• US, French Aircraft Carriers Rush Toward Syrian Coast To Find Numerous Russian Warships Already There

  Two weeks ago, on November 5, and one week before the Paris terrorist attack, we reported that somewhat unexpectedly, France had dispatched its only aircraft carrier, the Charles de Gaulle, to “the eastern Mediterranean for operations against Isis in both Syria and Iraq.”

  

  It was unclear just what these pre-emptive operations would be and why France is getting so dramatically involved in the campaign against ISIS. Not knowing the dramatic attack that was about to unfold (whose false flag origins have been quickly ignored as nobody has yet explained why a fake Syrian passport was found next to the suicide bomber), we speculated that this move had to do with the departure of the CVN-71 Theodore Roosevelt which had left the Persian Gulf region a month ago, leaving the entire 5th Naval Fleet without a US carrier presence for the first time in a decade.

  One week later, we found out that Paris may have had an advance hint of what was about to unfold when on the night of Friday 13 it all fell into place.

  But with the French aircraft carrier full steam ahead toward the Syrian coast, the US could not afford to leave the airborne defense of the region to the French, so it did what was just a matter of time: it weighed anchor on the CVN-75, Harry Truman which was deployed toward the Middle East where according to the Daily Press it will “fight the Islamic State.”

  USS Harry S. Truman (CVN 75) Deploys from Norfolk, Va. from SldInfo.com on Vimeo.

  According to the Press, “the Truman is expected to reach the Persian Gulf before the year’s end. The U.S. has been launching air strikes into Iraq and Syria from aircraft carriers in the Persian Gulf — at least until last month, when the USS Theodore Roosevelt left the area after an extended deployment. The two-month gap is the first in nearly a decade that the U.S. has had no carrier in the region.”

  While the Truman’s departure date was set more than a year ago, it came about six months earlier than first planned. In October 2014, it was announced that the ship would switch deployment cycles with the Norfolk-based USS Dwight D. Eisenhower, which required an additional 10 months in the shipyard.

  As the Navy Times reports, “there were no immediate changes to deployment orders as a result of Friday’s terror attacks, but there is great resolve among the sailors to support their French allies, said Capt. Ryan Scholl, Truman’s skipper. Scholl said his crew is ready to bring peace or “violent destruction.“

  Something tells us it will be the latter.

  Once again, here is the ETA: Carrier Theodore Roosevelt left 5th Fleet in mid-October, leaving that region without a carrier until the Truman CSG gets there, which should be about six weeks, or just around the New Year.

  Then again, according to the latest Stratfor naval map, the Truman is already approaching Gibraltar. If accurate, it means the carrier will be next to Syria in a couple of weeks tops.

  

  Scholl offered assurance to coalition and U.S. forces still in the fight across Syria and Iraq as part of Operation Inherent Resolve.

  “The Harry S. Truman battle group will be there in due time and execute our mission successfully,” he said. “We hope that brings some peace of mind to the people that are out there, both our coalition partners as well as our troops on the ground, and it brings a hard-to-swallow, deliberate pause in our enemy.”

  Where things get very interesting is what the Navy Times says next:

  ISIS is not the only challenge that awaits the flotilla, which includes the cruiser Anzio, Carrier Wing Air 7, and destroyers Bulkeley, Gravely and Gonzalez. Russian, Chinese and Iranian marines have established their presence in Syria, and Russian warships from the Black Sea have relocated to the eastern Mediterranean to protect fighter jets conducting airstrikes in support of Syria’s Assad regime. In preparation, the strike group’s Composite Training Unit Exercise focused on adversaries that more closely resembled those of the Cold War.

  Russians and Iranians we knew about, but Chinese? Does the US Navy know something that has not been made public previously?

  While we await the answer, what we do know is that suddenly the east Mediterranean is about to become a warship and aircraft carrier parking lot, with the Truman and de Gaulle side by side, just as we predicted it would be a month ago when we said that the summer of 2013 naval scenario is unfolding once again.

  Then there are the Russians. Here’s the latest from Tass:

  Ten ships of the Russian Navy are involved in the anti-terrorism operation in Syria, Russia’s Defense Minister Sergey Shoigu told President Vladimir Putin on Friday.

   

  “The naval group comprises ten ships, six of them are in the Mediterranean,” the minister said.

   

  Shoigu said the Caspian Flotilla warships on Friday launched 18 cruise missiles at terrorist positions in Syria hitting seven targets.

   

  “On November 20, the Caspian Flotilla warships launched 18 cruise missiles at seven targets in the Raqqa, Idlib and Aleppo provinces of Syria. All the targets were hit,” Shoigu said.

  As we said: busy, and it’s only going to get busier.

  But the punchline is Russia is already treating the Syrian coastline as its own playground, and has imposed explicit no fly zones in the eastern Mediterranean as the following tweet reveals:

  ??? ????????? ???? ??-?? “Russian Navy exercise” ????????? 14–23 ??????, 21–23 ?????? ? 24–26 ?????? ??????????????. pic.twitter.com/Pi3qwpw1wB

  — Ilya A. = ???? ?. (@ain92ru) November 20, 2015

  What happens when both the French and the US navies, both packing dozens of airplanes, arrive and convert the Mediterranean off the Syrian coast into one big warship parking lot.

  We can only hope that the sudden confluence of goodwill and best intentions by the superpowers to crush ISIS is genuine instead of merely a ploy to get everyone in the same place and result in the biggest ever Gulf of Tonkin redux and an “accidental” sinking of one or more ships… with or without a fake Syrian passport planted next to it.
  

  

  

  

  

  

• "Barrel Bombs" And Bullshit: The Tangled Threads Of Washington Lies About Syria And Russia

  Submitted by Robert Parry via ConsortiumNews.com,

  One way to view Official Washington is to envision a giant bubble that serves as a hothouse for growing genetically modified “group thinks.” Most inhabitants of the bubble praise these creations as glorious and beyond reproach, but a few dissenters note how strange and dangerous these products are. Those critics, however, are then banished from the bubble, leaving behind an evermore concentrated consensus.

  This process could be almost comical – as the many armchair warriors repeat What Everyone Knows to Be True as self-justifying proof that more and more wars and confrontations are needed – but the United States is the most powerful nation on earth and its fallacious “group thinks” are spreading a widening arc of chaos and death around the globe.

  

  President Barack Obama meets with his national security advisors in the Situation Room of the White House, Aug. 7, 2014. (Official White House Photo by Pete Souza)

  We even have presidential candidates, especially among the Republicans but including former Secretary of State Hillary Clinton, competing to out-bellicose each other, treating an invasion of Syria as the least one can do and some even bragging about how they might like to shoot down a few Russian warplanes.

  Though President Barack Obama has dragged his heels regarding some of the more extreme proposals, he still falls in line with the “group think,” continuing to insist on “regime change” in Syria (President Bashar al-Assad “must go”), permitting the supply of sophisticated weapons to Sunni jihadists (including TOW anti-tank missiles to Ahrar ash-Sham, a jihadist group founded by Al Qaeda veterans and fighting alongside Al Qaeda’s Nusra Front), and allowing his staff to personally insult Russian President Vladimir Putin (having White House spokesman Josh Earnest in September demean Putin’s posture for sitting with his legs apart during a Kremlin meeting with Israeli Prime Minister Benjamin Netanyahu).

  

  Israeli Prime Minister Benjamin Netanyahu meeting with Russian President Vladimir Putin in Moscow on Sept. 21, 2015.

  Not surprisingly, I guess, Earnest’s prissy disapproval of what is commonly called “man spread” didn’t extend to Netanyahu who adopted the same open-leg posture in the meeting with Putin on Sept. 21 and again in last week’s meeting with Obama, who – it should be noted – sat with his legs primly crossed.

  

  Prime Minister Benjamin Netanyahu meets with U.S. President Barack Obama in the White House on Nov. 9, 2015. (Photo credit: Raphael Ahren/Times of Israel)

  This combination of tough talk, crude insults and reckless support of Al Qaeda-connected jihadis (“our guys”) apparently has become de rigueur in Official Washington, which remains dominated by the foreign policy ideology of neoconservatives, who established the goal of “regime change” in Iraq, Syria and Iran as early as 1996 and haven’t changed course since. [See Consortiumnews.com’s “How Neocons Destabilized Europe.”]

  Shaping Narratives

  Despite the catastrophic Iraq War – based on neocon-driven falsehoods about WMD and the complicit unthinking “group think” – the neocons retained their influence largely through an alliance with “liberal interventionists” and their combined domination of major Washington think tanks, from the American Enterprise Institute to the Brookings Institution, and the mainstream U.S. news media, including The Washington Post and The New York Times.

  This power base has allowed the neocons to continue shaping Official Washington’s narratives regardless of what the actual facts are. For instance, a Post editorial on Thursday repeated the claim that Assad’s “atrocities” included use of chemical weapons, an apparent reference to the now largely discredited claim that Assad’s forces were responsible for a sarin gas attack outside Damascus on Aug. 21, 2013.

  After the attack, there was a rush to judgment by the U.S. State Department blaming Assad’s troops and leading Secretary of State John Kerry to threaten retaliatory strikes against the Syrian military. But U.S. intelligence analysts refused to sign on to the hasty conclusions, contributing to President Obama’s last-minute decision to hold off on a bombing campaign and to accept Putin’s help in negotiating Assad’s surrender of all Syrian chemical weapons (though Assad still denied a role in the sarin attack).

  Subsequently, much of the slapdash case for bombing Syria fell apart. As more evidence became available, it increasingly appeared that the sarin attack was a provocation by Sunni jihadists, possibly aided by Turkish intelligence, to trick the United States into destroying Assad’s military and thus clearing the way for a Sunni jihadist victory.

  We now know that the likely beneficiaries of such a U.S. attack would have been Al Qaeda’s Nusra Front and the spinoff known as the Islamic State (also called ISIS, ISIL or Daesh). But the Obama administration never formally retracted its spurious sarin claims, thus allowing irresponsible media outlets, such as The Washington Post, to continue citing the outdated “group think.”

  The same Post editorial denounced Assad for using “barrel bombs” against the Sunni rebels who are seeking to overthrow his secular government, which is viewed as the protector of Syria’s minorities – including Christians, Alawites and Shiites – who could face genocide if the Sunni extremists prevail.

  Though this “barrel bomb” theme has become a favorite talking point of both the neocons and liberal “human rights” groups, it’s never been clear how these homemade explosive devices shoved out of helicopters are any more inhumane than the massive volumes of “shock and awe” ordnance, including 500-pound bombs, deployed by the U.S. military across the Middle East, killing not only targeted fighters but innocent civilians.

  Nevertheless, the refrain “barrel bombs” is accepted across Official Washington as a worthy argument for launching devastating airstrikes against Syrian government targets, even if such attacks clear the way for Al Qaeda’s allies and offshoots gaining control of Damascus and unleashing even a worse humanitarian cataclysm. [See Consortiumnews.com’s “Obama’s Ludicrous ‘Barrel Bomb’ Theme.”]

  False-Narrative Knots

  But it is now almost impossible for Official Washington to disentangle itself from all the false narratives that the neocons and the liberal hawks have spun in support of their various “regime change” strategies. Plus, there are few people left inside the bubble who even recognize how false these narratives are.

  So, the American people are left with the mainstream U.S. news media endlessly repeating storylines that are either completely false or highly exaggerated. For instance, we hear again and again that the Russians intervened in the Syrian conflict promising to strike only ISIS but then broke their word by attacking Al Qaeda’s Nusra Front and “our guys” in Sunni jihadist forces armed by Saudi Arabia, Qatar, Turkey and the CIA.

  Though you hear this narrative everywhere in Official Washington, no one ever actually quotes Putin or another senior Russian official promising to strike only at ISIS. In all the quotes that I’ve seen, the Russians refer to attacking “terrorists,” including but not limited to ISIS.

  Unless Official Washington no longer regards Al Qaeda as a terrorist organization – a trial balloon that some neocons have floated – then the Putin-lied narrative makes no sense, even though every Important Person Knows It to Be True, including Obama’s neocon-leaning Defense Secretary Ashton Carter.

  The U.S. political and media big shots also mock the current Russian-Iranian proposal for first stabilizing Syria and then letting the Syrian people decide their own leadership through internationally observed democratic elections.

  Okay, you might say, what’s wrong with letting the Syrian people go to the polls and pick their own leaders? But that just shows that you’re a Russian-Iranian “apologist” who doesn’t belong inside the bubble. The Right Answer is that “Assad Must Go!” whatever the Syrian people might think.

  Or, as the snarky neocon editors of The Washington Post wrote on Thursday, “Mr. Putin duly dispatched his foreign minister to talks in Vienna last weekend on a Syrian political settlement. But Moscow and Tehran continue to push for terms that would leave Mr. Assad in power for 18 months or longer, while — in theory — a new constitution is drafted and elections organized. Even a U.S. proposal that Mr. Assad be excluded from the eventual elections was rejected, according to Iranian officials.”

