned all over the country.

    No one, however, seems to have asked the crucial question upon which Sweden's future depends: Is Islam compatible with democracy?

    The Swedish establishment has not grasped that Islam is more than a private religion, and therefore it dismisses all questions about Islam with the argument that Sweden has freedom of religion.

    Two facts point to Islam not being compatible with democracy. First, there is no country where Islam is dominant that can be considered a democracy with freedom of speech and equal justice under law. Some point to Malaysia and Indonesia — two countries where flogging and other corporal punishments are meted out, for example, to women showing too much hair or skin, as well as to anyone who makes fun of, questions or criticizes Islam. Others point to Turkey as an example of an "Islamic democracy" — a country which routinely imprisons journalists, political dissidents and random people thought to have "offended" President Erdogan, "Islam" or "the nation."

    Second, Muslims in Europe vote collectively. In France, 93% of Muslims voted for the current president, François Hollande, in 2012. In Sweden, the Social Democrats reported that 75% of Swedish Muslims voted for them in the general election of 2006; and studies show that the "red-green" bloc gets 80-90% of the Muslim vote.

    It is no secret that democracy can be used to abolish democracy — yet, this crucial issue is completely taboo in Sweden. Politicians, authorities and journalists all see Islam as just another religion. They seem to have no clue that Islam is also a political ideology, a justice system (sharia) and a specific culture that has rules for virtually everything in a person's life: how to dress; who your friends should be; which foot should go first when you enter the bathroom. Granted, not all Muslims follow all these rules, but that does not change the fact that Islam aspires to control every aspect of human life — the very definition of a totalitarian ideology.

    While the establishment closes its eyes to the problems that come with a rapidly growing Muslim population in Sweden, ordinary Swedes seem to be growing increasingly upset. Prime Minister Stefan Löfven, however, appears to be at a complete loss as to why this is. He recently told the British newspaper, Financial Times:

    "But the more surreal thing is that all the numbers are going in the right direction, but the picture the public have is that the country is now going in the wrong direction. It's not only a question about if they are afraid of the refugee crisis; it's as if everything is going in the wrong direction."

    This comment says a lot about how disconnected Prime Minister Löfven is from the reality that ordinary Swedes are facing. The mainstream media withhold information about most of the violence that goes on in, and around, the asylum houses in the country, and it is not very likely that Stefan Löfven reads the alternative media sites; he and others in power have, in unison, dubbed them "hate sites." He obviously has no idea about the anger and despair many Swedes are now feeling. It may have finally begun to dawn on them that Swedish Sweden will soon be lost forever, and in many areas replaced by a Middle Eastern state of affairs where different immigrant groups (mainly Muslims) make war on each other as well as on the Swedes.

    While the establishment closes its eyes to the problems that come with a rapidly growing Muslim population in Sweden, ordinary Swedes seem to be growing increasingly upset. Prime Minister Stefan Löfven (right), however, appears to be at a complete loss as to why this is. Pictured at left: The results of rioting in a Stockholm suburb, December 2014.

    The people suffering most cruelly in the "New Sweden" are the elderly. The costs of immigration borne by the welfare state have led to a quarter of a million retirees living below the EU poverty line. Meanwhile, the government recently added another 30 billion kronor (about $3.6 billion) to the migration budget. The 70 billion kronor ($8.4 billion) Sweden will spend on asylum seekers in 2016 is more than what the entire police force and justice system cost, more than national defense costs, and twice the amount of child benefits.

    Sweden's 9.5 million residents are thus forced to spend 70 billion kronor on letting citizens of other countries come in. In comparison, the United States, with its 320 million residents, spent $1.56 billion on refugees in 2015. The editorial columnist PM Nilsson commented in the business paper, Dagens Industri:

    "To understand the scope of the increase in spending, a historic look back can be worthwhile. When the right bloc came to power in 2006, the cost was 8 billion [kronor] a year. In 2014, it had gone up to 24 billion. That summer, then Minister of Finance Anders Borg talked about the increase being the most dramatic shift in the state budget he had ever seen. The year after, 2015, the cost rose to 35 billion, and in 2016, it is projected to rise to 70 billion."

    For many years, the politicians managed to fool the Swedish people into thinking that even if immigration presented an initial cost, the immigrants would soon enable the country to turn a profit. Now, more and more research indicates that the asylum seeker immigrants rarely or never find work. The daily newspaper Sydsvenskan reported in February, for example, that 64% of Malmö's immigrants are still unemployed after living in Sweden for ten years. The government openly calculates in its budget that in four years, 980,000 people will be living on either sickness benefits, disability pensions, unemployment benefits, "introduction benefits" or social welfare.

    Swedes, who for many years have paid the highest taxes in the world without whining, are now taking to social media to express their anger that their money is going to citizens of other countries. More and more Swedes are choosing to emigrate from Sweden, mainly to the other Nordic countries, but also to Spain, Portugal and Great Britain, where taxes on pensions are considerably less.

    But there are worse problems than the economic aspect. A sense of insecurity and fear has gripped the many Swedes who live close to asylum houses. On some level, the government seems to have grasped that danger: in a recent decision to continue maintaining border controls, Interior Minister Anders Ygeman wrote:

    "The Swedish Civil Contingencies Agency (Myndigheten för samhällsskydd och beredskap), MSB, makes the assessment that the flow of migrants still brings challenges to upholding security in society, when it comes to the ability to maintain certain important public functions, among other things. Several of these challenges are expected to persist over time. The Police Authority's assessment is still that a serious threat to public order and internal security exists. The Immigration Service still advocates border controls."

    Despite these ominous words, politicians still do not seem to understand that many Swedes are already experiencing "a serious threat to public order and internal security." New asylum houses are opening at an alarming pace, against the will of the people living near them. In the Stockholm suburb of Spånga-Tensta, on April 15, local authorities held a public meeting, the purpose of which was to allow local residents to ask the politicians and officials questions about planned housing for 600 migrants — next to a school. The meeting, which was filmed, showed a riotous mood among those gathered there, many shouting that they were going to fight "until their last breath" to keep the plans from materializing.

    Some of the comments and questions were:

    • "We have seen how many problems there have been at other asylum houses – stabbings, rapes and harassment. How can you guarantee the safety for us citizens? This is going to create a sense of us against them, it's going to create hate! Why these large houses, why not small ones with ten people in each? Why haven't you asked us, the people who live here, if we want this? How will you make this safe for us?"
    • "We already have problems at the existing asylum houses. It's irresponsible of you to create a situation where we put our own and our children's health in jeopardy, with people who are not feeling well and are in the wrong environment. Why is this house right next to a school? What is your analysis?"
    • "Will Swedes be allowed to live in these houses? Our young people have nowhere to live. You politicians should solve the housing issue for the people already living here, not for all the people in the world."

    When the chairman of the meeting, Green Party representative Awad Hersi, of Somali descent, thanked the audience for the questions without giving any answers, the mood approached that of a lynch mob. People shouted: "Answer! Answer our questions! We demand answers!"

    Everything points to the so far docile Swedes now having had enough of the irresponsible immigration policy that has been going on for many years, under socialist and conservative governments alike.

    People are furious at the wave of rapes that have given Sweden the second-highest rate of rape in the world, after only Lesotho, and that recently forced the Östersund police to issue a warning to women and girls not to go outside alone after dark. People are scared: the number of murders and manslaughters has soared. During the first three months of this year alone, there have been 40 murders and 57 attempted murders, according to statistics compiled by the journalist Elisabeth Höglund.

    The authorities have long claimed that lethal violence in Sweden is on the decline, but that is compared to a record-breaking year, 1989, when mass immigration to Sweden was already in full swing. If one instead were to compare the present to the 1950s and 1960s, when Sweden was still a homogenous country, the number of murders and manslaughters has doubled. Recently, the Swedish National Council for Crime Prevention (Brottsförebyggande rådet), BRÅ, had to admit that lethal violence did, in fact, increase in 2015, when 112 people were killed — 25 more than the year before. It was also revealed that the kind of lethal violence that has gone down was run-of-the-mill drunken homicides committed by Swedes, while the number of gangster-style hits carried out by immigrants has gone up dramatically. Improved trauma care for wounded victims also helps keep the number of murders and manslaughters down.

    A recent poll showed that 53% of Swedes now think immigration is the most important issue facing the country. The change from 2015 is dramatic — last year, only 27% said that immigration was most important. Another poll showed that 70% of Swedes feel that the amount of immigration to Sweden is too high. This is the fourth year in a row that skepticism about the magnitude of immigration has increased.

    More and more people also seem to worry about the future of Sweden as a democracy with an increasing number of Muslims — through continued immigration as well as Muslim women having significantly more children than Swedish women do.

    As statistics on religious beliefs are no longer kept, no one knows exactly how many Muslims are in Sweden. Last year, a poll showed that Swedes believe 17% of the population is Muslim, while the actual number, according to the polling institute Ipsos Mori, may be more like 5%. The company does not account for how it arrived at this number, and it is in all likelihood much too low. Ipsos Mori probably counted how many members Muslim congregations and organizations have, but as Islam is also a culture, and the country is equally affected by the Muslims who do not actively practice their faith, yet live according to Islamic culture.

    In 2012, the Swedish alternative newspaper, Dispatch International, calculated how many Muslims were registered residents of Sweden at that time, based on the Swedish name registry. The number the paper arrived at was 574,000, plus or minus 20,000. For obvious reasons, illegals and asylum seekers were not included. The actual number may therefore have been much higher.

    Since then, close to 300,000 people have sought asylum in Sweden. Not all of them have had their applications approved, but despite that, very few actually leave Sweden. The Immigration Service told Gatestone Institute that only 9,700 people were deported last year. Most asylum seekers are Muslim, which means that the number of Muslims in Sweden is fast approaching one million, or 10% of the population.

    In his book Slavery, Terrorism and Islam: The Historical Roots and Contemporary Threat, published in 2005, Dr. Peter Hammond describes what has always happened throughout history when the number of Muslims in a country increases. Admittedly generalities, Hammond outlines the following:

    • As long as the Muslims make up about 1%, they are generally considered a peace-loving minority who do not bother anyone.
    • At 2-3%, some start proselytizing to other minorities and disgruntled groups, especially in prison and among street gangs.
    • At 5%, Muslims have an unreasonably large influence relative to their share of the population. Many demand halal slaughtered meat, and have been pushing the food industry to produce and sell it. They have also started to work toward the government giving them autonomy under sharia law. Hammond writes that the goal of Islam is not to convert the whole world, but rather, to establish sharia law all over the world.
    • When Muslims reach 10%, historically, lawlessness increases. Some start to complain about their situation, start riots and car fires, and threaten people they feel insult Islam.
    • At 20%, violent riots erupt, jihadi militia groups are formed, people are murdered, and churches and synagogues are set ablaze.
    • When the Muslims reach 40% of the population, there are widespread massacres, constant terror attacks and militia warfare.
    • At 60%, there is the possibility of uninhibited persecution of non-Muslims, sporadic ethnic cleansing, possible genocide, implementation of sharia law and jizya (the tax for "protection" that unbelievers must pay).
    • When there are 80% Muslims in the country, they have taken control of the government apparatus and are, as in, for instance, Syria, Afghanistan, Pakistan and Iraq, committing violence in the name of Islam or political power.
    • When 100% are Muslims, the peace in the house of Islam is supposed to come — hence the claim that Islam is the "religion of peace."

    Hammond also writes that in many countries, such as France, Belgium, Great Britain and Sweden, most of the Muslim population lives in Islamic enclaves — and apparently prefer not to be assimilated into a Western society. This detachment strengthens the group internally, allowing them to exercise greater power than their share of the population might indicate.

    Hammond's description of the 10%-limit accurately describes Sweden. In the so-called exclusion areas, there are car torchings every day, and riots occur in the cities. (To name but a few examples, there were serious riots in Malmö 2008, Gothenburg 2009, Stockholm 2013, and Norrköping and Växjö 2015.) Sometimes, the unrest starts after a local Muslim has been arrested or shot by the police. Muslim leaders then immediately say they sympathize with their people's reaction. During the Husby riots in 2013, Rami Al-Khamisi of the youth organization "Megafonen" wrote: "We can see why people are reacting this way."

    The artist Lars Vilks, who drew the Muslim prophet Muhammed as a roundabout dog, has been the target of several assassination attempts, and now lives under round-the-clock police protection.

    Yet, almost no one in Sweden is willing to speak of these problems and how it all fits together. For months, Gatestone Institute has called politicians, civil servants, organizations and various minority groups, to ask how they feel about Islam in Sweden. Do they think Islam is compatible with democracy, freedom of speech and legal equality — and if so, in what way or what way not?

    The questions seemed to provoke anger as well as fear. Some of the people we called said they were angry at the mere questions, but assured the callers that Islam poses no problem whatsoever for Sweden. Others appeared frightened and refused to answer altogether. In the hopes of getting at least some honest answers, we presented ourselves as ordinary, concerned Swedes. Countless people hung up the phone, and in general, many answers pointed to an abysmal ignorance about what Islam is, what consequences the Islamization of a country might have, or how much trouble Sweden really is in. The country appears totally unprepared for what lies ahead.

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May 28

Today’s News 28th May 2016

  • Your Options: To Serve… Or Be Served

    Authored by StraightLineLogic's Robert Gore via The Burning Platform blog,

    There are three ways for a person to obtain something of value from another person: receive it as a donation, steal it by force or fraud, or exchange for it. It’s not much of an oversimplification to say that the advance of civilization has hinged on its movement from the first two methods to the third. The right to exchange, and the right to promise as part of a future exchange—the right to contract—are now taken for granted, but those rights are delicate and a whole complex of rights, assumptions, and obligations are subsumed by them. Their intellectual foundations are being undermined as the equality of rights implicit in contract and exchange gives way to a regressive inequality of rights: servitude.

    The essence of exchange is choice; it’s voluntary. Both parties have the choice of whether or not to transact, and neither will do so unless they subjectively value what they receive more than what they give up. That is not to say that there will be equality of resources, bargaining power, or negotiating skill between the parties, or that they will be equally happy with their bargain, only that both parties have the same choice to accept or reject the proposed transaction. Exchange embodies that equality of rights between parties, but not an equality of outcomes.

    The right to exchange implicitly assumes that parties are the best judges of their own interests, and that such determinations will be respected by both the parties and those outside the transaction. The rights to exchange and contract are individual rights, and the obligation to fulfill one’s side of the bargain an individual obligation. A collective entity such as a business can contract and exchange, but either the members of that entity have agreed that they will, collectively, do so, or have, by their membership in that entity, recognized implicitly or explicitly the right of those directing the entity to do so.

    The concept of a social contract is a contradiction in terms. With whom does a society contract? An entity cannot contract with itself. The notion has come to mean acceptance by the governed of the government, whatever its form. However, individuals have no choice to opt out of the collective entity known as society, as they would any other voluntarily chosen entity they joined, and the social contract supposedly binds not just those who were part of the society when the contract was made, but future generations. Thus, the term social contract wrongly connotes voluntary choice of an institution whose establishment has always been the product of chance and force, and has no meaning at all for the unborn who will nevertheless be compelled to live under the government so established.

    Exchange evokes hostility because it is a private decision in which the resulting agreement excludes everyone but the two parties, and it increases, by their own evaluations, their wellbeing. As it increases wellbeing, a rational government will do all it can to protect the rights of its citizens to contract and exchange for any licit purpose. However, a government relegated to protecting private contracts and exchange is a government subjugated; there is no opportunity for the exercise of coercive power. When contracts are breached, the government’s role is adjudication and remedy, not coercion. Even that role is unessential; parties can agree beforehand to nongovernmental dispute resolution.

    Nobody goes into government to refrain from exercising power. Governments ban certain contracts and exchanges, or dictate their terms in the name of regulation. They are humanity’s most rapacious and regressive institution; they arrogate to themselves the right to legally engage in theft. Outlawing or regulating certain exchanges furthers larceny as well; enforcement offers opportunities for extortion and accepting bribes.

    Historically, there has been a virtually straight line relationship between the share of activity within a society demarcated by voluntary contract and exchange and the progress made by that society. Voluntary exchanges and the private choices they incorporate are, by definition, made only when they enhance wellbeing. Once a government “escapes” the subjugation of enforcing private agreements and choices, they constrict the scope of such agreements and choices and extract value by force, that is, involuntarily, from the citizenry. Notwithstanding the delusions and lies of their many proponents, constricting choices and theft cannot further progress, they only retard, stop, or reverse it.

    Neither the relationship between donor and recipient nor between thief and victim is that of equals. The proper characterization for both is servility: recipients begging donors for donations and victims implicitly or explicitly begging thieves to spare some of their property or their lives. If a truth serum could be administered to ensure an honest answer, perhaps no single question would be more psychologically revealing than whether a person prefers relationships of servility or equality. A preference for the former is the most accurate marker for sociopathy available, and is not a bad one for psychopathy, either.

    So runs the sociopathic, psychopathic scam known as government. The productive are robbed and just enough is doled out to the beggars to keep them quiescent and voting correctly. The rest lines the pockets of the sociopaths and psychopaths, the “served.” This can be the only result when exchange is replaced with theft and begging as the basis of social and commercial interaction. Collectivist hostility to exchange stems not from its misattributed flaws, but from deep-rooted psychological hostility to a process that involves free choice and confers equally to both parties the option not to engage in it. Exchange presumes that individuals are capable of directing their own lives, and protecting the freedom to contract and exchange enshrines that autonomy. Freedom, exchange, and equality of rights under the law are inseparable.

    As exchange dies, the nation founded in revolution and independence descends into docile servility. Equality of rights under the law, a difficult but not impossible goal, gives way to a deluded and malignant drive for equality of outcomes. Exchange, contract, and freedom are inconsistent with equality of outcome. In order for voluntary exchange to occur, both parties must have something to exchange, which implies both parties have produced something and either retained it or exchanged it for something else of value. Productive ability is not equally distributed. Nor is the ability to benefit from exchange; some are better at it than others.

    Spurious promises of equal outcomes implicitly rely on begging, theft, and the coercive power of the sociopathic, psychopathic scam. There has never yet been a government in which the government, especially ones devoted to “equality,” did not become, in Orwell’s words, “more equal” than its begging and enslaved citizenry. Keep that in mind the next time you hear a blowhard bastard bloviating bromides about the beauty and nobility of “service.” You’re to be served… as the next course.

  • Forget Chinese Commodity Speculators, Meet North America's "Moms-and-Millennials" Oil Day-Traders

    We showed you the "bored" Chinese workers who traded commodity futures for excitement – Now, it's time to meet North America's oil day-traders… moms-and millenials.

    The recent volatility in crude oil has gotten the attention of people who do not list trading as their day job, but are randomly attempting to day trade oil anyway the WSJ reports.

    Take for example Erika Cajic, a 45-year old full-time parent who took a shot at trading oil via UWTI.

    When Erika Cajic woke before dawn one morning in early May and read that wildfires were breaking out in an oil-producing region of Alberta, she sat down on the family room couch with a cup of hot chocolate and her laptop and bought shares of an investment linked to crude.

     

    The 45-year-old full-time parent of two in Mississauga, Ontario, like many investors, reasoned that the production outages would drive up the price of oil. By buying the VelocityShares 3x Long Crude Oil exchange-traded note, she tripled down on her hunch, as the product uses derivatives that aim to rise and fall at triple the daily change in oil.

     

    Within about four days, she estimated she made about 500 Canadian dollars (US$384) on those trades after converting from U.S. dollars.

     

    “The swings are gigantic lately,” she said of the product, known by its ticker UWTI, and the other energy products she has traded in recent months.

    For Matt Krasnoff, an employee of LinkedIn, he just keeps his trades displayed on Yahoo Finance on his computer screen during the day and monitors his trades at work.

    “I just thought, let’s throw a couple of hundred dollars in it…and try it out,” said Matt Krasnoff, 26, of New York, who bought shares of UWTI last year after hearing about it from a friend. “I just enjoy the risk and the thrill of the market in general.”

     

    Mr. Krasnoff works at LinkedIn Corp. in New York and keeps a list of his investments displayed on Yahoo Finance on his computer screen during the day. He said he typically invests in technology companies that he is familiar with and reads articles about the industry and watches Twitter to stay up to date.

     

    He ditched UWTI within a few months of trying it, after he lost money. “It was outside of the realm of what I knew…the last straw was realizing that I wasn’t informed enough,” he said.

     

    Now, he says, he is going to stick to investing in what he knows, like tech.

    CME estimates that crude oil has been its second most traded contract among retail investors this year after the S&P – such investors make up about 10% of the daily trading volume said Mark Omens, executive director of retail sales at CME.

     

    Frederick Bailey, of Savannah, Georgia is inbetween jobs so he figured he would put some money into UWTI in January as crude broke $30 a barrel. Although at least Bailey had some dealings with ETF's in the past.

    Frederick Bailey, 59, of Savannah, Ga., said he put a modest amount of money in UWTI in January as crude broke below $30 a barrel and rode it higher as oil prices rebounded. Mr. Bailey, who said he is between jobs, once worked at banks that dealt with exchange-traded funds.

     

    Mr. Bailey also visits online chatter sites talking about oil, such as StockTwits, where one poster this week wrote: “…once again the crude been rude to this dude.”

    It also appears that millennials in their spare time at their parents house are also fans of day trading crude oil and related products on their smart phone.

    Grant Heimer, a 25-year-old in Dallas, trades stocks as a hobby and learned about commodity exchange-traded products from his friends last year, he said.

     

    An energy-industry software consultant who studied finance in college, he has traded oil and natural-gas exchange-traded products a few times using a smartphone app called Robinhood.

     

    “Oil just seemed to make a lot of sense to me,” said Mr. Heimer. He has never held a position longer than five days and still has most of his portfolio in stock investments. Most of his oil trades made money, he said, but not all.

     

    “I’m not careless,” said Mr. Heimer. “It’s a very appealing thing to do for somebody like me who’s OK with a small risk and a short amount of time.”

    Archna Jagtiani started trading on her own after the market came back after the crisis but her account had not recovered. She once traded exchange traded products but now trades futures, with a holding period of 15 minutes.

    Archna Jagtiani, a 42-year-old who lives in the Chicago suburbs, started trading after the financial crisis. “After 2010 when the market was up…my account had not come back and I was just paying fees,” she said. “It’s better this way. I cannot blame anybody if I lose money.” She said she spends her days trading and tutoring kids in math after the market closes.

    Ms. Jagtiani used to trade oil exchange-traded products, but a few months ago switched to buying and selling oil-futures contracts because of the quirks of holding some oil exchange-traded products for a long period of time.

    “If oil goes from $43.50 [a barrel] to $43.70, you’ve made a hundred bucks,” she said of oil futures, which she holds for intervals as short as 15 minutes.

    * * *

    Well, while we're not saying that the "professionals" do any better, we suspect that the 'passive day-trading' as a hobby may not be the best idea for those looking to preserve any discretionary income that may be left over after paying the monthly bills.

  • Oregon Senator Warns – Government Is Dramatically Expanding Its Hacking & Surveillance Authority

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    The Patriot Act continues to wreak its havoc on civil liberties. Section 213 was included in the Patriot Act over the protests of privacy advocates and granted law enforcement the power to conduct a search while delaying notice to the suspect of the search. Known as a “sneak and peek” warrant, law enforcement was adamant Section 213 was needed to protect against terrorism. But the latest government report detailing the numbers of “sneak and peek” warrants reveals that out of a total of over 11,000 sneak and peek requests, only 51 were used for terrorism. Yet again, terrorism concerns appear to be trampling our civil liberties.

     

    – From the post: More “War on Terror” Abuses – Spying Powers Are Used for Terrorism Only 0.5% of the Time

    Ron Wyden, a Senator from Oregon, has been one of the most influential and significant champions of Americans’ embattled 4th Amendment rights in the digital age. Recall that it was Sen. Wyden who caught Director of National Intelligence, James Clapper, lying under oath about government surveillance of U.S. citizens.

    Mr. Wyden continues to be a courageous voice for the public when it comes to pushing back against Big Brother spying. His latest post at Medium is a perfect example.

    Here it is in full:

    Shaking My Head

    The government will dramatically expand surveillance powers unless Congress acts

    Last month, at the request of the Department of Justice, the Courts approved changes to the obscure Rule 41 of the Federal Rules of Criminal Procedure, which governs search and seizure. By the nature of this obscure bureaucratic process, these rules become law unless Congress rejects the changes before December 1, 2016.

     

    Today I, along with my colleagues Senators Paul from Kentucky, Baldwin from Wisconsin, and Daines and Tester from Montana, am introducing the Stopping Mass Hacking (SMH) Act (bill, summary), a bill to protect millions of law-abiding Americans from a massive expansion of government hacking and surveillance. Join the conversation with #SMHact.

    What’s the problem here?

    For law enforcement to conduct a remote electronic search, they generally need to plant malware in?—?i.e. hack?—?a device. These rule changes will allow the government to search millions of computers with the warrant of a single judge. To me, that’s clearly a policy change that’s outside the scope of an “administrative change,” and it is something that Congress should consider. An agency with the record of the Justice Department shouldn’t be able to wave its arms and grant itself entirely new powers.

    Let’s get into the details

    These changes say that if law enforcement doesn’t know where an electronic device is located, a magistrate judge will now have the the authority to issue a warrant to remotely search the device, anywhere in the world. While it may be appropriate to address the issue of allowing a remote electronic search for a device at an unknown location, Congress needs to consider what protections must be in place to protect Americans’ digital security and privacy. This is a new and uncertain area of law, so there needs to be full and careful debate. The ACLU has a thorough discussion of the Fourth Amendment ramifications and the technological questions at issue with these kinds of searches.

     

    The second part of the change to Rule 41 would give a magistrate judge the authority to issue a single warrant that would authorize the search of an unlimited number?—?potentially thousands or millions?—?of devices, located anywhere in the world. These changes would dramatically expand the government’s hacking and surveillance authority. The American public should understand that these changes won’t just affect criminals: computer security experts and civil liberties advocates say the amendments would also dramatically expand the government’s ability to hack the electronic devices of law-abiding Americans if their devices were affected by a computer attack. Devices will be subject to search if their owners were victims of a botnet attack?—?so the government will be treating victims of hacking the same way they treat the perpetrators.

     

    As the Center on Democracy and Technology has noted, there are approximately 500 million computers that fall under this rule. The public doesn’t know nearly enough about how law enforcement executes these hacks, and what risks these types of searches will pose. By compromising the computer’s system, the search might leave it open to other attackers or damage the computer they are searching.

     

    Don’t take it from me that this will impact your security, read more from security researchers Steven Bellovin, Matt Blaze and Susan Landau.

     

    Finally, these changes to Rule 41 would also give some types of electronic searches different, weaker notification requirements than physical searches. Under this new Rule, they are only required to make “reasonable efforts” to notify people that their computers were searched. This raises the possibility of the FBI hacking into a cyber attack victim’s computer and not telling them about it until afterward, if at all.

    A job for Congress?—?not the Justice Department

    These changes are a major policy shift that will impact Americans’ digital security, expand the government’s surveillance powers and pose serious Fourth Amendment questions. Part of the problem is the simple fact that both the American public and security experts know so little about how the government goes about hacking a computer to search it. If a victim’s Fourth Amendment rights are violated, it might not be readily apparent because of the highly technical nature of the methods used to execute the warrant.

     

    It is Congress’ job to make sure we do not let the Executive Branch run roughshod over our constituents’ rights. That is why action is so important: this is a policy question that should be debated by Congress. Although the Department of Justice has tried to describe this rule change as simply a matter of judicial venue, sometimes a difference in scale really is a difference in kind. By allowing so many searches with the order of just a single judge, Congress’s failure to act on this issue would be a disaster for law-abiding Americans.

     

    When the public realizes what is at stake, I think there is going to be a massive outcry: Americans will look at Congress and say, “What were you thinking?”

    By failing to act, Congress is once again demonstrating that it is not just useless, it’s also dangerously corrupt and incompetent.

  • China Warns The World: America Is The "Greatest Threat To Peace & Stability"

    It is no secret that the relationship between the United States and China has been strained for quite some time. Earlier this month when the US sailed its guided missile destroyer the USS William P. Lawrence within 12 nautical miles of Chinese-occupied Fiery Cross Reef, it ended in China scrambling of two fighter jets and three warships to shadow the destroyer and convince it to leave the area.

    The US admitted that it sailed the USS William P. Lawrence by the disputed island in order to "challenge excessive maritime claims" made by China. In turn, China had this to say about the US effort: "This action by the U.S. side threatened China's sovereignty and security interests, endangered the staff and facilities on the reef, and damaged regional peace and stability."

    As the US meddles in the South China Sea disputes, China has been increasingly vocal about its displeasure, and that came out very directly in recent comments made on Thursday.

    The United Nations is getting ready to rule on a maritime dispute between China and the Philippines, and in discussing that potential ruling Yang Yujun, spokesman for the Ministry of National Defense (MND) said at a briefing that US involvement in these types of disputes is the greatest threat to the region.

    From Russia Today

    On Thursday, China said that it would not recognize the UN verdict on the issue, unless China’s claims are honored.

     

    “No matter what kind of ruling the Court makes, China will not accept nor recognize the adjudication,” Yang Yujun, spokesman for the Ministry of National Defense (MND) said at a briefing. “This is China’s right conferred by the international laws. By doing so we are actually abiding by and observing the international laws.”

     

    The tension is being exacerbated even further by a continuously growing American presence in the region, whose many allies also lay claims to the islands. China has called the US involvement in the dispute the “greatest” threat to the region.

     

    “Certain countries outside the region frequently show its military strength in the South China Sea area and this is actually the greatest threat to peace and stability in the region. We urge them to stop stirring up a storm in a teapot and stop sowing seeds of discord so as to maintain peace and stability in the South China Sea, which conforms to the common interests of all parties,” Yang said.

    Yang went on to say that "in essence, the root cause for security hazards and potential accidents in the air and at sea between China and the US is the long term, large-scale and frequent close-in reconnaissance activities against China by the US military vessels and aircraft."

    The statement made by Yang sums up perfectly what we have been saying for quite some time now. The more the US provokes China, and Russia for that matter, the likelihood of international incident increases. Of course, maybe that's what the United States has been after all along.

  • Disillusioned Democrats & The Demise Of Democracy In America

    Authored by Ben Tanosborn,

    It doesn’t seem so long ago when an ambitious political couple holding preteen Chelsea Clinton by the hand was moving from the governor’s mansion in Little Rock, Arkansas, to the august quarters of the White House in D.C.  A young Democratic president had just defeated Ronald Reagan’s heir, Papa Bush, and a prophetic populist with a Texan twang, Ross Perot, in the colorful presidential fray of 1992.

    Was Bill Clinton then a young Democratic president, Kennedy-style, we now ask… or was he Scoundrel Willy cloaked in smart, glittering and deceitful-wear?  For all the economic and social success attached to the two-term Clinton presidency, much of it could be easily reexamined and clarified using more appropriate historical light, as time has passed, should we dare revisit the causal variables, as well as the results, from published but never critically analyzed small-print statistics.  A micro-analysis of key employment statistics would certainly taint and modify much of the highly touted, yet unmerited, success showered on a charismatic and articulate Bill Clinton. 

    In fact, if a bottom line were to be made of Bill Clinton’s eight years in office, we could rationally claim that the Democratic Party had metamorphosed during this period into a new, and previously fictionalized, semi-compassionate wing of the Republican Party. In fact, Clinton’s demo-republicanism had renounced and replaced the heritage of FDR’s New Deal, and also Lyndon Johnson’s Great Society… by deregulating Wall Street; also incarcerating millions, destroying welfare, and taking on globalization (NAFTA) without plan or recourse, creating the beginning of the end for much of America’s economic middle class.  [We should add that the larger household income achieved during the period did come in great part from a very large increase in two-income families.  Also, technological change and deregulation scrambled the  employment dynamics which did result in the creation of 22 million new low-wage service jobs (mostly) which did mask the forced-exit of living-wage jobs, also extrapolating erroneous conclusions on the economy’s future… a future now present with a sadder, much different face.]

    A short generation from the time Bill Clinton was installed as president has not only transformed young Chelsea into a mother, but also has transformed a principled party of advocacy for the least-favored lower and middle classes into the Republican-lite political entity that it is today.  The Clinton-glue, present and accounted for during the two Obama terms, is still holding together an established mafia-clan of self-serving older politicians, a cadre of committed leaders that keep the rank-and-file in the Black and Latino communities/organizations walking the line at election time.  

    America lived much of the 1990’s dancing to the wind ensemble of Alan Greenspan’s clarinet and Bill Clinton’s saxophone; the incredible duet comprised of a talented con-man, Bill Clinton, and an inarticulate gobbledygook-mumbler, Alan Greenspan – more adept at pleasing the occupant of the White House than providing sound economic advice on global economics.  An uncanny combination of two musicians playing the wrong long-term economic notes!

    Amazingly, here we find ourselves in this United States of America less than six months from another presidential election with the likely prospect of electing a Weimar-worthy, anti-establishment savior, Donald Trump; or having as the sole alternative, at least for now, of calamitous Hillary and the prospect of a continuing, in-your-face, painful and shameless behavior towards much of America’s Bill-betrayed working class.

    Oops!  Did Hillary just say that, as president, she would knight Bill as her economic czar?  Obviously, bad judgment is a gene that neither Wellesley College nor Yale Law School can modify.