  In other words, the U.S. government doesn’t want the Syrian people to decide whether Assad should be kicked out, an odd and contradictory stance since President Obama keeps insisting that the vast majority of Syrians hate Assad. If that’s indeed the case, why not let free-and-fair elections prove the point? Or is Obama so enthralled by the neocon insistence of “regime change” for governments on Israel’s “hit list” that he doesn’t want to take the chance of the Syrian voters getting in the way?

  Reality Tied Down

  But truth and reality have become in Official Washington something like Gulliver being tied down by the Lilliputians. There are so many strands of lies and distortions that it’s impossible for sanity to rise up.

  Another major factor in America’s crisis of false narratives relates to the demonizing of Russia and Putin, a process that dates back in earnest to 2013 when Putin helped Obama sidetrack the neocon dream of bombing Syria and then Putin compounded his offense by assisting Obama in getting Iran to constrain its nuclear program, which derailed another neocon dream to bomb-bomb-bomb Iran.

  It became ominously clear to the neocons that this collaboration between the two presidents might even lead to joint pressure on Israel to finally reach a peace agreement with the Palestinians, a possibility that struck too close to the heart of neocon thinking which, for the past two decades, has favored using “regime change” in nearby countries to isolate and starve Lebanon’s Hezbollah and Palestinian groups, giving Israel a free hand to do whatever it wished.

  So, this Obama-Putin relationship had to be blown up and the point of detonation was Ukraine on Russia’s border. Official Washington’s false narratives around the Ukraine crisis are now also central to neocon/liberal-hawk efforts to prevent meaningful coordination between Obama and Putin in countering ISIS and Al Qaeda in Syria and Iraq.

  Inside Official Washington’s bubble, the crisis in Ukraine is routinely described as a simple case of Russian “aggression” against Ukraine, including an “invasion” of Crimea.

  If you relied on The New York Times or The Washington Post or the major networks that repeat what the big newspapers say, you wouldn’t know there was a U.S.-backed coup in February 2014 that overthrew the elected Ukrainian government of Viktor Yanukovych, even after he agreed to a European compromise in which he surrendered many powers and accepted early elections.

  Instead of letting that agreement go forward, right-wing ultra-nationalists, including neo-Nazis operating inside the Maidan protests, overran government buildings in Kiev on Feb. 22, 2014, causing Yanukovych and other leaders to flee for their lives.

  Behind the scenes, U.S. officials, such as neocon Assistant Secretary of State for European Affairs Victoria Nuland, had collaborated in the coup plans and celebrated the victory by Nuland’s handpicked leaders, including the post-coup Prime Minister Arseniy Yatsenyuk, whom she referred to in an earlier intercepted phone call as “Yats is the guy.”

  

  Assistant Secretary of State for European Affairs Victoria Nuland, who pushed for the Ukraine coup and helped pick the post-coup leaders.

  Nor would you know that the people of Crimea had voted overwhelmingly for President Yanukovych and – after the coup – voted overwhelmingly to get out of the failed Ukrainian state and reunify with Russia.

  The major U.S. news media twists that reality into a Russian “invasion” of Crimea even though it was the strangest “invasion” ever because there were no photos of Russian troops landing on the beaches or parachuting from the skies. What the Post and the Times routinely ignored was that Russian troops were already stationed inside Crimea as part of a basing agreement for the Russian fleet at Sevastopol. They didn’t need to “invade.”

  And Crimea’s referendum showing 96 percent approval for reunification with Russia – though hastily arranged – was not the “sham” that the U.S. mainstream media claimed. Indeed, the outcome has been reinforced by various polls conducted by Western agencies since then.

  

  Russian President Vladimir Putin addresses a crowd on May 9, 2014, celebrating the 69th anniversary of victory over Nazi Germany and the 70th anniversary of the liberation of the Crimean port city of Sevastopol from the Nazis. (Russian government photo)

  The MH-17 Case

  The demonization of Putin reached new heights after the July 17, 2014 shoot-down of Malaysia Airlines Flight 17 over eastern Ukraine killing all 298 people onboard. Although substantial evidence and logic point to elements of the Ukrainian military as responsible, Official Washington’s rush to judgment blamed ethnic Russian rebels for firing the missile and Putin for supposedly giving them a powerful Buk anti-aircraft missile system.

  That twisted narrative often relied on restating the irrelevant point that the Buks are “Russian-made,” which was used to implicate Moscow but was meaningless since the Ukrainian military also possessed Buk missiles. The real question was who fired the missiles, not where they were made.

  But the editors of the Post, the Times and the rest of the mainstream media think you are very stupid, so they keep emphasizing that the Buks are “Russian-made.” The more salient point is that U.S. intelligence with all its satellite and other capabilities was unable – both before and after the shoot-down – to find evidence that the Russians had given Buks to the rebels.

  Since the Buk missiles are 16-feet-long and hauled around by slow-moving trucks, it is hard to believe that U.S. intelligence would not have spotted them given the intense surveillance then in effect over eastern Ukraine.

  A more likely scenario of the MH-17 shoot-down was that Ukraine moved several of its Buk batteries to the frontlines, possibly fearing a Russian airstrike, and the operators were on edge after a Ukrainian warplane was shot down along the border on July 16, 2014, by an air-to-air missile presumably fired by a Russian plane.

  But – after rushing out a white paper five days after the tragedy pointing the finger at Moscow – the U.S. government has refused to provide any evidence or intelligence that might help pinpoint who fired the missile that brought down MH-17.

  Despite this remarkable failure by the U.S. government to cooperate with the investigation, the mainstream U.S. media has found nothing suspicious about this dog not barking and continues to cite the MH-17 case as another reason to despise Putin.

  How upside-down this “Everything Is Putin’s Fault” can be was displayed in a New York Times “news analysis” by Steven Erlanger and Peter Baker on Thursday when all the “fundamental disagreements” between Obama and Putin were blamed on Putin.

  “Dividing them are the Russian annexation of Crimea and its meddling in eastern Ukraine, Moscow’s efforts to demonize Washington and undermine confidence in NATO’s commitment to collective defense, and the Kremlin’s support of President Bashar al-Assad of Syria,” Erlanger and Baker wrote.

  Helping ISIS

  This tangle of false narratives is now tripping up the prospects of a U.S.-French-Russian-Iranian alliance to take on the Islamic State, Al Qaeda and other Sunni jihadist forces seeking to overthrow Syria’s secular government.

  The neocon Washington Post, in particular, has been venomous about this potential collaboration which – while possibly the best chance to finally resolve the horrific Syrian conflict – would torpedo the neocons’ long-held vision of imposed “regime change” in Syria.

  In editorials, the Post’s neocon editors also have displayed a stunning lack of sympathy for the 224 Russian tourists and crew killed in what appears to have been a terrorist bombing of a chartered plane over the Sinai in Egypt.

  On Nov. 7, instead of expressing solidarity, the Post’s editors ridiculed Putin and Egyptian President Abdel Fattah el-Sisi for not rushing to a judgment that it was an act of terrorism, instead insisting on first analyzing the evidence. The Post also mocked the two leaders for failing to vanquish the terrorists.

  Or as the Post’s editors put it: “While Mr. Putin suspended Russian flights on [Nov. 6], his spokesman was still insisting there was no reason to conclude that there had been an act of terrorism. … While Western governments worried about protecting their citizens, the Sissi and Putin regimes were focused on defending themselves. …

  “Both rulers have sold themselves as warriors courageously taking on the Islamic State and its affiliates; both are using that fight as a pretext to accomplish other ends, such as repressing peaceful domestic opponents and distracting attention from declining living standards. On the actual battlefield, both are failing.”

  Given the outpouring of sympathy that the United States received after the 9/11 attacks and the condolences that flooded France over the past week, it is hard to imagine a more graceless reaction to a major terrorist attack against innocent Russians.

  As for the Russian hesitancy to jump to conclusions earlier this month, that may have been partially wishful thinking but it surely is not an evil trait to await solid evidence before reaching a verdict. Even the Post’s editors admitted that U.S. officials noted that as of Nov. 7 there was “no conclusive evidence that the plane was bombed.”

  But the Post couldn’t wait to link the terrorist attack to “Mr. Putin’s Syrian adventure” and hoped that it would inflict on Putin “a potentially grievous political wound.” The Post’s editors also piled on with the gratuitous claim that Russian officials “still deny the overwhelming evidence that a Russian anti-aircraft missile downed a Malaysian airliner over Ukraine last year.” (There it is again, the attempt to dupe Post readers with a reference to “a Russian anti-aircraft missile.”)

  The Post seemed to take particular joy in the role of U.S. weapons killing Syrian and Iranian soldiers. On Thursday, the Post wrote, “Syrian and Iranian troops have lost scores of Russian-supplied tanks and armored vehicles to the rebels’ U.S.-made TOW missiles. Having failed to recapture significant territory, the Russian mission appears doomed to quagmire or even defeat in the absence of a diplomatic bailout.”

  Upping the Ante

  The neocons’ determination to demonize Putin has upped the ante, turning their Mideast obsession with “regime change” into a scheme for destabilizing Russia and forcing “regime change” in Moscow, setting the stage for a potential nuclear showdown that could end all life on the planet.

  To listen to the rhetoric from most Republican candidates and Democratic frontrunner Hillary Clinton, it is not hard to envision how all the tough talk could take on a life of its own and lead to catastrophe. [See, for instance, Philip Giraldi’s review of the “war with Russia” rhetoric free-flowing on the campaign trail and around Official Washington.]

  

  A nuclear test detonation carried out in Nevada on April 18, 1953.

  At this point, it may seem fruitless – even naïve – to suggest ways to pierce the various “group thinks” and the bubble that sustains them. But a counter-argument to the fake narratives is possible if some candidate seized on the principle of an informed electorate as vital to democracy.

  An argument for empowering citizens with facts is one that transcends traditional partisan and ideological boundaries. Whether on the right, on the left or in the center, Americans don’t want to be treated like cattle being herded by propaganda or “strategic communication” or whatever the latest euphemism is for deception and manipulation.

  So, a candidate could do the right thing and the smart thing by demanding the release of as much U.S. intelligence information to cut this Gordian knot of false narratives as possible. For instance, it is way past time to declassify the 28 pages from the congressional 9/11 report addressing alleged Saudi support for the hijackers. There also are surely more recent intelligence estimates on the funding of Al Qaeda’s affiliates and spin-offs, including ISIS.

  If this information embarrasses some “allies” – such as Saudi Arabia, Qatar and Turkey – so be it. If this history makes some past or present U.S. president look bad, so be it. American elections are diminished, if not made meaningless, when there is no informed electorate.

  A presidential candidate also could press President Obama to disclose what U.S. intelligence knows about other key turning points in the establishment of false narratives, such as what did CIA analysts conclude about the Aug. 21, 2013 sarin attack and what do they know about the July 17, 2014 shoot-down of MH-17.

  The pattern of the U.S. government exploiting emotional moments to gain an edge in an “info-war” against some “enemy” and then going silent as more evidence comes in has become a direct threat to American democracy and – in regards to nuclear-armed Russia – possibly the planet.

  Legitimate secrets, such as sources and methods, can be protected without becoming an all-purpose cloak to cover up whatever facts don’t fit with the desired propaganda narrative that is then used to whip the public into some mindless war frenzy.

  However, at this point in the presidential campaign, no candidate is making transparency an issue. Yet, after the deceptions of the Iraq War – and with the prospects of another war based on misleading or selective information in Syria and potentially a nuclear showdown with Russia – it seems to me that the American people would respond positively to someone treating them with the respect deserving of citizens in a democratic Republic.

  

  

  

  

  

• Two Gepolitical Wrongs Do Not Make A Right

  Global geopolitics (and why it won't end well) explained in 57 words…

  The political left is happy to see people cross borders but would happily restrict the flow of capital and goods.

   

  The political right is happy to see capital and goods cross borders but would happily build a fence to restrict the flow of people.

   

  I’m afraid that the compromise might be to restrict people, capital and goods.

  *  *  *

  Source: Joe Calhoun

  

  

  

  

  

• This Is How Far America Has Fallen

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  

  Give me liberty, or give me death!

   

  – Partrick Henry, American Founding Father, 1775

   

  They value their civil liberties more than they value life. I disagree with that. You want to be free and dead? I’d rather be not free and alive

   

  – Billionaire Hillary Clinton donor Haim Saban, 2015

  Just in case you’re wondering what the people bankrolling Hillary Clinton’s Presidential campaign think about civil liberties, you now have your answer.

  Here’s what billionaire Haim Saban had to say about civil liberties during an interview with The Wrap:

  What are people in Hollywood saying about the Paris terror attacks?

   

  Many members of the Hollywood community are very liberal and they value their civil liberties more than they value life. I disagree with that. You want to be free and dead? I’d rather be not free and alive. The reality is that certain things that are unacceptable in times of peace — such as profiling, listening in on anyone and everybody who looks suspicious, or interviewing Muslims in a more intense way than interviewing Christian refugees —  is all acceptable [during war]. Why? Because we value life more than our civil liberties and it’s temporary until the problem goes away. But to say this is shameful — I disagree.

   

  [ISIS] said, ‘We’re going to Paris,’ and they went to Paris. They’re saying they’re now going to Washington. Watch out, they might. I’m not suggesting we put Muslims through some kind of a torture room to get them to admit that they are or they’re not terrorists. But I am saying we should have more scrutiny. 

  Yes, because it’s so liberal to push a false Orwellian choice between freedom and safety. The entire concept of civilization and liberty revolves around the belief individuals never have to make such a sacrifice Indeed, America never would have been founded in the first place had the colonists accepted Saban’s infantile logic.

  How does this guy sound any different from George W. Bush or Dick Cheney? The answer is he doesn’t, which makes perfect sense because Hillary Clinton is a dyed in the wool neocon. Always has been always will be. Meanwhile, The Wrap highlighted just how important Haim Saban is to Hillary…

  TheWrap spoke to Saban about his support for the Democratic presidential frontrunner — he and and his wife, Cheryl, gave $2 million to Priorities USA Action, Clinton’s Super PAC, and hosted a fundraiser in May that netted another $2 million.

  In case you forget, I’ve highlighted Saban in the past. Recall the following from the post, Inside the Mind of an Oligarch – Sheldon Adelson Proclaims “I Don’t Like Journalism”:

  At the conference, which also featured top Democratic funder Haim Saban, Adelson also said Israel would not be able to survive as a democracy: “So Israel won’t be a democratic state, so what?” he asked Saban, adding that democracy, after all, is not mentioned in the Torah,and recommended that the country build a “big wall” to protect itself, saying, “I would put up a big wall around my property.”

   

  Saban and Adelson should buy The New York Times together in an effort to bring more “balance” to the newspaper’s coverage of Israel and the Middle East, Adelson suggested to wild applause. Adelson already owns Israel Hayom, a free Israeli newspaper widely seen as reflecting the positions of Prime Minister Benjamin Netanyahu, who is considered close to Adelson, and, more recently, news website NRG and religious newspaper Makor Rishon.

   

  Haim Saban, a media mogul and close Democratic ally of Hillary Rodham Clinton, criticized President Obama’s outreach to Iran, declaring that “we’ve shown too many carrots and a very small stick.”

   

  Still, Saban said that he thinks Clinton would repair the relationship and that he has told her he would spend “whatever it takes” to propel her into the White House. That includes giving millions of dollars to Priorities USA, a super PAC that helped Obama in 2012 and is revving up to aid Clinton in 2016.

  But hey…

  

   

  

  

  

  

  

• Stagflation Ahead: Goldman Is "Unreservedly Disappointed" With Latin America

  As regular readers are no doubt aware, we’ve devoted quite a bit of time to covering Brazil’s unfolding economic meltdown. The latest data out this week showed GDP in “free fall mode” (to quote Barclays), inflation hitting double digits for the first time in over a decade, and unemployment soaring to 7.9% in August, up sharply from just 4.3% a year earlier. 

  In many ways, Brazil is representative of the problems facing EM as a whole. Slumping commodity prices, currency carnage, FX pass through inflation, sensitivity to decelerating Chinese demand and to Beijing’s yuan deval, Brazil has it all – they even have a seemingly intractable political crisis, and as we never tire of pointing out, idiosyncratic political risk factors have become an important part of the EM calculus (see Turkey and Malaysia for instance). 

  Because Brazil tends to dominate the discussion when we talk about Latin America, it’s sometimes easy to forget that the outlook for Brazil’s neighbors matters as well. Latin America is a net commodities exporter and we can learn a lot from observing the interplay between slumping prices for commodities, rising inflation, lackluster economic growth, and central banks forced by the prospect of rising prices to adopt procyclical, rather than counter-cyclical policies despite their weakening economies. 

  When last we checked in on Latin America as a whole, we said the following: 

  “…a plunging currency, FX pass through inflation, and a soft outlook for growth is a pretty terrible place to be in if you’re a central bank, but that’s exactly where things stand for the “LA-5” (believe it or not, that’s not a reference to the Lakers, it’s short for Brazil, Chile, Colombia, Mexico, and Peru), who very shortly will be forced to decide whether the risks associated with further FX weakness outweigh those of hiking rates into a poor economic environment.” 

  We went on to highlight comments from Goldman regarding the likely path for Latin American monetary policy given the factors outlined above.

  Now, Goldman is out with its latest take on the macro outlook for Latin America and unsurprisingly, the forecast is “uninspiring.”

  “Latin America’s growth performance has been eroding since 2010, and has unreservedly disappointed in recent years. Aggregate regional growth peaked in 2010 at above 6%, moderated steadily throughout 2011-13, and downshifted sharply to a significantly below-trend pace during 2014-15,” Goldman begins, adding that “unfortunately, the near future may not be more endearing as we do not envisage a major pickup in growth buoyancy and expect inflation to remain relatively high.” 

  Here’s a more comprehensive assessment:

  Given the shifting external backdrop, the region is unlikely to count on strong balance of payments dynamics to leverage and support a visible economic recovery. The expectation of low-for-longer commodity prices, weak non-commodity export demand, moderating FDI and portfolio inflows, and likely more expensive and selective access to external funding, may well demand additional current account adjustment. This would require further currency depreciation, higher domestic savings and contained investment (i.e., weak domestic absorption). Furthermore, we see virtually no room for additional countercyclical fiscal or monetary stimulus to support a more vigorous recovery.

   

  

   

  And here’s a big picture look at the growth/inflation outlook across the region:

  

  As you can see, the inflation/growth mix doesn’t look particularly favorable. As Goldman goes on to note, “Latin America is forecasted to grow an uninspiring +0.8% in 2016; a very shallow recovery from the -0.3% growth rate forecasted for 2015.” Consider the following graphic, which underscores the extent to which the region is performing well below trend:

   

  Subpar, disappointing growth that’s disastrously below trend and will remain marginally so through 2020. Got it. 

  Of course what you don’t want if you’ve got lackluster growth, is rising inflation because that sets the stage for the “S” word. Unfortunately, that’s where Latin America looks to be headed. Here’s Goldman on the inflation outlook: 

  Despite the weak growth dynamics, inflation is expected to remain high across LatAm. Average inflation ex-Venezuela is expected to reach 8.1% in 2016, down slightly from the forecasted 8.7% average for 2015.

   

  
  

   

  In Brazil, headline inflation is expected to end 2015 in double digits and to moderate gradually throughout 2016, albeit to a still very high 6.5% due to weak policy fiscal and monetary policy credibility, renewed deterioration of inflations expectations, additional BRL depreciation, lingering upward pressure on administered and regulated prices, strong inertial forces, and widespread formal and informal indexation mechanisms which introduce significant downward rigidity (stickiness) in price formation. 

   

  Overall, inflationary pressures across the Andean economies are expected to remain relatively high throughout 1H2016 given the expected lagged pass-through from currency depreciation and the impact from what is expected to be an intense El Niño weather phenomenon. 

  And finally, coming full circle to our original discussion of how high inflation and weak currencies have put regional CBs in a position of having to, at the least, remain on hold and more likely adopt procyclical policies despite the tepid outlook for growth, Goldman suggests that “the scope for monetary accommodation in the region in 2016” is limited at best. “In Brazil, sticky above-target inflation should limit the capacity of the central bank to ease monetary policy in 2016 [and] the central banks across the Andean region have been normalizing monetary policy during 2H2015 given persistent and generalized above-target inflationary pressures,” Alberto Ramos (the Goldman analyst who has a talent for making lists of Brazil’s myriad problems that are so long as to induce riotous laughter) adds.

  Last, but certainly not least, here’s how the FX situation will likely develop in 2016:

  Regional currencies have weakened significantly in 2014-15 and we expect further weakness in 2016. We expect most currencies to depreciate moderately in 2016 given the evolving global backdrop (low commodity prices with additional declines forecasted for copper prices, rising dollar yields, and strengthening USD), the unhappy domestic combination of low growth and high inflation, and a number of idiosyncratic factors.

  So while it’s probably too strong to equate the overall regional outlook with the stagflationary nightmare gripping Brazil, all of the above does indeed suggest that Latin America is stuck with a decidedly unfavorable growth-inflation outcome which is likely to worsen materially going forward. On that note, we’ll close with one last passage from Goldman:

  Despite the undistinguished growth outlook, in our assessment, the spectrum of risks is still tilted to the downside. In fact, the vector of risks is to a large extent not materially different from the risks the region was facing at the beginning of 2015, namely: (1) sharperthan-expected growth deceleration in China; (2) another leg down in commodity prices; (3) potential quasi-sovereign and private corporate sector forced deleveraging or balance sheet distress given heavy borrowing over the last few years and diminished profitability, and, last but not the least, (4) sharper-than-expected deceleration of capital inflows triggered by a strengthening USD, rising Dollar yields, and/or renewed bouts of volatility in international financial markets that could dampen sentiment towards emerging markets. 

  

  

  

  

  

• The Syrian Refugee Situation Summed Up (Using M&Ms)

  Presented with no comment…

   

  

   

  Source: hope@ZeroKelvin via The Burning Platform

  

  

  

  

  

• South Pacific Showdown? Japan May Send Warships To China Islands

  On Tuesday, Chinese Vice Foreign Minister Liu Zhenmin told the press that contrary to the narrative being propagated by Washington and its allies in the South Pacific, Beijing had actually shown “great restraint” in the South China Sea. 

  China, Liu went on to explain, has tolerated the “occupation” of the disputed waters even as Beijing has “both the right and the ability to recover the islands and reefs illegally occupied by neighboring countries.” Essentially, Liu said China would be well within its rights to forcibly expel The Philippines, Malaysia, and Vietnam from the Spratlys. 

  Liu’s comments came ahead of the Asia-Pacific Economic Cooperation summit held in Manila on Thursday and Friday.

  At the close of the Summit, Japanese PM Shinzo Abe met with President Benigno Aquino – who earlier this year compared the Chinese to Nazis – to discuss the possibility that Japan could provide Manila with “large ships” that the Philippines can use to patrol the South China Sea. 

  As Reuters reported on Friday, “the deal will mark the first time Japan has agreed to directly donate military equipment to another country, and is the latest example of Abe’s more muscular security agenda.” 

  “There was a request from President Benigno Aquino regarding the provision of large patrol vessels to the Philippine Coast Guard and Japan would like to consider the specifics,” Abe said in a statement.

  Reuters goes on to note that “rather than challenge Beijing directly by sending warships or planes to patrol the South China Sea, Japan is helping to build the military capacity of friendly nations with claims to parts of the waterway.”

  Well don’t look now, but Abe may soon move beyond the mere provision of ships to Japan’s allies. Here’s Nikkei with more:

  Tokyo will consider dispatching its Self-Defense Forces to the South China Sea, Prime Minister Shinzo Abe told U.S. President Barack Obama here Thursday, suggesting a possible role for Japan in patrolling those tense waters.

   

  Abe said his government is watching how the situation in that body of water affects Japan’s national security. Several nations have competing claims to various islands in the South China Sea.

   

  “The United States-Japanese alliance is one of the lynchpins of our security as well as Japan’s,” Obama told reporters before his roughly 90-minute meeting with Abe, their first since the prime minister visited Washington in April.

   

  In their talk, Abe expressed support for what the U.S. calls “freedom of navigation exercises” in the South China Sea — sailing warships through waters claimed by China around islands it has built. Obama said America will continue to do so routinely.

   

  Japan will support countries with a stake in the situation and reject all unilateral actions that seek to change the status quo or raise tensions, Abe said.

  Bear in mind that in addition to the generally “frosty” relations between Tokyo and Beijing, Japan and China are at odds over Beijing’s construction of oil and gas exploration platforms close to disputed waters in the East China Sea: 

  

  Make no mistake, if Japan starts to conduct the same type of “freedom of navigation” exercises near the Spratlys that the US has now pledged to carry out at least twice per quarter, it will be more than Beijing can bear.

  The US is one thing, Japan is entirely another and if Ash Carter and The Pentagon are really looking to escalate a South Pacific conflict, they can certainly do so by encouraging Abe to send warships near Fiery Cross, Subi, and Mischief.