    Bill Clinton’s demo-republicanism, not even a generation old, may be coming to an abrupt end as justified political anger, and (unfortunately) unjustified bigotry, artfully combines to deal Donald Trump a winning hand.  Hillary Clinton’s continuous courtship with bad judgment is sure to betray her during the summer campaign, even against a narcissist lowbrow such as Donald Trump.

    So much for a revitalization of the Democratic Party and its return to its progressive roots; the last politico-masochistic act by the current demo-republican leadership is likely to take place at the convention in Philadelphia, as Bernie Sanders is permanently put to rest, or hypnotized/drugged to accept Hillary as a lesser demonic prospect to occupy the Oval Office.  And that will spell disaster for the short-lived, Clinton-created, demo-republicanism.  So much for Bernie’s idealized revolution!

    Democracy in America, we ask: is it our destiny, or political curse, to have to choose between the lesser of two evils at election time?  Why? Are we terminally incapable of acknowledging a fundamental truth: that democracy will never take hold until we change the undemocratic process that keep us in chains… and learn to govern ourselves, selflessly, for the welfare of all?

  • Clinton Foundation Snafu: Video Footage Catches FBI Probe Suspects Arriving At Hillary's House

    Recently we reported that Virginia governor Terry McAuliffe was under investigation by the FBI and prosecutors from the Justice Department's integrity unit regarding donations to McAuliffe's campaign during his time as a board member of the Clinton Global Initiative. Specifically, investigators were scrutinizing a $120,000 donation McAuliffe received from Wang Wenliang, a Chinese businessman, who was also a donor to the Clinton foundation, pledging $2 million.

    While the details of the case are still evolving, being that US election law prohibits foreign nationals from donating to federal, state or local elections McAuliffe immediately went on the offensive early on in order to distance himself from the situation by saying "I wouldn't know the man if he sat in the chair next to me."

    Ironically, Wang may have literally sat in the chair next to McAuliffe on many occasions. The Daily Mail has obtained footage that shows the two men entering Hillary Clinton's residence off D.C.'s Embassy row as they attended a fundraiser on September 30, 2013.

     

    Not only did the two men attend the same fundraiser at Hillary's house, TIME reports that the McAuliffe and Wang had interacted at least three times, and that it was McAuliffe himself who invited Wang to the Clinton fundraiser. TIME also goes on to say that according to McAuliffe's attorney James Cooper, the focus of the investigation is not on the Wang donations, but questions over foreign sources of personal income and whether the governor lobbied on behalf of foreign interests without registering as a foreign agent.

    Virginia Gov. Terry McAuliffe invited the Chinese businessman whose donations to him have been named as a focus of Justice Department investigators to a 2013 fundraiser at Hillary Clinton’s personal Washington, D.C., residence.

     

    Wang Wenliang, a Chinese national with U.S. permanent residency, briefly shook Clinton’s hand at the Sept. 30 event, a representative for Wang told TIME. An American company controlled by Wang made a $60,000 contribution to McAuliffe’s campaign three weeks before the fundraiser. Less than a month later, a separate Wang company pledged $500,000 to the Clinton Foundation, the first of several donations that eventually totaled $2 million.

     

    The fundraiser was one of at least three interactions between Wang and McAuliffe, according to the businessman’s representative. McAuliffe initially told reporters this week he could not remember ever meeting Wang, though he later clarified that his staff had informed him of several likely meetings. “I did no deals,” McAuliffe said Wednesday in a radio interview. “I would not know the man if he sat in the chair next to me.”

     

    The relationship between McAuliffe and Wang has been under scrutiny since CNN reported that the FBI and Justice Department’s public integrity division were investigating McAuliffe. Among the donations that were of interest to investigators, according to CNN, were a total of $120,000 in contributions to McAuliffe from a company controlled by Wang. Foreigners with permanent residency in the U.S. are allowed to make donations to campaigns under U.S. election laws, and corporations are allowed to make direct donations in Virginia.

     

    James W. Cooper, an attorney at Arnold and Porter who has been hired by McAuliffe, told reporters Wednesday that Justice Department officials had told him the focus of investigation was not the Wang donations, but questions over foreign sources of personal income and whether the governor lobbied on behalf of foreign interests without registering as a foreign agent. Cooper said that the Justice Department told him there had been no findings of wrongdoing by the governor.

     

    In a statement to TIME, the Justice Department declined to clarify the investigation’s focus. “As a matter of policy, the department generally neither confirms nor denies whether a matter is under investigation,” Justice Department spokesman Peter Carr told TIME.

    Cooper also went on to say "all of this income is from the governor's time as a private citizen and the businessman who did deals that were well publicized around the world. So the fact that he had foreign income was not remarkable."

    According to Wang's representative, a second meeting between McAuliffe and Wang took place in the state capital of Richmond after McAuliffe's election to discuss an expansion of a soybean export agreement between Wang and the state. A third meeting occurred at a dinner in Washington organized by former South Carolina governor Jim Hodges, who has registered as a federal lobbyist for one of Wang's companies.

    While it's unclear exactly where all of this tangled web leads, we eagerly await the end result of the investigation which will detail at best another case of crony capitalism, and at worst yet another case of flat out corruption.

  • "People Who Live In Glass White Houses…"

    Presented with no comment…

     

     

    Source: Townhall.com

  • Bank of America's Winning Excuse: "We Didn't Mean To"

    Authored by Jesse Eisinger via ProPublica.org,

    Back in the late-housing-bubble period, in 2007, Countrywide Home Loans, which was then the largest mortgage provider in the country, rolled out a new lending program. The bank called it the “high-speed swim lane,” or HSSL, or, even more to the point, “hustle.” Countrywide, like most mortgage lenders, sold its loans to Wall Street banks or Fannie Mae and Freddie Mac, two mortgage giants, which bundled them and, in turn, sold them to investors. Unlike the Wall Street banks, Fannie and Freddie insured the loans, so they demanded only the ones of the highest quality. But by that time, borrowers with high credit scores were getting scarcer, and Countrywide faced the prospect of collapsing revenue and profits. Hence, the hustle program, which “streamlined” Countrywide’s loan origination, cutting out underwriters and putting loan processors, whom the company had previously deemed not qualified to answer borrowers’ questions, in charge of reviewing loan applications. In practice, Countrywide dropped most of the conditions meant to insure that loans would be repaid.

    The company didn’t tell Fannie or Freddie any of this, however. Lower-level Countrywide executives repeatedly warned top executives that the mortgages did not fulfill the requirements. Employees changed data about the mortgages to make them look better, sometimes increasing the borrower’s income on the forms until the loan looked acceptable. Then, Countrywide sold them to the mortgage giants anyway.

    At one point, the head of underwriting at Countrywide wrote an alarmed e-mail, with a list of questions from employees, such as, does “the request to move loans mean we no longer care about quality?”

    The executive in charge of the decision, Rebecca Mairone, replied, “So – it sounds like it may work. Is that what I am hearing?”

    To federal prosecutors—and to a jury in Manhattan—the hustle sounded like fraud. And in 2013, Bank of America, which had by then taken over Countrywide, was found liable for fraud and later ordered to pay a $1.27 billion judgment to the government.

    But this week, the 2nd U.S. Circuit Court of Appeals looked at that judgment and asked this question: If a entity (in this case, a bank) enters into a contract pure of heart and only deceives its partners afterward, is that fraud?

    The three-judge panel’s answer was no. Bank of America is no longer required to pay the judgment.

    The Bank of America case was a rare outcome in the collapse of the financial system: a firm whose actions had contributed to the crisis was held to account by a court of law. The U.S. Attorney’s Office for the Southern District of New York, which brought the case in 2012, used an ingenious strategy, charging the bank under a law dating from the savings-and-loan crisis of the late 1980s, called Financial Institutions Reform, Recovery and Enforcement Act, or FIRREA. And the government actually identified a human being, Rebecca Mairone, claiming she defrauded Fannie and Freddie. Though it was a civil action, rather than a criminal one, the case actually went to trial—unusual in this day and age—and the jury found Bank of America and Mairone liable. (The 2nd Circuit panel’s ruling reversed a finding of fraud against Mairone and tossed out a million-dollar ruling against Mairone.)

    The appellate-court panel accepted the main facts as described by the government. It acknowledged that Countrywide intentionally breached its contract but ruled that it had not engaged in fraud.

    The ruling, written by Richard C. Wesley, a George W. Bush appointee, was unanimous, with another Bush appointee and an Obama appointee voting in favor. “What fraud … turns on, however, is when the representations were made and the intent of the promisor at that time,” Judge Wesley wrote. If the fraud is based on “promises made in a contract, a party claiming fraud must prove fraudulent intent at the time of contract execution; evidence of a subsequent, willful breach cannot sustain the claim.”

    The government hadn’t set out to prove Countrywide’s intentions—honorable or otherwise—of Countrywide at the moment it signed the contracts with Fannie and Freddie. Consequently, the court ruled that the government had not provided sufficient evidence for its contentions. “The government had zero evidence of affirmative misrepresentations at the time of the bad conduct,” Samuel Buell, a law professor at Duke University and the author of the forthcoming book “Capital Offenses: Business Crime and Punishment in America’s Corporate Age,” says. But to other legal scholars, the ruling seemed nonsensical. “Is the idea that a good state of mind initially can insulate you from fraud later on?” Brandon Garrett, a professor of law at the University of Virginia and the author of “Too Big To Jail: How Prosecutors Compromise with Corporations,” asked. “That would be a very strange and troubling doctrine.” He added, “It almost seems like the 2nd Circuit fell victim to a lawyer’s trick.”

    For U.S. Attorney Preet Bharara, the court’s ruling is yet another setback in his corporate-crime efforts. In 2014, the 2nd Circuit overturned one of the office’s major insider-trading cases, throwing the law in that area into disarray.

    It’s tempting to read something personal into these rulings. Courts often view themselves as a check on what they see as prosecutors responding to the pitchfork-wielding mob. In the 1990s, the 2nd Circuit overruled several high-profile Wall Street prosecutions brought in the ’80s by Rudolph Giuliani, who had been the Southern District’s U.S. attorney. Now it is doing the same to Bharara, who (as Jeffrey Toobin wrote in The New Yorker recently) has antagonized the bench, and is viewed by some as overly aggressive and arrogant. The ruling also bolsters the argument, so often heard from prosecutors, that they didn’t bring many big cases after the financial crisis because the laws required an evidentiary standard that couldn’t be met. “We thought it would be unfair to bring it as a criminal case, and therefore properly and fairly used our discretion to bring it as a civil case, but we thought it was clearly fraudulent," one former prosecutor familiar with the case said. The ruling, this person says, is “extraordinary and dispiriting.”

    The relentless criticism of its post-financial-crisis crackdown has taken a toll on regulators. “This is a perfect example of how everyone thinks it is so easy to bring financial-crisis cases, but it isn’t,” the former prosecutor says. “The Court of Appeals didn’t agree, and now they’ve undone a major, major case tried before a jury. We get criticized for timidity in taking on financial-crisis cases, but the appeals court clearly viewed us as too aggressive. So maybe everyone who rails about the failures to bring financial-crisis cases needs to understand that there is a legal system, and what seems so obvious to them, is in fact not.”

    The ruling does not affect the many multibillion-dollar settlements that the government has reached with most of the top financial firms for mortgage abuses. The parties entered those settlements voluntarily. Settlements are highly unsatisfying as a matter of justice. Companies and their defense attorneys complain that the government extorts them out of unreasonable sums because they have no choice but to negotiate, while the public feels companies are not held accountable, punished only by being compelled to write checks that have little effect on their bottom line.

    After this ruling, the government may be even less willing to fight it out in court. Worse, it may have less leverage with companies when trying to extract penalties and fines in settlement negotiations over misconduct allegations. The court has provided companies with a new piece of ammunition: the ability to argue that their deliberate misconduct was not actually fraud.

  • Another Bubble Has Burst: The Miami Luxury Condo Market Is A "Ticking Timebomb"

    Last year we warned that the luxury condo market in Miami was cooling down, and we also noted that one of the mail culprits was the fact that foreign buyers (especially Brazilians) were seeing their buying power crushed by the appreciating dollar.

    Today, the bubble has officially burst and the Miami luxury condo market is a complete trainwreck. There are 3,397 condominiums available in the downtown Miami area, and at current prices it is estimated that it would take 29 months to sell those. A strong US Dollar has continued to force South American investors to unload recently built condos, adding inventory to an area where 8,000 units are under construction and nine towers have already been completed since 2013.

     

    Purchases from January through April fell 25 percent from the same period in 2015, and average prices have fallen 6 percent on a per-square-foot basis according to Bloomberg.

    And prices will continue to slide…

    "The problem is that investors are no longer buying, and now they're going to be looking to sell. And what buyers are going to replace those other than vulture buyers looking for deals." said Jack McCabe, a housing consultant based in Deerfield Beach, Florida.

    During this latest construction boom, projects required cash deposits of as much as 60 percent, and contract cancellation had stiff penalties. Due to this, some investors have been able to cover costs as they wait to sell by renting the condo's out, but that isn't a viable option for everyone either, as apartment vacancies have been on the rise as well.

    "The ticking time bomb is based on rental rates. When some of the foreign investors sitting on the sidelines have to dig into their pockets and subsidize renters, that's the fuse that will lead to a correction." said Peter Zalewski, owner of real estate development tracker CraneSpotters.

    Or said another way, will accelerate the current correction.

    Even billionaires are dumping their property in Miami. Apollo Global Management founder Leon Black, Ken Griffin, and former Saks CEO Stephen Sadove all have units on the market. Sadove has even lowered his asking price by almost 11 percent to $12.95 million – that unit may be there a while.

    Andrew Stearns of StatFunding.com, which provides residential mortgages for foreign nationals, pointed out that of 14 new Miami towers, the share of resale listings range from 7 percent at MyBrickell tower to 40 percent at 400 Sunny Isles.

    "The concern is we're in a price-discovery phase, and the prices people are trying to get for their condos is a lot higher than the market will bear." Stearns said.

    A lot higher indeed. A slide from a recent StatFunding.com presentation shows a snapshot of just how underwater some of these condos are at the present time.

     

    It's also worth noting, that from the same slide deck, Stearns shows that 22% of new units built since 2012 are for sale, and at the current sell-through rates there is a 126+ month supply!

    * * *

    The note at the bottom of that last slide from Andrew Stears sums everything up perfectly: As additional resale inventory is added to the market, the market could get frightening.

    Don't say we didn't warn you.

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May 27

Today’s News 27th May 2016

  • The Looting Stage Of Capitalism Begins: Germany's Assault On The IMF

    Submitted by Paul Craig Roberts via Counterpunch.org,

    Having successfully used the EU to conquer the Greek people by turning the Greek “leftwing” government into a pawn of Germany’s banks, Germany now finds the IMF in the way of its plan to loot Greece into oblivion.

    The IMF’s rules prevent the organization from lending to countries that cannot repay the loan. The IMF has concluded on the basis of facts and analysis that Greece cannot repay.  Therefore, the IMF is unwilling to lend Greece the money with which to repay the private banks.

    The IMF says that Greece’s creditors, many of whom are not creditors but simply bought up Greek debt at a cheap price in hopes of profiting, must write off some of the Greek debt in order to lower the debt to an amount that the Greek economy can service.

    The banks don’t want Greece to be able to service its debt, because the banks intend to use Greece’s inability to service the debt in order to loot Greece of its assets and resources and in order to roll back the social safety net put in place during the 20th century.  Neoliberalism intends to reestablish feudalism—a few robber barons and many serfs: the One Percent and the 99 percent.

    The way Germany sees it, the IMF is supposed to lend Greece the money with which to repay the private German banks.  Then the IMF is to be repaid by forcing Greece to reduce or abolish old age pensions, reduce public services and employment, and use the revenues saved to repay the IMF.

    As these amounts will be insufficient, additional austerity measures are imposed that require Greece to sell its national assets, such as public water companies and ports and protected Greek islands to foreign investors, principallly the banks themselves or their major clients.

    So far the so-called “creditors” have only pledged to some form of debt relief, not yet decided, beginning in 2 years.  By then the younger part of the Greek population will have emigrated and will have been replaced by immigrants fleeing Washington’s Middle Eastern and African wars who will have loaded up Greece’s unfunded welfare system.

    In other words, Greece is being destroyed by the EU that it so foolishly joined and trusted.  The same thing is happening to Portugal and is also underway in Spain and Italy.  The looting has already devoured Ireland and Latvia (and a number of Latin American countries) and is underway in Ukraine.

    The current newspaper headlines reporting an agreement being reached between the IMF and Germany about writing down the Greek debt to a level that could be serviced are false.  No “creditor” has yet agreed to write off one cent of the debt.  All that the IMF has been given by so-called “creditors” is unspecific “pledges” of an unspecified amount of debt writedown two years from now.

    The newspaper headlines are nothing but fluff that provide cover for the IMF to succumb to presssure and violate its own rules. The cover lets the IMF say that a (future unspecified) debt writedown will enable Greece to service the remainder of its debt and, therefore, the IMF can lend Greece the money to pay the private banks.

    In other words, the IMF is now another lawless Western institution whose charter means no more than the US Constitution or the word of the US government in Washington.

    The media persists in calling the looting of Greece a “bailout.”

    To call the looting of a country and its people a “bailout” is Orwellian.  The brainwashing is so successful that even the media and politicians of looted Greece call the financial imperialism that Greece is suffering a “bailout.”

    Everywhere in the Western world a variety of measures, both corporate and governmental, have resulted in the stagnation of income growth. In order to continue to report profits, mega-banks and global corporations have turned to looting.  Social Security systems and public services are targeted for privatization, and indebtedness so accurately described by John Perkins in his book, Confessions of an Economic Hit Man, is used to set up entire countries to be looted.

    We have entered the looting stage of capitalism. Desolation will be the result.

  • Beware What Washington Wishes For – Russia Is Ready For War

    Authored by Pepe Escobar, Op-Ed via RT.com,

    So foreign ministers from the 28 NATO member-nations met in Brussels for a two-day summit, while mighty military power Montenegro was inducted as a new member.

    Global Robocop NATO predictably discussed Afghanistan (a war NATO ignominiously lost); Iraq (a war the Pentagon ignominiously lost); Libya (a nation NATO turned into a failed state devastated by militia hell); Syria (a nation NATO, via Turkey, would love to invade, and is already a militia hell).

    Afghans must now rest assured that NATO’s Resolute Support mission – plus “financial support for Afghan forces” – will finally assure the success of Operation Enduring Freedom forever.

    Libyans must be reassured, in the words of NATO figurehead secretary Jens Stoltenberg, that we “should stand ready to support the new Government of National Accord in Libya.”

    And then there’s the icing on the NATO cake, described as “measures against Russia”.

    Stoltenberg duly confirmed, “We have already decided to enhance our forward presence in the eastern part of our alliance. Our military planners have put forward proposals of several battalions in different countries in the region. No decision has been taken on the numbers and locations.”

    These puny “several battalions” won’t cause any Russian planner to lose sleep. The real “measure” is the deployment of the Aegis Ashore system in Romania last week – plus a further one in Poland in 2018. This has been vehemently opposed by Moscow since the early 2000s. NATO’s argument that the Aegis represents protection against the “threat” of ballistic missiles from Iran does not even qualify as kindergarten play.

    Every Russian military planner knows the Aegis is not defensive. This is a serious game-changer – as in de-localizing US nuclear capability to Eastern Europe. No wonder Russian President Vladimir Putin had to make it clear Russia would respond “adequately” to any threat to its security.

    Predictably all Cold War 2.0 hell broke loose, all over again.

    A former NATO deputy commander went ballistic, while saner heads wondered whether Moscow, sooner rather than later, would have had enough of these shenanigans and prepare for war.

    That worthless Patriot

    A case can be made that the Beltway – neocons and neoliberalcons alike – do not want a hot war with Russia. What they want, apart from racking in more cash for the Pentagon, is to raise the ante to such a high level that Moscow will back down – based on a rational cost analysis. Yet oil prices will inevitably rise later in 2016 – and under this scenario Washington is a loser. So we may see a raise of interest rates by the Fed (with all the money continuing to go to Wall Street) trying to reverse the scenario.

    Comparisons of the current NATO buildup to pre-WWII buildups, or to NATO when opposed to the Warsaw Pact, are amateurish. The THAAD and Patriot missiles are worthless – according to the Israeli Defense Forces (IDF) themselves; that’s why they tried to improve them with Iron Dome.

    Meanwhile, those new NATO army “battalions” are inconsequential. The basic thrust behind the Pentagon’s moves under neocon Ash Carter continues to be to draw Russia ever further into Syria and Ukraine (as if Moscow actually was involved in, or wanted, a Ukrainian quagmire); trap Russia in proxy wars; and economically bleed Russia to death while crippling the bulk of oil and natural gas income to the Russian state.

    Russia does not want – and does not need – war. Yet the “Russian aggression” narrative never stops. Thus it’s always enlightening to come back to this RAND corporation study, which examined what would happen if a war actually took place. RAND reached an “unambiguous” conclusion after a series of war games in 2015-2015; Russia could overrun NATO in a mere 60 hours – if not less – if it ever amounted to a hot war on European soil.

    The Rand Corporation is essentially a CIA outpost – thus a propaganda machine. Yet it’s not propaganda to state the Baltic States and Ukraine would completely fall in less than three days before the Russian Army. However, the suggestion that additional NATO air power and heavily armored combat divisions would make a material difference is bogus.

    The Aegis changes the game in the sense that it qualifies as a launch area for US missile defense. Think US missiles with minimum flying time – around 30 minutes – from Moscow; that’s a certified threat to the Russian nation. The Russian military has also been “unambiguous”; if it is ascertained that NATO – via the Pentagon – is about to try something funny, there are grounds for a preventive strike by Iskander-M systems out of Transnistria – as in the destruction of the US missiles by conveniently armed precision weapons.

    Meanwhile, Moscow has pulled a stunning success – of course, it’s far from over – in Syria. So what’s left for the Pentagon – via NATO – is essentially to play the scare tactics card. They know Russia is prepared for war – certainly much better prepared than NATO. They know neither Putin nor the Russian military will back down because of kindergarten scaremongering. As for a too conciliatory tone by the Kremlin towards Washington, things may be about to change soon.

    Say hello to my S-500

    The Russian military are about to test the first prototypes of the S-500 Prometey air and missile defense system, also known as 55R6M Triumfator M – capable of destroying ICBMs, hypersonic cruise missiles and planes at over Mach 5 speeds; and capable of detecting and simultaneously attacking up to ten ballistic missile warheads at a range of 1300 km. This means the S-500 can smash ballistic missiles before their warheads re-enter the atmosphere.

    So in the case of RAND-style NATO pussyfooting, the S-500 would totally eliminate all NATO air power over the Baltic States – while the advanced Kornet missile would destroy all NATO armored vehicles. And that’s not even considering conventional weapon hell.

    If push comes to nuclear shove, the S-400 and especially the S-500 anti-missile missiles would block all incoming US ICBMs, cruise missiles and stealth aircraft. Offensive drones would be blocked by drone defenses. The S-500 practically consigns to the dustbin stealth warplanes such as the F-22, F-35 and the B-2.

    The bottom line is that Russia – in terms of hypersonic missile development – is about four generations ahead of the US, if we measure it by the development of the S-300, S-400 and S-500 systems. As a working hypothesis, we could describe the next system – already in the drawing boards – as the S-600. It would take the US military at least ten years to develop and roll out a new weapons system, which in military terms represents a generation. Every Pentagon planner worth his pension plan should know that.

    Russian – and Chinese – missiles are already able to knock out the satellite guidance systems for US nuclear tipped ICBMs and cruise missiles. They could also knock out the early alert warnings that the satellite constellations would give. A Russian hypersonic ICBM flight time, launched for instance from a Russian nuclear sub all the way to the US East Coast, counts for less than 20 minutes. So an early warning system is absolutely critical. Don’t count on the worthless THAAD and Patriot to do their job. Once again, Russian hypersonic technology has already rendered the entire missile defense system in both the US and Europe totally obsolete.

    So why is Moscow so worried by the Pentagon placing the Aegis system so close to Russia’s borders? A credible answer is that Moscow is always concerned that the US industrial military-complex might develop some really effective anti-missile missiles even though they are now about four generations behind.

    At the same time, Pentagon planners have reasons to be very worried by what they know, or hint. At the same time the Russian military – in a very Asian way – never reveal their full hand. The key fact of the matter needs to be stressed over and over again; the S-500 is impenetrable – and allows Russia for the first time in history to launch a first strike nuclear attack, if it ever chooses to do so, and be immune to retaliation.

    The rest is idle babbling. Still, expect the official Pentagon/NATO narrative to remain the same. After all, the industrial-military complex is a cash-devouring hydra, and a powerful enemy is a must (the phony Daesh “caliphate” does not count).

    The Threat Narrative rules that Russia has to meekly accept being surrounded by NATO. Russia is not allowed any response; in any case, any response will be branded as “Russian aggression”. If Russia defends itself, this will be “exposed” as an unacceptable provocation. And may even furnish the pretext for a pre-emptive attack by NATO against Russia.

    Now let those Pentagon/NATO planners duly go back to play in their lavish kindergarten.

  • Is There Ample Evidence To Indict Hillary? This Judge Thinks So

    After the latest State Department announcement that Hillary Clinton violated government rules, Judge Andrew Napolitano definitively says there is now ample evidence to indict. Sadly, he is much less certain on whether or not the indictment will actually come.

    Here is Napolitano's case as he laid it out to Bill O'reilly:

    "Today is a big deal for a couple of reasons. First, it directly refutes a statement she has made dozens of times, 'it was allowed', we now know that it was not allowed. She never even asked."

     

    "She signed a two page statement under oath on her first day on the job which was given after she had a two hour tutorial by two FBI agents telling her about the proper care and legal obligations for state secrets. In that oath she swore that she had the obligation to know how to care for state secrets and to recognize them."

     

    "Here is what's new in the report today. Her server in her house went down a couple of times, and when it went down the blackberry wouldn't work. The state department IT people said 'here use a state department blackberry', and she said through her assistant Huma Abedin 'no because we are concerned with the Freedom of Information Act', so she went dark and she had documents verbally read to her rather than transmitted to her through the state department email system."

    When Bill O'reilly was surprised to hear about the fact that Clinton was concerned about having documents subject to FOIA, Napolitano hammers home the the point that now the FBI has intent.

    "Now what does this tell the FBI? This shows intent. You don't have to prove intent when you're talking about espionage, you can prove it by gross negligence, there's ample evidence of gross negligence. But avoiding the transparency laws shows a consciousness of evading the requirements."

    On whether or not Napolitano believes, after all of the above, that Clinton will actually be indicted, the judge wasn't so sure.

    "I believe there's ample evidence to indict her and the only way she wouldn't be is if the president or the attorney general makes a political decision."

    And just as we said long ago, Napolitano also believes that one way or another, the FBI will get the evidence out to the public.

    "Whether she's indicted or not I believe we'll learn what it is. I believe it'll happen before the Democratic National Convention in Philadelphia, that's two months."

    * * *

    Well then, based on Obama's guarantee that there will be absolutely no political influence in the decision on whether or not the DOJ decides to indict, we should expect the indictment in the coming months… right?

    Full Interview

    Watch the latest video at video.foxnews.com

  • Five Years Later, TEPCO Still Can't Locate 600 Tons Of Melted Radioactive Fuel

    Five years after the Fukushima tragedy, TEPCO's chief of decommissioning Naohiro Masuda admits that the company still has no idea exactly where 600 tons of melted radioactive fuel from three nuclear reactors is located.

    As we discussed when we profiled the status of Fukushima on its five year anniversary, the radiation at the plant is still so powerful that it is impossible to get deep enough into the area to find and remove the melted fuel rods. The situation is so severe that even the robots that were sent in to find the highly radioactive fuel have died.

    Masuda went on to say that the company still hopes to locate and remove the missing fuel, but the fuel extraction technology is yet to be determined – that assumes they are able to locate it of course.

    "It's important to find it as soon as possible. Once we can find out the condition of the melted fuel and identify its location, I believe we can develop the necessary tools to retrieve it." said Masuda.

    Of course, this is easier said than done as everyone knows – as RT points out, if the radioactivity flux killed the robots that were sent in to find the material, human exploration is obviously out of the question. The first major hurdle in this effort is to first locate the material, let alone be able to find a way to extract it.

    As a reminder, when the 2011 tsunami caused the meltdown, uranium fuel of three power generating reactors gained critical temperature and burnt through the respective reactor pressure vessels, concentrating somewhere on the lower levels of the station that is currently filled with water.

    The company's decommission plan implies a 30-40 year period before the consequences of the meltdown are fully eliminated, however experts are skeptical that the technology is sufficient enough right now to deal with the task.

    Given the fact that nobody knows where the radioactive fuel is at this point, it may be a possibility that it's left there.

    “It may be possible that we're never able to remove the fuel. You may just have to wind up leaving it there and somehow entomb it as it is,” said Jaczko, who headed the USNRC at the time of the Fukushima disaster.

    As RT explains, melted fuel rods and tons and tons of radioactive water aren't the only issues facing TEPCO's clean-up effort – there is also some 10 million plastic bags full of contaminated soil concentrated in gigantic waste dumps scattered around the devastated nuclear facility.

    There is also the cost of the clean up, although given the fact that the BOJ will monetize everything it's much less of an issue. At the time of the disaster the government said it was paying TEPCO $70 billion to enable the company to accomplish its decommissioning – and that number would likely be more than $240 billion over a 40 year time frame.

    To give context to the extend of the disaster, here is an eerie video of the area taken by a drone. We can only hope things are able to improve in the efforts to finally get this disaster taken care of.

  • China's Credit-Fuelled Economy Is "Gyrating Like A Spinning-Top That's Out Of Momentum"

    China's hard landing has already begun, warns economist Richard Duncan as the nation's credit-fuelled economic boom ended in 2015 and a protracted slump lies ahead. He has published a series of videos explaining why China’s economic development model of export-led and investment-driven growth is now in crisis leaving "China’s economy resembles a spinning top that is running out of momentum. It is wobbling and gyrating erratically."

     

     

    A former Hong Kong-based banking analyst, Duncan has also worked as an analyst at the World Bank, and as global head of investment strategy at ABN AMRO Asset Management in London. He has authored three books on the global economic crisis, including The Dollar Crisis: Causes, Consequences, Cures. He is now chief economist at the Singapore-based hedge fund Blackhorse Asset Management. Duncan was also a speaker at last week’s Asian Leadership Forum in Seoul, South Korea. The South China Morning Post was a media partner to the event. He runs the blog Macro Watch, a subscription-based website providing analysis on global economic trends.

    Source: The South China Morning Post

  • And Another Week Of Selling: "In 2016, Equity Funds Have Lost The Largest Ever Outflow For The Asset Class"

    For many weeks in a row now we have been asking, mostly jokingly, how with everyone else (both retail and “smart money”) selling, and with stock buybacks sharply lower in recent months, is the market higher. Specifically, who is buying?

    This question is no longer a joke. After this week’s 17th consecutive outflow by “smart money” funds (mostly on the back of surging hedge fund redemption), moments ago we got the latest Lipper fund flow data. It was, as BofA put it, “unambiguous risk-off weekly flows.”

    As BofA also put it: “Equities continued to experience outflows and lost $3.32bn (-0.1%) last week, their 4th consecutive decline. Year-to-date, equity funds have lost $58.6bn (-0.6%), the largest ever dollar outflow in any 22 week period for the asset class“

    And yet, despite record retail outflows, despite record smart money selling, despite slowing buybacks, the S&P is not only higher on the year, but just shy off all time highs. At this rate the central banks will really need to reassess their strategy before they lose what little credibility they have left.

    Here are the fund flow details from BofA’s Michael Contopoulos:

    Equities continued to experience outflows and lost $3.32bn (-0.1%) last week, their 4th consecutive decline. Year-to-date, equity funds have lost $58.6bn (-0.6%), the largest ever dollar outflow in any 22 week period for the asset class.

     

     

     

    Global high yield saw a 4th consecutive week of outflows, led by non-US HY’s $2.2bn (-0.9%) outpour and partially offset by a minor $131mn (+0.1%) inflow into US domiciled high yield funds. The divergence is likely a result of US HY’s outperformance since the February 11th lows, outpacing its European counterpart by 6.5% over the 3.5 month span. Also a contributing factor is the ECB announcement of its Corporate Sector Purchase Program, which has caused European investors to pull money out of EU high yield and invest in ECB-eligible high grade corporates. Within the US, ETFs led the inflows (+$180mn, +0.5%) compared to a $49mn outflow (-0.0%) from non-ETFs.