  

  

  

  

  

• Largest Immigration Wave In Modern History Ends: More Mexicans Are Leaving The US Than Entering

  The 'Great Recession' was evidently so bad for the economy that it stopped the net influx of illegal immigrants from Mexico. For the first time since the 1940s, more Mexicans have been leaving the U.S. to return home than arriving, a reversal that brings down the curtain on the largest immigration wave in modern American history. As WSJ reports, the Pew Research Center figures released Thursday suggest that the surge in legal and illegal Mexican immigration that helped transform America – and remains a contentious issue on the presidential campaign trail – may have peaked for good.

  

  Pew Hispanic found that, according to official numbers, more than 800,000 undocumented workers came to the United States during 2009-2014 while more than 1 million fled the U.S. during the same period. It seems that employment became more difficult after the 2008 economic crisis, while Mexico’s economy actually improved.

  Apparently there are so few good jobs that many Mexican migrants – including both those that are legal and illegal – departed or stop coming in and turned instead to work in their home country where they can also be with family.

  According to Pew Research, best estimates and careful research show a dramatic change in illegal immigration:

  More Mexican immigrants have returned to Mexico from the U.S. than have migrated here since the end of the Great Recession, according to a new Pew Research Center analysis of newly available government data from both countries. The same data sources also show the overall flow of Mexican immigrants between the two countries is at its smallest since the 1990s, mostly due to a drop in the number of Mexican immigrants coming to the U.S.

   

  From 2009 to 2014, 1 million Mexicans and their families (including U.S.-born children) left the U.S. for Mexico, according to data from the 2014 Mexican National Survey of Demographic Dynamics (ENADID). U.S. census data for the same period show an estimated 870,000 Mexican nationals left Mexico to come to the U.S., a smaller number than the flow of families from the U.S. to Mexico.

   

  […]

  Mexico is the largest birth country among the U.S. foreign-born population – 28% of all U.S. immigrants came from there in 2013. Mexico also is the largest source of U.S. unauthorized immigrants.

   

  […]

  A majority of the 1 million who left the U.S. for Mexico between 2009 and 2014 left of their own accord, according to the Mexican government’s ENADID survey data.

  While it is true that many immigrants are not officially counted and many estimates put the number of undocumented workers much higher than 12 or 13 million, that number is declining for the first time since the 1970s.

  This chart below tells a story that words alone cannot describe, and images of border crossings and protests fail to capture.

  

   

  The situation is economic much more than it is political. The Wall Street Journal suggests several factors have undermined the lure of the U.S.

  Mexican families have fewer mouths to feed as the country’s birthrate has declined to near replacement level, similar to that of the U.S., relieving economic pressure that motivated migrants to go north to find higher-paying jobs than are available in Mexico. Meanwhile, Mexico’s economy improved.

   

  "The days of mass immigration from Mexico are over," said Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas who studies migration. "Slower population growth in Mexico along with a stable economy and an expanded public-safety net are developments that have trimmed the 'push factor.'"

  But, as SHTFPlan.com's Mac Slavo writes,  the celebration of a historic turning of the tide for one of the most contentious issues in American politics may also herald the tough times ahead for Americans and everyone else working here, regardless of status.

  The jobs have essentially dried up, and things stand to get even worse if/when the next economic bomb drops. And that could be any day now.

  The writing is on the wall, the system is on edge, and something as simple as a Federal Reserve rate hike could mean financial desperation for millions upon millions of Americans.

  Perhaps surprisingly, many Mexican nationals no longer view life in the United States as a better opportunity, with many seeing it is as on-par with life in Mexico:

  While almost half (48%) of adults in Mexico believe life is better in the U.S., a growing share says it is neither better nor worse than life in Mexico. Today, a third (33%) of adults in Mexico say those who move to the U.S. lead a life that is equivalent to that in Mexico

  But with the receding tide of immigrants from south of the border may come larger and larger numbers of immigrants from China and India, as well as Islamic countries, including many technically skilled workers here on H-1B visas who are replacing American jobs.

  USA Today reports on the shift – not of overall immigration numbers, but of their sources:

  “The nature of immigration itself is beginning to change,” [Mark Hugo Lopez, director of Hispanic research at Pew Research] said. “It looks like Mexican migration is at an end.”

   

  The reversal of Mexican migration doesn’t mean that the United States is seeing fewer immigrants overall, just that their countries of origin are changing.

   

  The United States has seen a record number of Central Americans fleeing violence in the past few years, straining the country’s ability to process their requests for asylum. In addition, Lopez said, immigrants from China, India and other Asian nations are coming as students and high-tech workers. Eventually, Asians will become the dominant share of the immigrant population, he added.

  Though they claim to have now reversed their decision, Disney recently came under fire for decision to layoff all of its American workers – including those with decades of experience – and replace them with cheaper (but equally skilled) IT workers from India.

  The move, cancelled or not, is a sign of the times for a situation that may become more desperate and gloomy with each passing year for native American workers who once assumed relative wealth among the middle class, but are now fighting for survival.

  President Obama, for his part, has over-extended – well, abused really – his executive authority to grant amnesty to millions of illegal immigrants from Mexico, but they too may soon prefer their country of origin – particularly if the coming financial implosion hits worst in the United States.

  

  

  

  

  

• "It Looks Like A Warzone" – Army, APCs, Roadblocks Deployed In Brussels After Explosives, Chemical Weapons Found

  In the aftermath of last night’s warning of an “imminent” terror threat in Brussels when OCAM Crisis Center and the government raised the country’s terror alert to the highest level, today the escalation continues and the Belgian capital looks like not only a ghost town but something out of a Call of Duty warzone after authorities deployed special forces, and APCs, shut the metro, locked down shopping centers, closed sporting events, and warned the public to avoid crowds, train stations, airports and commercial districts because of a “serious and imminent” threat of an attack.

  As Reuters reports, a week after the Paris attacks carried out by Islamic State militants, of whom one suspect from Brussels is at large and said by authorities to be highly dangerous, Brussels was placed on the top level “four” in the government’s threat scale after a meeting of top ministers, police and security services.

  “The advice for the population is to avoid places where a lot of people come together like shopping centers, concerts, events or public transport stations wherever possible,” a spokesman for the government’s crisis center said.

  As AFP reported earlier, the spike in the terror threat is due to a risk of attacks by “weapons and explosives”

  #BREAKING Belgium terror alert linked to a risk of attacks by ‘weapons and explosives’: PM

  — Agence France-Presse (@AFP) November 21, 2015

  The local security forces are taking no chances, and as can be seen on the photos below, APC have been deployed as the city barricades itself with the use of roadblocks at strategic locations.

  

  

  

  

  

  

  Metro closed, all football games cancelled and city center looks like military base. #Brussels 2015 #Bruxelles pic.twitter.com/FP8UoCOFv5

  — Zaprudsky (@ZaprudskyOU) November 21, 2015

  this is brussels right now. It looks like the war. #Bruxelles pic.twitter.com/iOzES4H3Jg

  — harry saw me (@lwtharoId) November 21, 2015

  Belgian Prime Minister Charles Michel declined to give the reason why the authorities raised the alert level but told a news conference the government would review the security situation on Sunday afternoon and that the decision to raise the threat level was taken “based on quite precise information about the risk of an attack like the one that happened in Paris where several individuals with arms and explosives launch actions, perhaps even in several places at the same time.” The metro system would remain closed until then, in line with the recommendation of the crisis center, he said.

  The reason for the dramatic escalation is that chemicals and explosives were among the items found in the during a police raid on Vandepeerboom Street area in the immigrant neighborhood of Molenbeek, a rundown area where Paris attacker Abdelhamid Abaaoud was suspected of operating a terrorist cell.

  L’Echo has more:

  A search was conducted on Friday at the home of a suspect placed under arrest, federal prosecutors said on Saturday. Some weapons have been discovered, but no explosives or explosive belt.

   

  The suspect was arrested Thursday in the series of searches carried out in Brussels. The person concerned is suspected of involvement in terrorist attacks and participation in activities of a terrorist group.

  The find came as Belgium’s capital entered a security lockdown. The government has warned that there could be a repeat of Paris-style attacks in the country’s capital, prompting the closure of subways in Brussels and the deployment of heavily armed police and soldiers.

  Fears that terrorists may use chemical or biological weapons quickly spread to Paris where according to the Guardian, security has been stepped up at key water supply sites in Paris, after the French prime minister warned the country could not rule out attacks from “chemical or biological weapons”.

  The heightened security comes as reports claim that biohazard suits have been stolen from a Paris hospital, the Telegraph reports. Eau de Paris, the municipal water company, yesterday told Le Parisien that access to its sites has been limited to only the necessary service personnel, and that they have been accredited by the defence ministry.

  Furthermore, we learned today that one more suspect from last Friday’s terror attack has been arrested in Brussels which has quickly emerged as the nerve center of last week’s Paris attacks.

  According to Belgian media @RTBFinfo a key suspect in the #ParisAttacks was arrested in the Brussels region last night

  — Michael Horowitz (@michaelh992) November 21, 2015

  As Reuters further adds, the crisis center website said it was calling on local authorities to cancel large events, urge people to avoid crowds, postpone soccer matches, close the Brussels metro for the weekend and stepping up the military and police presence. Suspected militant Salah Abdeslam, 26, returned home to Brussels from Paris after the attacks, when his elder brother Brahim blew himself up at a cafe.

  Fears of the risk he still poses prompted the cancellation last week of an international friendly soccer match in Brussels against Spain. The crisis center said weekend games in the top two professional divisions should now be postponed.

   

  The alert level for the whole country was raised following the Paris attacks to level three out of four, implying a “possible or probable” threat. Previously, only certain sites, such as the U.S. embassy, were at level three.

   

  Belgium, and its capital in particular, have been at the center of investigations into the Paris attacks – which included suicide bombers targeting a France-Germany soccer match – after the links to Brussels emerged. Three people detained in Brussels are facing terrorism charges.

  As a reminder, French authorities have said the attacks were planned in Brussels by a local man, Abdelhamid Abaaoud, 28, who fought for Islamic State in Syria and was killed in the siege of an apartment in the Paris suburb of St. Denis on Wednesday.

  Salah Abdeslam, who was from the same Brussels neighborhood of Molenbeek and is said by officials to have known Abaaoud in prison, was pulled over three times by French police but not arrested as he was driven back to Brussels early last Saturday by two of the men now in custody.

  As well as Abdeslam’s brother, a second man from Molenbeek, Bilal Hadfi, was also among the Paris suicide bombers.

  Belgian Interior Minister Jan Jambon told reporters he wanted a register of everyone living in Molenbeek because it was not clear at present who was there, with authorities conducting door-to-door checks of every house. “The local administration should knock on every door and ask who really lives there,” Jambon said. Curiously when Donald Trump suggests doing something comparable in the US, immediate comparisons with Hitler emerge.

  Meanwhile, as the photos below show, soldiers are already on guard in all key parts of Brussels, including at the institutions of the European Union headquartered in the city. Brussels is also home to the headquarters of NATO.

  

  

  

  

  

  

  

   

  More military and police deploy roadblocks around central #Brussels following terror threat. pic.twitter.com/XpQDmOK9KD

  — M. Cruickshank CN (@MJ_Cruickshank) November 21, 2015

  Finally, Belgium’s interior ministry has released the following list of recommendations what the local population should do while the terror threat is at its highest level.

  Evaluation of the terror threat – level 4 – Recommandations for the Brussels-Capital Region #Brussels #infographic pic.twitter.com/ArvZvMdzG6

  — CrisisCenter Belgium (@CrisiscenterBE) November 21, 2015

  

  

  

  

• These Are The Stocks Most Hated By Hedge Funds (And Why You May Want To Buy Them)

  Back in the summer of 2013 we revealed what the best “alpha-generating” strategy was in a New Normal where hedge fund clustering would ultimately lead to such dramatic hedge fund hotel implosions such as what was seen in the third quarter (described in detail in “What Hedge Fund Panic Looks Like“) and where central banks themselves do their best to crush anyone who dares to short single names courtesy of $13 trillion in excess liquidity.

  But while buying the most shorted names (expecting furious central bank and HFT-catalyzed short squeezes) had been a great way to outperform the market in 2012 thru 2014, in 2015 this strategy took a back seat as suddenly the most hated names revealed that there was a reason why they were most hated, and plunged as the Fed’s determination to push stocks higher no matter the cost was put into question.

  However, now that the Fed et al have made it beyond clear a downtick is unacceptable even as hedge funds are dramatically underperforming the market and are all – absolutely all of them – rushing to buy the same 5 stocks into year-end due to FOMO, even the tiniest deviation from a priced to perfection market will make the Valeant hedge fund hotel collapse of Q3 seem like a dress rehearsal if F, or A, or N, or G or all of them were to be Philidored.

  It would also force a sequential scramble to cover shorts as margin calls are quietly and not so quietly administered on the increasingly underperforming hedge funds (for whom a crowdsourced margin call funding attempt will not be a feasible way out unlike novice E-traders).

  What does all this mean?

  Well, since central banks have made it abundantly clear they will not allow the S&P to drop even a few modest percent, and since going short the most beloved hedge fund names also carries with it the risk of substantial margin calls (not to mention inlimited downside) the best bearish trade into the year end is, paradoxically, to go long the most shorted names with the expectation that hedge fund blow ups will force domino-like, sequential short squeezes.

  In other words, the most bearish trade going into the year end period is to go long a handful of very specific stocks.

  So which are the stocks that have the highest hedge fund short interest as a % of market cap? For the answer we go to the latest hedge fund tracker by Goldman.

  The answer: first, here are the stocks with a sub $1 billion market cap:

  

  And next, the large, $1+ billion companies:

  

  We will equal-weight CIX this basket and see how it performs relative to the market over the next few weeks. We hope to provide periodic updates on how this trade, made possible thanks to the Fed totally breaking the market’s discounting function, is performing.

  

  

  

  

  

• Caught On Tape: Russia Launches Cruise Missiles Against ISIS Targets

  Make no mistake, the Russian campaign against anti-Assad elements operating in Syria was what you might call “relentless” right from the very beginning. 

  From the time a Russian three star general strolled into the US embassy in Baghdad on September 30 and told whoever was there that airstrikes in Syria “start in 1 hour, stay out of the way”, Moscow has bombed militant targets day and night in hundreds upon hundreds of strikes using Su-34s, Su-25s and Su-24Ms to wreak havoc on anything that even looks like a rebel. 

  But as ruthless as the air campaign already was, the downing of a Russian passenger jet over the Sinai Peninsula by Islamic State’s Egyptian affiliate made the situation immeasurably worse (if you’re a militant) and as we noted on Wednesday, The Kremlin has now sent in the strategic bombers. 

  

  Tupolev Tu-95 Bear

  

  Tu-22 Blinder

  

  Tu-160 Blackjack

  In addition to the deployment of the strategic bomber fleet – which Moscow says will allow Russia to double the number of strikes it can launch – The Kremlin is also stepping up sea-based cruise missle attacks from the Caspian fleet. 

  As RT reports, “the Russian military has launched cruise missiles against Islamic State positions in Syria from both the Mediterranean and Caspian seas, one of which killed over 600 terrorists in the Deir Ex-Zor Province, Russian Defense Minister Sergey Shoigu has said.” Here’s more:

  “On November 20, the warships of the Caspian Fleet launched 18 cruise missiles at seven targets in the provinces of Raqqa, Idlib and Aleppo. All targets were hit successfully,” he reported to President Vladimir Putin.

  
  

  Overall, there are 10 warships taking part in the operation, six of which are in the Mediterranean.

  
  

  Over the past four days, Russian air forces have conducted 522 sorties, deploying more than 100 cruise missiles and 1,400 tons of bombs of various types, the minister stated.

  
  

  He added that a strike on a target in Deir ez-Zor utilizing multiple cruise missiles had killed more than 600 militants.

  Note that Paris attack mastermind Abdelhamid Abaaoud was Emir of War in Deir ez-Zor. 

  Having thus set the stage, we bring you a buffet of new footage showing all three strategic bomber variants in action as well as footage of the cruise missile strikes. 

  Bonus: the following clips purport to show the missiles hitting Idlib…

  

  

  

  

• In China, Money Is Power… Literally

  While recent market turmoil in China has meant the government has been burning through its cash reserves at a record pace, for the electric utility plant in Yancheng; money is quite literally power as 3 billion yuan of outdated or damaged bank-notes are incinerated to generate electricity for Jiangsu province each and every year...

   

  Out with the old, in with the new: 3 billion yuan in outdated notes burned to provide electricity

  

  With the long-awaited introduction last week of China's crisp, new 100-yuan notes, you might catch yourself wondering, just where is all that old cash going?

  Some Chinese reporters asked themselves the very same question and it turns out that they are going up in flames.

  

  A photoseries published earlier today shows the steps that it takes to efficiently turn money into power. A truck first arrives at the electric power plant in Yancheng, Jiangsu province, filled with 3 billion yuan ($470 million) in outdated and damaged banknotes. The notes are divided into chunks by denomination. Each chunk is worth around 30,000 yuan.

  

  The chunks are first shredded into confetti and then mixed together with straw. The cash and straw then go together on a conveyor belt toward their doom inside an incinerator.

  

  

  

  An employee of the power company told reporters that each of these trucks carries 30 tons of banknotes and that they usually burn around 1,800 tons each and every year.

  Doing a little math, he said that 30 tons of cash generates 30,000 kWh, which is enough to provide electricity to a household for 300 months. Not like you can take it with you.

  Source: Shanghaiist.com

  

  

  

  

  

• Guest Post: Ending Blowback Terrorism

  Authored by Jeffrey Sachs, originally posted at Project Syndicate,

  Terrorist attacks on civilians, whether the downing over Sinai of a Russian aircraft killing 224 civilian passengers, the horrific Paris massacre claiming 129 innocent lives, or the tragic bombing in Ankara that killed 102 peace activists, are crimes against humanity. Their perpetrators – in this case, the Islamic State (ISIS) – must be stopped. Success will require a clear understanding of the roots of this ruthless network of jihadists.

  Painful as it is to admit, the West, especially the United States, bears significant responsibility for creating the conditions in which ISIS has flourished. Only a change in US and European foreign policy vis-à-vis the Middle East can reduce the risk of further terrorism.

  The recent attacks should be understood as “blowback terrorism”: a dreadful unintended result of repeated US and European covert and overt military actions throughout the Middle East, North Africa, the Horn of Africa, and Central Asia that aimed to overthrow governments and install regimes compliant with Western interests. These operations have not only destabilized the targeted regions, causing great suffering; they have also put populations in the US, the European Union, Russia, and the Middle East at significant risk of terror.

  The public has never really been told the true history of Osama bin Laden, Al Qaeda, or the rise of ISIS in Iraq and Syria. Starting in 1979, the CIA mobilized, recruited, trained, and armed Sunni young men to fight the Soviet Union in Afghanistan. The CIA recruited widely from Muslim populations (including in Europe) to form the Mujahideen, a multinational Sunni fighting force mobilized to oust the Soviet infidel from Afghanistan.

  Bin Laden, from a wealthy Saudi family, was brought in to help lead and co-finance the operation. This was typical of CIA operations: relying on improvised funding through a wealthy Saudi family and proceeds from local smuggling and the narcotics trade.

  By promoting the core vision of a jihad to defend the lands of Islam (Dar al-Islam) from outsiders, the CIA produced a hardened fighting force of thousands of young men displaced from their homes and stoked for battle. It is this initial fighting force – and the ideology that motivated it – that today still forms the basis of the Sunni jihadist insurgencies, including ISIS. While the jihadists’ original target was the Soviet Union, today the “infidel” includes the US, Europe (notably France and the United Kingdom), and Russia.

  At the end of the 1980s, with the Soviet retreat from Afghanistan, some elements of the Mujahideen morphed into Al Qaeda, Arabic for “the base,” which referred to the military facilities and training grounds in Afghanistan built for the Mujahideen by bin Laden and the CIA. After the Soviet withdrawal, the term Al Qaeda shifted meaning from the specific military base to the organizational base of jihadist activities.

  Blowback against the US began in 1990 with the first Gulf War, when the US created and expanded its military bases in the Dar al-Islam, most notably in Saudi Arabia, the home of Islam’s founding and holiest sites. This expanded US military presence was anathema to the core jihadist ideology that the CIA had done so much to foster.

  America’s unprovoked war on Iraq in 2003 unleashed the demons. Not only was the war itself launched on the basis of CIA lies; it also aimed to create a Shia-led regime subservient to the US and anathema to the Sunni jihadists and the many more Sunni Iraqis who were ready to take up arms. More recently, the US, France, and the UK toppled Muammar el-Qaddafi in Libya, and the US worked with the Egyptian generals who ousted the elected Muslim Brotherhood government. In Syria, following President Bashar al-Assad’s violent suppression of peaceful public protests in 2011, the US, Saudi Arabia, Turkey, and other regional allies helped to foment a military insurgency that has pushed the country into a downward spiral of chaos and violence.

  Such operations have failed – repeatedly and frequently disastrously – to produce legitimate governments or even rudimentary stability. On the contrary, by upending established, albeit authoritarian, governments in Iraq, Libya, and Syria, and destabilizing Sudan and other parts of Africa deemed hostile to the West, they have done much to fuel chaos, bloodshed, and civil war. It is this turmoil that has enabled ISIS to capture and defend territory in Syria, Iraq, and parts of North Africa.

  Three steps are needed to defeat ISIS and other violent jihadists.

  First, US President Barack Obama should pull the plug on CIA covert operations. The use of the CIA as a secret army of destabilization has a long, tragic history of failure, all hidden from public view under the agency’s cloak of secrecy. Ending CIA-caused mayhem would go far to staunch the instability, violence, and anti-Western hatred that fuels today’s terrorism.

   

  Second, the US, Russia, and the other permanent members of the United Nations Security Council should immediately stop their infighting and establish a framework for Syrian peace. They have a shared and urgent stake in confronting ISIS; all are victims of the terror. Moreover, military action against ISIS can succeed only with the legitimacy and backing of the UN Security Council.

   

  The UN framework should include an immediate end to the insurgency against Assad that the US, Saudi Arabia, and Turkey have pursued; a Syrian cease-fire; a UN-mandated military force to confront ISIS; and a political transition in Syria dictated not by the US, but by a UN consensus to support a non-violent political reconstruction.

   

  Finally, the long-term solution to regional instability lies in sustainable development. The entire Middle East is beset not only by wars but also by deepening development failures: intensifying fresh water stress, desertification, high youth unemployment, poor educational systems, and other serious blockages.

  More wars – especially CIA-backed, Western-led wars – will solve nothing. By contrast, a surge of investment in education, health, renewable energy, agriculture, and infrastructure, financed both from within the region and globally, is the real key to building a more stable future for the Middle East and the world.
   

  

  

  

  

  

• El-Erian Says "The Market Believes Central Banks Are Our Best Friends Forever", Just Don't Show It "Figure 4"

  A recurring theme we have covered here over the past few weeks and months (most recently here), is that while stocks have soared since the September lows (first on bad payrolls news suggesting no rate hike, then on a Fed hint a rate hike is imminent, go figure), most other asset classes have ignored the furious rally, and none other more so than junk bonds and ETFs.

  This is shown both longer-term:

  

  As well as recently:

  

  And it’s decoupling in the leveraged loan segment too:

  

  And risk is perceived notably “differently” across equity and credit markets:

  

  That is happening even as the yield curve has furiously pancaked, suggesting the Fed is about to commit a major policy error.

  

   

  But that’s the topic of another post.

  For now, we are looking at the one asset class which according to Carl Icahn (who is famously quite short said asset class) remains the canary in the liquidity coalmine, namly junk bonds.

  It is here where according to the latest analysis by Citi’s Stephen Antczak things are going from bad to worse, not only in terms of underlying fundamentals (recall that as we showed a week ago, corporate leverage is at record high just as corporate cash flows are declining), but in terms of underlying market liquidity.

  In fact, for October Citi calculates that the spread between an illiquid and a liquid junk bond portfolio soared to just shy of 100 bps, the highest in this series’ history, and double the average of 48 bps. Presenting the infamous “Figure 4”:

  Liquidity premiums can be meaningful: In the current environment illiquid bonds can offer a sigificant spread premium to more liquid bonds. To illustrate, we created two HY portfolios, one comprised of 100 liquid issues and the other comprised of 100 illiquid bonds. We chose bonds to minimize rating, sector, and maturity differences (and note that we did not include any triple-C, energy, and basic materials CUSIPs, where factors such as potential recovery values may drive valuations more than liquidity).

   

  In Figure 4 we present the spread differences between the two buckets since April, and we see that on average the liquidity premium is 48 bp in HY. We see a significant premium in IG as well (Also noteworthy is that, for both markets, the premium tends to fluctuate dramatically).

  

   

  For those who have a tough time visualizing the real liquidity in the market, think 80/20, or rather 90/10 – 10% of all bonds account for 90% of the trades with an asymptotic distribution.

  Quote Citi: “in Figure 5 we plot the total number of block size trades over the past 3 months by CUSIP in the IG market, sorted from least traded to most traded. We see that the incremental number of trades by CUSIP is quite modest for most issues, but the gap is much, much larger for the most actively traded portion of the market. It’s a small number of bonds that really helps one to behave tactically.“

  

   

  In other words, if one is long any of the names that comprise 90% of the entire bond market CUSIP universe, good luck liquidating if and when you have to, and good luck hoping to “eat” only a 100 bps spread in pricing, especially if and when the market goes bidless.