     

     

    Meanwhile, loans gained $94mn (+0.1%) in net inflows, driven by the greater odds of a summer rate hike. Investment grade corporates continued to benefit from sizeable inflows, gaining $1.29bn (+0.1%) last week for the 14th straight inflow. Other asset classes we track reporting flows last week include EM Debt (-$324mn, -0.1%), munis (+$1.23bn, +0.3%), money markets (+$7.41bn, +0.3%), and commodities (-$271mn, -0.3%). As a whole, fixed income funds recorded a $2.53bn inflow, or +0.1% of AUM

    And the global flow details from Michael Hartnett

    • Equities: $9.2bn outflows (7 straight weeks) (note $11.1bn mutual fund outflows partially offset by $1.9bn ETF inflows)
    • Bonds: $2.6bn inflows (inflows in 12 of past 13 weeks)
    • Precious metals: tiny $32mn outflows (only the second week of outflows in 20 weeks)
    • Money-markets: $12.2bn inflows

    Fixed Income Flows (Chart 2)

    • First inflows to Govt/Tsy funds in 14 weeks ($0.6bn)
    • Largest outflows from HY bond funds in 15 weeks ($2.1bn)
    • Largest outflows from EM debt funds in 14 weeks ($0.3bn)
    • $2.5bn inflows to IG bond funds (12 straight weeks)
    • $1.2bn inflows to Munis (36 straight weeks)
    • Inflows to TIPS funds in 14 of past 15 weeks ($0.3bn)

    Equity Flows (Table 2)

    • Japan: $0.9bn outflows (first outflows in 3 weeks)
    • Europe: $3.3bn outflows (16 straight weeks)
    • EM: $2.0bn outflows (4 straight weeks)
    • US: $1.1bn outflows (outflows in 6 of past 7 weeks)
    • By sector, first outflows from REITs in 14 weeks ($0.2bn); largest financials inflows in
    • 5 months ($0.5bn); 6 straight weeks of tech outflows ($0.4bn)

    To summarize: everything except ETFs was sold in the past week; while global equity outflows in 2016 are now at a record high $105 billion for the 22 week period.

  • It`s A Technological Arm`s Race (Video)

    By EconMatters

     

    I have made some changes to my Trading Rig Configuration to account for more Natural Gas Trading, the US Dollar Index, the VIX and Bonds.

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

  • Examining American Exceptionalism

    Submitted by Stephen Bergstrom via The Saker blog,

    On the surface, American exceptionalism appears to represent a boldly-stated concept but when contrasted to the subtleties of personal experience, the lessons and flow of history and individual geographically-rooted place, horribly small-minded and delusional, conceivable only as a statement by a crazed, power-hungry overlord to an underling.

    Synchronized beautifully in 2004 by a senior aide to Bush Jr. to Pulitzer Prize winning journalist Ron Suskind writing in the New York Times Magazine, American Exceptionalism is,

    ”…an empire now, and when we act, we create our own reality. And while you’re studying that reality — judiciously, as you will — we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do…” (http://www.nytimes.com/2004/10/17/magazine/17BUSH.html).

    To begin examination, let’s take a closer look at basic definitions (courtesy of Merriam-Webster).

    Exceptional:

    1. not usual
    2. unusual or uncommon
    3. unusually good

    ism:

    1. the act, practice, or process of doing something
    2. behavior like that of a specified kind of person or thing
    3. unfair treatment of a group of people who have a particular quality

    Exceptionalism:

    1. the condition of being different from the norm; also
    2. a theory expounding the exceptionalism especially of a nation or region

    Combining the above, we realize that exceptionalism equates to perception or a perceiving of self that endows the perceiver with uncommon power.

    In the case of the United States, seeming high-level leadership self-perceives that the U.S. is “exceptional” (i.e., unusual or unusually good in possession of the ability to act) and does not need to conform to normal rules or general principles. In worldly terms, the U.S. exits the brotherhood of nations and is empire among middling servant states.

    Voicing American Exceptionalism

    U.S. President Barack Obama speaking at the 2009 NATO Summit, Strasbourg, France,

    “I believe in American exceptionalism…we have a core set of values that are enshrined in our Constitution, in our body of law, in our democratic practices, in our belief in free speech and equality, that, though imperfect, are exceptional…”

    U.S. President Barack Obama speaking to West Point’s graduating class 2014,

    “America must always lead on the world stage…The United States is the one indispensable nation…I believe in American exceptionalism with every fabric of my being…”

    Then actor and to-be President, Ronald Reagan at the First Conservative Political Action Conference, 1974,

    “…We cannot escape our destiny, nor should we try to do so. The leadership of the free world was thrust upon us two centuries ago in that little hall of Philadelphia. In the days following World War II, when the economic strength and power of America was all that stood between the world and the return to the dark ages, Pope Pius XII said, ‘The American people have a great genius for splendid and unselfish actions. Into the hands of America God has placed the destinies of an afflicted mankind.’

     

    We are indeed, and we are today, the last best hope of man on earth.”

     

    The City on the Hill: Finding the Roots to American Exceptionalism

    First Governor of the Massachusetts Bay Colony John Winthrop (1588-1649) represented early American Puritanical Tradition. Addressing a bevy of puritan emigrants waiting to disembark the Arabella to create the first settlement in what would become the first of the New England states, Winthrop declared,

    “…we shall find that the God of Israel is among us, when ten of us shall be able to resist a thousand of our enemies…for we must Consider that we shall be as a City upon a Hill, the eyes of all people are upon us…”

    That forenamed city destined to be recast time and again by America’s political leadership and undoubtedly favored by those behind that leadership, first by Reagan in his same above speech;

    “Standing on the tiny deck of the Arabella in 1630 off the Massachusetts coast, John Winthrop said, ‘We will be as a city upon a hill. The eyes of all people are upon us, so that if we deal falsely with our God in this work we have undertaken and so cause Him to withdraw His present help from us, we shall be made a story and a byword throughout the world.’ Well, we have not dealt falsely with our God…”

    President-elect John F. Kennedy said, in an address to the Massachusetts Legislature on January 9, 1961,

    “During the last 60 days I have been engaged in the task of constructing an administration…. I have been guided by the standard John Winthrop set before his shipmates on the flagship Arabella [sic] 331 years ago, as they, too, faced the task of building a government on a new and perilous frontier. ‘We must always consider,’ he said, ‘that we shall be as a city upon a hill—the eyes of all people are upon us.’”

    From George H. W. Bush’s “thousand points of light” to Bill Clinton’s “America has a special role in the eyes of God” to John Kerry’s “…we have moved closer to the America we can become – for our own people, for the country, and for all the world…”, to lesser weighted John Bolton’s “The most important thing you need is a president who is proud of the United States of America, who believes in American exceptionalism” to Condy Rice’s, “When the world looks to America, they look to us because we are the most successful economic and political experiment in human history. That is the true basis of American exceptionalism…” special effort has been made to convince America she is biblically-blessed and exceptional.

     

    A Truth Hidden, Half Told

    But conviction does not always mesh with contradiction nor will those convicted remain so in the face of evidence, direct personal experience and the geography of place.

    Alexis de Tocqueville was one. The son of Norman aristocrats, de Tocqueville lives a short life. Born in Paris, July 29th, 1805, he travels to America in 1831 and publishes the tome upon which his fame rests, Democracy in America, in the year of his thirtieth birthday, 1835 and in which he observed that America was creating ”…a distinct species of mankind…(http://www.washingtonpost.com/wp-srv/special/politics/american-exceptionalism/).

    But in what ways distinct?

    In Tocqueville’s eyes, Americans will be birthed first by mindset in the Winthropian, “… Puritanical origin…” and meshed then with “…exclusively commercial habits…”

    And in what ways convicted?

    The American, this distinct species of mankind, de Tocqueville asserts will become convicted, will become aware of their personal distinctiveness through uniqueness of place, through the,

    “…country they inhabit which seems to divert their minds from the pursuit of science, literature, and the arts, the proximity of Europe … to fix the mind of the American upon purely practical objects. His passions, his wants, his education, and everything about him seem to unite in drawing the native of the United States earthward…” (http://www.visionandvalues.org/2011/04/the-roots-of-tocqueville-s-american-exceptionalism/#sthash.CIhYaf5j.dpuf).

    And therein lies contradiction and echoes so much of what the world says about America, about despising the policies of a government etched in puritanical righteousness and commercial industry and imported inventiveness that exports war and fiat currency but loving a people contradicted and tempered by place, by the geographical, by the land, by windswept prairies, by three coasts, by 14,000 foot mountaintops, by desert, by waterways, by Great Lakes as big as oceans, by the echo and remaining presence of the country’s native Turtle Island, by the original earth-based inhabitants, by the combined sources of the continent’s non-corporate literature and artistic impulses and the unbidden anti-hero like suspicion, resistance and mockery at the everyday level to technological boondoggle and oversized government.

    This Curious Exceptional Dilemma

    In the hands of the few, trademarked American Exceptionalism acts as a battering ram, is a corporate brand name front that unites evangelism, militarism and Keynesianism, that installs dictators, that perpetuates privately-owned fiat currencies, that topples the same dictators to create in name-only democracies, that trains militants and insurgents, that funds gladio-styled terrorism, NATO, international banking organizations, the IMF, the World Bank, Export-Import Banks, that emasculates Europe, that fans and funds conflict between installed dictators and in name-only democracies, between insurgents and loyalists, this City on the Hill, these thousand points of light.

    But below the surface, this thing about America that is exceptional but not distinct from other cultures, her land, her native roots, her resistance by natives long thought exterminated and to be made extinct by cavalries and cannons, by legislation, by armed men riding trains gunning down millions of bison, acts of terrorism and food and shelter-based genocide, by reservation life, this America inspired by the land, by her earthiness, influences this unexceptional America, is non-corporate artistic, makes small press literature, invents good things, does not war, combats big pharma, forced vaccinations, big ag, big biz, big banks, chemtrails, opposes GMOs, opposes false flags, staged shootings and propagandized media, billion dollar political campaigns and privately-owned, fiat-issuing central banks, hallmarks all of Exceptional Empire, writes songs, sings, dances, drums, shapes pottery, tears down pork barrel, fractionalized fiat currency hydro-electric dams, honors the sacred, loves animals, grows gardens, all as if a secret to celebrity-promoted corporate media but known by the hearts of many, by foreign tourists walking through centuries old Santa Fe, traipsing through Navajo country, watching salmon run, peering at petroglyphs in HOPI land, known by creatives, known by seekers, known by the evidence, becomes human, not exceptional.

  • "You Are Redefining Yourself As A Comic-Book Villain" – Nick Denton's Open Letter To Peter Thiel

    Now that Peter Thiel’s vendetta against Nick Denton is in the open, and it’s safe to say that the tech billionaire will not stop before putting Gawker out of business, Denton is starting to scramble realizing that he has a borderline irrational adversary, one for whom money is no object if it means a tombstone for the gossip tabloid.

    And, as the attached just issued open letter to Peter Thiel by Denton, who asks for a public debate to resolve some differences, reveals the panic is palpable. What happens next in this, ironically, soon to be made into a Hollywood movie drama, could be almost as entertaining as the US presidential election.

    Here is Denton’s Open Letter to Peter Thiel.

    Peter Thiel,

    Nearly a decade ago, after you had opened up to friends and colleagues, a gay writer for Gawker shared an item with the readers of Valleywag, a section for news and gossip about the rich and powerful of Silicon Valley. “Peter Thiel, the smartest VC in the world, is gay,” wrote Owen Thomas. “More power to him.”

    And more power did indeed come to you. Your investments in Facebook and other companies have given you a net worth of more than $2 billion. You have tapped some of that fortune to support gay groups such as HomoCon. It is now clear that gay people are everywhere, not just in industries such as entertainment, but at the pinnacles of Silicon Valley power.

    I thought we had all moved on, not realizing that, for someone who aspires to immortality, nine years may not be such a long time as it seems to most of us. Max Levchin, your fellow founder at Paypal, told me back in 2007 you were concerned about the reaction, not in Silicon Valley, but among investors in your hedge fund from less tolerant places such as Saudi Arabia. He also warned of the retribution you would exact if a story was published about your personal life.

    Your revenge has been served well, cold and (until now) anonymously. You admit you have been planning the punishment of Gawker and its writers for years, and that you have so far spent $10 million to fund litigation against the company. Charles Harder, the Hollywood plaintiff’s lawyer who has marshaled your legal campaign, is representing not just the wrestler Hulk Hogan on your behalf, but two other subjects of stories in suits against Gawker and its editorial staff.

    You told the New York Times that you are motivated by friends who had their lives ruined by Gawker coverage, and that your funding is a “philanthropic” project to help other “victims” of negative stories. Let us run through a few examples so that people can actually read the articles you find so illegitimate, and make their own judgment about their newsworthiness.

    Sean Parker, a partner in your Founders Fund and an early backer of Facebook, is one of the friends who was covered extensively on Gawker’s Valleywag. Those stories, some of them by me, helped define the colorful character played by Justin Timberlake in The Social Network, the David Fincher movie about the founding of Facebook. Parker was stung more recently by criticism from his neighbors of the disruption to 10th St. in Manhattan when the street was dug up to get a Fios line to Bacchus House, the famous party venue where Parker had been planning to live. Valleywag covered that story, as well as his lavish and controversial wedding in the redwoods near Big Sur.

    Hulk Hogan was the first client represented by Charles Harder in a suit against Gawker. As we now know, the famous wrestler and entertainer sued over snippets of a sex tape apparently in order to shut down reporting of a racist rant against a black man dating his daughter.

    Ashley Terrill, also represented by Harder, is suing Gawker for $10 million for defamation. She is a reporter who offered information about the conflict between the founders of two dating apps, Tinder and Bumble, who herself became part of the story after claiming she was being harassed and surveilled by agents of Tinder co-founder Whitney Wolfe.

    Shiva Ayyadurai is a Massachusetts entrepreneur who says he invented email—about a decade after email was actually invented. A story on Gizmodo, Gawker’s tech property, said straight out that his claims were false, as did the Washington Post and the Los Angeles Times. Represented also by the lawyer you hired, Ayyadurai is suing Gawker for $35 million for defamation, though not the other news organizations that made the same point.

    Peter Thiel—that is, you. Yes, Gawker has often been critical. Our writers have derided your views on female suffrage, mocked the libertarian separatist vision of offshore seasteads free of government interference, and questioned some of the businesses you have backed. There is much more. They don’t find you very likable.

    I can see how irritating Gawker would be to you and other figures in the technology industry. For Silicon Valley, the media spotlight is a relatively recent phenomenon. Most executives and venture capitalists are accustomed to dealing with acquiescent trade journalists and a dazzled mainstream media, who will typically play along with embargoes, join in enthusiasm for new products, and hew to the authorized version of a story. They do not have the sophistication, and the thicker skins, of public figures in other older power centers such as New York, Los Angeles and Washington, D.C.

    And I can see how tempting it would be to use Silicon Valley’s most abundant resource, a vast fortune, against the harsh words of the writers of a small New York media company. We have our devices; you have yours.

    Among the million posts published by Gawker and other properties since the company was founded, there have undoubtedly been occasions we overstepped the line. In offsetting the fawning coverage of tech luminaries and others, sometimes our stories swing too far for my taste toward snark.

    But this vindictive decade-long campaign is quite out of proportion to the hurt you claim. Your plaintiff’s lawyer, Charles Harder, has sued not just the company, but individual journalists.

    A.J. Daulerio, author of the 2012 story on Hulk Hogan, is out of work and unable to pay the $100,000 in punitive damages awarded by the jury. In the Ayyadurai and Terrill complaints, Harder cynically paints author Sam Biddle as an abuser of narcotics, basing this claim on Biddle’s own writing about his struggle with anxiety and depression, and the physician-prescribed medication he takes to treat his mood disorders. John Cook, our executive editor, is accused of negligent hiring and retention.

    Peter, this is twisted. Even were you to succeed in bankrupting Gawker Media, the writers you dislike, and me, just think what it will mean.

    The world is already uncomfortable with the unaccountable power of the billionaire class, the accumulation of wealth in Silicon Valley, and technology’s influence over the media.

    You are a board member of Facebook, which is under congressional investigation after our site Gizmodo reported on the opaque and potentially biased way it decides what news sources are seen by its billions of users.

    Now you show yourself as a thin-skinned billionaire who, despite all the success and public recognition that a person could dream of, seethes over criticism and plots behind the scenes to tie up his opponents in litigation he can afford better than they.

    You were the basis for the affectless venture capitalist in the HBO show, Silicon Valley; with this diabolical decade-long scheme for revenge, you are redefining yourself as a comic-book villain.

    This story will play out in the press and the courts. Both are adversarial forums, in which each side selects facts and quotes to undermine the reputation and credibility of the other. We are confident of our arguments on the newsworthiness of our Hogan story, once it reaches the appeals court. Your main proxy, Hulk Hogan, has his.

    We, and those you have sent into battle against us, have been stripped naked, our texts, online chats and finances revealed through the press and the courts; in the next phase, you too will be subject to a dose of transparency. However philanthropic your intention, and careful the planning, the details of your involvement will be gruesome.

    I’m going to suggest an alternative approach. The best regulation for speech, in a free society, is more speech. We each claim to respect independent journalism, and liberty. We each have criticisms of the other’s methods and objectives. Now you have revealed yourself, let us have an open and public debate.

    The court cases will proceed as long as you fund them. And I am sure the war of headlines will continue. But, even if we put down weapons just for a brief truce, let us have a more constructive exchange.

    We can hold the discussion in person with a moderator of your choosing, in front of an audience, under the auspices of the Committee to Protect Journalists, or in a written discussion on some neutral platform such as Medium. Just tell me where and when.

    At the very least, it will improve public understanding of the interplay of media and power. Considering the amount spent on lawyers, $20 million between us at this point, there should be some public benefit.

    In the meantime, here are some more pointed and immediate questions.

    • Have you or your representatives paid Hulk Hogan personally in addition to covering his legal expenses?
    • You say that you are operating much like a contingency lawyer, so does that mean you will take a third of any final judgement, or more?
    • You said you were funding several cases. Specifically, can you confirm you are funding Charles Harder’s work for Shiva Ayyadurai and Ashley Terrill?
    • Is your goal to bankrupt, buy, or wound Gawker Media? If you were to own the company after a final judgment in the Hogan case, what would your editorial strategy be?
    • You say that Gawker is not a legitimate news source. Do you take the same view of the other properties—Gizmodo, Deadspin, Jezebel, Kotaku, Jalopnik and Lifehacker?
    • As a Facebook board member, how have your own views on politics and news influenced your contribution to corporate decisions?
    • When you say your aim is deterrence rather than revenge, whom do you aim to deter?
    • You said you wanted to even the legal playing field for people without your resources. If Gawker Media was forced to sell the company to pay a bond or fight these court cases, would you and your agents seek to block that transaction?
    • Is Sean Parker the friend you mentioned that persuaded you to pursue this campaign?
    • And lastly, I understand that you give codenames from Tolkien for all your projects. What’s this one? (Let me guess: Mordor.)

    * * *

    Somehow we doubt that after reading this letter, Thiel’s rage will be in any way reduced. In fact, quite the opposite.

Digest powered by RSS Digest

May 26

Today’s News 26th May 2016

  • Imminent Intervention? Greece, Italy, & Malta Close Airspace For Aircraft From Libya

    Via KeepTalkingGreece.com,

    Weird things are happening in the Mediterranean Sea. Almost simultaneously three countries in the Mediterranean have closed their airspace and territories for aircraft departing from Libya. The exceptions are very few and involve the transport of military and evacuees. At the same time, three NATO exercises are taking place but the airspace closure and directly little to do with that.

    The first country to close its airspace for aircraft departing from Libya” was Italy, followed by Malta. Today it was Greece’s turn. All three countries issued relevant NOTAMs:

    Italy on May 11 and closes the airspace May 11 – August 8 2016, consequently at the same period Malta that issued the NOTAM on May 12.

    Greece’s NOTAM was issued today, May 25th and the period for banning aircraft departed from Libya to overflight and land  is given as May 25th – September 8, 2016.

    The overlapping FIR closure period by the three countries is actually May 25 – August 8 2016.

    What is interesting in the Greek NOTAM are aircraft like “military aircraft of other nations, state flights or other VIP flights, ambulance flights” are not affected by the ban. Italy records also some exceptions but not of “ambulance aircraft.”

    Why do Greece, Italy and Malta need to close their airspace and territories to aircraft departing from Libya? Is there something the NATO allies have on their mind? Or the NATO itself? Something like an imminent intervention against Libya? It was beginning of April when US President Barack Obama and Secretary General Jens Stoltenrbg had declared that they could help Libya to face the Islamic Caliphate.

    Defense news website OnAlert.gr that brought up this exclusive story, notes that there is already since May 17th the NATO exercise “Phoenix Express 2016” (Phoenix 2016) taking part off the island of Crete.

    The exercise scenarios focus geographically in North Africa, The forces that participate in Phoenix 2016 are: Algeria, Egypt, Greece, Italy, Malta, Mauritania, Morocco, Spain, Tunisia, Turkey and the United States.

    “The at-sea portion of the exercise will test North African, European, and U.S. forces’ abilities to combat illegal migration, illicit trafficking, and movement of materials for weapons of mass destruction. Additionally, participating forces will work together to practice procedures of search-and-rescue in cases where vessels are in distress. Participating Maritime Operations Centers (MOCs) will exercise information sharing practices.”

     

    Exercise Phoenix Express is one of three U.S. Naval Forces Europe-Africa/U.S. 6th Fleet facilitated regional exercises.

    (announcement by USA Navy)

    Phoenix 2016 will conclude on May 27th.

    Right after that date, two NATO Refueling Exercises will take place, south and west of the island of Crete (May 30-21/2016) and south and west of the island of Karpathos (May 31-June 1/2016)

    According to Greek NOTAMs refering to NATO Refueling exercises.

    According to OnAlert,gr there has been increase of NATO exercises in the area recently.

    So it looks as if Greece will play a significant role in a possible intervention against Libya and even be able to receive aircraft that have departed from Libya carrying evacuees, VIP and other…

    Such in case that the scenario comes true and thus before summer is over.

    It is not clear whether also Libya’s neighbors Egypt, Algeria and Tunesia have issued similar NOTAMs.

  • Rising prices of raisins – The real effect of rampant inflation and FX

    Inflation is out of control.  Now, we mostly agree that the Fed’s official inflation numbers are just – ridiculous.  But the real inflation, is even harder to quantify, and more subtle – as we explain in Splitting Pennies – Understanding Forex.  What drives inflation is NOT Adam Smith’s “Supply and Demand” – an interesting idea but completely static, and completely irrelevant for practical applications – and certainly not useful for business, or economic forcasting.  Inflation is a simple function of monetary policy, multiplied by FX.  That means, in today’s world, inflation must be counted including the FX markets because – no matter how much USD the Fed prints, it’s constantly being exchanged for Euros and Yen on the open FX markets.  FX is a limited, finite system.  But the USD itself – is not.  It’s defined by other currencies, and the market value of the USD vs. others.

    Other less quantitative signs of inflation:

    • Reduction of quality
    • Less quantity, but for the same price (less chips in the bag, every year)
    • Intentional, engineered ‘appearance’ of more (there are less chips, and bag is bigger too)
    • Accompanying marketing ‘feel good’ slogans 

    The best signs of real inflation, not the academic mumbo jumbo Fedspeak produced by The Fed and Federal Economic Departments (like BEA), is FX – and consumer goods.  Because we need energy, we need food.  Without food and energy, society can’t function.  We can live without iphones, we can live without Tesla, we can live without many ‘industries’ – but we can’t live without food, at least based on our modern consumption system used by most human beings on this small planet Earth.  And speaking of iphones, they all rely on energy – Apple (AAPL) investors should hedge their bets with energy stocks.  We can expect that high-tech products have inflation, but take a look at the real inflation, the rising prices of raisins:

    You wouldn’t think this is unusual, based on data from the raisin growers:

    So what gives?  Here’s the deal.  Recently I learned my wife is pregnant and so we’ve changed our diet (in addition to our whole lives – that’s another topic).  Having a dash of chemicals here and there for an adult is one thing, but for a developing newborn and pregnant mother, it’s out of the question.  We have in the south Earthfare, which is notably much more picky and choosy than WholeFoods, their customers more fussy and thus everything is much more expensive.  But the point here is that these raisins, are like the raisins we used to get really cheaply, 20 or 30 years ago.  Now you have to go to a place like Earthfare to get real food, by real I mean not artificial, loaded with chemicals, fillers, and other things that make for a good science experiment.  Health is another topic, but economically speaking – this is an excellent example of what inflation is.  Inflation isn’t necessarily when prices go up, although $6.99 a pound for raisins is alot.  It’s about deteriorating quality.  When the Fed picks a basket of goods to calculate CPI, what ‘goods’ do they choose?  Certainly, NOT products from Earthfare or Wholefoods.  Quality is qualitative, so it’s hard to overlay a deterioration of quality line against the CPI or do statistical analysis.  There are methods though, to evaluate quality and its deterioration.  

    The problem is that – in order to prove the status quo establishment method –  quality is deteriorating, by using methods by establishment institutions, and from data by establishment institutions, is a paradox.  In other words, we have to think outside of the box, and use our intuition.  For example if we look to the CDC for a correlation, we’ll get nothing:

    Checkout the full report, Surveillance for Foodborne Disease Outbreaks — United States, 1998–2008.

    But, this is the same CDC that tells us to wash our hands to fight disease, the same CDC that exposed its own worker to Ebola.

    You must see for yourself.  The raisins you eat – are they like when you were a child?  How do you remember, the taste of tomato, apple, grape, melon, and veggies?  The organic movement itself is riddled with misleading information and corruption.  But at the end of the day, if a consumer wants a ‘real’ raisin, not frankenfoods sold by major grocers, you have to pay the price, and buy Organic, or grow your own.

    How does FX enter the raisin market?  If the Currency markets were fixed, something could be said about supply and demand.  Raisin growers now compete with farms from around the world.  The world’s flat, and payment is instantaneous.  Farmers don’t only compete domestically, they compete internationally.  Farmers outside the USD world maybe aren’t subsidized like those in the US, but they sure are subsidized (indirectly) by their central banks, who like to make their currencies worthless, thus making the prices of these inferior raisins much cheaper, and more attractive.  Farmers at least can hedge this risk by opening a forex account and trading, but the end result of the current capitalistic system we have in the world is one thing:  garbage.  Our brains are deteriorating, health, quality of life, society, relationships, all the way down the maslow pyramid to what Americans used to love: food.  In major chains there’s not much difference between pork and beef.  Not that many could notice the difference.

    At least, there are methods to fight this disease we call inflation, as we explain in our book – Splitting Pennies.  We’ve released a slightly longer paperback edition which is really popular – get a copy for only $14.98.  The book is only the beginning.  It’s only a key – you must use it to unlock the door to your new life.

  • The Truth Behind The Surge In Conservative "Extremism"

    Submitted by Brandon Smith via Alt-Market.com,

    The definition of “extremist” is a rather ambiguous issue primarily dependent on opinion rather than fact. That is to say, it is generally the people in power and their propaganda mouthpieces that determine who is an extremist and who is not. There is no set or fair standard.

    If you are a quiet and passive sort of citizen with no political deviations and no thoughts outside of what is considered “mainstream,” then you are probably considered a non-threat to the establishment. If, however, you promote an ideal that is opposed to the establishment agenda and display a potential to actually ACT to fight for that ideal, then you will eventually be labeled an extremist.

    So who sets the standard for extremism in America today? The responsibility of enforcement has been undertaken by the Department of Homeland Security. But, the initial profiling of extremism and the engineering behind the farcical talking points that the DHS often uses and spreads to local law enforcement agencies is the work of the Southern Poverty Law Center.

    The SPLC’s profiling guidelines on extremism and terrorism tend to end up in DHS and fusion center reports that are usually not meant for the eyes of the public. A more well-known example would be the exposure of the Missouri Information Analysis Center (MIAC) Report back in 2009 which listed Ron Paul supporters as being potential terrorists. The SPLC complained widely that the MIAC report should not have been abandoned after the uproar from conservatives, but instead, should have been pursued.

    The SPLC lists “active anti-government groups” on their website with a nicely made but meaningless graph which would have you believe that such groups have exploded in number since 2008. How the SPLC designates groups as “anti-government” is entirely dependent on their own baseless opinions rather than any discernible or practical method. They could easily make their graph say anything they want it to say and pretend there is some kind of science to it.

    Hilariously, the SPLC lists my own website, Alt-Market, as an “anti-government group” under Pennsylvania, the state I lived in when Alt-Market was first established. Apparently, they consider a website a “group,” and I suppose I should be flattered that my individual efforts have been effective enough to constitute a group-sized threat in their minds.

    I am also not “anti-government.” I am anti-corrupt government, but the SPLC does not seem to care at all about this kind of distinction.

    I can say that Alt-Market is certainly not a group. While I do promote the formation of private barter groups as well as mutual aid and community security groups, these groups are in no way under the control of Alt-Market. If the SPLC considers me, all by my lonesome, as an anti-government group, then I question the validity of their list. If they had some confusion as to what Alt-Market was, all they had to do was ask me, but they never have.

    I addressed the SPLC directly and outlined the corruption inherent in their institution years ago in my article ‘A Message To The SPLC From A Montana “Extremist.”’ To summarize, the SPLC’s goal is to promote Cultural Marxism while incessantly demonizing the opposing belief system — true conservatism. They do this through the use of an old propaganda ploy called ‘false association.’

    If you examine the SPLC’s list of people they consider prominent extremists in the U.S., you will find a mixture of liberty movement proponents with their photos pasted right next to white supremacists and Klu Klux Klan members. This is not an accident. The strategy is to associate liberty activists with racists in the minds of the SPLC’s gullible readership without risking lawsuit by defamation.

    For example, the SPLC has never (as far as I know) directly labeled liberty voices like Stewart Rhodes or Chuck Baldwin as “racists” or supremacists. However, they will work very hard in various media including their magazine ‘Intelligence Report’ (equating “intelligence” with the SPLC is a laughable premise) to influence the public to attach ideas of liberty to racial supremacy as if they are part of the same ideological movement.

    Now frankly, I do not care if an individual or group “hates” another individual or group. As long as they do not harm anyone, invade their privacy or impede their constitutional rights, then it is none of my business. This does not mean I agree with them, but they have a right to believe whatever they want to believe.

    The SPLC, along with the “extreme left,” though, does not think that people have a right to believe what they want to believe, and this is where problems start to emerge. The movement to criminalize “hate speech” may be a paper tiger, it may not. According to some polls, 41 percent of Americans and over half of Democrats support the criminalization of hate speech.

    Again, if such speech is criminalized, then who gets to determine the definition of what hate speech is? Yes, most likely it will be social justice think-tanks like the SPLC.

    That which constitutes “hate speech” and that which constitutes “extremism” is invariably conservative in nature… according to the SPLC and the DHS. Though you will see far more race-hate related speech from groups like Black Lives Matter, you will probably never see them listed on the SPLC’s website.

    Conservative opposition to illegal immigration, to the medieval tyranny of Islamic sharia law, to government enforcement of transgender ideology on private property, along with conservative support of 2nd Amendment rights of firearms ownership and 1st Amendments rights in the face of “hate speech” legislation have all been categorized as extremism or racism by the SPLC. This is not simply a battle of ideas with no tangible consequences outside of the academic. The poison of cultural Marxism championed by the SPLC is leaching into everyday life.

    I was sent this example recently; a story out of Washington D.C. in which a man in a wig entered the women’s bathroom at a Giant supermarket (private property). A female security guard at the establishment forced “Ebony Belcher” (see photo below) to leave the bathroom according to store policy after the man refused to heed verbal warnings.  The security guard cited that there was no law allowing transgenders to violate the store's bathroom policy.

    Belcher then proceeded to file a complaint with D.C. police. Instead of shrugging off the incident as a matter of private property as they should have, police arrested the guard pursuant of “hate crime” charges.

    This is merely one incident, yes, but it is now one of MANY examples of government force backing cultural Marxists, and is representative of where the entire nation is headed if the SPLC and the federal government get their way.

    The position that private property owners have the right to restrict a person who has the genetics and biology of a man to male bathroom facilities in order to protect the privacy and safety of their female customers is now being called a hate crime. That which is entirely practical and sane today will be labeled dangerous “extremism” tomorrow.

    Therefore, I would submit to you that there is no “surge” in conservative extremism. Instead, normal longstanding conservative principles, along with conservative groups and individuals are being increasingly and arbitrarily labeled as “extremists.” We are not necessarily becoming more dangerous than we were before, more of us are just being targeted as dangerous by well-placed political minorities in a war of cultural dominance.

    That said, conservative individuals and groups that are targeted will of course move to defend themselves. The orchestrated demonization and sublimation of conservatives on the part of cultural Marxists is the very definition of true extremism, and when one group decides to implement an extremist methodology in order to attain power over others, it is inevitable that they will invite an equal or greater opposing reaction.

    The Washington Post recently warned of this reaction in an exposé titled Primed To Fight The Government.

    The article begins in typical establishment propaganda fashion by immediately working to inoculate readers against conservative or liberty movement viewpoints. The SPLC is, of course, brought in to repeat their standard list of lies and half-truths while noting that their list of extremist groups has skyrocketed ever since 2008 — when America’s first black president was elected. This is surely intended once again to associate liberty activists with racism.

    There is no mention of the numerous groups and individuals on their list (myself included) who started their work long before 2008 and have been as consistently critical of white republicans as they have been of Barack Obama.

    The Post then finally allows the primary subjects of the article, B.J. Soper and his Central Oregon Constitutional Guard, to give their voice on the matter. Soper comes off as even handed and solidly grounded, with views easily supported by verifiable evidence; he did not appear as “extreme” as the SPLC might prefer.

    If The Washington Post and the SPLC are truly curious as to the source of the supposed surge in conservatives “ready to go to war” with the government, I would challenge them to set aside their bias (or ignore their corporate handlers) and look more closely at the behavior of the government today as well as the extremists on the “Left” side of the political spectrum.

    Perhaps they should take a more mathematical approach to their views on the socialization of America and its clear negative effects on our economic future.

    Perhaps they should take a closer look at the UN’s “Strong Cities Network,” which is a program in collaboration with governments around the world including the U.S. to weaponize local communities against any behavior considered "extremist"; promoting a world of self-policing and self censoring towns and cities while instituting anti-extremist (mostly anti-conservative) policies on an Orwellian scale.