  But will the junk bond, or any other markets, go bidless as a result of plunging liquidity?

  That was the question posed at the Reuters Global Investment Outlook Summit in New York. Here is what the participants said, courtesy of Reuters:

  “The reason why volatility is going to be higher … you don’t have this huge blanket of liquidity in the world like you had for the last three or four years,” said Rick Rieder, chief investment officer of fundamental fixed income for BlackRock, which manages $4.5 trillion.

   

  Rieder noted that currency reserves in China were declining after several years of a reserve buildup in the world’s second-biggest economy that had resulted in money entering the U.S. financial markets in “huge size.”

   

  Scarce liquidity, partly as a result of curbs on banks’ ability to take risks and an increase in technology-driven trading, has contributed to events such as the Dow Jones industrial average losing more than 1,000 points in the first few minutes of trading on Aug. 24 and the Treasury market “flash crash” on Oct. 15, 2014.“

   

  There is just not as much two-way flow in the markets as we saw pre-crisis, and I don’t think that’s getting better in 2016,” said Erin Browne, portfolio manager at Point72 Asset Management.  “Particularly where the Fed’s going to be raising rates, there is less liquidity in the market, there is the opportunity for more gap risk next year,” she said in reference to the risk of sudden declines in prices, and with it, sharp widening in bid-ask spreads.

  And if SAC, pardon “Point72” is worried about liquidity risk, well… that means that Citi’s “Figure 4” is about to get much worse.

  So what is one to do? According to Mohamed el-Erian, prayer to the Fed works: the same Fed which is about to take away the liquidity…

  Some investors remain under the illusion that the Fed is going to reassure markets during periods of distress, said Mohamed El-Erian, chief economic adviser at Allianz SE.

   

  “The market is comfortable that whenever we hit a hiccup, the Fed is going to come back in,” he said. “It’s very deeply embedded that central banks are our best friends forever.”

   

  He noted that, even though the U.S. central bank “wants to” normalize rates, people have expressed in recent weeks that they still believe that the Fed will engage in another round of quantitative easing. He reiterated, however, that low liquidity remained a risk and that there was a 30 percent probability of a U.S. recession in 2017.

  … just to give it right back when the next rerun of the August 24 market-wide flash crash arrives, only this time there is no subsequent rebound and everyone comes crying to Aunt Janet to make it all well again and unleaseh NIRP or QE4, or both.

  

  

  

  

  

• Current Copper Price Below Cost of Production

  By EconMatters 

  

   

  Long Dollar Trade

   

  One of the common trades in financial markets these days is going long the US Dollar and shorting Commodities, especially the precious and industrial metals. This has been a bad year for commodities, and this trade has picked up steam with large fund flows the last 6 weeks.

   

  Schizophrenic Fed & Employment Reports

  This all turned around after the poor employment report of October 2^nd, followed by some trade unwinding thinking the Federal Reserve may be on hold for the remainder of the year after the dismal October Employment Report. This resulted in about eight days of currency unwinds and around October 14^th, Investors started putting the Long Dollar Trade back on as they realized the Fed still wanted to raise rates, and since China seemed to stabilize from a crashing standpoint, Fed Speak became hawkish to telegraph to financial markets that the December meeting was a potential live meeting for a rate rise. This trade really picked up speed when the November 6^th Employment Report came in much stronger than anticipated with a robust 271,000 new jobs created for the previous month.

   

  

  Trading Algos & Paper Markets

   

  Oil has also been hit along with the metals but it has inventory issues to contend with and is in the midst of a price war for market share. But there is no such price war in the metals industry, and although China`s weakness has no doubt tempered demand, the precious and industrial metals are basically being hammered down in the paper markets by fund flows in this Long Dollar Trade. This trade has become such a reflexive trade, that if the US Dollar is strong, the trading algos just start attacking Gold, Silver, Copper, Aluminum, Platinum and Palladium. These metals by and large trade as a group with slight differences in the charts based upon any unique demand characteristics of the given metal.

   

  

  Soft Demand

   

  Demand hasn`t really fluctuated much for any of these metals the last six weeks, China and the global economy are just sort of trudging along with China`s rebalancing and the global economy growing somewhere in the area of 3.5%. But what has changed the last 6 weeks is the large fund flows into the US Dollar all trying to front run the Federal Reserve, and shorting the Euro, (which makes up the largest component in the US Dollar Index), with traders also front running Mario Draghi who has been telegraphing more future stimulus for the European Union.

   

  

  No Shale Technology for Copper Mining

   

  But at some point every asset has a price, it really comes down to price, markets often over shoot in one direction or the other, but ultimately, what is a ‘fair price’ given the dynamics in the market. Copper is an interesting market because it is being slammed down with Gold and Oil, and the supply side of the Copper market has had its issues in 2015, with supply constraints limiting new supply on the market. Most of the pressures have come from the demand side of the equation with China`s rebalancing. But Copper doesn`t grow on trees, and is actually rather difficult to get out of the ground and process from a cost perspective. The steps involved in actually processing Copper to get it in a marketable form are rather extensive and involve considerable resources. And with six straight weeks of slamming down by traders we have reached the low level of $2 on the Nymex December Futures contract.

   

  

  Marginal versus Production Processing Costs

   

  There are various estimates for what the Marginal Cost of getting Copper out of the ground is before supply is taken offline completely. But it is reasonable to assume that Copper is currently being priced well below the long term Production Cost of Processing the Industrial Metal, and a large component for this trend is strictly fund flows in the Long Dollar Trade.

   

  

  Path Forward for Copper

   

  I am not sure how much this trade has left in it for the near term, who literally knows with asset prices and financial markets these days. But my intuition is that this Long Dollar Trade will probably be pushed into the European Central Bank Decision regarding more stimulus measures and the Fed December Meetings regarding a 25 basis point hike. Also, two other contributing factors are the December 4^th Employment Report and traders wanting to take profits before the actual event in early December.

   

  

  Buy the Rumor, Sell the News

   

  And given the fact that the Federal Reserve is probably going to go out of its way to talk dovish with a 25 basis point rate hike, almost a “One and Done” intended messaging given what the rest of the world is doing in this robust currency devaluation game; it probably means that traders buy the rumor, and sell the US Dollar hard after the actual news of a rate hike, at least in the near term.

   

  

  Short Covering Rally

   

  This is when traders will probably really unwind these Fund Flows with buying Gold hand over fist, covering the substantial shorts in the market, and simultaneously putting new money to work in Gold and the rest of the Industrial and Precious Metals. And if it starts getting cold Oil might even get a bid along with these commodities. We shall see how this all plays out in the market, but $2 Copper could be setting up for an ample short covering rally before 2015 ends!

  © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle

  

  

  

  

• Chicago's John Hancock Building Fire Is Out, Police Report 1 Injured

  A fire burning in a residence on the 50th floor of the John Hancock Center in Chicago has been put out according to the city’s fire department. At least 6 ambulances were on scene responding to the initial situation. One injury has been confirmed by the Chicago Fire Department via Twitter.

   

  The infamous John Hancock building in Chicago is on fire. CNN reports, and the following tweets show, flames visible halfway up and enormous plumes of smoke amid the freezing Illinois air. The fire is in the northeast corner of what appears to be the 50th floor of the building. No details yet on the cause or of any injuries…

  AP reports,

  A fire has broken out high up in the John Hancock Center, one of Chicago's tallest skyscrapers.

   

  Flames could be seen shooting out of a window on the 50th floor Saturday.

   

  Chicago police say they were getting calls reporting the blaze from people inside the building. It has offices and residential units, along with a rooftop observation room popular with tourists.

   

  It's not clear whether anyone is hurt.

   

  The Fire Department's media office tweeted that the fire was under control and firefighters were ventilating the floor. A Fire Department spokesman could not immediately be reached to provide more details.

  *  *  *

  Authorities have shut down Michigan Avenue, which will be holding the Magnificent Mile Festival of Lights Parade Saturday evening.

  Images from the scene…

  CFD on scene of 50th floor blaze at the Hancock. Tune to @WBBMNewsradio for latest. Photo: @TheRealTBlake pic.twitter.com/0uYLcYGJgd

  — Brad Edwards (@tvbrad) November 21, 2015

   

   

  #hancocktower #chicago @ABC7Chicago @SchulteABC7 pic.twitter.com/eubY8eVIPk

  — Chris DosSantos (@cdossantos5) November 21, 2015

  John Hancock on fire pic.twitter.com/jqIuNTH241

  — TheProShow (@NicoThePro) November 21, 2015

  NEW > fire in #Hancock tower #Chicago Pic via @cdossantos5 pic.twitter.com/mhCUGbDK7S

  — John Fricke (@JohnFricke) November 21, 2015

  Casually in Chicago and the Hancock building is on fire pic.twitter.com/IZq5aNrbMo

  — Samantha Wright (@_SamanthaRenee) November 21, 2015

  

  

  

  

  

• Recovery? "We Never Came Close"

  Economics is messy, rarely offering up a clear view of the economy. The chart below shows that Americans have taken on more revolving debt (credit cards basically) since March than they did the previous three years combined.

  

  As Alhambra's Joe Calhoun notes, this could be a positive or a negative and we won’t know until some time in the future.

  • It could be a reflection of confident consumers, readily taking on debt in an improving economy.
  • Or it could be that consumers are using their credit cards because they don’t have cash and this is a precursor to recession.

  That’s what happened in 2000 and 2007 but pointing that out these days gets you labeled a perma-bear. That might be a clue as to how one ought to interpret the data… but maybe not.

  The Fed has many problems with its attempt to convince the world that it has itself fulfilled its recovery mission. That self-reflected “mandate” is meant to include a masterful revisit to prior American infatuation with debt and credit. There was no more visible and visceral demonstration of those terms than the middle 2000’s, and it is the intent of monetary policy to get Americans back there. However, as Jeffrey Snider explains, in 2015, however, in the few areas where that has been found it does not identify monetary success but rather demonstrates even more how the theory never came close.

  Revolving credit has just surged this year, particularly starting in March. The numbers are staggering, as revolving credit balances, estimated and reported by the Federal Reserve itself, have jumped by more than $39 billion in the seven months ending with the update for September. By comparison, from the start of 2012 until February 2015, revolving credit balances expanded by about $44 billion; in just seven months this year consumers have indebted themselves by almost as much as they had in the more than three years before March.

   

  

  Economists are, as you would expect, nearly ecstatic over the impoverishment. To them, it signals the final capitulation of consumers to that which Janet Yellen has been professing since her term began. But there is a huge problem with that view; if consumers are borrowing, what are they doing with the balances?

  For the first time in at least a decade, imports fell in both September and October at each of the three busiest U.S. seaports, according to data from trade researcher Zepol Corp. analyzed by The Wall Street Journal. Combined, imports at the container terminals at the ports of Los Angeles, Long Beach, Calif. and around New York harbor, which handle just over half of the goods entering the country by sea, fell by just over 10% between August and October.

  The declines came during a stretch from late summer to early fall known in the transportation world as peak shipping season, when cargo volumes typically surge through U.S. ports. It is a crucial few months for the U.S. economy as well: High import volumes can signal a confident view on the economy among retailers and manufacturers, while fears of a slowdown grow when ports are quiet.

  The mainstream wishes to belittle the “manufacturing recession” as if it is in and of itself with no major economic connotations. Further, we know retail sales have been among the worst in the entire quarter-century of data, “bested” in consumer atrocity only by the depths of the Great Recession, in exactly this period where revolving, credit card usage has spiked.

  

  It isn’t just importations, either, though that already confounds orthodox understanding as far as what should be happening in trade because of the relative “cheapness” via the dollar exchange. Trucking and shipping companies internally have been vocal in their questioning the dominant, happy rhetoric. In short, if consumers are in full indebted throat upon an orthodox rebirth of the mid-2000’s there isn’t anything out in the real economy to suggest it. There aren’t swelling quantities of goods being moved, fewer in fact, and even less as far as counted spending. There has been a tendency to suggest that consumers, if avoiding goods, have been binging upon services, but they sure aren’t going to be using their credit cards to pay their health insurance premiums or bank fees.

  Instead, this discontinuity can only be consistent where consumers are completely out of options. If there are noticeably fewer goods being shipped here and within here, the US, and borrowing has just exploded at the same exact time then it is rather easy to conclude far more of full recession than recovery.

  That is a point that is further bolstered by the continuing surge in auto loans (as well as student loans via the federal government). In other words, overall manufacturing is, to be blunt, already in the toilet to which even economists recognize despite the fact that auto credit remains at the heart of a relatively robust auto sector; what does that say about the real nastiness in manufacturing apart from autos? What does it suggest about consumers where student loans aren’t being applied toward the labor participation problem?

  

  As it is, economists still can’t make any sense of it since they are convinced (though becoming, significantly enough, less so as you can see below) of Yellen’s forthrightness.

  Economists are divided as to whether the peak season slump signals a short-term hiccup for the U.S. economy, or marks the start of a sustained period of weakness.

   

  Some say the slump is being driven by businesses that have cut back on imports because of a weak economic outlook, which could point to sluggish global growth ahead. Others say it is a side effect of a massive inventory buildup that took place earlier in the year.

  Those are actually two parts of the same process, not competing explanations. If businesses have indeed started to cut back, then inventory is the marginal driving force derived from lower sales that have driven inventory to such heights. Add to that such “sluggish” outlook the indebting nature of consumers just to keep the economy in a bad state rather than something obviously worse and it is no wonder commodities and money markets are speaking to unthinkable contradiction.

  In short, there is no way to reconcile the sudden surge in credit card usage with this magnitude of reduced trade in goods that ends with the US on a surging plane of booming vigor. The “dollar” warned of such behavior and inconsistency starting in the middle of last year, and come to find out the pieces are fitting and corroborating that warning more and more.

  

  

  

  

  

• US Congresswoman Introduces Bill To Stop "Illegal" War On Assad; Says CIA Ops Must Stop

  Last month, US Congresswoman Tulsi Gabbard went on CNN and laid bare Washington’s Syria strategy. 

  In a remarkably candid interview with Wolf Blitzer, Gabbard calls Washington’s effort to oust Assad “counterproductive” and “illegal” before taking it a step further and accusing the CIA of arming the very same terrorists who The White House insists are “sworn enemies.” 

  In short, Gabbard all but tells the American public that the government is lying to them and may end up inadvertently starting “World War III.”

  For those who missed it, here’s the clip:

  That was before Paris. 

  Well, in the wake of the attacks, Gabbard has apparently had just about enough of Washington vacillating in the fight against terror just so the US can ensure that ISIS continues to destabilize Assad and now, with bi-partisan support, the brazen Hawaii Democrat has introduced legislation to end the “illegal war” to overthrow Assad. 

  Gabbard, who fought in Iraq – twice – has partnered with Republican Adam Scott on the bill. Here’s AP: 

  In an unusual alliance, a House Democrat and Republican have teamed up to urge the Obama administration to stop trying to overthrow Syrian President Bashar Assad and focus all its efforts on destroying Islamic State militants.

   

  Reps. Tulsi Gabbard, a Democrat, and Austin Scott, a Republican, introduced legislation on Friday to end what they called an “illegal war” to overthrow Assad, the leader of Syria accused of killing tens of thousands of Syrian citizens in a more than four-year-old civil war entangled in a battle against IS extremists, also known as ISIS.

   

  “The U.S. is waging two wars in Syria,” Gabbard said. “The first is the war against ISIS and other Islamic extremists, which Congress authorized after the terrorist attack on 9/11. The second war is the illegal war to overthrow the Syrian government of Assad.”

   

  Scott said, “Working to remove Assad at this stage is counter-productive to what I believe our primary mission should be.”

   

  Since 2013, the CIA has trained an estimated 10,000 fighters, although the number still fighting with so-called moderate forces is unclear. CIA-backed rebels in Syria, who had begun to put serious pressure on Assad’s forces, are now under Russian bombardment with little prospect of rescue by their American patrons, U.S. officials say.

   

  For years, the CIA effort had foundered — so much so that over the summer, some in Congress proposed cutting its budget. Some CIA-supported rebels had been captured; others had defected to extremist groups.

   

  Gabbard complained that Congress has never authorized the CIA effort, though covert programs do not require congressional approval, and the program has been briefed to the intelligence committees as required by law, according to congressional aides who are not authorized to be quoted discussing the matter.

   

  Gabbard contends the effort to overthrow Assad is counter-productive because it is helping IS topple the Syrian leader and take control of all of Syria. If IS were able to seize the Syrian military’s weaponry, infrastructure and hardware, the group would become even more dangerous than it is now and exacerbate the refugee crisis.

  And make no mistake, Tulsi’s understanding of Washington’s absurd Mid-East policy goes far beyond Syria. That is, Gabbard fully grasps the big picture as well. Here’s what she has to say about the idea that the US should everywhere and always attempt to overthrow regimes when human rights groups claim there’s evidence of oppression:

  “People said the very same thing about Saddam (Hussein), the very same thing about (Moammar) Gadhafi, the results of those two failed efforts of regime change and the following nation-building have been absolute, not only have they been failures, but they’ve actually worked to strengthen our enemy.”

  Somebody get Langley on the phone, this woman must be stopped. 

  Here’s Gabbard speaking to CNN this week about Assad:

  So there’s hope for the US public after all.

  Perhaps if the clueless masses won’t listen to “lunatic” fringe blogs or Sergei Lavrov, they’ll listen to a US Congresswoman who served two tours of duty in Iraq and who is now telling Americans that The White House, The Pentagon, and most especially the CIA are together engaged in an “illegal” effort to overthrow the government of a sovereign country and in the process are arming the very same extremists that are attacking civilians in places like Paris.

  Good luck Tulsi, and thanks for proving that there’s at least one person inside that Beltway that isn’t either dishonest or naive. 

  *  *  *

  From Gabbard

   “Here are 10 reasons the U.S. must end its war to overthrow the Syrian government of Assad:

  1. Because if we succeed in overthrowing the Syrian government of Assad, it will open the door for ISIS, al-Qaeda, and other Islamic extremists to take over all of Syria.  There will be genocide and suffering on a scale beyond our imagination.  These Islamic extremists will take over all the weaponry, infrastructure, and military hardware of the Syrian army and be more dangerous than ever before.
  2. We should not be allying ourselves with these Islamic extremists by helping them achieve their goal because it is against the security interests of the United States and all of civilization.
  3. Because the money and weapons the CIA is providing to overthrow the Syrian government of Assad are going directly or indirectly into the hands of the Islamic extremist groups, including al-Qaeda affiliates, al-Nusra, Ahrar al-Sham, and others who are the actual enemies of the United States.  These groups make up close to 90 percent of the so-called opposition forces, and are the most dominant fighters on the ground.
  4. Because our efforts to overthrow Assad has increased and will continue to increase the strength of ISIS and other Islamic extremists, thus making them a bigger regional and global threat.
  5. Because this war has exacerbated the chaos and carnage in Syria and, along with the terror inflicted by ISIS and other Islamic extremist groups fighting to take over Syria, continues to increase the number of Syrians forced to flee their country.
  6. Because we should learn from our past mistakes in Iraq and Libya that U.S. wars to overthrow secular dictators (Saddam Hussein and Muammar Gaddafi) cause even more chaos and human suffering and open the door for Islamic extremists to take over in those countries.
  7. Because the U.S. has no credible government or government leader ready to bring order, security, and freedom to the people of Syria.
  8. Because even the ‘best case’ scenario—that the U.S. successfully overthrows the Syrian government of Assad—would obligate the United States to spend trillions of dollars and the lives of American service members in the futile effort to create a new Syria.  This is what we have been trying to do in Iraq for twelve years, and we still have not succeeded.  The situation in Syria will be much more difficult than in Iraq.
  9. Because our war against the Syrian government of Assad is interfering with our being one-pointedly focused on the war to defeat ISIS, Al-Qaeda, and the other Islamic extremists who are our actual enemy.
  10. Because our war to overthrow the Assad government puts us in direct conflict with Russia and increases the likelihood of war between the United States and Russia and the possibility of another world war.”

  *  *  *

  Oh, and if you needed another reason to like Tulsi, here’s a bonus 40 second clip for your amusement…

  

  

  

  

  

• Mission Accomplished?

  Success… or?

   

  

   

  Source: Townhall.com

  

  

  

  

  

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• Belgium Warns Of "Imminent" Terror Threat In Brussels: "Avoid Crowded Areas"

  Following the massacre that unfolded last Friday in Paris, Belgium has become a focal point for European authorities’ anti-terror efforts. 

  As we detailed in “Meet The 27-Year Old “Mastermind” Behind The Paris Attacks“, Abdelhamid Abaaoud began to figure prominently in discussions among Western intelligence officials after two of his operatives were killed in a January raid in Verviers.

  Abaaoud was born in Belgium, and partly due to the “fame” he achieved by orchestrating the ISIS operation in Paris, the entire world is now suddenly awake to the role Brussels plays in serving as a kind of terrorist incubator.

  Specifically, all eyes are on Molenbeek, a working class, immigrant neighborhood which Foreign Policy notes is separated from the historical district by a “breezy canal” and is but a 20 minute subway “hop” from Brussels’ European Quarter. 

  

  As The New York Times recounted earlier this week, “the assassination of the Afghan anti-Taliban commander Ahmed Shah Massoud, immediately before the Sept. 11 attacks in 2001; the train bombings in Madrid in 2004; and the killing of four people at the Brussels Jewish Museum in 2014; the foiled shooting on a high-speed train, the anti-terrorist raid in the eastern Belgian town of Verviers, the attack on a Paris kosher supermarket and, finally, the Nov. 13 attacks on the French capital — all had some connection to Molenbeek.“

  In short, Molenbeek is to European terrorists what Charlestown is to bank robbers, although residents are understandably distressed about that rather unflattering characterization. 

  In any event, Belgium is now on high alert – literally. As AFP reports, Belgium has raised its terror alert level to the highest level for Brussels on Saturday. An attack, officials say, could be “imminent”:

  “Following our latest evaluation… the centre has raised its terror alert to level 4, signifying a very serious threat, for the Brussels region,” said a statement from OCAM, which comes a week after the Paris attacks left 130 dead.

   

  “The analysis shows a serious and imminent threat requiring specific security measures as well as detailed recommendations to the population,” OCAM, which is part of the Belgian Interior Ministry, said in the statement.

  Here’s the whole statement (Google translated):

  Following a new assessment of the OCAM performed this Friday, 20/11 at night, the terror alert level rose to a level 4, very serious, for the Brussels Region. Level 3 continue to apply to the rest of the country.

   

  The analysis shows indeed a serious and imminent threat that requires taking specific security measures as well as specific recommendations for the population.

   

  Advice to the population:

   

  Avoid places with high concentrations of people in the Brussels region (concerts, major events, train stations and airports, public transport, places of high commercial concentration).

   

  Facilitate follow the safety controls

  
  

  Do not post rumors: follow the official information from the authorities and police services

  
  

  In order to enable judicial inquiries to track their progress, no further details will be given. A communication from the Government will follow tomorrow morning.

  

  Yes, “no further details will be given.” Until a raid turns up a couple of Syrian passports that is.

  

  

  

  

  

• Congress Wants To Seize Your Passport For Unpaid Taxes

  Submitted by Simon Black via SovereignMan.com,

  Sometimes you just have to stand in awe at the level of corruption and incompetence in government.

  Case in point, the new highway bill in the Land of the Free. And, trust me, you’ll love this.

  The latest version of the highway bill is called the “Developing a Reliable and Innovative Vision for the Economy Act.”

  And yes, they abbreviate it as the DRIVE Act.

  I cannot even begin to imagine how large the team of monkeys is that works on these silly acronyms. And as is typical for legislation, the more high sounding the name of the law, the more destructive its consequences.

  On the surface, the DRIVE Act aims to fund the federal transportation network and investments in highway infrastructure for the next several years, as well as recapitalize the Highway Trust Fund.

  Federal trust funds are supposed to responsibly and conservatively manage money that has been set aside for a specific purpose to benefit taxpayers.

  There are so many of these trust funds. There are the big ones like Social Security’s “Old Age Survivor’s Insurance” and “Disability Insurance” (which is literally days away from running out of money).

  And there are many more you’ve probably never heard about, like the “Black Lung” trust fund and the “Leaking Underground Storage Tank” trust fund.

  Most of these funds are insolvent, or at least pitifully undercapitalized, clearly proving the government to be one of the worst asset managers in history.

  The Highway Trust Fund is no exception: it has completely run out of money, and at this point literally has a ZERO account balance. The DRIVE Act intends to fix that.

  And even though it has nothing to do with funding highways, the bill also aims to re-authorize the Export-Import Bank.

  The Ex-Im Bank was created during the Great Depression and is designed to facilitate trade. That’s code for ‘boost the profits of Boeing and General Electric.’

  Even the government’s own Congressional Research Service found that “more than 60% of Ex-Im Bank’s loan guarantees, by dollar value, supported the sale of Boeing airplanes in foreign countries”.

  Ex-Im is essentially a gift on a golden platter from the taxpayers of the United States to a handful of mega-companies.

  The Bank’s charter lapsed earlier this year. But rather than let it die, they’re jumpstarting Ex-Im with even more taxpayer money.

  Clearly the government needs cash. They need to fund Ex-Im, the Highway Trust Fund, and all the improvements for America’s dilapidated infrastructure.

  And their solutions to address this cash crunch are nothing short of remarkable.