    Perhaps they should examine how free speech is being progressively eroded with legal “exceptions” in the name of protecting people’s tender feelings or protecting the public from “dangerous ideas.” True conservatives understand that NO ONE has the right to limit the speech of everyone in the name of personal comfort for an overly-sensitive few, and for some reason this makes us extremists.

    Perhaps they should re-think their accusations of “racism” against the tens of millions of Americans of all ethnicities who stand against illegal immigration. Perhaps by ignoring the fact that the vast majority of people who oppose illegal immigration do so based on realistic economic and social dangers is pressuring conservatives to see armed preparedness as the only avenue left to them.

    Or perhaps the establishment should acknowledge that they have been militarizing local police forces and indoctrinating them with assertions that conservatives are a menace, a racist, fascist ticking time bomb ready to explode and that must be contained or re-educated. Conservatives are not going to simply stand by idly forever while this kind of fourth generation warfare continues unchallenged. Obviously we are preparing for a fight. When one is attacked, defense is natural.

    As I point out in my article The Weirdest Possible Outcomes For The Strangest Election In History, the potential for violent divisions within the U.S. over the course of this election year is very high. In fact, the stage is pretty well set for conflict regardless of who becomes president.

    The mob actions and growing madness of the extreme left, instigated and in some cases funded (Ferguson, Missouri) by elitists like George Soros is going to force conservatives into a position of armed reaction. It is only a matter of time. And perhaps this is what the elites prefer — Americans fighting and killing other Americans while they sit back and enjoy the show. After all, the failure of America is a perfect justification for the greater influence of globalism to stem the tide of “nationalist fervor.” And in a totally globalized and collectivized world, conservatism has no place.

    Conservatives are called “extremists” because the establishment needs an excuse to get rid of us.  We are threat, yes, but only to power mongers and their collectivist hordes. More and more of us grow awake and aware of the program each day. As a result of this awakening, we end up becoming more extreme by mainstream definition in order to protect ourselves and our values. Ultimately, to be an extremist conservative is not a crime against humanity as some would have us believe. To be an extremist conservative in the face of open conflagration against the principles of freedom is to be on the right side of history.

  • An Inside Look at the World's Biggest Paper Gold Market

    Every day, there are a whopping 5,500 tonnes ($212 billion) of gold traded in London, making it the largest wholesale and over-the-counter (OTC) market for gold in the world.

    To put that in perspective, Visual Capitalist's Jeff Desjardins notes that  more gold is traded in London each day than what is stored at Fort Knox (4,176 tonnes). On a higher volume day, amounts closer to total U.S. gold reserves (8,133.5 tonnes) can change hands.

    How is this possible?

    The infographic below tells the story about gold’s foremost trading hub, as well as the paper gold market in London, England:

    Courtesy of: Visual Capitalist

     

    London is dominant in global price discovery for gold.

    In 2015, it accounted for roughly 88% of gold trade – most of which occurs between banks on behalf of their clients. Further, 90% of London trade is spot trading, which further emphasizes London’s importance in price discovery for gold markets.

    While the high-level details of the market are visible, the individual mechanisms behind the London gold trade are less clear. There is very little detailed information provided on physical shipments, outstanding gold deposits or loans, allocated or unallocated gold, or clientele types. Trade reporting also breaks down at a more granular level, and datasets on the GOFO (Gold Forward Offered Rate) were also discontinued in January, 2015.

    Almost all gold (95%) traded in London is unallocated and without legal title. This makes it easier to trade, but it also raises concerns about a market that is opaque to begin with. There are 5,500 tonnes of paper gold exchanging hands on paper each day, but there are only 300 tonnes of gold vaulted in London outside of the reserves for ETFs or the Bank of England.

    What would happen if there was ever even a small rush to get the physical asset behind the paper? Is there a system in place for such an event, and how does it work?

    Original graphic by: BullionStar

  • Quantitative Easing And The Corruption Of Corporate America

    Submitted by Danielle DiMartino Booth via DiMartinoBooth.com,

    The art of brevity was not lost on Abraham Lincoln. It is that brevity in all its glory that shines through in what endures as one of the most beautiful testaments to the art of oration: The Gettysburg Address rounds out at 272 resounding words. The nation’s 16th President humbly predicted that the world would quickly forget his words of that November day in 1863. Rather, he said, history would solely evoke the valiant acts of men such as those whose blood still soaked the consecrated battleground on which they stood. Of course, Lincoln was both right and wrong. Neither the men who sacrificed their lives nor his words would be forgotten. We remember and know that a terrible and ever mounting price would ultimately be paid, some 623,026 American lives, the steepest in man’s bloody history.

    In what can only be described as the pinnacle of prescience, a 28-year old Lincoln foretold of the coming Civil War, which he presaged would come to pass if the scourge of slavery remained unchecked. In an address to the Young Men’s Lyceum of Springfield, Illinois in January 1838, Lincoln spoke these haunting words: “If destruction be our lot, we must ourselves be its author and finisher.” The enemy within.

    Since that devastating brother against brother Civil War, so prophetically foreseen by Lincoln, more than 626,000 American soldiers have lost their lives defending the ideals and freedom of our Union. Today that Union stands, but it must now face the threat of an enemy rising within its borders to wage a different kind of war against our hard fought freedom.

    To be precise, today’s dangers emanate from our nation’s boardrooms, where officers and executives have authorized an era of reckless abandon in the form of share buybacks. In the event the word ‘hyperbolic’ just came to mind, the ramifications of a lost generation of investment in Corporate America should not be lightly dismissed. This trend, above all others, has weakened the foundation of U.S. long term economic growth.

    The real question is whether those who have facilitated the malfeasance will be held accountable. Before the launch of the second iteration of quantitative easing (QE2) that the Fed voted to implement on November 3, 2010, Richard Fisher, to whom yours truly once answered, raised serious concerns. An October 7, 2010 speech before the Economic Club of Minneapolis was the venue.

    The contextual backdrop is key: Just weeks before at Jackson Hole, Ben Bernanke had unleashed the mother of all stock market rallies by hinting that QE2 was indeed coming down the FOMC pipeline. The hawks were understandably hopping mad as the debate on the inside was anything but settled. Fisher indicated as much, albeit with notoriously diplomatic panache:

    “In my darkest moments I have begun to wonder if the monetary accommodation we have already engineered might even be working in the wrong places. Far too many of the large corporations I survey that are committing to fixed investment report that the most effective way to deploy cheap money raised in the current bond markets or in the form of loans from banks, beyond buying in stock or expanding dividends, is to invest it abroad where taxes are lower and governments are more eager to please.”

    Six years on, corporate leverage is hovering near a 12-year high and domestic capital expenditures have plunged. In the interim, reams of commentary have been devoted to share buybacks and with good reason. Companies reducing their share count have, at least in recent years, been where the hottest action is, courtyard-seat level action.

    But now, it looks as if the trend is finally cresting. A fresh report by TrimTabs Investment Research found that companies have announced 35 percent less in buybacks through May 19th compared with the same period last year. And while $261.5 billion is still respectable (for the purpose of placating shareholders), it is nevertheless a steep decline from 2015’s $399.4 billion. Even this tempered number is deceiving – only half the number of firms have announced buybacks vs last year.

    Have U.S. executives and their Boards of Directors finally found religion?

    We can only hope. The devastation wrought by the multi-trillion-dollar buyback frenzy is what many of us learned in Econ 101 as the ‘opportunity cost,’ or the value of what’s been foregone. As yet, the value of lost investment opportunities remains a huge unknown.

    In the event doing right by future generations does not suffice, executives might be motivated to renounce their errant ways because shareholders appear to have stopped rewarding buybacks. According to Marketwatch, an exchange traded fund that affords investors access to the most aggressive companies in the buyback arena is off 0.8 percent for the year and down 9.8 percent over the last 12 months.

    The hope is that Corporate America is at the precipice of an investment binge that sparks economic activity that richly rewards those with patience over those with the burning need for instant gratification. The risk? That central bankers whisper sweet nothings the likes of which no Board or CFO can resist. Mario Draghi may already have done so.

    In announcing its latest iteration of QE, the European Central Bank (ECB) added investment grade corporate bonds to the list of eligible securities that can satisfy its purchase commitment. Critically, U.S. multinationals with European operations are included among qualifying issuers. As Evergreen Gavekal’s David Hay recently pointed out, McDonald’s has jumped right into the pool, issuing five-year Euro-denominated paper at an interest rate of a barely discernible 0.45 percent.

    Hay ventures further that the ECB’s program will have the welcome effect of mitigating the widening of the yield differential, or spread, between Treasurys and similar maturity U.S. corporate bonds the next time markets seize up. The firm’s chief investment officer takes one last step over the intellectual Rubicon with the following hypothesis, “The Fed might want to imitate the ECB but may be restricted from doing so by its charter,” Hay posits, adding that, “We wouldn’t discount the possibility it will try to amend, or get around, any prohibitions, however.”

    Talk about sweet nothings on steroids. But could it really happen in a theoretical launch of (God forbid) QE4?

    For the record, Hay is right. There is no explicit permission in the Federal Reserve Act that authorizes open market corporate bond purchases. Hay is also correct, however, that there could be legal wiggle room. This possibility was corroborated by Cumberland Advisors’ in-house central banking guru Bob Eisenbeis, who noted that the Fed’s emergency powers provision, when invoked, allows for purchases of almost any security, especially those that are not expressly disallowed in the Act’s language.

    As for the prospect that politicians would put their foot down and insist that the Fed stand pat and not cross the line? What are the odds of that happening if the economic backdrop is dire enough for the subject of QE4 and open market corporate bond purchases to be matters of public debate?

    Given markets’ maniacal machinations of late, the degree to which the economic data remain mixed, and the growing vocal consensus among Fed officials that June is a ‘go’ for a rate hike, it’s a safe bet that the details of QE4 will not be a focal point of the upcoming FOMC meeting.

    When the time does come, and it’s sure to come before rates are normalized, Corporate America will hopefully be capable of resisting the temptation to play along. To bolster their resolve: Required reading on all CEO, CFO and Board officer bedside tables should be last November’s missive by Bank of America Merrill Lynch’s Michael Hartnett.

    In it, the firm’s Chief Investment Strategist paraphrases Winston Churchill and how the great statesman would have described the risk of what Hartnett cleverly warns could be, ‘Quantitative Failure,’:

    “Never in the field of monetary policy was so much gained by so few at the expense of so many.”

    May those words be ones Janet Yellen lives by.

    Hartnett then goes on to encapsulate the one statistic that should haunt the current generation of central bankers more than any other: For every one job created in the United States in the last decade, $296,000 has been spent on share buybacks.

    Recall that the fair Chair is a labor market economist above any other field. Surely she will be able to see the damage past QE has wrought and forgo the facilitation of further bad behavior. Should she ignore the potential for further QE-financed share buybacks to exact more untold economic damage, it would be akin to intentionally corrupting Corporate America.

    In the words that have mistakenly been attributed to Abraham Lincoln, arguably with sound reasoning: “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.”

    Since the turn of this century, debt-financed share buybacks have severely tested the character of those charged with growing publically-traded U.S. firms. The time, though, has come for these wayward companies’ banker and enabler, the Fed, to hold the line, no matter how difficult the next inevitable test of their character may prove to be. It’s time for the Fed to defend the entire Union and end a civil war that pits a chosen few against the economic freedom of the many.

  • Hillary Accuses State Department Report Of Having An "Anti-Clinton Bias"

    Today’s long awaited blockbuster report released by the State Department Inspector General, which found that Hillary Clinton broke government rules by using a private email server without approval, and that among many other things Clinton would not have been allowed to use the server in her home had she asked the department officials in charge of information security, made the day of all of Hillary’s critics as it confirmed most of their accusations, while at the same time justified Hillary’s worst fears: apparently epic sloppiness “did make a difference after all” especially since it confirmed she had lied, again.

    The report explicitly contradicted Clinton’s repeated assertion that her server was allowed and that no permission was needed.

    “OIG found no evidence that the Secretary requested or obtained guidance or approval to conduct official business via a personal email account on her private server,” the report said, adding that Clinton should have discussed the arrangement with the department’s security and technology officials. Officials told investigators that they “did not – and would not – approve her exclusive reliance on a personal email account to conduct Department business.” The reason, those officials said, is because it breached department rules and presented “security risks.”

    The palpable lack of coherent response to this sudden revelation confirmed just how jarred by today’s events the presumptive Democratic presidential candidate was.

    As we first reported earlier today, the Clinton camp’s initial reaction was to use a kindergarten excuse: former secretaries of state were also doing it, or in the words of Hillary’s press secretary Brian Fallon, “the Inspector General documents just how consistent her email practices were with those of other Secretaries and senior officials at the State Department who also used personal email.”

    In other words, Hillary was abusing Federal regulations and failed to maintain proper record-keeping practices, but others were doing it, so please look the other say. Which incidentally, was also a lie: Fallon did not address the report’s criticism of Clinton’s use of a private server, something no other secretary of state has done.

    This “explanation” only made the hole Hillary now finds herself in even deeper.

    So what did Hillary do next?

    Just a few hours later, Brian Fallon appeared on CNN’s “The Situation Room” and called into question the timing of the State Department investigation into Clinton’s use of a private email server.  Fallon referred to the “appropriateness” of the investigation, parallel to the Justice Department’s investigation into the same issue, as “an open question” even if both Fallon and Hillary were aware of the two investigations for over a year.

    In other words, another conspiracy theory… the same kind of conspiracy theory that CNN want postal on Donald Trump for just 24 hours earlier when he dared to hint that something was “fishy” about the Vince Foster death. Oddly, there were no comparable accusations this time.

    Where thing got really unhinged, however, is when Fallon tried to defend Clinton’s decision not to meet with the inspector
    general     for the investigation by arguing that Clinton and her staff
    decided to “prioritize the Justice Department review.”

    When repeatedly asked by CNN’s Wolf Blitzer why Clinton didn’t have time to do both, Fallon noted both the handful of inquiries Clinton has responded to. But the punchline was that this too was another vast conspiracy – he stated “reports” from inside the office claiming that the investigation had an “anti-Clinton bias.”

    All Bush’s fault?

    Blitzer responded by asking Fallon, a former Justice Department spokesman, if he was leveling those accusations at State, but he said that he was not… even though quite clearly he did, in effect redoing what Trump did yesterday by mentioning the “Vince Foster story” and saying he would not talk about, when he too clearly did. This too was something that CNN’s Jonathan Tapper took umbrage with just 24 hours earlier.

    None such treatment for Mr. Fallon or Ms. Clinton.

    But what would lend at least some credibility to Hillary’s own de novo conspiracy theory is if the Inspector General was some hardened republican clearly out to get here. Here’s the problem: current Secretary of State Kerry asked Steve Linick, the State Department inspector general, to investigate after Clinton’s email arrangement came to light last year. President Barack Obama appointed Linick to the role in 2013.

    In other words, it was all… Obama’s fault.

    Then again maybe Hillary is right, and it is yet another vast conspiracy, a vast left-wing conspiracy that is. Because if Hillary is indeed right, that would mean that none other than… Obama wants to take her down?

  • Former McDonalds CEO Crushes The Minimum Wage Lie: "It's Cheaper To Buy A Robot Than Hire At $15/Hour"

    While this should come as no surprise to any rational non-establishment-teet-suckling economist (and certainly not to our readers), former McDonalds’ CEO Ed Rensi continued his crusade against the naive “solution” to poor living standards that has been peddled by a clueless administration in the form of a higher federal minimum wage, and after he patiently explained one month ago that “the $15 minimum wage demand, which translates to $30,000 a year for a full-time employee, is built upon a fundamental misunderstanding of a restaurant business just do the math” Rensi found that nobody has still done the math.

    Which is perhaps why the ex-CEO reappeared on Fox Business yesterday to explain to Maria Bartiromo that as fast-food workers across the country vie for $15 per hour wages, many business owners have already begun to take humans out of the picture, McDonalds most certainly included.

    As Rensi admitted, “I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry – it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries – it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”

    “It’s not just going to be in the fast food business. Franchising is the best business model in the United States. It’s dependent on people that have low job skills that have to grow. Well if you can’t get people a reasonable wage, you’re going to get machines to do the work. It’s just common sense. It’s going to happen whether you like it or not. And the more you push this it’s going to happen faster,” the former McDonalds Chief Executive added.

    Rensi also said that we should do away with the federal minimum wage and leave it up to the states, which is quite logical. It’s also why it will never happen.

    “I think we ought to have a multi-faceted wage program in this country. If you’re a high school kid, you ought to have a student wage. If you’re an entry level worker you ought to have a separate wage. The states ought to manage this because they know more [about] what’s going on the ground than anybody in Washington D.C.” Spot on.

    As a reminder, this is how Rensi concluded his tirade against the minimum wage last month: “I suspect that the labor organizers behind this campaign for a $15 minimum wage are less interested in helping employees, and more interested in helping themselves to dues money from their paycheck. They’re unlikely to succeed in their goal of organizing the employees of McDonald’s franchisees, but they may well succeed in passing $15 into law in other sympathetic locales.“

    And that’s the whole truth. You’ll see their legacy every time you visit the Golden Arches, where “would you like fries with that” will soon be an ubiquitous button on a computer screen telling a robotic arm in the kitchen what to prepare, all at a wage of $0.00/hour.

    Watch the latest video at video.foxbusiness.com

  • "Someday We'll Be Microchipping All Of Our Children"

    Submitted by Michael Snyder via The Economic Collapse blog,

    Would you allow microchips to be surgically implanted in your children if that would keep them safer?  This is already being done to pets on a widespread basis, and a shocking local NBC News report is promoting the idea that if it is good for our pets, then we should be doing it to our children as well.  As you will see below, the report even puts a guilt trip on parents by asking them this question: “How far would you go to keep your children secure?” 

    Of course most parents very much want to keep their children safe, and a microchip would enable authorities to track them down if they were lost or stolen.  But is this really a good idea?  And where is all of this technology eventually leading?  If you have not seen this very disturbing local NBC News report yet, you can view it right here…

     

    In the video, the reporter says that our children could be implanted with microchips “the size of a grain of rice” and that there would be “little to no health risks” involved.

    And near the end of the report, she insists that “we could see those microchips in everyone” eventually.

    Wow.

    I am speechless.

    The report also quoted an electronics expert who claimed that testing of these microchips “is being done right now”…

    The piece flips back to pushing the idea when it quotes electronics expert Stuart Lipoff, who asserts that microchipping children is safe and inevitable.

     

    “People should be aware that testing is being done right now. The military is not only testing this out, but already utilizes its properties. It’s not a matter of if it will happen, but when,” states Lipoff.

    Of course if widespread microchipping of the population does start happening, at first it will likely be purely voluntary.  But once enough of the population starts adopting the idea, it will be really easy for the government to make it mandatory.

    Just imagine a world where physical cash was a thing of the past and you could not buy, sell, get a job or open a bank account without your government-issued microchip identification.

    Will you allow yourself and your family to be chipped when that day arrives?

    If not, how will you eat?

    How will you survive?

    What will you do when your children come crying to you for food?

    I am certainly not saying that you should allow yourself to be chipped.  I know that nobody is ever chipping me.  But what I am saying is that people are going to be faced with some absolutely heart-breaking choices.

  • Hillary In Trouble: State Department Says Clinton Did Not Comply With Record Policies: Full Report

    In a surprising reversal, what many thought was impossible, namely the State Department cracking down on its former head and Democratic presidential frontrunner, Hillary Clinton, seems all too possible following news that the State Department Inspector General audit has faulted Hillary Clinton, other secretaries of state for poorly managing electronic communications.

    • CLINTON’S FAILURE TO SURRENDER ALL EMAILS DEALING WITH DEPARTMENT BUSINESS BEFORE LEAVING GOVERNMENT VIOLATED POLICY -INSPECTOR GENERAL

    As WaPo summarizes, the IG found that Clinton’s use of private email for public business was “not an appropriate method” of preserving documents and that her practices failed to comply with department policies meant to ensure that federal record laws are followed.

    The report says Clinton should have printed and saved her emails during her four years in office or surrendered her work-related correspondence immediately upon stepping down in February 2013. Instead, Clinton provided those records in December 2014, nearly two years after leaving office.

    The report found that a top Clinton aide was warned in 2010 that the system may not properly preserve records but dismissed those worries, indicating that the system passed legal muster. But the inspector general said it could not show evidence of a review by legal counsel.

     

    As Politico adds, the State Department inspector general concluded that Hillary Clinton did not comply with the agency’s policies on records, according to a report released to lawmakers on Wednesday that also revealed that Clinton and her top aides chose not to cooperate with the review.

    The agency on Wednesday released the long-awaited report to Capitol Hill, copy of which was obtained by POLITICO, providing just the latest turn in the headache-inducing saga that has dogged Clinton’s campaign.

    While the report concludes that the agency suffers from “longstanding, systemic weaknesses” with records that “go well beyond the tenure of any one Secretary of State,” it specifically dings Clinton for her exclusive use of private email.

    “Therefore, Secretary Clinton should have preserved any Federal records she created and received on her personal account by printing and filing those records with the related files in the Office of the Secretary,” the report states. “At a minimum, Secretary Clinton should have surrendered all emails dealing with Department business before leaving government service and, because she did not do so, she did not comply with the Department’s policies that were implemented in accordance with the Federal Records Act.”

    The report states that its findings are based on interviews with current Secretary of State John Kerry and his predecessors – Madeleine Albright, Colin Powell and Condoleezza Rice, but that Clinton and her deputies declined the IG’s requests for interviews.

    Cheryl Mills, Jake Sullivan, and Huma Abedin are among those who did not cooperate with the investigation.

    The IG report is just one of many fronts that still exist in the email scandal. Clinton also faces an ongoing FBI investigation into the setup of the private server that she used for official State Department business during her four years in the Obama administration, and various Freedom of Information Act lawsuits are working their way through the courts.

    Needless to say, the report will only provide more ammunition for Donald Trump, who has already been seizing on the persistent controversy, which first emerged in March of last year, as he tries to further undermine the trustworthiness of “Crooked Hillary,” as he calls her.

    Clinton and her allies contend she did nothing illegal by choosing to set up a private email server and account at her Chappaqua, New York, home, and that she was not trying to evade public records requests. Instead, Clinton has said she was motivated by the desire for convenience, though she has conceded it was not the best choice.

    One again wonders if there is a quiet press behind the scenes to push for Bernie Sanders, or even Joe Biden at the Democrat convention if enough dirty laundry piles up against Hillary, who it is no secret has had a rocky relationship with many of the current Democrat power elite.

    A quick observation from Glenn Greenwald finds a quick lie within the state department:

     

    Full OIG report below (link)

    The full report is below:

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May 25

Today’s News 25th May 2016

  • The Global Monetary System Has Devalued 47% Over The Last 10 Years

    Authored by Paul Brodsky via Macro-Allocation.com,

    We have argued the inevitability of Fed-administered hyperinflation, prompted by a global slowdown and its negative impact on the ability to service and repay systemic debt. One of the most politically expedient avenues policy makers could take would be to inflate the debt away in real terms through coordinated currency devaluations against gold, the only monetize-able asset on most central bank balance sheets. To do so they would create new base money with which to purchase gold at pre-arranged fixed exchange prices, which would raise the general price levels in their currencies and across the world to levels that diminish the relative burden of debt repayment (while not sacrificing debt covenants).

    The odds of this occurring seem to have risen, judging by the gold prices. Table 1 looks at gold performance over one, five and ten years in terms of the fifteen currencies representing the fifteen largest economies (about 77% of global GDP). The bold figures at the bottom show gold’s performance weighted for GDP.

    Gold is mostly quoted in US dollars, but it is also implicitly valued at each point in time in all currencies (as is everything that may be bought or sold across the world), simply by applying cross exchange rates to its USD price. Table 1 shows the experience of gold holders around the world has been quite different. A Russian would have had the currency he receives his wages in devalued to gold by almost 370% over the last ten years. Or, he could have generated a 370% gain by converting his ruble savings into gold. Anyone else in the world would also show a 370% gain by having owned gold and having been short the ruble.

    Meanwhile, gold in dollar terms, as it is quoted for capital market participants given London and US exchange dominance over fungible gold trading, is up far less – about 94%. (This performance also represents gold performance for currencies pegged to the dollar, like the Saudi Arabian riyal.) Gold in Chinese yuan terms and Swiss franc terms are only about 57% higher over the last ten years.

    The wide gap in gold’s performance is due to sharp differences in ongoing currency exchange rates. Gold is a currency hedge – the stable fulcrum around which fiat currencies fluctuate. Gold is not consumed and has no internal rate of return. Changing market quotes for gold – whether for spot gold, gold futures or gold bullion – merely represent currency exchange rates. The performance of gold in Table 1 is not the performance of gold at all, but rather the performance of the currencies in which it is quoted.

    The last line of Table 1 shows gold price changes adjusted for the relative importance of currencies, as determined by GDP. It implies that the global monetary system has been devalued against gold by 46.88% over the last ten years (1/1.8824), which was in line with the MSCI ACWI World equity index over this time.) One who produced a good or service anywhere in the world over the last ten years would have been wise to save the fruit of his labor in gold terms.

    Central Banks

    If we were a central banker overseeing the fiat global monetary regime we would want to treat gold as a market-based indicator of inflation, not as a potential competitor to the currencies we established and promote. We would build econometric models in which we would define the relationships linking credit growth to demand growth, demand growth to production growth, and production growth to inflation and employment. We would establish economic mandates, like stable prices and full employment, and then we would model conditional scenarios and reaction functions in which to proceed.

    We would be very transparent in our communications policies, sharing assumptions and data from our models and our economic projections based on them. It would appear to all the world that we would be applying thoughtful, best efforts science to the vagaries of irrational human animal spirits – the irrationality of mass consumption and investment or the irrationality of short term decision making over what would be more sustainable. We would blanket our science in pedantic academic rhetoric and debate nuance with others interested in the same discipline.

    We would not question the moral nature of our pursuits because science is amoral. Nor would we question whether our models and actions might be unduly harmful because our position is clearly defined and its roadmap conditional and usually marked with precedent. We would not question our reason for being because we would be the very foundation upon which economies sit. We would not separate economics from finance because, well, because it would not reconcile with everything else we do.

    When asked about gold, we would testify before our congresses and parliaments that we hold it on our balance sheets merely as tradition, and that its relevance in our scientifically managed domestic economies and coordinated, financial-centric global economies is de minimus. Gold would be an afterthought to us, and most serious economists, politicians, policy makers and market observers.

    Those clinging to the relevancy of the barbarous relic would be generally perceived as sour pessimists, economic losers unwilling to change with the times, malcontents clinging to regressive social mores, Chicken Littles seeking to undermine centrist politics and policy in the face of contrary economic indicators, druids unwilling or incapable of using leveraged financial assets to save, provincial patriots unwilling to strive to live in a peaceful and prosperous international community.

    Ironically, it is this last point that holds the key to gold’s relevancy in modern times. The fact that gold remains on the balance sheets of central banks and is being aggressively bought by them suggests it is gaining, not losing, relevancy as a monetary asset. The fact that it can be used as the fulcrum against which to devalue currencies gives it purpose. The fact that allocations to gold and gold-related assets remains less than 3% of investment portfolios makes it a superior risk-adjusted portfolio allocation.

     

    Expectations

    Graph 1, shows the relationship of US real yields and the USD gold price. Real (inflation adjusted) yields and gold have been tightly correlated. Non-income producing gold ebbs and flows inversely with yields available on financial assets. This is understandable, but ask yourself this: what happens now that global sovereign interest rates must go negative to give the impression that credit is becoming easier?

    The sound reasoning behind the tight correlation should break down if/when no amount of central bank stimulus, other than QE, produces inflation, and that inflation is limited to asset inflation. Then, the system would break and global monetary authorities would have to re-work it.

    Our view is that there will not be a switch to a fully-reserved banking system or even a reversion to a fixed exchange rate; however, there will be a significant increase in global currency devaluations against gold, and that it will be coordinated by monetary authorities.

  • Paul Craig Roberts: "Americans Are A Conquered People"

    Authored by Paul Craig Roberts,

    As readers know, I have seen some optimism in voters support for Trump and Sanders as neither are members of the corrupt Republican and Democratic political establishments. Members of both political establishments enrich themselves by betraying the American people and serving only the interest of the One Percent. The American people are being driven into the ground purely for the sake of more mega-billions for a handful of super-rich people.

    Neither political party is capable of doing anything whatsoever about it, and neither will.

    The optimism that I see is that the public’s support of outsiders is an indication that the insouciant public is waking up. But Americans will have to do more than wake up, as they cannot rescue themselves via the voting booth. In my opinion, the American people will remain serfs until they wake up to Revolution.

    Today Americans exist as a conquered people. They have lost the Bill of Rights, the amendments to the Constitution that protect their liberty. Anyone, other than the One Percent and their political and legal servants, can be picked up without charges and detained indefinitely as during the Dark Ages, when government was unaccountable and no one had any rights. Only those with power were safe. In America today anyone not politically protected can be declared “associated with terrorism” and taken out by a Hellfire missile from a drone on the basis of a list of human targets drawn up by the president’s advisers. Due process, guaranteed by the US Constitution, no longer exists in the United States of America. Neither does the constitutional prohibition against the government spying on citizens without just cause and a court warrant. The First Amendment itself, whose importance was emphasized by our Founding Fathers by making it the First Amendment, is no longer protected by the corrupt Supreme Court. The Nine who comprise the Supreme Court, like the rest of the bought-and-paid-for-government, serve only the One Percent. Truth-tellers have become “an enemy of the state.” Whistleblowers are imprisoned despite their legal protection in US law.

    The United States government has unaccountable power. Its power is not accountable to US statutory law, to international law, to the Congress, to the judiciary, to the American people, or to moral conscience. In the 21st century the war criminal US government has murdered, maimed, and dislocated millions of people based on lies and propaganda. Washington has destroyed seven countries in whole or part in order to enrich the American elite and comply with the neoconservative drive for US world hegemony.

    Americans live in a propaganda-fabricated world in which a brutal police state is cloaked in nice words like “freedom and democracy.” “Freedom and democracy” is what Washington’s war machine brings with sanctions, bombs, no-fly zones, troops, and drones to countries that dare to cling to their independence from Washington’s hegemony.

    Only two countries armed with strong military capability and nuclear weapons—Russia and China—stand between Washington and Washington’s goal of hegemony over the entire world.

    If Russia or China falter, the evil ensconced in Washington will rule the world. America will be the Anti-Christ. The predictions of the Christian Evangelicals preaching “end times” will take on new meaning.

    Russia is vulnerable to becoming a vassal state of Washington. Despite a legion of betrayals by Washington, the Russian government has just proposed a joint US/Russia cooperation against terrorists.

    One wonders if the Russian government will ever learn from experience. Has Washington cooperated with the agreement concerning Ukraine? Of course not. Has Washington cooperated in the investigation of MH-17? Of course not. Has Washington ceased its propaganda about a Russian invasion of Crimera and Ukraine? Of course not. Has Washington kept any agreement previous US governments made with Russia? Of course not.

    So why does the Russian government think Washington would keep any agreement about a joint effort against terrorism?

    The Russian government and the Russian people are so unaware of the danger that they face from Washington that they let foreigners control 20 percent of their media! Is Russia unaware that Washington has Russia slated for vassalage or destruction?

    China is even more absurd. According to the Chinese government itself, China has 7,000 foreign-financed NGOs operating in China! Foreign financed NGOs are what Washington used to destabilize Ukraine and overthrow the elected government.

    What does the Chinese government think these NGOs are doing other than destabilizing China?

    Both Russia and China are infected with Western worship that creates a vulnerability that Washington can exploit. Delusions can result in inadequate response to threat.

    All of Europe, both western, eastern and southern, the British Pacific such as Australia and New Zealand, Japan and other parts of Asia are vassal states of Washington’s Empire. None of these allegedly “sovereign” countries have an independent voice or an independent foreign or economic policy. All of Latin America is subject to Washington’s control. No reformist government in Latin America has ever survived Washington’s disapproval of putting the interests of the domestic populations ahead of American corporate and financial profits. Already this year Washington has overthrown the female presidents of Argentina and Brazil. Washington is currently in the process of overthrowing the government in Venezuela, with Ecuador and Bolivia waiting in the wings. In 2009 Killary Clinton and Obama overthrew the government of Honduras, an old Washington habit.

    As Washington pays the UN’s bills, the UN is compliant. No hand is ever raised against Washington. So why does anyone on the face of the earth think that an American election can change anything or mean anything?

    We know that Killary is a liar, a crook, an agent for the One Percent, and a warmonger. Let’s now look at Trump.

    Are there grounds for optimism about Trump? In the West “news reporting” is propaganda, so it is difficult to know. Moreover, we do know that, at least initially, the response of the Republican Establishment to Trump is to demonize him, so we do not know the veracity of the news reports about Trump.

    Without belaboring the issue, two news reports struck me. One is the Washington Post report that the Zionist multi-billionaire US casino owner Sheldon Adelson has endorsed Donald Trump for President.

    Other reports say that Adelson has mentioned as much as $100 million as his political campaign contribution to Trump.

    Anyone who gives a political campaign $100 million dollars expect something in exchange, and the recipient is obligated to provide whatever is desired. So are we witnessing the purchase of Donald Trump? The initial Republican response to Trump, encouraged by the crazed neoconservatives, was to abandon the Republican candidate and to vote for Killary.

    Is Adelson’s endorsement a signal that Trump can be bought and brought into the establishment?

    Additional evidence that Trump has sold out his naive supporters is his latest statement that Wall Street should be deregulated. 

    It is extraordinary that Trump’s advisers have not told him that Wall Street was deregulated back in the 20th century during the Clinton regime. The repeal of Glass-Steagall deregulated Wall Street. One source of the 2008 financial crisis is the deregulated derivative market. When Brooksley Born attempted to fulfill the responsibility of the Commodity Futures Trading Commission and regulate over-the-counter derivatives, she was blocked by the Federal Reserve, the US Treasury, the SEC, and the US Congress.

    Nothing has been done to correct the massive mistake of financial deregulation. The Dodd-Frank legislation did not correct the massive financial concentration that produced banks too big to fail, and the legislation did not stop Wall Street’s reckless casino gambling with the US economy. Yet Trump says he will dismantle even the weak Dodd-Frank restrictions.

    The American print and TV media are so corrupt that these reports could be false stories, the purpose of which is to demoralize Trump’s supporters. On the other hand, should we be surprised if a billionaire aligns with the One Percent?

    Elections are an unlikely means of restoring government that is accountable to the people rather than to the One Percent. Even if Trump is legitimate, he does not have the experience in foreign and economic affairs to know who to appoint to his government in order to implement change. Moreover, even if he knew, unless Trump candidates also replace the Senate, Trump could not get his choices confirmed by a Senate accountable only to the One Percent.

    Americans are a conquered people. We see this in the appeal from RootsAction to the rest of the world to come to the aid of the American people. Unable to stop the lawlessness of their own “democratic” government, Americans plea for help from abroad. 

    The plea from RootsAction indicates that committed activists now acknowledge that change in America cannot be produced by elections or be achieved internally through peaceful means.

  • Currency War Resumes – China Devalues Yuan To 5-Year Lows

    After a brief hiatus from the ongoing currency wars, China fired another salvo at The Fed tonight by devaluing the Yuan fix to 6.5693 – its weakest against the USD since March 2011. After eight days higher in a row for The USD Index, it seems PBOC has turned its currency liberalization plan off, stabilizing the broad Renminbi basket (which has been steadily devalued) and turning its attention to devaluing against the USD. Having unleashed turmoil in August (pre-Sept FOMC) and January (post Dec rate-hike), it appears the rising rate-hike probabilities jawboned by The Fed are decidedly disagreeable to "authoritative persons" in China.

     

    The Yuan Fix was driven down to March 2011 lows…

    Front-running?

    “It could be because the authorities want to alleviate some of the depreciation pressure before the Fed interest rate decision in June," said Christy Tan, head of markets strategy at National Australia Bank Ltd. in Hong Kong. "If there are signs of panic dollar buying, the PBOC will step in."

    As it seems maintaining some 'stability' against the USD has lost its appeal as the USD surges once again…

     

    What the chart above shows is that the Chinese currency (red) has been devaluing in an orderly and quiet manner for much of the year while maintaining the appearance of stability against the USD (blue). That appears to have changed now and the last time turmoil started to ripple through the CNHUSD markets – it didn't stop until Tom Cook lied to Jim Cramer and The PPT rescued the world.

    The irony of the apparent stability in the broad-based Renminbi basket (while devaluing against the USD) is that it comes after a desperate China has reportedly given up on its liberalization goals. As The Wall Street Journal notes,

    Behind closed doors in March, some of China’s most prominent economists and bankers bluntly asked the People’s Bank of China to stop fighting the financial markets and let the value of the nation’s currency fall.

     

    They got nowhere. “The primary task is to maintain stability,” said one central-bank official, according to previously undisclosed minutes of the meeting reviewed by The Wall Street Journal.

     

    The meeting left little doubt China’s top leaders have lost interest in a major policy shift announced in a surprise move just nine months ago. In August 2015, the PBOC said it would make the yuan’s value more market-based, an important step in liberalizing the world’s second-largest economy.

    In reality, though, the yuan’s daily exchange rate is now back under tight government control, according to meeting minutes that detail private deliberations and interviews with Chinese officials and advisers who spoke with The Wall Street Journal about the country’s currency policy.

    On Jan. 4, the central bank behind closed doors ditched the market-based mechanism, according to people close to the PBOC. The central bank hasn’t announced the reversal, but officials have essentially returned to the old way of adjusting the yuan’s daily value higher or lower based on whatever suits Beijing best.

    The flip-flop is a sign of policy makers’ deepening wariness about how much money is fleeing China, a problem driven by its slowing economy. For now, at least, officials believe the benefits of freeing the yuan are outnumbered by the number of threats… though we note that a 3% depreciation of the yuan could add $25.6 billion to Chinese companies’ annual interest payments on dollar debts, according to estimates by analysts at BNP Paribas.

    So the question is – will the Yuan turmoil ripple through markets enough to spook The Fed once more and dissolve what little credibility they have left or will Janet and her henchmen stand up to the foreign forces, hike rates to spit their own face, and deal with the aftermath through some more Citadel-driven VIXtermination? With VIX futures near record shorts and S&P futures at their longest in almost 2 years – there's not much easy leveraged money to squeeze there – like there was in August.

  • Here's The Full List Of Organizations That Paid Hillary Clinton From 2013-2015

    Submitted by Michael Krieger via Liberty Blitzkrieg blog,

    Screen Shot 2016-05-23 at 3.35.50 PM

    In its article titled, How Corporate America Bought Hillary Clinton for $21M, The New York Post details the companies and organizations that paid Hillary in speaking fees from 2013-2015.

    The total comes to $21.7 million, which is a remarkable sum for one of the least charismatic and unimaginative orators the world has ever known.

    The New York Post reports:

    Screen Shot 2016-05-23 at 3.26.08 PM

    Screen Shot 2016-05-23 at 3.19.03 PM
    Screen Shot 2016-05-23 at 3.27.49 PM
    Screen Shot 2016-05-23 at 3.28.30 PM

    Screen Shot 2016-05-23 at 3.29.21 PM

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    So are you ready?

    Screen Shot 2016-05-09 at 8.32.36 AM

  • All You Need To Know About The China Boom-Bust Cycle In One Chart

    If anyone is still confused about the not so subtle dynamics between markets and monetary policy in China, or the country’s bipolar, and ever more frequent boom and bust cycles, you won’t be after seeing this chart from Socgen.

    If still unclear, here is SocGen’s explanation:

    Our economists expect China’s structural deceleration to continue over the coming years and it should thus remain a major source of uncertainty for commodity prices and equity markets alike. The recent recovery in Q1 16 was based on a sharp rebound in the property sector and significant credit injections. 

     

    This stimulus can only be temporary, as it increases debt in the system, keeps zombie companies alive, and defers reforms, at the cost of higher risk for financial stability in the future. Policymakers are aware of the risks coming from an overheating housing market and excessive debt build-up. As long as the recovery in the property keeps going, the economy could perform more or less in line with market expectations.

     

    But, as Chinese authorities will eventually reduce credit easing, we expect the economy to return on its deceleration path in the coming quarters. The economy is thus likely to continue suffering from a series of mini boom-and-bust-cycles that will create repeated periods of volatility.

    We just had a 3 months period of stability. Following the latest Yuan fixing released moments ago, which at 6.5693 was the lowest since March 2011, it sounds like we are about to have some volatility.

  • What It Takes To Be President Of The American Police State

    Submitted by John Whitehead via The Rutherford Institute,

    “The qualifications for president seem to be that one is willing to commit mass murder one minute and hand presidential medals of freedom to other war criminals in the next. One need only apply if one has very loose, flexible, or non-existent morality.”—Author and activist Cindy Sheehan

    Long gone are the days when the path to the White House was open to anyone who met the Constitution’s bare minimum requirements of being a natural born citizen, a resident of the United States for 14 years, and 35 years of age or older.

    Today’s presidential hopefuls must jump through a series of hoops aimed at selecting the candidates best suited to serve the interests of the American police state. Candidates who are anti-war, anti-militarization, anti-Big Money, pro-Constitution, pro-individual freedom and unabashed advocates for the citizenry need not apply.

    The carefully crafted spectacle of the presidential election with its nail-biting primaries, mud-slinging debates, caucuses, super-delegates, popular votes and electoral colleges has become a fool-proof exercise in how to persuade a gullible citizenry into believing that their votes matter.

    Yet no matter how many Americans go to the polls on November 8, “we the people” will not be selecting the nation’s next president.

    While voters might care about where a candidate stands on healthcare, Social Security, abortion and immigration—hot-button issues that are guaranteed to stir up the masses, secure campaign contributions and turn any election into a circus free-for-all—those aren’t the issues that will decide the outcome of this presidential election.

    What decides elections are money and power.

    We’ve been hoodwinked into believing that our votes count, that we live in a democracy, that elections make a difference, that it matters whether we vote Republican or Democrat, and that our elected officials are looking out for our best interests. Truth be told, we live in an oligarchy, and politicians represent only the profit motives of the corporate state, whose leaders know all too well that there is no discernible difference between red and blue politics, because there is only one color that matters in politics—green.

    As much as the Republicans and Democrats like to act as if there’s a huge difference between them and their policies, they are part of the same big, brawling, noisy, semi-incestuous clan. Watch them interact at social events—hugging and kissing and nudging and joking and hobnobbing with each other—and it quickly becomes clear that they are not sworn enemies but partners in crime, united in a common goal, which is to maintain the status quo.

    The powers-that-be will not allow anyone to be elected to the White House who does not answer to them.

    Who are the powers-that-be, you might ask?

    As I point out in my book Battlefield America: The War on the American People, the powers-that-be are the individuals and corporations who profit from America’s endless wars abroad and make their fortunes many times over by turning America’s homeland into a war zone. They are the agents and employees of the military-industrial complex, the security-industrial complex, and the surveillance-industrial complex. They are the fat cats on Wall Street who view the American citizenry as economic units to be bought, sold and traded on a moment’s notice. They are the monied elite from the defense and technology sectors, Hollywood, and Corporate America who believe their money makes them better suited to decide the nation’s future. They are the foreign nationals to whom America is trillions of dollars in debt.

    One thing is for certain: the powers-that-be are not you and me.

    In this way, the presidential race is just an exaggerated farce of political theater intended to dazzle, distract and divide us, all the while the police state marches steadily forward.

    It’s a straight-forward equation: the candidate who wins the White House will be the one who can do the best job of ensuring that the powers-that-be keep raking in the money and acquiring ever greater powers. In other words, for any viable presidential candidate to get elected today that person must be willing to kill, lie, cheat, steal, be bought and sold and made to dance to the tune of his or her corporate overlords.

    The following are just some of the necessary qualifications for anyone hoping to be appointed president of the American police state. Candidates must:

    Help grow the military–industrial complex: Fifty-five years after President Dwight D. Eisenhower warned about the growth of the “military-industrial complex” in his farewell address, the partnership between the government, the military and private corporations has resulted in the permanent militarization of America. From militarized police and the explosive growth of SWAT teams to endless wars abroad, the expansion of private sector contractors, and never-ending blowback from our foreign occupations, we have become a nation permanently at war. As the New York Times pointed out, “the military is the true ‘third rail’ of American politics.” The military-industrial complex understands the value of buying the presidency, and has profited from the incessant warmongering of Obama and his predecessors. If money is any indicator of who the defense industry expects to win this November, thus far, Hillary Clinton is winning the money race, having collected more campaign contributions from employees with the 50 largest military contractors.

     

    Police the rest of the world using U.S. troops: The U.S. military empire’s determination to police the rest of the world has resulted in more than 1.3 million U.S. troops being stationed at roughly 1000 military bases in over 150 countries around the world, including 48,000 in Japan, 37,000 in Germany, 27,000 in South Korea and 9800 in Afghanistan. That doesn’t include the number of private contractors pulling in hefty salaries at taxpayer expense. In Afghanistan, for example, private contractors outnumber U.S. troops three to one. Now comes the news that the U.S. is preparing to send troops to Libya on a long-term mission to fight ISIS.

     

    Sow seeds of discord and foment wars among other nations under the guise of democracy: It’s not enough for the commander-in-chief to lead the United States into endless wars abroad. Any successful presidential candidate also needs to be adept at stirring up strife within other nations under the guise of spreading democracy. The real motive, of course, is creating new markets for the nation’s #1 export: weapons. In this way, the U.S. is constantly arming so-called “allies” with deadly weapons, only to later wage war against these same nations for possessing weapons of mass destruction. It happened in Iraq when the U.S. sold Saddam Hussein weapons to build his war machine. It happened in Syria when the U.S. provided rebel fighters with military equipment and munitions, only to have them seized by ISIS and used against us. Now comes the news that President Obama has agreed to sell weapons to Vietnam, lifting a decades-long embargo against the nation whose civil war claimed the lives of more than 90,000 Americans.

     

    Speak of peace while slaughtering innocent civilians: Barack Obama’s campaign and subsequent presidency illustrates this principle perfectly. The first black American to become president, Obama was awarded the Nobel Peace Prize long before he had done anything to truly deserve it. He has rewarded the Nobel committee’s faith in him by becoming one of the most hawkish war presidents to lead the nation, overseeing a targeted-killing drone campaign that has resulted in thousands of civilian casualties and deaths. Ironically, while Obama has made no significant effort to de-escalate government-inflicted violence or de-weaponize militarized police, he has gone to great lengths to denounce and derail private gun ownership by American citizens.

     

    Prioritize surveillance in the name of security over privacy: Since 9/11, the Surveillance State has undergone a dramatic boom, thanks largely to the passage of the USA Patriot Act and so-called “secret” interpretations of the mammoth law allowing the NSA and other government agencies to spy on Americans’ electronic communications. What began as a government-driven program under George W. Bush has grown under Obama into a mass surveillance private sector that makes its money by spying on American citizens. As Fortune reports, “In response to security concerns after 9/11, Americans witnessed the growth of a massive domestic security apparatus, fueled by federal largesse.” That profit-incentive has opened up a multi-billion dollar video surveillance industry that is blanketing the country with surveillance cameras—both governmental and private—which can be accessed by law enforcement at a moment’s notice.

     

    Promote the interests of Corporate America and Big Money over the rights of the citizenry: Almost every major government program hailed as benefiting Americans—affordable healthcare, the war on terror, airport security, police-worn body cameras—has proven to be a Trojan Horse aimed at enriching Corporate America while leaving Americans poorer, less secure and less free. For instance, the so-called “affordable” health care mandated by Congress has become yet another costly line item in already strained household budgets for millions of Americans.

     

    Expand the powers of the imperial president while repeatedly undermining the rule of law: George W. Bush assumed near-absolute power soon after the September 11, 2001, attacks. Unfettered by Congress or the Constitution, Bush led the “war on terror” abroad and championed both the USA Patriot Act and Homeland Security Department domestically. This, of course, led to the Bush Administration’s demand that presidential wartime powers permit the President to assume complete control over any and all aspects of an international war on terrorism. Such control included establishing military tribunals and eliminating basic rights long recognized under American law.

     

    When Barack Obama ascended to the presidency in 2008, there was a sense, at least among those who voted for him, that the country might change for the better. Those who watched in awe as President Bush chipped away at our civil liberties over the course of his two terms as president thought that perhaps the young, charismatic Senator from Illinois would reverse course and put an end to some of the Bush administration’s worst transgressions—the indefinite detention of suspected terrorists, the torture, the black site prisons, and the never-ending wars that have drained our resources, to name just a few. As we near the end of Obama’s two terms in office, that fantasy has proven to be just that: a fantasy. Indeed, President Obama has not only carried on the Bush legacy, but has taken it to its logical conclusion. Obama has gone beyond Guantanamo Bay, gone beyond spying on Americans’ emails and phone calls, and gone beyond bombing countries without Congressional authorization. As journalist Amy Goodman warned, “the recent excesses of U.S. presidential power are not transient aberrations, but the creation of a frightening new normal, where drone strikes, warrantless surveillance, assassination and indefinite detention are conducted with arrogance and impunity, shielded by secrecy and beyond the reach of law.”

     

    Act as if the work of the presidency is a hardship while enjoying all the perks: The race for the White House is an expensive, grueling horse race: candidates must have at a minimum $200 or $300 million or more just to get to the starting line. The total cost for this year’s election is estimated to exceed $5 billion and could go as high as $10 billion. However, for the winner, life in the White House is an endless series of star-studded dinner parties, lavish vacations and perks the likes of which the average American will never enjoy. The grand prize winner will rake in a $400,000 annual salary (not including $100,000 a year for travel expenses, $19,000 for entertaining, $50,000 for “general” expenses and last but not least, $1,000,000 for “unanticipated” expenses), live rent-free in a deluxe, 6-storey, 55,000 square foot mansion that comes complete with its own movie theater and bowling alley, round-the-clock staff, florists, valets and butlers. Upon leaving the White House, presidents are gifted with hefty pensions, paid staff and office space, travel allowances and lifetime medical care. Ex-presidents can also expand upon their largesse by writing books and giving speeches (Bill Clinton was given a $15 million advance for his memoir and routinely makes upwards of $100,000 per speech).

    Clearly, it doesn’t matter where a candidate claims to stand on an issue as long as he or she is prepared to obey the dictates of the architects, movers and shakers, and shareholders of the police state once in office.

    So here we are once again, preparing to embark upon yet another delusional, reassurance ritual of voting in order to sustain the illusion that we have a democratic republic when, in fact, what we have is a dictatorship without tears. Once again, we are left feeling helpless in the face of a well-funded, heavily armed propaganda machine that is busily spinning political webs with which the candidates can lure voters. And once again we are being urged to vote for the lesser of two evils.

    Railing against a political choice that offers no real choice, gonzo journalist Hunter S. Thompson snarled, “How many more of these stinking, double-downer sideshows will we have to go through before we can get ourselves straight enough to put together some kind of national election that will give me and the at least 20 million people I tend to agree with a chance to vote for something, instead of always being faced with that old familiar choice between the lesser of two evils?”

    Remember, the lesser of two evils is still evil.

  • Eurogroup Agrees To Disburse €7.5BN To Greece Which Will Be Used To Repay Creditors

    Once upon a time, markets trembled when Greek bailout implementation headlines were announced, which is what just happened if slightly ahead of our forecast schedule…

    … and this time nobody cares. Well maybe the Greeks do, but by now even they realize that most of the “money” they receive will be used to repay creditors and especially the ECB, and they will see virtually none of it.

    So, for them, or anyone else who cares, here are the key headlines and details as they come in. Few surprises from what had been leaked previously.

    EUROGROUP MEETING ENDS, DEAL ALLOWS LOAN DISBURSEMENT
    EU DIJSSELBLOEM: REACHED FULL STAFF LEVEL AGREEMENT ON GREECE

    * * *

    DIJSSELBLOEM: ESM TO APPROVE E10.3 BLN IN SEVERAL DISBURSEMENT
    DIJSSELBLOEM: INSTITUTIONS TO HAVE FINAL CHECK ON LEGISLATION
    DIJSSELBLOEM: NEED TO MAKE SURE GREECE STAYS ON FISCAL PATH
    DIJSSELBLOEM: AGREED ON METHODOLOGY OF GREECE DEBT SUSTAINBLTY
    DIJSSELBLOEM: ASKED ESM TO LOOK AT MEASURES IN DEBT REPAYMENTS
    DIJSSELBLOEM: DEBT MID-LONG MEASURES INTO EFFECT JULY 2018
    DIJSSELBLOEM: SMP, ANFA PROFITS ALSO PART OF DEBT DEAL
    DIJSSELBLOEM: UNUSED ESM FUNDING COULD BE USED TO SWAP GR DEBT
    DIJSSELBLOEM: AGREED ON MECHANISM FOR DEBT MEASURES IN L-TERM
    DIJSSELBLOEM: IMPORTANT THAT IMF ON BOARD WITH GREECE
    DIJSSELBLOEM: IMF TO RECOMMEND NEW PROGRAMME FOR GREECE BY YR END
    DIJSSELBLOEM: BUT IMF WILL DECIDE ON NEW DEBT SUSTAINABILITY
    DIJSSELBLOEM: DEBT RELIEF WILL BE DELIVERED AT END PROGRAM

    * * *

    MOSCOVICI: GREECE SHOWED POLITICAL RESPONSIBILITY
    MOSCOVICI: ESSENTIAL THAT IMF REMAINS IN GREECE PROGRAM
    MOSCOVICI: GREECE WILL BE ABLE TO REPAY STATE ARREARS NOW

    * * *

    REGLING: LOAN TRANCHES LINKED WITH GR PROGRAM IMPLEMENTATION
    REGLING: FIRST GREECE LOAN TRANCHE OF E7.5 BLN IN JUNE
    REGLING: SECOND LOAN TRANCHE TO BE GIVEN IN AUTUMN
    REGLING: GREECE NOW TO IMPLEMENT OUTSTANDING PRIOR ACTIONS

    * * *

    According to Bloomberg, the First set of measures includes:

    • Smoothening the EFSF repayment profile under the current weighted average maturity
    • Use EFSF/ESM diversified funding strategy to reduce interest rate risk without incurring any additional costs for former program countries
    • Waiver of the step-up interest rate margin related to the debt buy-back tranche of the 2nd Greek program for the year 2017
    • “Decision on the smoothening of the EFSF repayment profile and the reduction of interest rate risks should be taken as a matter of priority”

    For the medium term, the Eurogroup expects to implement a possible second set of measures following the successful implementation of the ESM program:

    • Abolish the step-up interest rate margin related to the debt buy-back tranche of the 2nd Greek program as of 2018
    • Use of 2014 SMP profits from the ESM segregated account and the restoration of the transfer of ANFA and SMP profits to Greece (as of budget year 2017) to the ESM segregated account as an ESM internal buffer to reduce future gross financing needs.
    • Liability management – early partial repayment of existing official loans to Greece by utilizing unused resources within the ESM program to reduce interest rate costs and to extend maturities
    • If necessary, some targeted EFSF reprofiling (e.g. extension of the weighted average maturities, re- profiling of the EFSF amortization as well as capping and deferral of interest payments) to the extent needed to keep GFN under the agreed benchmark in order to give comfort to the IMF and without incurring any additional costs for former program countries or to the EFSF

    For the long term, the Eurogroup also agrees on a contingency mechanism on debt which would be activated after the ESM program to ensure debt sustainability in the long run in case a more adverse scenario were to materialize

    • Such mechanism could entail measures such as a further EFSF reprofiling and capping and deferral of interest payments

    Eurogroup mandated finance ministry officials from the currency bloc “to verify in the next few days the full implementation of the outstanding prior actions,” for the conclusion of the Greek bailout review, according to e-mailed statement following meeting of euro area finance ministers in Brussels.

    EWG of finance ministry officials have been mandated to verify “in particular the corrections to the legislation on the opening up of the market for the sale of loans, and on the pension reform, as well as the completion of all prior actions related to the government pending actions in the field of privatization”

    Following full implementation of all prior actions and subject to the completion of national procedures, governing bodies of the euro area’s crisis fund ESM will approve EU10.3b disbursement of bailout loans to Greece

    • First sub-tranche of EU7.5b to cover debt servicing needs and to allow a clearance of an initial part of arrears as a means to support the real economy
    • “Subsequent disbursements to be used for arrears clearance and further debt servicing needs will be made after the summer”
    • “Disbursements for arrears clearance will be subject to a positive reporting by the European Institutions on the clearance of net arrears”

    Eurogroup “recalls” Greece’s medium-term primary budget surplus target of 3.5%/GDP as of 2018

    Ministers set benchmark of Greek debt sustainability:

    • Country’s gross debt financing needs, or GFN, “should remain below 15% of GDP during the post program period for the medium term, and below 20% of GDP thereafter”

    * * *

    And again, here is the punchline:

    First sub-tranche of EU7.5b to cover debt servicing needs and to allow a clearance of an initial part of arrears as a means to support the real economy

    In other words, virtually all the €7.5 billion Greece just got as part of its first tranche… will promptly be used to repay its creditors, as has been the case from day one

    * * *

    The short summary: Greece has promised to implement even more Draconian measures (which may or may not happen) in order to get money that was already promised to it, while the Eurogroup disburses just enough cash to cover the immediate funding needs of the creditors with a little left over to pay for government arrears while demanding even more austerity; future tranches may or may not be paid out if Greece complies with its promises (which will not happen) and meanwhile the Eurogroup says it may someday provide debt relief, once Greece ends its bailout program… which will never happen.

  • Political Polarity Shift – "Trigger Happy Hillary" Making Dems The War Party

    Authored by Justin Raimondo via AntiWar.com (h/t Contra Corner blog),

    Americans are rejecting imperialism – on both sides of the political spectrum

    As Bob Dylan put it, “the times they are a changing!” – and that is certainly the case when it comes to the debate over US foreign policy this election season. A recent article in the Boston Globe, summarizing the observations of a group of Brown University students who tracked the foreign policy discourse of the candidates, underscored what is happening on both sides of the partisan divide:

    “As we watched, Republican voters rejected every candidate who favored their party’s traditional hardline foreign policies, including Lindsey Graham, Chris Christie, Jeb Bush, and Marco Rubio…. Trump, the presumptive nominee, has broken with foreign policy dogma on a host of issues. He asserts that decades of foreign wars have not been good for the United States – hardly a traditional Republican view.”

    The Democratic party, too, is experiencing what these youthful observers describe as a “foreign policy identity crisis”:

    “Clinton, the likely nominee, is an activist by nature and supports escalation from Afghanistan to Syria to Ukraine. Her opponent, Senator Bernie Sanders, has condemned her ‘very aggressive policy of intervention’ and said he does not believe the United States should be ‘the world’s policeman.’ Yet though Sanders effectively pushed Clinton further left in terms of domestic policy, he was unsuccessful in changing her deeply held foreign policy views.”

    The two parties are undergoing a process of “role reversal,” as these students put it, right before our eyes. Trump is now attacking “trigger happy Hillary,” while Mrs. Clinton is parrying these thrusts with accusations that “dangerous Donald” lacks the steadiness of an Establishment politician who sticks with the familiar script that casts America in the role of “the indispensable nation” destined to police the world.

    With the fall of the Soviet Union and the evaporation of the international communist movement as a credible threat to US national security,  American conservatives have been steadily moving – in fits and starts – back to their historic position of nonintervention in the affairs of other nations. Neoconservatism was an anomaly, a tangent occasioned by the alleged necessities of the cold war: its life was prolonged by the 9/11 attacks, but as the effect of that signal event wore off, and as the country exhausted itself in a futile (and losing) military campaign to make the Middle East into an Arabic version of Kansas, the rebellion against the neocons gathered strength and finally triumphed. No matter what the fate of Trump’s candidacy, and in spite of his other controversial views, he has succeeded in overthrowing the old GOP foreign policy orthodoxy and replacing it with what he calls a policy of “America First.”

    And while this inward-looking nationalism has its problems and contradictions, the direction the Right seems to be moving is an unmistakable victory for anti-interventionists: the terms of the foreign policy discourse have been shifted in a fundamental way, and – much to the neocons’ chagrin – there is no going back.

    On the left, too, the anti-interventionists are on the offensive. Although they have not succeeded in overthrowing the Establishment – thanks to a rigged primary system, Mrs. Clinton has all but clinched the nomination – Sanders has directly challenged Clintonian interventionism and he is taking his fight all the way to the Democratic party national convention. Sanders’ critique of the bipartisan foreign policy “consensus” springs from the same roots as Trump’s: correctly perceiving an economic and even a spiritual crisis on the home front, Bernie wants America to come home and concentrate on solving our domestic problems – which threaten to overwhelm us even as we go marching off to “liberate” the world.

    This turmoil is cause for optimism – and, indeed, in researching this column, I took at look back at one of my old columns, “The Case for Optimism,” in the course of which I wrote the following:

    “To be sure, the military-industrial complex gets rich off our wars, but the fact is that their rising stock values are making the rest of us poorer – and, increasingly, the American people (and people all over the world, for that matter) are well aware of it. Which brings us to the third major factor limiting the War Party’s future prospects: technological advances that make the acquisition of knowledge much easier.

     

    “It used to be that we had to rely on government officials and their journalistic camarilla for information about America’s far-flung military interventions: back in 1914, for example, very few Americans could place Sarajevo on a map, and even fewer knew of the complex political and social factors that led to the fateful assassination of an Austrian archduke in that city, an event that eventually dragged us into the Great War. It was easy to fool the people into believing a conflict that would destroy European civilization at its zenith was really a war to ‘make the world safe for democracy.’

     

    “Today the job of the war propagandist is much harder, and the reason is the Internet. While most Americans still probably couldn’t place Sarajevo on a map, they could easily choose to do so with a few keystrokes – and therein lies the big problem faced by warmongers these days.”

    The case for optimism has never been stronger. The War Party is beleaguered, besieged, and beside itself with panic because the American people are finally waking up. A lot of this is due to the Internet – and the existence of Antiwar.com has played a part in all this.

    For twenty years we’ve been debunking the lies of the War Party and building up a slow but steady momentum on behalf of a real movement to change American foreign policy. And now the big breakthrough is coming, with a real mass rebellion against the bipartisan “consensus” that insists America’s proper role is to police the world. With our country facing a growing internal crisis, and the foreign wars we’re engaged in turning into disasters on every front, the American people are rising up and demanding an end to the Empire.

    The part Antiwar.com plays in all this is key – because the voters don’t necessarily have the facts on hand. Ordinary folks don’t have the time or the inclination to research what’s really going on in Syria, or what the facts are about who’s paying the lion’s share for NATO. They have jobs, families, lawns to mow and kids to take to soccer practice – they don’t have time to become foreign policy experts!

    So when some bought-and-paid for “expert” is cited in the media as being absolutely certain that some tinpot despot has “weapons of mass destruction,” or that Vladimir Putin is definitely plotting to march on Paris tomorrow, they may be skeptical of the need for Uncle Sam to intervene – but they don’t know enough to contest “expert” opinion. This is how the Beltway crowd pulls the wool over people’s eyes every time. Yet there is an antidote for the poisonous lies being spread by the War Party – and that’s Antiwar.com.

  • CNN Lashes Out At Trump Over Vince Foster "Conspiracy", Rushes To Hillary's Defense

    Following Trump’s bombardment of Bill and Hillary Clinton over the past 24 hours, first with a video clip featuring Bill rape accusers Kathleen Willey and Juanita Broaddrick, and shortly thereafter by digging up the most sensitive skeleton in the Clintons’ closet, that of Vince Foster, whose death Trump said he found “very fishy“, we wondered briefly if and how Hillary would respond.

    We got our answer moments ago when the response came, only not from Hillary, but from one of her favorite TV outlets, CNN whose Jake Tapper valiantly stepped up to the Clintons’ defense.”

    “Once again, journalists are in the unhappy predicament of trying to decide whether and how to cover false allegations raised by a candidate for president of the United States,” Tapper said at the start his show, “The Lead.” He continued: “The notion that this was a murder is a fiction born of delusion and untethered to reality and contradicted by evidence reviewed in at least six investigations, one of them by Ken Starr, hardly a Bill Clinton defender. To say otherwise is ridiculous, and, frankly, shameful.”

    Tapper claims reiterating that his scrutiny of Trump’s comments wasn’t “pro-Clinton” or “anti-Trump” but a “pro-truth position.” Some would beg to differ.

    Tapper continued: “Trump called the circumstances surrounding Foster’s death “very fishy” in an interview with The Washington Post, saying the aide had “intimate knowledge” of events surrounding the Clintons. Trump has recently launched personal attacks at Hillary Clinton, the Democratic presidential front-runner.

    “I don’t bring [Foster] up because I don’t know enough to really discuss it,” Trump told the newspaper. “I will say there are people who continue to bring it up because they think it was absolutely a murder. I don’t do that because I don’t think it’s fair.”

    Tapper’s meltdown at Trump continued for having “lent credence to a bizarre and unfounded conspiracy theory,” saying Trump was “right to say it wasn’t fair to bring up the conspiracies. You’re right, it’s not fair that you did that, certainly not to Mr. Foster’s widow or their three children.”

    His conclusion: “The notion that this was a murder is a fiction borne of delusion and untethered to reality and contradicted by evidence in at least six investigations. To say otherwise is ridiculous and frankly shameful. This is not a pro-Clinton position or an anti-Trump position, it is a pro-truth position.“

    Which, of course, anyone rushing to Hillary’s defense would conclude with.

    * * *

    We doubt Tapper has brought this, or any other issue to a close, in this most remarkable presidential race in history.

    In fact, judging by the speed and severity of his response, the CNN anchor, one of many who still hasn’t grasped how Trump operates, has merely assured that Trump will not only continue to irritate the Tappers of the world by bringing up Foster, but will also push deeper until he penetrates through the thick shield of media defenders surrounding Hillary and forces her to confront demons she was confident has been buried decades ago.

    Full clip below.

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May 24

Today’s News 24th May 2016

  • Ten Riot Police Squads Deployed To Greek Refugee Camp As Evacuation Begins

    Fearing a "forced" evacuation, dozens of migrants have left the refugee camp at Idomeni on the Greek-Macedonian border and are reportedly hiding in the surrounding region. It is perhaps no surprise they are fleeing as KeepTalkingGreece reports, ten riot police squads left Athens this morning and are expected to take position at the camp to aid in what officials call "a friendly evacuation." Other police forces from Northern Greece will be deployed in the area for "as long as it takes" to remove the 8,500 men, women, and children.

    According to Greek media, the evacuation of the camp is scheduled to be launched at 6 a.m. on Tuesday and conclude after a week to ten days. Spokesman of Migration Coordination Body, Giorgos Kyritsis said Monday morning that operation may start “Tuesday or Wednesday.”

    Buses will transfer the refugees to several open accommodation reception centers across the country. There are apparently empty places in refugee centers, however not enough to host all these people. Therefore, more reception places are to be established in the next days.

    The evacuation plan has been prepared by the Ministry of Public Order and Greek police.

    Authorities consider a “friendly evacuation” with the use of “as less violence as possible” as there are many children, babies and other vulnerable people in the camp. However, they do not exclude problems to arise if refugee groups and/or “solidarity organizations” that oppose the camp evacuation and support an open border policy.

    It is not clear, how close Greek and international media will be allowed to cover the operation.

    Greek government had long planned the evacuation of the camp, however reception places were not ready.

    The evacuation will also free the rail track that has been “occupied” by refugees and migrants and allow trains to come through again.

    Plans always seem perfect on the papers. Let’s see how “friendly” the evacuation will be implemented…

  • Who Is Right Between Oil And Other Commodities: One Hedge Fund's Opinion

    From Francesco Filia of Fasanara Capital

    So far in May, base metals and Oil decoupled markedly (chart attached below). While the Oil price kept rising and moved closer to 50$, base metals fell off a cliff and descended below March lows.

    We believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria and all-time record speculative flows, and is more likely to catch down to other commodities going forward rather than the other way round. We look at Oil gyrations as short-term heavy volatility, within a long-term downward trend.

    • Supply disruptions in Canada and Nigeria held back 2mn b/d. Temporarily.
    • Speculation runs at record levels: NYMEX Crude Oil Non-Commercial Long Contracts at all-time highs (chart below)

    On the other hand, weakness in commodities is consistent with fundamentals:

    • Weak aggregate demand (likely to stay shallow in the foreseeable future) vis-a-vis chronic global over-supply,
    • China inability to keep expanding credit at current pace and keep creating an illusion of demand the world over (1trn$ or 10% of GDP per quarter is unsustainable),
    • A stronger US Dollar, and the unease of the FED to talk it down, as current account deficit shrinks and only small hikes are priced in

    As such, at present, we find the price action so far in May to come in confirmation of our underlying thesis, thus expect more weakness in commodities from here, and Oil to eventually give in.

    * * *

    Extract from our latest Outlook
    Investment Outlook 3rd May attached here

    1.    Strong US Dollar Factor:

    The weak Dollar is the major factor propelling the reflation sentiment in the market – EMs and Commodities greeted it with enthusiasm. However, it seems to us more a story of appreciating Yen and Eur out of the failed attempts by the Boj and the ECB to reflate their economies, as markets doubt their capacity at negative rates. It is not the typical weak Dollar out of increasing US current account deficit and increasing spending / imports, positive for the world and inflation. We expect the USD to have another leg up in the months ahead. A stronger Dollar alone has the potential to revive January-type fears over Oil, CNH, EMs, leading to a risk off of global assets, including the S&P. We see drivers of USD strength as follows:

    a.    The FED took the steam off the Dollar by moving its expected path of tightening in 2016 from 4 hikes to 2 hikes only. The FED may become more dovish than that, but the market already discounts that. Of the 2 rate hikes planned, a tiny 20% is priced in at present. Not much headwind for the USD is left from FED’s communication. At the other end of the equation, after recent fails, the BoJ first and then the ECB will go back at it, trying again to reflate their stagnant economies, with the debasement of JPY and EUR either a working tool or a side effect.

    b.    A contracting current account deficit and budget deficit in the US will help strengthen the US Dollar. Recent trade balance numbers showed an unexpected marked improvement. The propensity to take on more debt for households and businesses may well be on a declining path. Savings rate for lower income brackets may rise as uncertainties loom large, the cost of retirement has gone up on zero rates environment, together with growing healthcare and education costs. Corporates desire for leverage, buybacks and M&As, may also deflate somewhat, as short rate rise, leverage ratios are now high (the median credit rating for S&P companies is now BB and declining, for a median net debt/ebitda above 3), regulation changes (inversion trades), pricing power is weak, excess capacity abounds.  The public sector should fill the gap, but that is unlikely to happen in an election year. You can’t increase deficit if you do not take on more debt. If borrowing declines, the deficit declines, the US Dollar rallies.

    c.    Most likely, the relative performance of the US economy will continue to outclass growth in EMs, Europe and Japan. Technology is a huge plus for the US economy, their lead likely to outlast any speed-bump due to elections.

    2.    China factor:

    In the first quarter of 2016, it only managed to keep GDP in shape by means of monumental 1trn$ credit expansion (a whopping 10% of GDP in one quarter); unsustainable pace, and clearly a Pyrrhic victory. Unsurprisingly, you cannot borrow 10% of GDP per quarter for long without a currency adjustment, whether desired or not. And generally, what is the point in selling reserves to defend the peg, thus doing monetary tightening, when you seek so desperately monetary expansion.

    China’s slowdown will continue affecting commodities markets front and center, metals in primis. China has grown to become the world’s largest purchaser of aluminum, iron ore, zinc, nickel and copper, asking every year for more than double the needs o the US, Europe and Japan altogether. Incidentally, moreover, the speculative flows that determined massive volatility in RMB equity markets earlier on and possibly boosted propensity to currency outflows, are now to be seen in the commodity market. Not only then China buys a lot of metals, but speculative flows multiply those flows a few times over. Anecdotally, twice in the last few months, trading volumes in Iron Ore on the Dallan Commodities Exchange exceeded total China’s 2015 imports (950m tonnes), in a single day. Rebar trading volumes exceeded Iron Ore, across 100 million trading accounts. Authorities rushed to curb speculation through higher fees and more margin requirements, but we have seen how effective they were last time around. An epic unwind may loom large (Read).

    Base Metals vs. Brent

    In May, there has been a clear divergence between Oil and other commodities. We believe that Oil is the errant outlier, helped by deep but temporary supply outages in Canada and Nigeria, and is more likely to catch down to other commodities going forward rather than the other way round. We look at Oil gyrations as short-term heavy volatility, within a long-term downward trend.

     

    Speculative flows on Oil at all-time record highs

    NYMEX Crude Oil Light Sweet Non-Commercial Long Contracts/Futures Only at all-time highs

     

    Iron Ore Futures

    Iron Ore has recently broken below March lows, falling by almost 30% this month. More weakness may be expected in the following weeks.

    Rebar Futures

    Similarly to Iron Ore, Rebar lost more than 30% in the last month.

     

    US Crude Oil Production

    US Crude Oil Production is slowing but not falling off a cliff (differently than what most market participants seem to believe).

     

    DOE Crude Oil Total Inventories

    Crude Oil inventories remain close to historical highs (despite 60+ defaults in the US energy sector alone this year).

     

    US Interest Rate Implied Probabilities

    A 32% hike probability is now priced in for the June meeting, from just 4% last week.

    US 2yr Treasuries’ yield

    2yr US yields are currently close to a major resistance.

     

     

  • FBI's Own Report Exposes "War On Cops" As Pure Propaganda

    Submitted by William Grigg via The Free Thought Project,

    Following a year in which the public was relentlessly barraged with alarmist rhetoric about a “war on cops” and the dreadful impact of the so-called “Ferguson Effect,” official FBI statistics confirm that violent line-of-duty police deaths declined precipitously in 2015.

    According to the Bureau:

    “Preliminary statistics … show that 41 law enforcement officers were feloniously killed in the line of duty in 2015. This is a decrease of almost 20 percent when compared with the 51 officers killed in 2014.” A greater number of officers (45) suffered fatal injuries in duty-related accidents, 41 of which involved motor vehicles.

     

    Through May 17 of this year, according to the Officer Down Memorial Page, there have been 35 line-of-duty police officer deaths, 21 of which involve violence, such as gunfire or vehicular assault. This suggests that 2016 might see an increase in that grim total, but fortunately that remains only a possibility.

    Throughout 2015, law enforcement officials, police unions, and even FBI Director James Comey warned of a “war on cops” that was supposedly an outgrowth of what they called the “Ferguson Effect” – police reluctance to use force because of concerns over negative publicity. On May 10, for instance, Comey reiterated that theme, insisting that the “viral video effect” has changed “the way police may be acting” by inhibiting them from taking assertive action to deal with violent crime. This supposedly leaves police more insecure, thereby emancipating criminals to wreak havoc on under-protected communities.

    However, as former Baltimore police officer-turned-police reform advocate Michael Wood Jr. told The Intercept, there are cases in which less aggressive policing has corresponded to a decline in violent crime: Where police don’t treat the public as an enemy to be subdued, the public responds by seeking help, and giving it, in the effort to deter crimes against persons and property.

    “Police now for the first time are having to consider the consequences of being brutal, being unethical, and doing things that for the longest time they could do and not be accountable for,” Wood declares. “But that doesn’t make crime happen.”

    Comey’s melodramatic statements about a “chill wind blowing through law enforcement,” and reliance on things he has been told “in lots of conversations privately with police leaders” demonstrate that “he is pushing an ideology,” Woods continues. “Comey’s position is that if the armed enforcement wing of the government takes its boot off the neck of the public, just a little, then we will just become killers.”

    While fewer police suffered violent deaths last year than in any year since 2013 – when 27 officers were feloniously killed – there is no evidence that the police have been inhibited in the use of deadly force. According to unofficial tabulations, at least 1,200 Americans died in violent encounters with the police last year. Official notice is taken of each of the exceedingly rare instances in which police are violently killed, but there is no official tally of people killed by the police, or accounting for whether each use of lethal force was legally justified.

    It is true, as Comey and other law enforcement officials have said, that last year’s murder rate was about eleven percent higher than the year before, as defined by crime statistics gathered in the country’s 30 largest cities. However, as the Brennan Center for Justice points out in its detailed report on the subject, “Even with the 2015 increases, murder rates are roughly the same as they were in 2012”; furthermore, while murder rates were up in 14 of the 30 largest cities, 11 others saw that rate go down last year.

    When all documented offenses against persons and property were taken into account, elaborates the Brennan Center, the crime rate for 2015 declined by 1.5 percent.

    “It is important to remember just how much crime has fallen in the last 25 years,” underscores the Brennan Center report. “The crime rate is now half what it was in 1990, and almost a quarter (22 percent) less than it was at the turn of the century.”

    Since violent on-duty police deaths are vanishingly rare, and crime of all kinds at near-historic lows, what is the real “Ferguson Effect”?

    Perhaps the true meaning of that expression is found in the emergence of a movement spearheaded by police unions to define law enforcement as a “specially protected category” for the purposes of “hate crimes” prosecution.

    Police officers already enjoy the benefits of “Blue Privilege” – qualified immunity and special consideration in the use of occupational violence. Criminal offenses against police officers are already treated as serious felonies. However, at the urging of police unions and their allies, legislatures in several states are considering bills that would treat violence against police – such as actively resisting arrest – as hate crimes.

    Versions of that legislation, which is supported by the Fraternal Order of Police (FOP) – the country’s largest police union – have been introduced in Maryland and Louisiana, and as ordinances in several cities. The Louisiana bill, HB 953, would make any offense committed against a person or property because of “actual or perceived … employment as a law enforcement officer or firefighter” a felony punishable by up to five years in prison and a $5,000 fine.

    An FOP-supported bill in Maryland that would likely serve as a model for federal legislation would make resisting arrest a “hate crime” owing to the identity of the supposed victim. State legislatures elsewhere are considering similar measures, and some municipal governments are enacting resolutions endorsing the FOP’s demand to swaddle police officers in federal “specially protected” status.

    In a letter to President Obama, Chuck Canterbury, National President of the armed tax-feeders’ union, demanded that “the current Federal hate crimes law be expanded to include law enforcement officers. This call has gone unanswered and our nation’s law enforcement officers continue to die in the streets.”

    Displaying tone-deafness as to what his comments say about the supposed valor of police officers, Canterbury demanded that cops be designated a “specially protected” group who are “hunted and targeted just because of the uniform they wear.” This woeful account of insurgent criminals and besieged cops evolved into a demand that “hate speech” be treated as a federal offense.

    “Elected officials are quick to console the families of the fallen and praise us for the difficult and dangerous work that we do every day,” sniffles the FOP commissar. “Yet, too many are silent when the hate speech floods the media with calls for violence against police or demands that police stand down and give them” – Canterbury never defines “them,” interestingly – “`room to destroy.’ The violence will not end until the rhetoric does which is why I have called on Congress and your Administration to work with us to address the surge of violence against police by expanding the Federal hate crimes law to protect police.” (Emphasis added.)

    The objective here, once again, is to penalize rhetoric as a criminal act against a member of a specially protected class. Apparently, the “War on Cops” won’t be won until citizens who criticize them face criminal prosecution for doing so. 

  • The Fed's Loss Of Credibility Is Real: This Is What It Looks Like

    Asset markets aren't prepared for a hawkish Fed. As Bloomberg's Richard Breslow notes Fed speakers have even taken to the Sunday talk shows to beat the rate-rise drum as economics is morphing into punditry. They’re going to raise rates because they can, are independent, apolitical and can’t be bullied by foreigners. The numbers notwithstanding…

    Hallelujah

     

    Perhaps we’ll know more when Chair Janet Yellen speaks on Friday in the more rarefied surroundings of Radcliffe Yard. For all the talk, one thing is true: asset markets aren’t priced for a FOMC ready to raise rates and looking to do more.

     

     

    The yield curve continues to flatten, reaching its tightest levels since 2007. That’s a sign of low medium-term inflation expectations and concern that the economic cycle is closer to recession than boom.

     

    It also reflects investors continuing to extend duration in search for yield, exactly what the Fed has forced them to do.

    Simply put, as BofAML warns, a lack of credibility constrains Fed effectiveness drastically as they have "cried hawk" one too many times…

    The policy mistake angle assigned to the Fed is visible in more areas than the yield curve.

     

    As we have said repeatedly stated before, the TIPS market continues to believe that the Fed will deliver real rates that are far too high and miss on its long-term inflation target by at least 50bp.

     

    To us, the lack of focus and the inability of the Fed to improve longerterm expectations priced-in to the rates market the line of igniting a bigger concern: getting dangerously close to the market pricing in inverted yield curves, two to three years forward.

     

     

    The policy mistake feedback loop in the rates market will unwind only when the focus shifts to boosting longer-term global growth and inflation expectations as opposed to shifting near-term hike probabilities in an environment where structural risks remain (China, potential growth).

    Therefore, as Breslow concludes, if the Fed plans to preemptively tighten, many investors will be caught massively off side doing the central bank’s bidding. Unless the Fed immediately starts intoning the mantra of “gradualism” in every speech.

    Which raises the question, “why tighten now?” Inflation below target, but too many jobs being created seems an odd rationale after so many lean years.

     

    With equities still hovering near all-time highs despite earnings being suspect, and global trade under attack, it’s hard to argue anything priced in.

     

    What cost are they prepared to pay to give banks better net-interest-margins?

     

    The dollar has been bouncing in the last three weeks from silly levels and amid further global economic weakness. A hawkish Fed could see the rally pick up a head of steam.

     

     

    Dollar strength protesting as game theory: Get it low so it can go up from a lower level.

    If the Fed wants to rack up a success, they should let the economy continue to improve. Raising rates when they aren’t sure risks being a “Mission Accomplished” moment.

  • The CME Admits Futures Trading Was Rigged Under Old System

    Ask any trader what they believe to be the hallmark feature of any “rigged market” and the most frequent response(in addition to flagrant crime of the type supposedly demonstrated every day by Deutsche Bank and which should not exist in a regulated market) will be an institutionally bifurcated and legitimized playing field, one in which those who can afford faster, bigger, more effective data pipes, collocated servers and response times – and thus riskless trades – outperform everyone else who may or may not know that the market is legally rigged against them.

    Think of it as baseball game for those who take steroids vs a ‘roid free game, only here the steroids are perfectly legal for those who can afford them. Or like a casino where the house, or in this case the HFTs, always win.

    However, as it turned out, the vast majority of the public had no idea that a small subset of the market was juicing, despite our constant reports on the topic since 2009, until the arrival of Michael Lewis’ book Flash Boys, which explained the secret sauce that made all those HFT prop shops into unbeatable “trading titans“: frontrunning.

    That’s really all one had to know about the mystical inner working of the modern market. All Reg NMS did was legitimize and legalize frontrunning at a massive scale for those who could afford (and hide) it, all the while the technology race ran in the background making it increasingly more expensive to stay at the top: fiber optics, microwaves, lasers, FPGAs, PCI-Express and so on.

    And, as we have also discovered in recent years especially since the advent of IEX, for many exchanges providing a two-tiered marketplace was the lifeblood of the business model: the bulk of the revenues for “exchanges” such as BATS and Nasdaq would come from selling non-HFT retail and institutional orderflow to HFT clients. Since the HFTs made far more than the invested cost in permitting such perfectly legal frontrunning, they were happy, the exchanges were happy too as they betrayed only those clients who didn’t pay up the “extra fee”, and only the true outsiders lost. And any time they complained how rigged the system was against them, the HFTs would scream that “they provide liquidity” as they are the real modern-day market makers.

    Except that’s not true: the only time HFTs provide liquidity it when it is not needed. When liquidity is truly scarce and required in the market, such as on days like the May 2010 flash crash, or August 2015…  they disappear.

    Meanwhile, nothing changes, because the regulators are just as corrupt as the exchanges and the HFTs, and their role is not to bring transparency to a broken, manipulated market, but to keep retail investors in the dark about just how rigged everything is.

    It appears that the CME was doing just that as well.

    According to Bloomberg, the CME Group – the world’s largest exchange operator – just completed an “upgrade” traders said would eliminate a shortcoming that gave some participants an advantage.

    Under the old system, data connections that linked customers to CME – where key products like Treasury futures and contracts tied to the Standard & Poor’s 500 Index trade – had noticeably different speeds, opening up the potential for gaming, according to traders and other experts. Those who knew how to gain faster access could increase their odds of being first in line to trade.

    The new design supposedly stamps that out.

    Oh, so it was a design glitch that allowed those who “knew” how to frontrun everyone else to do so. That’s the first time we have heard of the particular excuse. Usually the scapegoat is a “glitch”, only in this case the CME didn’t even bother.

    “It’s an excellent step forward,” said Matthew Andresen, co-owner of Headlands Technologies LLC, a quantitative trading firm. “The new architecture is flat and fair, a great improvement,” said Andresen, whose knowledge of market infrastructure goes back to the 1990s, when he worked for electronic trading pioneer Island ECN.

    But, wait… if it is an “excellent step” that some traders can no longer frontrun other traders on the CME, why is it not a “poor step” that virtually every other exchange still enables precisely this kind of tiered marketplace, which is neither flat nor fair?

    Actually, scratch that: that’s precisely what IEX is trying to resolve. The reaction? An exchange which explicitly profits from providing a two-tiered market and charging an arm and a leg for those who can afford it (and thus frontrun everyone else) namely the Nasdaq, has threatened to sue the SEC if it permits IEX to become a full-fledged stock exchange.

    As Bloomberg adds, the situation involving CME’s data connections highlights a fresh set of difficulties ensuring a level playing field in the era of light-speed markets, in which even the smallest bits of a second matter. The race to shave off milliseconds has spurred efforts to carve through mountains, span continents with microwave networks and prompted a backlash championed by the likes of IEX Group Inc., the upstart stock market that delays trading to impose fairness.

    Unlike some of today’s state of the art means of being faster than everyone else, frontrunning orderflow on the CME was more of a “brute force” mechanism: CME customers are allotted data connections to the exchange. Some have more, some have less. Given that their speeds varied noticeably under the old architecture, the more lines a trading firm had, the better odds it could find a faster one. Trading firms with a lot of links had the chance to fish around for the fastest way to get trades done. Other firms that didn’t have as many connections or the computer programming resources to test around and find the quickest, most efficient way in were at the mercy of the connections they had.

    “The performance could vary widely” with data connections under the former CME architecture, Andresen said. By which he meant that those who could afford to pay much more than everyone else, would also be able to frontrun almost everyone else.

    But no more. The new system “is an important innovation that will set a new standard for fair and efficient access to the futures markets,” said Benjamin Blander, managing member of Radix Trading, a Chicago-based trading firm.

    CME declined to comment on claims the old system was unfair, Bloomberg adds. “We are continuously enhancing our infrastructure in order to provide the latest and best technology architecture for our clients,” said Michael Shore, a spokesman for CME.

    CME has been installing the new architecture since February. The last group of futures and options became available on the new system last week, according to CME. Traders aren’t required to switch over to the new system and can keep trading the old way if they want.

    This isn’t the first time CME revamped its systems to stamp out an imperfection. Before an upgrade more than two years ago, traders were notified that their own orders were completed before everyone else found out, potentially giving initiators of transactions time to buy or sell on other exchanges with knowledge of their executions.

    We expect more violations of “accidentally” rigged markets to be uncovered in time, both on the CME and elsewhere, although we wonder at this time does it even matter: besides central banks trading with other central banks (especially courtesy of the CME’s own Central Bank Incentive Program), does anyone else even bother? If judging by the total collapse in trading volumes over the past decade in virtually every product class, the answer is clear.

  • Wheelbarrow Economics

    Submitted by Jeff Thomas via InternationalMan.com,

    In 2014, we published an article entitled “Watch the Movie Before It Is Filmed.” In that article, I described the situation in Venezuela at that time. The effects of fifteen years of collectivism were threatening to collapse the economy. The government was reacting by printing bolivares (Venezuelan currency) on a large scale—a knee-jerk solution that has been utilized by over twenty other countries in the last century—always with the same outcome: hyperinflation, resulting in economic collapse.

    At the time, I recommended to readers that they “watch the movie” as it was being played out in Venezuela, as it would offer them insight into what was on the way in their own country, should they reside in Europe or North America.

    The pattern followed by Venezuela is roughly the same as for the other jurisdictions; Venezuela is just a bit more advanced in the progression. Therefore, what we are observing in Venezuela is likely to be played out in other countries that have made the same mistake of taking on more debt than they can ever pay back.

    As predicted, Venezuela is now well along with regard to hyperinflation.

    The traditional definition of “inflation” is “the increase of the amount of money in circulation.” Today, we think of inflation as an increase in the cost of goods, but this is merely a predictable by-product of inflation. If the amount of money increases, the cost of goods will always rise to meet it. Therefore, the issuance of large amounts of paper money has only a very temporary positive effect. Ultimately, it creates an increase in the price of goods and services, which, in turn, calls for further printing.

    In 1922, Germany was up to its eyes in debt, to the point that it was beyond repayment. The government, in attempting to overcome the dire poverty that had developed, decided to print more paper banknotes. The printing didn’t (and couldn’t) solve the problem, so they printed more. Then more again. They kept up the printing, until, by the autumn of 1922, the reichsmark was worth so little that new bills were being delivered to the banks in boxcars. A story of the time describes a man bringing a wheelbarrow of reichsmarks to a baker to buy a loaf of bread. Whilst in the shop, making the deal with the baker, he was robbed—the wheelbarrow full of money that he had left out on the sidewalk had been stolen. The thief dumped the reichsmarks on the pavement and made off with the wheelbarrow.

    Above, we see a photo from the time—a wheelbarrow full of reichsmarks. Next to it, we see a photo from present-day Venezuela—a wheelbarrow full of bolivares.

    So, are the leaders of Venezuela learning from the mistakes of other countries that have followed this pattern? Far from it. Recently, they took delivery of over five billion banknotes—enough to fill three dozen 747 cargo planes. At the same time, Venezuela is selling off its gold in order to pay for the new currency and other debts. Venezuela will soon run out of real money to pay for the fiat money, and that will bring the charade to a disastrous end.

    The reader may say to himself, “When will people learn?” Sadly, they don’t. Incredibly, when the reichsmark collapsed in 1923, no one blamed the excessive printing. In fact, many people felt that if only the printing had continued just a bit longer, everything might have been all right.

    What we can take away from this is that what happened in Weimar Germany in 1922–1923 is happening now in Venezuela in 2016. (And has happened in some twenty other countries over the last hundred years, most recently in Argentina in 2000 and in Zimbabwe in 2008.)

    The same will occur in Europe and America in the fairly near future. That’s not a “Chicken Little” overreaction; it’s a virtual certainty. The same economic errors always bring the same catastrophic results.

    Ben Bernanke, just two years prior to being named head of the Federal Reserve, assured an audience that the Fed would react to any deflationary trend by printing as many currency notes as necessary. This was no idle threat. Remember, the owners of the Fed profit heavily from the hidden tax of inflation, but lose money if there is deflation. That assures us that, with the present unsustainable level of U.S. national debt (nominally, some nineteen trillion dollars, but actually some hundred trillion dollars, including unfunded liabilities), a collapse in the dollar is a given.

    And, of course, the severity of the crash is always commensurate with the level of the debt, which promises us that, since this debt load is by far the greatest the world has ever seen, the crash will be the greatest the world has ever seen.

    Those who have studied the histories of countries after they’ve experienced a hyperinflationary collapse will be aware of what’s headed their way, if they reside in Europe or North America. Those who have not undertaken such a study might choose instead to watch the movie—to observe what happens in Venezuela as its hyperinflation plays out and learn what their own fate might be.

    Our predicted outcome, which may have seemed hypothetical in 2014, is now right around the corner in Venezuela. This will be of value to the reader who watches as the collapse occurs, then observes what follows. The events that unfold will be essentially the events that will unfold in Europe and North America when their respective collapses occur.

    This “movie” is not meant to be entertainment at the expense of others’ suffering; watching it is a way to forewarn oneself as to what’s coming to those countries that are irrevocably on the same path, but have not yet reached the same point.

    By watching, the reader may be forewarned as to how to prepare himself so that, whilst his country may be headed toward economic collapse, he may take action to assure that the impact to himself, his family and his investments are diminished.

  • We're In The Eye Of A Global Financial Hurricane

    Submitted by Charles Hugh-Smith via OfTwoMinds blog,

    The only "growth" we're experiencing are the financial cancers of systemic risk and financialization's soaring wealth/income inequality.

    The Keynesian gods have failed, and as a result we're in the eye of a global financial hurricane.

    The Keynesian god of growth has failed.

    The Keynesian god of borrowing from the future to fund today's consumption has failed.

    The Keynesian god of monetary stimulus / financialization has failed.

    Every major central bank and state worships these Keynesian idols:

    1. Growth. (Never mind the cost or what kind of growth–all growth is good, even the financial equivalent of aggressive cancer).

    2. Borrowing from the future to fund today's keg party, worthless college diploma, particle board bookcase, stock buy-back, etc. (oops, I mean "investment")–a.k.a. deficit spending which is a polite way of saying this unsavory truth: stealing from our children and grandchildren to fund our lifestyles today.

    3. Monetary stimulus / financialization. If private investment sags (because there are few attractive investments at today's nosebleed valuations and few attractive investments in a global economy burdened with massive over-production and over-capacity), drop interest rates to zero (or below zero) to "stimulate" new borrowing… for whatever: global carry trades, bat guano derivatives, etc.

    Here is my definition of Financialization:

    Financialization is the mass commodification of debt and debt-based financial instruments collaterized by previously low-risk assets, a pyramiding of risk and speculative gains that is only possible in a massive expansion of low-cost credit and leverage.

    That is a mouthful, so let's break it into bite-sized chunks.

    Home mortgages are a good example of how financialization increases financial profits by jacking up risk and distributing it to suckers who don't recognize the potential for staggering losses.

    In the good old days, home mortgages were safe and dull: banks and savings and loans institutions issued the mortgages and kept the loans on their books, earning a stable return for the 30 years of the mortgage's term.

    Then the financialization machine revolutionized the home mortgage business to increase profits. The first step was to generate entire new types of mortgages with higher profit margins than conventional mortgages. These included no-down payment mortgages (liar loans), no-interest-for-the-first-few-years mortgages, adjustable-rate mortgages, home equity lines of credit, and so on.

    This broadening of options (and risks) greatly expanded the pool of people who qualified for a mortgage. In the old days, only those with sterling credit qualified for a home mortgage. In the financialized realm, almost anyone with a pulse could qualify for an exotic mortgage.

    The interest rate, risk and profit margins were all much higher for the originators. What's not to like? Well, the risk of default is a problem. Defaults trigger losses.

    Financialization's solution: package the risk in safe-looking securities and offload the risk onto suckers and marks. Securitizing mortgages enabled loan originators to skim the origination fees and profits up front and then offload the risk of default and loss onto buyers of the mortgage securities.

    Securitization was tailor-made for hiding risk deep inside apparently low-risk pools of mortgages and rigging the tranches to maximize profits for the packagers at the expense of the unwary buyers, who bought high-risk securities under the false premise that they were "safe home mortgages."

    Financialization– which can only expand to dominate an economy if it is supported by a central bank bent on expanding credit–has two inevitable and highly toxic consequences:

    — Risk seeps into every nook and cranny of the financial system, greatly increasing the odds of a systemic domino reaction in financial meltdowns. This is precisely what we saw in the 2008-09 Global Financial Meltdown (GFM): supposedly "contained" subprime mortgages toppled dominoes left and right, bringing the entire risk-saturated system to its knees.

    — Extraordinary wealth and income inequality, as those closest to the central bank money/credit spigots can scoop up income-producing assets first at much lower costs than Mom and Pop Main Street investors.

    The rising anger of the masses left behind by the central bank / financialization wealth harvesting machine is the direct result of Keynesian monetary stimulus that rewards debt-based speculative gambles by those closest to the cheap-credit spigots.

    As I explain in my book Why Our Status Quo Failed and Is Beyond Reform, the only possible output of central bank monetary stimulus is financialization, and the only possible output of financialization is unprecedented wealth and income inequality.

    The global financial system is in the eye of an unprecedented hurricane. While central bankers are congratulating themselves on their god-like mastery of Nature, and secretly praying to the idols of the Keynesian Cargo Cult every night, the inevitable consequence of borrowing from the future, the obsession with "growth" at any cost and financialization /monetary stimulus, a.k.a. the rich get richer thanks to central banks is systemic collapse.

    Don't fall for the mainstream media and politicos' shuck-and-jive that all is well and "growth" will return any day now. The only "growth" we're experiencing are the financial cancers of systemic risk and financialization's soaring wealth/income inequality.

  • Here’s How The U.S. Government Treats Whistleblowers

    Submitted by Michael Krieger of LibertyBlitzkrieg

    Here’s How the U.S. Government Treats Whistleblowers

     

    What is it about whistleblowers that the powers that be can’t stand?

     

    When I blew the whistle on the CIA’s illegal torture program, I was derided in many quarters as a traitor. My detractors in the government attacked me for violating my secrecy agreement, even as they ignored the oath we’d all taken to protect and defend the Constitution.

     

    All of this happened despite the fact that the torture I helped expose is illegal in the United States. Torture also violates a number of international laws and treaties to which our country is signatory — some of which the United States itself was the driving force in drafting.

     

    I was charged with three counts of espionage, all of which were eventually dropped when I took a plea to a lesser count. I had to choose between spending up to 30 months in prison and rolling the dice to risk a 45-year sentence. With five kids, and three of them under the age of 10, I took the plea.

     

    Tom Drake — the NSA whistleblower who went through the agency’s chain of command to report its illegal program to spy on American citizens — was thanked for his honesty and hard work by being charged with 10 felonies, including five counts of espionage. The government eventually dropped the charges, but not before Drake had suffered terrible financial, professional, and personal distress.

    This is an ongoing theme, especially in government

         – From the post: CIA Torture Program Whistleblower Speaks – “The Sad Fate of America’s Whistleblowers”

     

    While we always knew the U.S. government’s line that Snowden had avenues for effective whistleblowing through official channels was a heaping pile of bullshit, it’s always good to prove the point.

    The Guardian reports:

    Edward Snowden has called for a complete overhaul of US whistleblower protections after a new source from deep inside the Pentagon came forward with a startling account of how the system became a “trap” for those seeking to expose wrongdoing.

     

    The account of John Crane, a former senior Pentagon investigator, appears to undermine Barack Obama, Hillary Clinton and other major establishment figures who argue that there were established routes for Snowden other than leaking to the media.

     

    Crane, a longtime assistant inspector general at the Pentagon, has accused his old office of retaliating against a major surveillance whistleblower, Thomas Drake, in an episode that helps explain Snowden’s 2013 National Security Agency disclosures. Not only did Pentagon officials provide Drake’s name to criminal investigators, Crane told the Guardian, they destroyed documents relevant to his defense.

     

    Snowden, responding to Crane’s revelations, said he had tried to raise his concerns with colleagues, supervisors and lawyers and been told by all of them: “You’re playing with fire.”

     

    Thomas Drake’s legal ordeal ruined him financially and ended in 2011 with all serious accusations against him dropped. His case served as a prologue to Snowden’s. Now Crane’s account has led to a new investigation at the US justice department into whistleblower retaliation at the Pentagon that may serve as an epilogue – one Crane hopes will make the Pentagon a safe place for insiders to expose wrongdoing and illegality.

     

    Snowden cited Drake’s case as a reason for his lack of faith in the government’s official whistleblower channels.

     

    “When I was at NSA, everybody knew that for anything more serious than workplace harassment, going through the official process was a career-ender at best. It’s part of the culture,” Snowden told the Guardian.

     

    “If your boss in the mailroom lies on his timesheets, the IG might look into it. But if you’re Thomas Drake, and you find out the president of the United States ordered the warrantless wiretapping of everyone in the country, what’s the IG going to do? They’re going to flush it, and you with it.”

    Thanks for playin’.

    For related articles, see:

    The “Insider Threat Program” and the Government’s War on Whistleblowers
    The 3 Key Takeaways from the Ridiculous “Insider Threat Program”
    CIA Torture Program Whistleblower Speaks on – “The Sad Fate of America’s Whistleblowers”
    Have You Heard of John Kiriakou?
    Revelations from the Torture Report – CIA Lies, Nazi Methods and the $81 Million No-Bid Torture Contract
    CIA Torture Victims Launch Lawsuit Against Psychologist Masterminds Behind the Program

  • "Pre-Crime" Arrives In Chicago – Big Data Tells Cops Who's Next To Be Shot

    In Chicago, where homicides are out of control and estimated to top 550 in 2016 (the most since 2012), police are so desperate to correct the problem that they are throwing good old fashioned police work to the wind, and turning to 'Minority Report'-esque algorithms to do the work for them.

     

    The Chicago PD is using an algorithm in order to generate a list of people from police databases in order to figure out who to "target." Each individual on the list is provided a score based on arrests, shootings, affiliations with gangs, and other variables. The intent of the list is to predict who is next to be shot, or shoot someone, and once the list is updated, authorities then go visit individuals with the highest scores at their home. The individuals are then told that they're on the list, and that they are being monitored the NYT reports.

    In this city’s urgent push to rein in gun and gang violence, the Police Department is keeping a list. Derived from a computer algorithm that assigns scores based on arrests, shootings, affiliations with gang members and other variables, the list aims to predict who is most likely to be shot soon or to shoot someone.

     

    The police have been using the list, in part, to choose individuals for visits, known as “custom notifications.” Over the past three years, police officers, social workers and community leaders have gone to the homes of more than 1,300 people with high numbers on the list. Mr. Johnson, the police superintendent, says that officials this year are stepping up those visits, with at least 1,000 more people.

     

    During these visits — with those on the list and with their families, girlfriends and mothers — the police bluntly warn that the person is on the department’s radar. Social workers who visit offer ways out of gangs, including drug treatment programs, housing and job training.

     

    “We let you know that we know what’s going on,” said Christopher Mallette, the executive director of the Chicago Violence Reduction Strategy, a leader in the effort. “You know why we’re here. We don’t want you to get killed.”

    Authorities assume that by narrowing down the key players that are most likely to be involved in violence will allow them to stop it. Of course, civil liberties being irrelevant in today's world, the program is in use already. Police superintendent Eddie Johnson says that there is a small segment of people driving the violence, and although homicides are on the rise after three years of the program, the "Strategic Subject List" generated by the fourth revision of the algorithm is the answer to stopping them. Supporters of the program point to statistics such as 117 of the 140 people arrested in a drug and gang raid last week being on the list.

    “We know we have a lot of violence in Chicago, but we also know there’s a small segment that’s driving this stuff,” Eddie Johnson, the police superintendent, said in a recent interview.

     

    The authorities hope that knowing who is most likely to be involved in violence can bring them a step closer to curtailing it. They are warning those highest on the list that they are under intense scrutiny, while offering social services to those who want a path away from the bloodshed.

     

    About three years into the program and on a fourth revision of the computer algorithm that generates the list, critics are raising pointed questions about potential breaches to civil liberties in the creation of such a ranking. And the list’s efficacy remains in doubt as killings and shootings have continued to rise this year.

     

    In a city of 2.7 million people, about 1,400 are responsible for much of the violence, Mr. Johnson said, and all of them are on the department’s “Strategic Subject List.”

     

    In a broad drug and gang raid carried out last week amid a disturbing uptick this year in shootings and murders, the Police Department said that 117 of the 140 people arrested were on the list. And in one recent report on homicides and shootings over a two-day stretch, nearly everyone involved was on the list.

     

    “We are targeting the correct individuals,” Mr. Johnson said. “We just need our judicial partners and our state legislators to hold these people accountable.”

    The algorithm was created by Miles Wernick, a professor at the Illinois Institute of Technology. Wernick says that while many variables are used to generate the list, the model avoids race, gender, ethnicity, and geography.

    Miles Wernick, a professor at the Illinois Institute of Technology, created the algorithm.

     

    It draws, the police say, on variables tied to a person’s past behavior, particularly arrests and convictions, to predict who is most likely to become a “party to violence.”

     

    The police cite proprietary technology as the reason they will not make public the 10 variables used to create the list, but say that some examples include questions like: Have you been shot before? Is your “trend line” for crimes increasing or decreasing? Do you have an arrest for weapons?

     

    Dr. Wernick says the model intentionally avoids using variables that could discriminate in some way, like race, gender, ethnicity and geography.

    * * *

    While it makes sense to use technology in order to prevent and solve crimes, the use of a 'Minority Report'-esque algorithm to generate "strategic subject lists" wreaks of infringing on individual's civil liberties. Then again, since when do civil liberties matter anymore. Also, as everything is now just being funneled into one big data warehouse that nobody is allowed to know anything about anyway, at least the Chicago Police Department admits to the targeting.

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May 23

Today’s News 23rd May 2016

  • Despite Depression, Greece Forced To Hike VAT, Add New Taxes

    Submitted by Michael Shedlock via MishTalk.com,

    Greece remains in an economic depression interrupted by a few quarters of anemic growth.

    Hiking taxes in a depression is one of the stupidest thing one can do, but Greece is set for another vote to do just that.

    Prime minister Alexis Tsipras is once again prepared to kiss German Chancellor Angela Merkel’s behind, and his party will likely go along for the ride.

    The wildcard IMF has yet to chime in on the economic stupidity of this hike.

    Please consider Greece Set for Austerity Vote to Secure Bailout Cash.

    Greece’s parliament is expected to vote late Sunday on a raft of fresh taxes and austerity reforms that the country must legislate to unlock further rescue loans, ahead of a crucial eurozone finance ministers meeting on Tuesday.

     

    The bill includes the last portion of an austerity package worth €5.4 billion ($6.06 billion), or 3% of the country’s gross domestic product, which Greece has agreed on with its international creditors to implement by 2018 in exchange for fresh bailout funds under the terms of its third bailout deal.

     

    The IMF has said it would only sign up to the Greek bailout if Germany agrees to debt relief. But German officials are seeking to delay any debt restructuring until the end of the current Greek bailout program in 2018, so that Germany’s parliament, the Bundestag, would pass such measures only after Germany’s 2017 elections.

     

    To meet its targets, Athens was asked to set up a “contingency mechanism” of additional austerity measures worth some 2% of GDP.

     

    The measures being voted on Sunday include new taxes on fuel, tobacco, alcohol, Internet, pay TV, hotel stays, cars, changes in property tax, as well as a rise in the basic value-added tax rate, applied to most goods and services, from 23% to 24%.

     

    The Greek parliament is also expected to vote on the fiscal brake mechanism that would automatically cut state spending if Greece misses its budget targets.

     

    How much the next bailout tranche would be is still to be determined, but European Union officials indicate it could be €10 billion.

     

    Another Humiliating Greece Cave-In

    On May 14, I reported Greece “Demands” Debt Relief, Owes Troika €11+ Billion by July.

    My comment: “Greece has caved in every time, and in the most humiliating ways. Greece even caved in on pension cuts last week. Why should anyone believe Greek demands now?”

    €10 billion would be a lot of money, if the money went to Greece. But virtually none of it will go to Greece.

     

    Greece Short-Term Debt Timeline

    Greece Debt Obligations1

    Somehow I expect the next tranche to be a “greater than expected” €11 billion. Perhaps €10 billion will suffice if Greece has €1 billion of its own to pony up.

     

    Greece Long-Term Debt Timeline

    Greece Debt Obligations2

    Payments to the Troika stretch all the way to 2059, while assuming Greece can maintain a primary account surplus of 3.5% the entire way.

    The IMF says this is impossible, while proposing a surplus of 1.5%, also impossible.

     

    Politics of Debt Relief

    The IMF wants debt relief now, but Germany wants the IMF to hold off until Merkel wins reelection.

    Meanwhile, the Greek depression resumes.

    Greek Tax Hikes

    These tax hikes are insane. The key question remains: Is the IMF bluffing about debt relief or not?

  • "Everything Is Plunging" – China Commodity Carnage Continues

    Hot on the heels of Trumpian-size tariffs imposed by The Obama administration on a desperately glutted and mal-invested steel industry, the entire panic-buying "well the market is always right", "China is recovering" narrative based rally in Chinese commodities has crashed back down to earth with an incredible thud. As one veteran trader in the China commodity markets put it "everything is plunging… except cotton," with Iron Ore, and Rebar down 7% today…

    At least one industry executive "got it" – Baosteel's Zhang: "The price rebound is not beneficial to the overcapacity situation…. It will delay the shutdown of (inefficient) capacity."

    How right he was…

    Dalian Iron Ore has collapsed 30% in a month, down 7% today…

     

    Steel Rebar has crashed 32% in a month, down 5% today… (it seems the brief BTFD support has completely collapsed)…

     

    Hot Rolled Coil -28% in a month, down 6% today…

     

     

    Makes one wonder what the world's only marginal-buyer-of-crude could do 'retaliate' to a nation imposing tariffs like that which is also dependent on a bounce in oil prices to supports its 'wealth-creating' stock market?

  • Guess What Occupation Is Most Frequently Cited In The Panama Papers?

    With all the anti-one-percenter rhetoric and tax-evading-evil-doer narratives spewing forth from the mainstream media mouthpieces of the establishment since The Panama Papers were exposed for all to see, it may come as a surprise to some to find out which cohort of the elites are the most populous among the tax-haven-creating documents…

    The Politicians!

    Source: WikiData

    Which makes us wonder if this leak was indeed a plot to blackmail/expose the West's ruling class?

    Nevertheless, one thing is very clear, as Luis Guillermo Valez explains via PanamPost, officials are hypocritically denouncing the strategies they practice themselves…

    Why can’t tax evasion be a legitimate form of self defense? In some countries and circumstances, it is.

    Despite what politicians want us to believe, tax havens exist because some countries have been turned into tax hellholes by officials bent on “social justice” and “income redistribution.” Sometimes, those same politicians top the list of “offshore” account holders trying to evade taxes.

    “The Wealth of Nations” by Adam Smith had something to say about this kind of government revenue, namely that taxes are a lesser evil overall than other forms of paying for public services.

    But to prevent taxes from harmful excess, Smith left to posterity the four principles of good taxation, which have been almost completely forgotten by politicians concerned with legislating taxation. Here is Smith’s wise warning:

    Excessive taxation is a powerful stimulus to evasion, so penalties to offenders grow proportionally to the temptation that causes it. Contrary to the principles of justice, the law first raises the temptation to infringe it and then punishes the violators.

    And if corruption and overspending is added to excessive taxation, the motives for tax evasion are complete. Once again Smith:

    In all countries where there is a corrupt government, and where there is suspicion that it incurs in great expense and government revenue is improperly used, very often these laws that protect contributions are little respected

    In the 1970s, I met a Canadian man called Bryan O’Connor. He used to deliver pizzas in Toronto and always carried a little notebook in which he religiously wrote down all the tips he received in his work, preventing the risk of missing a penny in his tax return.

    I’ve never met anyone else like Bryan. I think he and Immanuel Kant are probably the only people in human history who voluntarily paid all their taxes. I’m sure Bryan has.

    Nor do I believe that Jesus Christ was completely honest when answering the Pharisees about paying taxes. He said “give back to Caesar what is Caesar’s.” After all, the man had left behind the honorable carpentry work and did not seem to generate any taxable income. That’s probably why he was defeated in the famous vote competing with Barabbas, who– weapons in hand – had rebelled against the ominous tribute of Imperial Rome.

    Since ancient times people have rebelled against taxes. The Roman provinces were often faced uprisings against fiscal depredations and their leaders’ abuses. The peasant wars in Germany, of which Frederick Engels, Marx’s buddy, has left a vivid account were tax rebellions.

    The French Revolution began as the uprising of the Estates General against taxes, demanding a cheap government. Interestingly, the twentieth century, which saw a rapid growth in the size of governments and taxes, was free of riots and tax rebellions. And not because all taxpayers behaved like Bryan O’Connor.

    Panama Papers: What about Modern Governments?

    Though no less rapacious than prior ones, modern governments are more tempered and have given up on the most ominous tax collection practices: murder and torture.

    However, it is not shocking to the majority’s opinion that there are a few who punish tax evasion with imprisonment. This is the case of Mexico, Chile, and Peru, Colombia’s partners in the Pacific Alliance, and whose shameful example the Colombian government proposed to imitate in the last tax reform.

    Everyone, from the Leviathan-worshipping economists, politicians, and political scientists who serve them, to journalists, tax attorneys, and the public opinion sees the evader as a criminal and the government that punishes him as the defender of society, no matter how corrupt and abusive it may be.

    In illo tempore, the evader was seen as a hero who faced a thief state. The inverted values of current times have a background of hypocrisy that nobody can deny.

    In almost all countries, legislatures who enact taxes are composed mostly of professional politicians who, by granting special benefits, want to keep lobbyists and wealthy campaign donors happy.

    Interest groups and political operators are willing to grant each other benefits with the hope that the general coffers will bear the costs.

    Everything is a bargaining of crossed interests leading to casuistical and tangled tax regimes, completely away from the predicaments of solidarity, equity, and efficiency which ultimately are no more than a cover more for private interests.

    The economists, lawyers, tax experts, and other technicians who advise governments in the design of structural tax reforms – which are periodically announced but never arrive – are generally also company advisers and wealthy individuals looking to reduce their effective taxation rate.

    The middle class defends itself by under-invoicing or non-billing and making up liabilities and expenses on their tax returns. The poorest, who usually only are reached by indirect taxation, join the noisy protests of civil servants who live from taxes and always receive the support of politicians competing for their votes.

    That is the common background of what is called the state, from which everyone wants to get a lot and contribute little. But yes, everyone denounces tax evasion.

    Governments around the world – in their relentless fight against the tax evasion problem created by themselves with their fiscal voracity and performance – have unseemly decided to form an international coalition against so-called tax havens, while those same officials seek shelter for their good or ill-gotten fortune.

    This new and sinister Statist International will be a major threat to capital mobility and individual freedom. However, because supposedly the offshore world only affects the rich, everyone applauds in a universal expression of envy and hypocrisy.

    The problem of national and international evasion is not resolved with the creation of a universal tax police. Small, moderate, simple, and austere governments and fiscal systems adjusted to the four rules of Smith are the best antidote against tax evasion.

    But in the current state of public opinion where people accept and demand – as Walter Lippmann would say– a large government that administers their affairs for them instead of a government that administers justice among men who conduct their own affairs, it is at best an anachronism to invoke the wise old Smith.

  • Can Russia Survive Washington's Attack?

    Authored by Paul Craig Roberts,

    It is not only American generals who are irresponsible and declare on the basis of no evidence whatsoever that “Russia is an existential threat to the United States” and also to the Baltic states, Poland, Georgia, Ukraine, and all of Europe. British generals also participate in the warmongering.  UK retired general and former NATO commander Sir Richard Shirreff, Deputy Supreme Allied Commander in Europe until 2014, has just declared that nuclear war with Russia is “entirely possible” within the year.  

    My loyal readers know that I, myself, have been warning for some time about the likelihood of nuclear war.  However, there is a vast difference between me and the Western generals.  I see the war as the consequence of the neoconservative drive for US world hegemony.  The neoconservative drive for world hegemony is acknowledged by the neoconservatives themselves in their public position papers, and it has a 15 year record of being implemented in America’s many and ongoing wars in the Middle East and Africa.  Although the Presstitute media does its best to keep our focus away from the known facts, the facts remain known.

    The position of the Western generals is that “Russian aggression” is driving an innocent America/NATO to nuclear war.  

    Here is General Shirreff’s list of “Russian aggressions”: “He [Putin] has invaded Georgia, he has invaded the Crimea, he has invaded Ukraine. He has used force and got away with it.  In a period of tension, an attack on the Baltic states… is entirely plausible.” Shirreff is talking about make-believe happenings that even if real would be taking place inside what were until recently Russia’s long-standing national boundaries. 

    General Shirreff strikes me as either uninformed or a dissembler. It is the United States and Israel who use force and get away with it. The Russian invasion of the former Russian province, Georgia, was a response to the American puppet government’s invasion of South Ossetia in which the American and israeli trained and equipped Georgian troops killed Russian peace-keeping troops and a large number of South Ossetian civilians while the Russian government was at the Beijing olympics. 

    It only took a small fraction of the Russian Army a few hours to roll up the American and Israeli trained Georgian Army.  Putin had the former Russian province in his hand. He could have hung the American puppet president and reincorporated Georgia back into Russia, where if probably belongs, having spent all of modern history in that location.

    But Putin did not see Georgia as a prize, and having made his point, let the Americans have their puppet state back.  The president at the time, a scummy scoundrel, was thrown out of the country by Georgians and now serves the American puppet state of Ukraine, like so many others who are not Ukrainian. Apparently, Washington can’t find enough Ukrainians who will sell out their country for Washington and has to bring in foreigners to help Washington rule Ukraine.

    There has been, alas, no Russian invasion of Ukraine.  Putin would not even accept the pleas of the Russian majority populations in the breakaway provinces of Donetsk and Luhansk to be reincorporated back into Russia where they belong. If Putin actually wanted Ukraine, he doesn’t need to send in an army.  He can take back the eastern and southern parts just by accepting the pleas of the people to again be a part of Russia.

    The only plea that Putin accepted was that of the Crimeans, who with an extremely high turnout never experienced in “western democracies” voted 97.6 percent to rejoin Russia, where Crimea resided for longer than the US has existed, until Khrushchev, a Ukrainian, transferred Crimea from the Russian Soviet Republic to the Ukrainian Soviet Republic when both were provinces of the Soviet Union. 

    Little doubt that Putin accepted Crimea’s plea because Russia’s only warm water port and entrance into the Mediterranean Sea is Russia’s naval base in Crimea, and little doubt that Putin refused Donetsk and Luhansk in order to deflect Washington’s propagandistic charges, such as those of former general Shirreff. Putin reasoned, mistakenly in my view, that his refusal to accept Donetsk and Luhansk would reassure Washington’s NATO puppet states and lessen Washington’s influence over Europe.  For the corrupt Europeans, facts are of no consequence. Washington’s money prevails.

    Putin doesn’t understand the power of Washington’s money.  In the entire West only money counts.  There is no such thing as Washington’s word, government integrity, truth, or even empirical facts.  There are only well-propagated lies.  The entire West is a lie. The West exists for one reason only–corporate profits. 

    The retired general Shirreff claims, without any evidence, which is typical, that Putin “used force and got away with it.”

    What force is the general talking about?  Can he identify the force?  The independent international observers of the Crimean voting report that it was completely fair, that there was no intimidation, no troops or any Russian intimidation present. 

    The former NATO general Shirreff believes that a Russian attack “on the Baltic states is entirely possible.”  For what reason?  The Baltic states, former provinces of the Soviet Union, comprise no threat whatsoever to Russia.  The Russians have no reason whatsoever to attack the Baltic states. It was Russia that gave the Baltic states their independence.  Just as it was Russia that gave Ukraine and Georgia their independence.

    Imperial Washington is leveraging the reasonableness of the Russian government to put Russia in a propagandistic light. The Russian government has permitted itself to be put on the defensive and has given the attack to Washington.

    Russia has not attacked anyone except the terrorist group ISIS. Allegedly, Washington is opposed to terrorism, but Washington has been using ISIS in an effort to overthrow the Syrian government with terrorism.  Russia has put a halt to that. The question before us is whether the Russian government so desires to be accepted by the West that Putin sells out Syria to Washington/Israeli dismemberment in order to show that Russia is a good partner for the West.

    If Russia doesn’t get over its affection for the West, Russia will lose its independence.

    My understanding is that Russia has been resurrected as a Christian, morally principally country, perhaps the only one on earth.  The question that the Russian people and their Russian government need, desperately, to ask themselves is: Do we want to be associated with the War Criminal West that disobeys not only its own laws, but also international laws?

    The vast majority of the evil in the world resides in the West. It is the west with its lies and greed that has devastated millions of people in 7 countries during the new 21st century.  This is the most threatening beginning of a new millennium in modern times.

    Unsatisfied with its looting of the Third World, South America, Greece, Portugal, Latvia, Argentina, and now Brazil and Ukraine, the Western Capitalists have their sights set on Russia, China, India, and South Africa.

    What a prize it would be to get Russia with all that vast expanse of Siberia that can be environmentally brutalized and destroyed for capitalist profits. The Russian government’s offering of free land in Siberia had better be limited to Russian citizens Otherwise, the land is likely to be bought up by the West, which will use its ownership of Russia to destroy the country.

    The Russians and the Chinese are blinded by the fact that they lived for decades under oppressive and failed regimes.  They look to the West as success. Their misreading of the West endangers their independence.

    Neither Russia nor China seek conflict. It is a gratuitous and reckless act for Washington to send the message to Russia and China that they must choose vassalage or war.

  • Erdogan Nears Absolute Power With Appointment Of Puppet Premier, Stripping MPs Of Immunity

    When the news hit on May 5 that Turkey’s Prime Minister Ahmet Davutoglu would unexpectedly stand down from his post as a result of sharply escalating fighting behind the scenes over president Tayyip Erdogan’s relentless attempt to rule Turkey with virtually no checks and balances, the market was not happy, and the volatility of the Turkish Lira soared the most in the past decade.

     

    Since then the Turkish market has modestly tamed, even if the Erdogan’s push for supreme control has done anything but, and during today’s congress of Turkey’s AKP, Erdogan confirmed an impotent lapdog, Binali Yildirim – a close ally for two decades and a co-founder of the ruling AK Party – as his new prime minister on Sunday, which as Reuters explained was “a big step towards the stronger presidential powers [Erdogan] has long sought.” In plain English, Turkey is unofficially a dictatorship, in which Erdogan is president only in title and in reality a supreme despot as there is no longer anyone who can politically challenge the president.

    Concurrently, Erdogan also accepted the resignation of outgoing Prime Minister Ahmet Davutoglu on Sunday, hours after AKP elected Yildirim as his replacement.

    In a speech to AKP delegates who earlier elected him party leader at a special congress, Yildirim, transport minister for most of the past decade and a half, left no doubt that he would prioritise the policies closest to Erdogan’s heart. His main aim, he said, was to deliver a new constitution and create an executive presidency, a change Erdogan says will bring stability to the NATO member state of 78 million, but which opponents fear will herald greater authoritarianism.

    Yildirim, 60, said constitutional change was a necessity to legitimize the existing situation, tacit acknowledgment that Erdogan has extended the traditionally ceremonial role of the Turkish presidency. “The most important mission we have today is to legalize the de facto situation, to bring to an end this confusion by changing the constitution,” he said. “The new constitution will be on an executive presidential system.”


    Erdogan meets with incoming Prime Minister Binali Yildirim.

    The constitutional change would give Erdogan unlimited power over virtually every aspect of governance.

    As if proof were needed of where power in the party lies, delegates remained standing through a message from Erdogan read out at the start of the congress. Yildirim vowed that, under his leadership, the AKP’s way would be “Erdogan’s way“. Justice Minister Bekir Bozdag said Erdogan was the party’s one leader.

    He has made clear he will pursue two of Erdogan’s biggest priorities – the executive presidency and the fight against militants of the outlawed Kurdistan Workers Party (PKK) in the largely Kurdish southeast. “They are asking us when the anti-terror operations will end. I am announcing hereby that operations will end when all our citizens are safe,” Yildirim said in an emotional speech.

    “Operations will continue without pause until the bloody-handed terrorist organization PKK ends its armed actions.”

    Despite Erdogan’s attempts to silence any journalistic criticism by sending his biggest public detractors to prison, some dares to voice their displeasure with what is happening inside the NATO member and Europe’s close Asian ally:

    “If they can succeed, this will be a transition period for the executive presidency,” journalist Abdulkadir Selvi, who is seen as close to AKP, told Reuters.

    And now that the Turkish premier figurehead is known, investors’ eyes shift to the future of Deputy Prime Minister Mehmet Simsek, who according to Reuters is seen as one of the remaining anchors of market confidence. Erdogan, who favors consumption-led growth, has repeatedly railed against high interest rates in Turkey, saying they cause inflation, a stance at odds with mainstream economics. Without Simsek, investors fear, it will be less likely that the government will deliver on promises to liberalize the labor market, encourage savings and bring in more private investment.

    Installing a puppet PM was not all Erdogan did in this busy week: just to make sure Erdogan can use the law to crack down on any of his political opponents, last Friday Erdogan’s puppet parliament agreed to strip its members of immunity, a move which will be used by Erdogan to prosecute members of the pro-Kurdish HDP, parliament’s third-biggest party, as well as anyone else he choose to take down.

    He accuses the HDP of being the political wing of the Kurdish Workers’ Party (PKK) which has waged a three-decade insurgency against the state. The HDP denies such links and says its parliamentary presence could be all but wiped out if prosecutions go ahead.

    In other words, if any MP says or does something that the president disagrees with, said member of parliament will promptly find themselves under arrest and behind bars: a strong deterrent never to say or do anything that would displease the ascendant tyrant.

    It is this stripping of immunity that Germany’s Chancellor Angela Merkel said she would discuss with Erdogan on Monday when the two meet tomorrow in Istanbul, voicing disquiet at a measure meant to sideline the pro-Kurdish opposition.


    Erdogan meets with Merkel in Ankara, Turkey February 8, 2016

    “Naturally some developments in Turkey are causing us grave concerns,” Merkel told the Frankfurter Allgemeine Zeitung on Sunday, one day before she meets Erdogan on the sidelines of a U.N.-sponsored humanitarian summit in Istanbul.

    However, it’s not as if Merkel has any leverage or strings to pull. Quite the opposite: Merkel is facing accusations at home that she has become too accommodating of Erdogan as she tries to secure a European Union deal with Ankara to stem the flow of refugees from Turkey into Europe, the bulk of whom have gone to Germany.

    Worse, the accusations are 100% accurate, because as of this moment the person who dictates the future of Europe is neither in Greece, nor in Great Britain, but is not even located in Europe in the first place (although that may change soon). This guy.

  • Rapper Threatens To Kill Donald Trump If His "Momma's Food Stamps" Are Taken Away

    Threats by prominent members of the black community against Donald Trump, either directly or indirectly, are nothing new.

    Just under two months ago we reported about the latest social fallout incident from Trump’s rising popularity, when prominent Black Lives Matter activist and rapper Tef Poe tweeted a message for “white people”: if Donald Trump wins the presidency, “niggas” will ‘incite riots everywhere.’

    “Dear white people if Trump wins young niggas such as myself are fully hell bent on inciting riots everywhere we go. Just so you know,” Poe tweeted. A screenshot of his since deleted tweet was captured below by the Daily Media.

     

    To be sure, the antagonism among African-Americans toward Trump is well-known by now, and even CLSA’s noted commentator Chris Wood touched upon this in the latest edition of hs “Greed and Fear” newsletter.

     

    However, a new and perhaps even more bizarre protest, not to mention death threat, against Donald Trump was revealed this weekend when Louisiana rapper Maine Muzik said during a YouTube video recording that he would kill presumptive presidential candidate Donald Trump if his “Mamma’s food stamps are taken away.” To wit:

    I could go to war with whoever the fuck I want to, but I really want to go to war with Donald Trump because Donald Trump trying to take food stamps from my mamma and that’s all the fuck she’s got. As long as the motherfucking government let us keep food stamps… we gonna be good, but the first time this nigga pass a law talking about he taking Louisiana purchase, shit going to get ugly.  I swear to god on every motherfucking chain I got, bitchez gonna go down.

     

    You gotta understand them (inaudible) love Fruit Loops. They love that shit so if you take that shit nigga it’s coming with the madness and a nigga ain’t gonna play about that.  Y’all take Donald Trump and let him know it’s up over here. We gonna declare war.

    In his tirade he even went on to declare his allegiance to the Islamic State.

    And I ain’t worried about ISIS because they just called me, they want me to fuck with them now… Ya, we got them drums bitch and grenades but I’m scared to throw them.

    According to Vidmax, on the same week Muzik record this threat, he was visited by police for posting a video to his Instagram account where he and his gang showed off a stockpile of weapons.

    Threats aside, the implications from this “heartfelt” video for Trump could be substantial: if indeed the republican candidate wants to shift to a more “centrist” position, all he would have to do is promise he won’t “take momma’s foodstamps” and Trump could quickly find himself not only supported by belligerent Louisiana rappers, but also take a decisive chunk out of Hillary Clinton’s primary ethnic voting group.

    In the meantime, we expect more such videos which explain that for millions in potential voters, all it really boils down to is whether or not the foodstamps are taken away.

  • Governments Create Monopolies And Cause Worker-Exploitation, Not Free-Markets

    Authored by Richard M. Ebeling via The Future of Freedom Foundation,

    The world is threatened with a renewed wave of anti-capitalism and anti-business sentiments and policies. Many who cheered the demise of Soviet communism in the early 1990s, presumed that this meant that, by default, the case for free markets and competitive enterprise had won in the battle of ideas. Over the last twenty-five years it has become clear that the same misguided arguments against free market capitalism constantly reemerge, like an ideological vampire waiting to rise from the intellectual grave and drain market freedom of its lifeblood by more government regulations and controls.

    One of the most persistent of these misguided ideas is the belief that left on its own, competitive markets tend to bring about concentration of wealth, inequality of income, and “market power” to exploit workers and consumers of what justly should be theirs.

    The most recent example of this is an article on, “Monopoly’s New Era,” by Joseph E. Stiglitz, the 2001 Nobel Prize winner in economics, which appeared on Project Syndicate website on May 13, 2016. Professor Stiglitz is one of those thinkers who seem to see a “market failure” at every turn and apparently has rarely found a government intervention he did not like.

    Two Ways of Looking at the Market Process

    He contrasts two differing views of the market economy. One view, an outgrowth of Adam Smith and those who followed in his intellectual footsteps over the last 250 years, argue that freedom, prosperity, and income equity are generally assured wherever the market is kept open and competitive, with minimal government impediments.

    The other “school of thought” that he interestingly identifies with no one particular thinker of the past “takes as its starting point ‘power,’ including the ability to exercise monopoly control or, in labor markets, to assert authority over workers,” Stiglitz explains. “Scholars in this area have focused on what gives rise to power, how it is maintained and strengthened, and other features that may prevent markets from being competitive. Work on exploitation arising from asymmetries of information is an important example.”

    Professor Stiglitz insists that this second approach has shown its insight and efficacy in the clear evidence of concentration of market control and income inequality in such sectors of the market such as finance and banking, cable television, health care, pharmaceuticals, agro-business, and a variety of others.

    The truth and reality of this concentration of power and wealth conception of capitalism, Stiglitz argues, is also shown, historically, in labor markets, to the disadvantage of many “minority” groups. “Of course, historically, the oppression of large groups – slaves, women, and minorities of various types – are obvious instances where inequalities are the result of [market] power relationships,” he states.

    His conclusion, therefore, should not be surprising. If competitive capitalism leads to it’s opposite – concentrated, monopoly capitalism – then government regulation and control is essential to preserve a free, prosperous, and “socially just” society. Or in the words with which Professor Stiglitz concludes his article: “But if markets are based on exploitation, the rationale for laissez?faire disappears. Indeed, in that case, the battle against entrenched power is not only a battle for democracy; it is also a battle for efficiency and shared prosperity.”

    Karl Marx’s Theory of Worker Exploitation

    The nineteenth century economist most famous for insisting that capitalism leads to concentration, monopoly and exploitation was, of course, Karl Marx. He is the leading thinker that Stiglitz avoids mentioning by name. Marx claimed to have unearthed “the laws of historical evolution” that by a necessity as irresistible as the physical laws of nature, place human history on a trajectory that transformed society from feudalism to capitalism and would have to culminate in the triumph of socialism and a post-scarcity world of communism.

    Marx was insistent that businessmen are driven in the pursuit of profits to invest in laborsaving industrial machinery. This results in two consequences. First, in this competitive race for profits through industrialization, some private enterprisers would be driven to the wall and pushed out of business, with their companies bought up by those capitalists who had better weathered the market storm. As this process repeated itself, there would be fewer and fewer private enterprisers left standing, with the result of the private ownership of businesses remaining in fewer and fewer hands. Hence, market competition leads to the concentration of ownership and wealth in the hands of a diminishing number of enterprise owners, according to Marx.

    Second, as machines replace workers, there are fewer and fewer jobs for all those needing employment to feed themselves and their families. The non-property owning workers – “the proletariat,” in Marxian jargon – are joined by the businessmen driven out of business due to that concentration of ownership and wealth.

    Workers competing for a decreasing number of jobs bring about a lowering of wages and decreased living standards for the vast majority of the population. Thus, a growing material inequality emerges between most working members of society and the handful of property-owning wealthy capitalists, or as it has become fashionable to describe them nowadays, the “one percent.”

    Finally, in the Marxian version of this theory, the workers rise up and overthrow the remaining handful of exploiting capitalists, and the new dawn of historical progressivism arrives: socialism, with the State owning, managing and centrally planning the resources and enterprises of the society in the name of “the people.”

    Marx’s Errors and the Benefits from Classical Liberal Capitalism

    Both economic theory and the actual events of economic history have shown the errors and absurdities in this and related theories over the last two hundred years. Rather than a bi-polar social world of a handful of “the rich” versus a human mass of “the poor,” industrial and financial capitalism saw the emergence of what has become known as “the middle class,” whose numbers came from the ranks of the poverty-ridden poor of the pre-capitalist era.

    The political philosophy of classical liberalism that gained intellectual ground in the eighteenth and nineteenth centuries called for the end to absolute monarchy and the establishment of representative, but constitutionally limited government. It espoused the cause of ending the governmental privileges and favors bestowed on a narrow group of special interest groups surrounding and serving the king, including legal monopolies that prevented market competition.

    Classical liberalism called for the end to slavery, the emancipation of women, and an equality of individual rights for all in society to life, liberty, and honestly acquired property before an unbiased and impartial rule of law.

    Domestic and international trade barriers were reduced or abolished, opening the field to virtually unrestricted free market competition. A smaller and far less intrusive government brought about a lowered tax burden on all in the society, leaving more of the earned wealth by all in the hands of the private individuals whose efforts and energies had produced it.

    Respect and enforcement of private property rights; competitive markets open to all those with entrepreneurial visions of how to manufacture and sell more, better and less expensive goods and services to consumers as the peaceful and honest means of pursuing the earning of profits; freed labor markets giving all the opportunity to search out gainful employment wherever the most attractive terms of earning a living seemed to offer itself; and a growing financial sector provided the means for making possible the expensive industrial investments that created jobs and expanded the productive capabilities of society.

    Capitalism Created a Prosperous Middle Class from the Poor

    The last point is, perhaps, worth emphasizing. Through most of human history, the vast majority of people who found themselves able to somehow save anything out of their meager earnings were fortunate if they could hide away a few gold or silver coins as a form of accumulated wealth.

    But the development of modern banking now made it possible for even those of meager material means to put aside their modest savings in a financial institution offering an interest return on their deposits. These financial institutions could now pool together large amounts of savings from many modest savers. They funneled these people’s savings out to entrepreneurs who could never have funded their dreams of industrial enterprises out of their own incomes.

    Out of the profits earned by the successful entrepreneurial borrowers came the monetary means to pay back what had been borrowed plus the interest payments agreed to, to start up or to expand their private enterprises. This interest income earned by the banks both paid the interest owed to the depositors and increased the capital of the banks to develop their ability to lend to a growing number of enterprising borrowers.

    The increasing field of created and expanded private enterprises was made possible through the savings of “the workers,” themselves, and who thereby earned interest on their individual savings accounts, and through the plowing back of retained earnings into those enterprises by successful businessmen widened the number of businesses looking for workers to fill the growing number of jobs in the marketplace.

    At the same time, investment in more and better machines, tools and equipment in those industrial enterprises were increasing the productivity of each worker employment, helped to increase the wages worth paying each worker hired in conjunction with the increased demand of more employers competing for workers in their businesses.

    Of course, wages for all types of labor did not all rise at the same time and to the same degree. But looking over the decades of the nineteenth and twentieth centuries, competitive and relatively free markets demonstrated the lie to all the naysayers like Karl Marx who claimed that “the workers” were doomed to poverty, destitution, and despair.  Competitive capitalism did and has been raising increasing portions of mankind from wretched subsistence and starvation to unimaginable ease, comfort and convenience that even the richest and most successfully plundering kings and conquerors of the past could never have conceived.

    Joseph Stiglitz and Asymmetric Information

    Joseph Stiglitz, needless to say, is not a Marxist or a socialist, and it would be unfair to in anyway suggest that he is. His own variation on the injustice of capitalism and its potential for exploitation is partly based on his theory of “asymmetric information” and how it enables private enterprisers to take advantage of consumers and workers in society. Indeed, this theory helped earn him the Nobel Prize in Economics in 2001.

    A core element in his theory is that individuals in the marketplace do not all possess the same type or degree of knowledge. Some people know things that others do not. And this “privileged” information can enable some to “exploit” others. For instance, the producer and marketer is likely to know far more about that product’s qualities, features and characteristics that he is offering on the market than most of the buyers possibly interested in purchasing it.

    By withholding or not fully informing the potential buyer about all of the qualities, features and characteristics of his good, he may succeed in creating a false impression that makes the consumer have a greater demand for it and be willing to pay a higher price for it than would be the case if that consumer knew as much about the good as the seller knows.

    Markets Integrate and Coordinate Decentralized Knowledge

    There is no doubt that in a system of division of labor there is an accompanying division of knowledge, but this is a theme in theories of the market process long ago explained by economists in the “Austrian” tradition, especially Friedrich A. Hayek, who also received a Nobel Prize in Economics in 1974.

    The Austrians have long emphasized that competition is a “discovery procedure” through which individuals find out things never known or imagined before. The peaceful rivalry of the marketplace creates the incentives for entrepreneurs to be unceasingly alert to profit opportunities to see possibilities that either others have missed or not thought of before. The unknown or barely perceived become seen and understood, and then taken advantage of in the form of new, better, and less expensive products offered to the consuming public.

    The purpose of competitive markets and price systems is precisely to provide a way to integrate and coordinate the dispersed and decentralized knowledge in any society possessing a degree of complexity.

    This same competitive market has also found ways to reduce and overcome the asymmetry of consumer versus seller knowledge concerning the qualities, features and characteristics of goods, as well, and thereby to reduce the potential and possibility of “exploiting” what the seller may know at the expense of the market buyers.

    The Meaning of Search Goods and Judging the Quality of Products

    In explaining how markets do this, economists sometimes distinguish between two types of goods offered and sold on the market: search goods and experience goods.

    Search goods are those that can be examined and judged by the potential buyer before a purchase is made. For instance, suppose that a supermarket advertises that perfectly ripened bananas are available and on sale in their store. A consumer can enter the supermarket and fairly reasonably judge whether the quality of the good matches what has been promised in the advertising before buying it.

    If examination shows that the bananas are either non-eatable green or over-ripened brown, the consumer can walk away without spending a penny on a product that has not met what was promised. By falsely or incorrectly advertising, or even unreasonably exaggerating in its advertising, the business runs the risk of not only losing that sale but the loss of its brand name reputation, threatening to see that consumer never return to that establishment again. Plus, that person can tell others what his “search” of the good came up with, potentially leading to those others not trusting that businesses advertising word without inspecting the good themselves.

    This creates a self-interested incentive on the part of such sellers to practice “true in advertising,” or suffer the loss of some their regular customers upon whose repeat business their long-term profitability is dependent.

    The Meaning of Experience Goods and Market Safeguards

    Experience goods are those goods whose qualities, features and characteristics cannot really be fully known and appreciated without using the product in question for a period of time. Think of an automobile; you can go for a test drive, but your own best judgment of its safety, reliability and handling cannot be really known without driving the car in various weather and traffic conditions over a period of time. Or think of a bed mattress; you sit down and bounce on it, or stretch out and lay down on it in the furniture showroom, but you cannot really know if it will give you a comfortable and restful sleep every night until you’ve gone to bed on it for a period of time.

    The same applies to many goods, such as household appliances, for instance. The competitive market’s response to this uncertain and imperfect knowledge on the part of potential buyers has been the seller and manufacture’s system of product warranties that enable the buyer to return the product over a period of time for his or her money back, or a replacement at no extra cost to the buyer.

    It is, again, in the seller’s own self-interest to make sure that the product is what has been promised and is reliable in its working order and performance. Once more, the seller and manufacturer run the risk of losing their brand name reputation concerning quality and trustworthiness. Plus, if a warranty has to be fulfilled it is the manufacturer or seller who is forced to eat the cost of replacing the unit returned due to malfunction or failure to match buyer expectation, thus cutting into his own profit margin.

    Market Uncertainty and Franchise Businesses

    But what about those situations in which concern about repeat business or brand name reputation do not seem to be as present? For instance, suppose you are traveling on business or vacation and are passing through some town you are highly unlikely ever to see again.

    You’re hungry for a meal or a place to stay for the night. How can you know about the quality of the meal in the local “Joe’s Greasy Spoon,” or the bedbug-free mattress in any of the rooms in the local “Bates Motel”?

    The market has provided consumer information about the qualities, features and characteristics of such products and services to overcome this inescapable imperfect knowledge in the form of chain stores and franchises. You may never eat or sleep again in that particular town, but you will likely eat and sleep away from home somewhere at sometime again in the future.

    The sight of the MacDonald’s “Golden Arches” or the sign for an IHOP (International House of Pancakes) anywhere, any place tells you the quality and variety of foods that you can have in any of their establishments, regardless of where its location in the United States or even the world. The same applies to seeing the sign for a Motel 6, or a Holiday Inn Express or an Embassy Suites, or a Hilton-family hotel.

    You may never again go to that particular MacDonald’s or Holiday Inn, but if you travel you may very well eat or spend the night at some other chain franchise of that company. And that is the repeat business and brand name reputation that is important to the “mother company.” Thus, each chain store and franchise is required to meet standards of quality and variety that enables the consumer to have a high degree of confidence and reduced knowledge uncertainty of what he or she is getting when they enter any of these establishments regardless of where it may be located.

    What makes this practice in the market consistently happen and successfully relied upon? Market competition and the self-interested profit motive.

    “Perfect Competition” versus the Competitive Process

    Professor Stiglitz sets up the straw man of what in economics is known as the “perfect competition” model. The presumption is that a market is only and truly “competitive” when it is filled with such a large number of sellers that each one is too small to influence the market price and in which each seller offers a product the quality of which is exactly the same ones sold by his competitors; and in which every buyer already knows all the same perfectly correct information as is known by all the sellers in those same markets.

    Friedrich Hayek demonstrated the essential fallacies in this argument exacting 70 years ago when he delivered a lecture on “The Meaning of Competition” on May 20, 1946 at Princeton University. He explained that the very nature of a truly competitive market is precisely one in which rivals are attempting to improve the qualities of the products they offer to consumers and try to devise ways to make their products at lower costs precisely to be able to afford to offer them at lower prices to buyers to attract business way from their competitors. That is what makes market competition a dynamic, never-ending process of improved and less expensive goods and services available for the members of any society.

    For economists like Joseph Stiglitz, trying to offer goods at prices different than your rivals or with qualities and characteristics differentiated from those sold by your competitors is a sign of “market failure,” of “imperfect” or “monopolistic” market practices. But for economists like Friedrich Hayek, such price and product rivalry and competition is the essential indication of the vibrancy of the competitive process at work.

    Market competition in Hayek’s sense of the concept does not need a large number of rivals to be “truly” competitive. What is required are no political or legal barriers that stand in the way of potential competitors either at home or from abroad. From the economic point-of-view the market encompasses the world, regardless of where those who runs governments may have drawn lines on a political map.

    Stiglitz’s “Market Failures” are Really Forms of Crony Capitalism

    And this gets to the crucial and essential error in Professor Stiglitz’s argument concerning the concentration of “monopoly” power in the marketplace, and any resulting “unjust” inequality of wealth.

    Every one of the examples that he lists as instances of such concentration of “market power” – finance and banking, cable television, health care, pharmaceuticals, agro-business – are all instances in which the competitive, free market has been interfered with by the paternalistic and regulatory hand of the government. It is not the market that has “failed” in these corners of the economy, but rather it is the presence and pervasiveness of the interventionist state.

    But this, too, is typical of market critics such as Professor Stiglitz. They deceptively call “market failures” instances not of competitive free markets but of “crony capitalism” under which special interests have successfully interacted with politicians and bureaucrats to rig the market for their own benefit at the expense of both consumers and potential competitors who are legally prevented or hindered from entering sectors of the economy where they would like to try to gain market share and earn profits by offering better and lower priced goods than their privileged rivals are offering to those consumers.

    Con Men Are Always with Us, Free Markets Constrain Them

    Are there con men, hucksters and cheats? Of course there are. They existed in ancient Athens just as they exist today. There are always people who will try to dishonestly get what others have, when doing it that way seems easier and less costly than through honest production and trade.

    The question is not whether human nature can be transformed to eliminate this aspect of human conduct. The question is, are their market institutions and incentives that can systemically reduce this type of behavior and, instead, generate more honest and properly informed human interactions?

    And the answer is, yes. In fact, most of these positive incentive mechanisms have emerged and evolved out of the competitive market process, itself. These “market solutions” to the “social problem” of asymmetric information were discovered by market participants themselves to be profitable ways of gaining consumer trust and confidence and business, without any government command or imposition. Plus, their discovery and practiced institutional forms could never have been fully anticipated or imagined in their detail before and separate from the competitive market processes that generated them.

    Once again, the “let-alone” principle of peaceful competitive market association has demonstrated itself to be superior to the presumption and arrogance of the governmental social engineer.

    Worker Exploitation has Its Source in Government Intervention

    Furthermore, if workers have been exploited in the past or present, and do not receive the full and proper value for the labor services they may render, this, too, has been the result of politically-sponsored or allowed “power” inside the market. Compulsory labor unions have manipulated and rigged labor markets, giving wage and work privileges and favors to some workers, but at the expense of other workers locked out of employment and income opportunities due to the “closed shop.”

    Government imposed minimum wage laws have priced some low and unskilled workers out of jobs leaving them unemployed and possibly permanent wards of the government’s welfare state programs. Anti-competition regulations and related market restrictions (including burdensome taxes on business) have reduced the private sector’s ability and incentives to create jobs and invest in ways that raise the value of workers’ output over time.

    If workers are “exploited” in the modern world, Professor Stiglitz should look at the very interventionist policies that he proposes and defends. They are the primary cause of the very conditions and injustices that he deplores, including the greater degrees of material inequality than would or need exist, if only the regulating and paternalistic state they he so much desires and admires were to get out of the way of the free market competitive process.

  • China Has Quietly Bailed Out Over $220 Billion In Bad Debt In The Past 2 Months

    Two months ago we were amazed to read that according to the latest “deus ex machina” proposed by the PBOC, China would “sweep away” trillions in bad loans by equitizing them in the form of debt-for-equity exchanges. This is how we tried to explain this unprecedented move on March 10 when Reuters first hinted it was coming:

    This proposal entails nothing short of a nationalization on a grand scale, one which gives China’s impaired commercial banks – all of which are implicitly state controlled – the “equity keys” to the companies to which they have given secured loans, loans which are no longer performing because the underlying assets are clearly impaired, and where the cash flow generated can’t even cover the interest payments.

     

    In effect, the PBOC is proposing the biggest debt-for-equity swap ever seen. What it also means is that since the secured lender, which is at the top of the capital structure will drop all the way down, it wipes out the existing equity and unsecured debt, and make the banks the new equity owners, and as such China’s commercial banks will no longer be entitled to interest payments or security collateral on their now-equity investment. Finally, while this move does free up loss reserves, it essentially strips banks of their security and asset protection which they enjoyed as secured lenders.

     

    So why is China doing this? By equitizing trillions in bad loans, it frees up the corporate balance sheets to layer on fresh trillions in bad debt, the same debt that pushed these zombie companies into insolvency to begin with.

     

    What this grand equitization does not do, is make the underlying business any more profitable or viable: after all the loans are bad because the companies no longer can generate even the required cash interest payment – as a result of China’s unprecedented excess capacity and low commodity prices which prevent corporate viability. It has little to do with their current balance sheet.

     

    That, however, is irrelevant to the PBOC which is hoping that by taking this step it can magically eliminate trilliions in NPL from commercial bank balance sheets in what is not only the biggest equitization in history, but also the biggest diversion since David Copperfield made the statue of liberty disappear, as instead of keeping the bad loans on the asset side as NPLs, thus assuring at least some recoveries, the banks are crammed down and when the next NPL wave hits, their exposure will be fully wiped out as mere equity stakeholders.

    So why are banks agreeing to this? Because they know that as quasi (and not so quasi) state-owned enterprises, China’s commercial banks are wards of the state and when the ultimate impairment wave hits and banks have to write down trillions in “equity investments”, Beijiing will promptly bail them out. Essentially, in one simple move, Beijing is about to “guarantee” trillions in insolvent Chinese debt.

     

    In short, what the PBOC has proposed is the biggest “shadow nationalization” in history, one which will convert trillions in bad loans in insolvent enterprises into trillions in equity investments in the same enterprises, however without any new money actually coming in! Which means it will be up to new credit investors to prop up these failing businesses for a few more quarters before the reorganized equity also has to be wiped out.

    We concluded as follows: “While this is surely “good” news for the very short run, as it allows the worst of the worst in China’s insolvent corporate sector to issue even more debt, in the longer run it means that China’s total debt to GDP, which is already at 350% is about to surpass Japan’s gargantuan 400% within a year if not sooner.”

    It also means much more deflation, because Chinese corporations which were adding to China’s massive excess capacity bubble and which would have otherwise gone out of business, will remains in business as they no longer have to worry about funding interest (after being effectively nationalized by the state), and instead will pump output at historical levels.

    * * *

    To be sure, we did not think much more of this proposed grand nationalization in the past two months, because virtually everyone had spoken up against it: from pundits to analysts, even the media figured out what a naive plan this was.

    And then today we learned that not only was China going through with this epic debt-for-equity swap, but it has already equitized over $220 billion in non-performing loans.

    Note: these are not traditional, Chapter 11 prepacks where the debt is converted into equity and the debt holder gets the keys to the company. In this case, it is the Chinese government itself which indirectly via state-owned banks, has become the de facto owner of countless companies.

    As the FT reports:

    “Beijing has stepped up its battle against bad debt in China’s banking system, with a state-led debt-for-equity scheme surging in value by about $100bn in the past two months alone. The government-led programme, which forces banks to write off bad debt in exchange for equity in ailing companies, soared in value to hit more than $220bn by the end of April, up from about $120bn at the start of March, according to data from Wind Information.”

    As we said two months ago, and as the FT now confirms, this is nothing short of a state-led bailout of virtually every troubled, overindebted industry.

    The latest figures for the debt-to-equity swap, and a debt-to-bonds swap initiated last year, show a subtle bailout is already under way. “One can argue the government-led recapitalisation is already happening in an atypical way and thus reducing the need for recapitalisation in its written sense,” said Liao Qiang, director of financial institutions at S&P Global Ratings in Beijing.

    Sorry Liao, but ever since the Global Financial Crisis, recapitalization in the “written sense” has meant a direct or indirect taxpayer funded bailout of the most insolvent sector. And that is precisely what China is doing.

    To be sure, Beijing’s debt-to-equity strategy should be differentiated from the debt-to-bonds plan unveiled last year: under the latter program, up to Rmb4tn ($612bn) had been approved in 2015 for the debt-to-bonds swap, which has seen state-controlled banks trade short-term loans to companies connected to local governments in exchange for bonds with much longer maturities. The program relieved the pressure on local governments were that were forced to take out bank loans to proceed with public works projects in the absence of municipal bond markets.

    However, the debt-to-equity project has received far less enthusiasm from analysts, who say that coercing banks to become stakeholders in companies that could not pay back loans will further weigh down profits this year. Instead of underpinning stability at banks, Mr Liao says the efforts undermine it.

    The programmes are just two fronts in Beijing’s battle against bad debt.  A third one was revealed recently when China started repackaging its massive NPLs in the form securitizations. As the FT writes, “the government is also reopening the market for securitising bad debt with two deals worth Rmb534m due this month. The efforts have even gone online, with debt managers hawking off bad loans on China’s biggest online retail site.”

    The good news for China is that by swapping one bad asset into another, it may have confused the market long enough to buy a few quarters of time.

    The bad news is that, as we first reported last November citing Fitch calculations, China’s bad debt “neutron bomb” is roughly 20% of total bank loans. Last week, CLSA’s Frarncis Cheung came up with his own calculation of China’s NPL program which he see as anywhere between 15% and 19%. Here is his analysis:

    As analysts are now competing to come up with estimates of the real level of stressed loans in the China banking system and related shadow finance cycles, a good starting point can be found in the IMF’s latest Global Financial Stability Report published in April. This, based on a  sample of 2,871 listed and unlisted nonfinancial Chinese companies, calculates that 15.5% of total commercial bank loans to the corporate sector are “potentially at risk”. This debt-at-risk ratio is defined as having an interest coverage ratio (EBITDA dividend by interest expenses) of below one. Assuming a 60% loss ratio, the IMF puts potential bank losses at 7% of GDP, a level which it still considers as “manageable” while noting that for this to remain the case “prompt action” to address excess capacity and the like needs to occur.


    All this is perfectly reasonable. Still Francis Cheung makes the valid point in his report that the IMF has relaxed its criteria from when a similar exercise was done in 2014. Then the debt-atrisk estimate was done using an interest coverage ratio of less than 2x. Now it is 1x. If the same 2x threshold was employed in 2015 the debt-at-risk estimate would rise to 28% of total corporate loans. Meanwhile, Cheung estimates, using the latest listed A-share company data for 2015, China’s bad-debt ratio or NPL ratio at 15-19% based on companies’ interest coverage and debt sustainability.

    In short, whether China’s NPL are 15%, 19% or even 28% of total debt, these are absolutely gargantuan amounts – recall that China will report roughly $35 trillion in bank assets this quarter.

     

    To believe that any government, even that of China, will be able to cover up what is indeed the “neutron bomb” (as we first dubbed it) under the entire Chinese financial system with some rhetorical sleight of hand, and shifting non-performing assets from one bucket into another without actually addressing the underlying issue, namely collapsing of cash flow, is the height of stupidity and arrogance. Which probably explains why so many sellside banks see this as a viable plan.

  • These Americans Are Preparing For War With Their Own Government

    During the Oregon standoff, where a group of US citizens calling themselves the Citizens for Constitutional Freedom, seized control of a federal wildlife refuge in protest of harsh sentences being given to members of a ranching family for allegedly allowing fires set on their property to spread on to federal land, Ron Paul posed a question: Is the event isolated, or a sign of things to come?

    It is becoming increasingly apparent that the Oregon standoff was the latter.

    As the Washington Post writes, there is a significant movement among US citizens that are demanding that the federal government adhere to the Constitution, and stop what they see as systematic abuse of land rights, gun rights, freedom of speech and other liberties.

    One example of this movement is a group in Oregon that calls itself the Central Oregon Constitutional Guard. The group refers to themselves as patriots, and is made up of people from all walks of life. The organization describes itself as a “defensive unit against all enemies foreign and domestic”, mainly because they believe the government is capable of unprovoked aggression against its own people.

    Deep in the heart of a vast U.S. military training ground, surrounded by spent shotgun shells and juniper trees blasted to shreds, the Central Oregon Constitutional Guard was conducting its weekly firearms training.

     

    “The intent is to be able to work together and defend ourselves if we need to,” said Soper, 40, a building contractor who is an emerging leader in a growing national movement rooted in distrust of the federal government, one that increasingly finds itself in armed conflicts with authorities.

     

    Those in the movement call themselves patriots, demanding that the federal government adhere to the Constitution and stop what they see as systematic abuse of land rights, gun rights, freedom of speech and other liberties.

     

    Law enforcement officials call them dangerous, delusional and sometimes violent, and say that their numbers are growing amid a wave of anger at the government that has been gaining strength since 2008, a surge that coincided with the election of the first black U.S. president and a crippling economic recession.

     

    Soper started his group, which consists of about 30 men, women and children from a handful of families, two years ago as a “defensive unit” against “all enemies foreign and domestic.” Mainly, he’s talking about the federal government, which he thinks is capable of unprovoked aggression against its own people.

     

    The group’s members are drywallers and flooring contractors, nurses and painters and high school students, who stockpile supplies, practice survival skills and “basic infantry” tactics, learn how to treat combat injuries, study the Constitution and train with their concealed handguns and combat-style rifles.

     

    “It doesn’t say in our Constitution that you can’t stand up and defend yourself,” Soper said. “We’ve let the government step over the line and rule us, and that was never the intent of this country.”

    Law enforcement officials and watchdog groups are branding such organizations as anti-government extremists of course, and even trying to marginalize the groups by giving them nicknames such as “Y’all Qaeda” and “Vanilla Isis”, and the groups have even earned the designation of “domestic terrorists.” Despite the attempts to downplay the groups, the number of like minded organizations has grown from 150 in 2008 to about 1,000 now, and estimates peg the number of supporters in the hundreds of thousands. The movement had been emboldened by the 2014 standoff at Cliven Bundy’s ranch in Nevada, where federal agents faced off with hundreds of armed supporters of Bundy in a dispute over the rancher’s refusal to pay fees to graze his cattle on federal land – the agents eventually stood down.

    Law enforcement officials and the watchdog groups that track the self-styled “patriot” groups call them anti-government extremists, militias, armed militants or even domestic terrorists. Some opponents of the largely white and rural groups have made fun by calling them “Y’all Qaeda” or “Vanilla ISIS.”

     

    Mark Potok of the Southern Poverty Law Center, which monitors extremism, said there were about 150 such groups in 2008 and about 1,000 now. Potok and other analysts, including law enforcement officials who track the groups, said their supporters number in the hundreds of thousands, counting people who signal their support in more passive ways, such as following the groups on social media. The Facebook page of the Oath Keepers, a group of former members of police forces and the military, for example, has more than 525,000 “likes.”

     

    President Obama’s progressive policies and the tough economic times have inflamed anti-government anger, the same vein of rage into which Donald Trump has tapped during his Republican presidential campaign, said Potok and Mark Pitcavage, who works with the Anti-Defamation League and has monitored extremism for 20 years.

     

    Much of the movement traces its roots to the deadly 1990s confrontations between civilians and federal agents at Ruby Ridge, Idaho, and in Waco, Tex., that resulted in the deaths of as many as 90. Timothy Mc­Veigh cited both events before he was executed for the 1995 Oklahoma City bombing that killed 168 people, and said he had deliberately chosen a building housing federal government agencies.

     

    Now a “Second Wave” is spreading across the country, especially in the West, fueled by the Internet and social media. J.J. MacNab, an author and George Washington University researcher who specializes in extremism, said social media has allowed individuals or small groups such as Soper’s to become far more influential than in the 1990s, when the groups would spread their message through meetings at local diners and via faxes.

     

    The movement received a huge boost from the 2014 standoff at Cliven Bundy’s ranch in Nevada, where federal agents and hundreds of armed supporters of Bundy faced off in a dispute over the rancher’s refusal to pay fees to graze his cattle on federal land.

     

    When federal agents backed down rather than risk a bloody clash, Bundy’s supporters claimed victory and were emboldened to stage similar armed face-offs last year at gold mines in Oregon and Montana.

    The latest confrontation that has taken place was in Burns, Oregon, where armed occupiers, led by Cliven Bundy’s sons, took over the headquarters building of the Malheur National Wildlife Refuge. Ultimately, the standoff ended with multiple arrests, and even the death of the group spokesman Robert “LaVoy” Finicum, who was shot by the FBI after an incident at a roadblock in the area. BJ Soper, founder of the Central Oregon Constitutional Guard says he tries to be the calming voice of the growing movement, knowing there are many hot heads that fall within its ranks; a voice clearly much needed. After the standoff at the wildlife refuge, two members splintered off and went on to kill two police officers in Las Vegas, leaving a note saying “This is the beginning of the revolution.”

    In January, dozens of armed occupiers, led by Bundy’s sons Ammon and Ryan, took over the headquarters buildings of the Malheur National Wildlife Refuge near rural Burns, Ore., an action that resulted in the death of Robert “LaVoy” Finicum, an occupier who was shot by state troopers.

     

    Soper has been in the middle of all of it. He says he has tried to be a more moderate voice in a movement best known for its hotheads. He spent a month living in his RV at Burns, trying to talk the occupiers into standing down.

    Two days after Soper’s last visit to the refuge, Finicum was killed in an operation in which the Bundys were arrested. An independent local investigation concluded that the shooting was justified, although the U.S. Justice Department is investigating several FBI agents for possible misconduct. Soper considers Finicum’s death “murder.”

     

    That kind of talk is “a big deal,” said Stephanie Douglas, who retired in 2013 as the FBI’s top official overseeing foreign and domestic counterterrorism programs. “Free speech doesn’t make you a terrorist just because you disagree with the government. But if you start espousing violence and radicalizing your own people toward a violent act, the federal government is going to take notice.”

     

    Shortly after the Bundy ranch confrontation, two of Bundy’s supporters who had been at the ranch, Jerad and Amanda Miller, killed two police officers and a civilian and also died in a Las Vegas shooting rampage. Police said the couple left a note on the body of one the officers they had shot point-blank.

     

    It said: “This is the beginning of the revolution.”

     

    BJ Soper has described his reasons to to start the Central Oregon Constitutional Guard as being simply that he used to be oblivious to everything that was going on, but after the Bundy Ranch incident, he decided to get more involved and make a difference. Soper’s understandable skepticism about the government gets rather intense, taking views quite outside the norm, entertaining that the government had a hand in 9/11, that the government is mandating vaccines that cause autism, and that the United Nations wants to reduce global population through a program called Agenda 21. All of which spurred Soper’s desire to create the group, and prepare his family for any possible scenario through weapons training and emergency food storage.

    “I lived like 90 percent of Americans, oblivious to everything that was going on, from the time I was 18 until the Bundy Ranch happened,” he said. “I just said, ‘I can’t sit back and do nothing. I’ve got to get involved.’ I feel responsible for where we’re at, because I’ve done nothing my entire life.”

    His response was to start his Central Oregon Constitutional Guard, which he said was partly to protect against the government, but partly a way to get back to a simpler America.

     

    “As a kid, life was easy,” he says on the group’s website. “No worries. Very little threats. I would ride my bike around all over the neighborhood for hours on end. Play with friends and show back up for dinner without worry.”

     

    Critics say such talk is naive nostalgia for a 1950s America that wasn’t ever really such a homespun paradise in the first place. And they say the groups that have sprung up in response are far more dangerous than Soper and others want to make them seem.

     

    “The idea that he needs to face down the government with weapons I think is really, really wrong,” Potok said. “They don’t really say that, but I think that is what is right under the surface.”

     

    Soper’s research also led him to some of the Internet’s favorite conspiracy theories, including a purported U.N. plot to impose “One World Government.” And Soper, like most in the patriot movement, became a believer.

     

    He suspects that the United Nations, through a program called Agenda 21, wants to reduce the global population from 7 billion to fewer than 1 billion. He said the federal government may be promoting abortions overseas as part of that plot, and also may be deliberately mandating childhood vaccines designed to cause autism because autistic adults are less likely to have children.

     

    Soper said he could not rule out the possibility that the U.S. government was behind the 9/11 attacks. He suspects that the government and the “medical community” have had a cancer cure for years but won’t release it because cancer treatment is too profitable for pharmaceutical companies.

     

    “I’m not saying that’s the case,” he said, “but I like to look at all avenues.”

     

    Soper knows those ideas sound crazy to many people, but, he said with a laugh, “It shows I just don’t trust my government.”

    Alex McNeely, a 25 year old drywaller found the patriot group online, and joined the group to feel that he was helping defend the country. And in a textbook example of how words can cause many to take action, echoed the sentiment of many conservative pundits who claim Obama is a socialist who is trying to fundamentally change America. The group is conservative, and generally supports Trump, although anyone other than Hillary would suffice. One of the men indicted by the Bundy ranch case is Gerald DeLemus, who was New Hampshire co-chair of Veterans for Trump and was named by the Trump campaign as a New Hampshire alternate delegate to the Republican National Convention In Cleveland.

    “There’s this D.C. mentality that if you stand up for your rights, you’re dangerous and anti-government,” said McNeely, who has an AK-47 assault rifle tattooed on his forearm. “But if I’m denied my rights, what else can I do? Am I just going to stand there and take it, or am I going to do something?”

     

    In the Constitutional Guard, McNeely said, “I feel what we do is stand up for people who don’t have the means to stand up for themselves. I have an overwhelming desire to help people.”

     

    McNeely considered joining the military when he graduated from high school, but he turned 18 the month Obama was elected in 2008, and, because of Obama’s “socialist” policies, “I wasn’t going to accept him as my commander in chief.”

     

    “I don’t like that he wants to fundamentally change America,” McNeely said.

     

    The group members are conservatives, do not like former secretary of state Hillary Clinton and generally support Donald Trump. Soper said he would prefer just about anyone over Clinton but would not cast a vote for president this year. He said he thinks casting his vote is “a waste of time” because Oregon’s politics are dominated by Democrats.

    Everyone in the group keeps 30 days worth of food and emergency supplies on hand, and group members learn gardening and raising livestock. They camp, and learn survival tactics, including how to fashion a shelter, find food and water, and make a fire. The group is preparing for anything, and that includes economic collapse.

    “I don’t know that it’s all that far-fetched that we have an economic collapse,” he said. “The dollar is a pretty scary investment anymore. China’s buying up all the gold. When people get hungry and thirsty and can’t feed themselves, they get desperate.”

    Soper reiterates every chance that he gets that he does not want violence, however in his reality, he believes that if common sense doesn’t get restored in the government, people will get hurt.

    “The last thing I want is violence” Soper said. “But I hope they see that if we continue down this path, we’re going to have more bloodshed in this country.”

    As he writes his sheriff upon learning of the news that more people had been arrested in connection with the 2014 standoff at the Bundy Ranch, Soper airs his concerns, and ends the letter in a very dramatic fashion:

    “People are being detained without due process” he said. “These are not our American values.”

     

    “I pray we find some sense of it again, otherwise a very dark future awaits us, and it is not very far down the road.” Sheriff, he said, “People are going to die.“

     

    As America becomes even more fragmented, more fractured, and more polarized, and, as both the GOP and Democratic primaries have shown, with ever more people calling for true change to take place, the establishment may be under pressure to finally act for change, even if the change is at first, very painful – something 8 years of relentless central bank intervention has desperately tried to prevent. If the government chooses not to act, a violent future may await America as the people themselves rise up once more to recreate what was once the freest and most admired nation on earth.

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