  For example, they plan to steal $300 million from the Leaking Underground Storage Tank trust fund (LUST… yes, that’s really what they call it), and transfer that money to the Highway Fund.

  The only problem is that LUST is insolvent. So they’re stealing from one insolvent trust to fund another insolvent trust. It’s genius!

  One of my favorite sections in the bill is a directive to sell off 100+ million barrels of oil from the Strategic Petroleum Reserve.

  Only a politician could think to sell off oil supplies at a time when oil price is at multi-year lows.

  (It also really gives you a sense of how broke the government really is that they’re driven raise cash by selling off strategic assets.)

  Another gem buried in the 864 pages of the bill is a provision that allows the government to revoke your passport if they believe that you owe more than $50,000 in federal tax.

  There will be no judicial review, and no due process. You don’t get to go in front of a judge first to have a fair and impartial hearing over whether or not the government’s tax allegations are accurate.

  The language in the law is very clear: they can simply revoke your passport if you owe them money in their sole discretion.

  Once the law is passed, this would go into effect on January 1, 2016, and they claim it will generate $40 million per year in tax revenue.

  There was one more provision that proposed raising revenue from the biggest banks in America by reducing the dividend they receive from the Federal Reserve.

  Curiously, though, this specific provision was defeated yesterday after a heated committee meeting in Congress.

  So while the banks’ profits are off-limits, and the government will spend billions of taxpayer dollars to boost profits at Boeing, American citizens are threatened with having their passports revoked in order to raise money.

  It couldn’t be any more obvious how much the system is stacked against the little guy.

  They treat you like a dairy cow that exists only to be milked dry… like a medieval serf tied to the land and forced to serve his overlords.

  It’s revolting. But it doesn’t have to be this way.

  You can take sensible, rational steps to divorce yourself from this madness, or at least have a Plan B to protect yourself from it.

  If the government is threatening to take away your passport, for example, there are countless ways you can obtain another one from a country that will roll out the red carpet for you.

  If you’re sick and tired of having your income confiscated so that you can bail out big companies, there are completely legal steps you can take to reduce what you owe.

  It’s hard to imagine you’ll be worse off being more free and having more control over your life and finances.

  

  

  

  

  

• For Sale: Apocalypse Bunker, Can Withstand 20 Kiloton Nuclear Blast; Furnished: Asking $17,500,000

  Earlier this week we presented the Oppidium: a concept doomsday shelter which would be located in the Czech Republic, catering exclusively to billionaires who could watch mushroom clouds wrap the earth in a radioactive glow just the way they like it: in posh opulence, as the following proposed images suggested:

  

  Interior bedroom of bunker

  

  Bunker swimming pool and garden using artificial lighting

  

  Underground bunker wine cellar

  And the bottom line:

  

   

  Upon some further recollection three things emerged: the Oppidium bunker is completely useless because i) it was all style over substance; ii) it was a marketing gimmick for its designer/seller, and iii) it doesn’t even exist yet and furthermore its completion cost further billions.

  But perhaps most importantly, the bunker was located in Europe, somewhere in the Czech heartland, and as such would be largely useless to the targeted customer base: uber-wealthy Americans with a penchant for if not immortality then outliving everyone else, and who would hardly have the time to reach it as the “Apocalypse-level” event unfolded.

  Addressing all of these concerns is an underground facility and bunker dubbed “The Facility” in Southeast Georgia, located two hours from Savannah, which just hit the market for a far more modest $17.5 million, and which most importantly, is in “move-in ready” shape.

  As BizJournals reports, the property (which is exclusively listed by Sister Hood of Harry Norman, Realtors Buckhead Office), was built in 1969 and fully renovated to government standards in 2012. Its address is undisclosed.

  According to Harry Norman, it is the only hardened and privately owned underground bunker of its kind in the United States. The property features a commercial 3-Phase power plant, in addition to its own 8Kw new solar backup system. The facility is also equipped with a $100,000 CCTV security system.

  “Above ground, The Facility offers 2,000 square feet of commercial space, a renovated 1,000-square-foot caretaker’s home and below ground the facility offers 14,000-square-feet of living and working space,” the company reported. “The Facility is 45 feet underground and certified to withstand a 20K ton nuclear blast.”

  The Facility stands on 32 acres and has two levels of underground living space.

  Level two has four luxury apartments that are about 600-square-feet. The apartments are totally self-contained and have two full bedrooms, a kitchen and dining area, a living room with TV and internet and a large bathroom in addition to its own security, a HVAC system and environmental monitoring sensors. Level one of the underground facility has common areas similar to a luxury hotel, the company said.

  “Guests can enjoy the large home theater with seating for 15, a commercial grade kitchen, a recreation area, library and TV room,” Harry Norman reported. “The Facility is equipped with a full workshop, a separate business and conference center and fully equipped medical room.”

  In other words, unlike the Czech pipe dream, the Atlanta bunker can not only withstand a direct nuclear blast, but is move in ready right now – a key selling point which no other “concept” apocalypse shelters have as of this moment.

  Here is the full listing:

  

   

  And here is what $17,500,000 (price is negotiable) gets you.

  

  

  

  

  

  

  

  

  

  

  

  

  

  More images available here

  

  

  

  

• Fed To Hold An "Expedited, Closed" Meeting On Monday

  Given how awesome everything appears to be, judging by stocks and the tidal wave of FedSpeak of the last week confirming that rates are rising in December, we found it at least marginally ‘odd’ that out of the blue,  The Fed would announce an ‘expedited, closed’ meeting on Monday…

   

  

   

  As we are sure to be told: “it’s probably nothing!”

  

  

  

  

  

• No Joke! The Onion Predicted All Of This Back In 2003

  Submitted by Carey Wedler via TheAntiMedia.org,

  “George W. Bush may think that a war against Iraq is the solution to our problems, but the reality is, it will only serve to create far more,” read a 2003 article on The Onion a week after then-President George Bush launched the Iraq War. While a wide variety of organizations and individuals also rebuked that invasion, the satirical newspaper offered one of the most accurate assessments to date. So accurate, in fact, it all but predicted the rise of the Islamic State.

  In the mock-debate piece, entitled, “This War Will Destabilize The Entire Mideast Region And Set Off A Global Shockwave Of Anti-Americanism vs. No It Won’t,” The Onion highlighted the very real risks of war.

  As fictional debater Nathan Eckert warned:

  “This war will not put an end to anti-Americanism; it will fan the flames of hatred even higher. It will not end the threat of weapons of mass destruction; it will make possible their further proliferation. And it will not lay the groundwork for the flourishing of democracy throughout the Mideast; it will harden the resolve of Arab states to drive out all Western (i.e. U.S.) influence.”

  He continued:

  “If you thought Osama bin Laden was bad, just wait until the countless children who become orphaned by U.S. bombs in the coming weeks are all grown up. Do you think they will forget what country dropped the bombs that killed their parents? In 10 or 15 years, we will look back fondly on the days when there were only a few thousand Middle Easterners dedicated to destroying the U.S. and willing to die for the fundamentalist cause. From this war, a million bin Ladens will bloom.”

  More than a decade into the chronic conflict, the Onion’s projects are eerily—albeit predictably—accurate. By 2006, national security experts were warning the war was inspiring further radicalism. One of the Boston Marathon bombers was radicalized by the Iraq War. The Charlie Hebdo shooters were also radicalized by Western intervention in the Middle East.

  As the Guardian pointed out earlier this year, “there was no al-Qaida in Iraq until the US and Britain invaded. And the US has certainly exploited the existence of Isis against other forces in the region as part of a wider drive to maintain Western control.”

  The Onion article poked fun at empty rebuttals many proponents of war offered at the time.

  “Why do you keep saying these things? I can tell when there’s trouble looming, and I really don’t sense that right now. We’re in control of this situation, and we know what we’re doing. So stop being so pessimistic,” wrote the fictional opposing debater, Bob Sheffer.

  But the United States was not in control—and the pessimism (read: realism) was warranted. The Islamic State has thrived not only because of radical Islam, but because of resentment sparked by American intervention. A recent report by The Nation details interviews the author conducted with imprisoned Islamic State fighters. Journalist Lydia Wilson explained that while most people in the West believe the Islamic State is rooted solely in religion, it has attracted fighters for other reasons:

  “They are children of the occupation, many with missing fathers at crucial periods (through jail, death from execution, or fighting in the insurgency), filled with rage against America and their own government. They are not fueled by the idea of an Islamic caliphate without borders; rather, ISIS is the first group since the crushed Al Qaeda to offer these humiliated and enraged young men a way to defend their dignity, family, and tribe,” she wrote.

  As Eckert  opined in The Onion over 12 years ago:

  “Is our arrogance and hubris so great that we actually believe that a U.S. provisional military regime will be welcomed with open arms by the Iraqi people? Democracy cannot possibly thrive under coercion. To take over a country and impose one’s own system of government without regard for the people of that country is the very antithesis of democracy. And it is doomed to fail.”

  Just as proponents of war today dismiss long-term risks of continued intervention, the fictional Sheffer downplayed any negative consequences:

  “No it won’t. It just won’t. None of that will happen,” he replied to Eckert.

   

  “You’re getting worked up over nothing. Everything is going to be fine. So just relax okay? You’re really overreacting.”

  This is not the first Onion piece to foreshadow real world events. Earlier this year, a satirical article published on the site predicted the United States would offer weapons to Israeli Prime Minister Benjamin Netanyahu to placate him following Obama’s progress on the United States’ nuclear deal with Iran.

  

  

  

  

  

• Why Only Free Speech Gives Safe Space To The Oppressed

  Submitted by Dan Sanchez via TheAntiMedia.org,

  Social justice protests have been roiling American universities, even causing administrative heads to roll. To a significant degree, these campus uprisings have been characterized by an impulse to restrict speech and expression for the sake of creating “safe spaces” for marginalized groups. However, speech restriction is a double-edged sword that can just as easily injure the very people campus activists seek to help.

  The turmoil at the University of Missouri (Mizzou) in particular was sparked by racial incidents. And the protesters are closely aligned with the Black Lives Matter movement, which combats police brutality against black Americans.

  However, cops themselves have recently sought to restrict speech and expression in order to insulate that very brutality from criticism.

  As William N. Grigg wrote last year:

  “The NYPD has now added its name to the roster of Officially Protected Victims by filing ‘hate crimes’ charges against 36-year-old Rosella Best, who had tagged police vehicles and a public school with anti-NYPD graffiti. Among the entirely defensible sentiments inscribed by Best are ‘NYPD pick on the harmless,’ ‘NYPD pick on the innocent,’ and?—?in a display of familiar but increasingly justified hyperbole?—?‘NAZIS=NYPD.’ (Assuming that Ms. Best used only ‘public’ property as her canvas, it’s difficult to identify an actual victim in this case.)”

  And earlier this year, the Fraternal Order of Police demanded that Congress extend such special protection to the federal level.

  Many critics of the police have been arrested and charged over Facebook posts. Matthew Townsend of Meridien, Idaho was prosecuted as a felon for a Facebook post warning of a “non-violent and legal shame campaign,” which was treated by the authorities as a “terroristic threat.” Thomas Smith of Arena, Wisconsin was arrested and charged with “unlawful use of a computerized communication system” for throwing nothing more than F-bombs and accusations of racism at local cops on Facebook. And there was a whole wave of arrests last year over fierce anti-cop online rhetoric following the police killings of Michael Brown and Eric Garner and subsequent murders of police officers.

  In addition to arrests and prosecutions, cops have been orchestrating campaigns to have their social media critics shunned and fired. See the cases of restaurant workers Ashley Warden and Shawn Peterson.

  High profile cops from Wisconsin to Georgia have characterized Black Lives Matter as a “hate group,” and called for a crackdown on its “incitement.”

  Police (including the U.S. top cop, FBI Director James Comey) are also blaming the increase in violent crime in some cities on “the YouTube effect,” claiming officers are holding back from “proactive” (aggressive) policing for fear of having recordings of their violence go viral.

  Thus, ostensibly for the sake of “officer safety” (the blue brotherhood’s version of “safe space”), legislation has been proposed to make it a crime for ordinary people to point cameras at cops.

  Given these assaults by cops on the rights of individuals to combat police brutality through speech and the use of media, it is deeply troubling that allies of Black Lives Matter at Mizzou should have reacted to journalists trying to photograph their rally with threats of violence, and even police violence.

  While a crowd of protesters was physically forcing student photographer Tim Tai out of a public space on campus, one of the activists warned him, “They can call the police on you.”

  After Tai was driven away, the journalist who video recorded the incident remained. Faculty member Melissa Click demanded that he leave, too. When the journalist refused, Click tried to enlist fellow activists to physically remove him, saying:

  “Who wants to help me get this reporter out of here? I need some muscle over here!”

  This was a “progressive” assistant professor of mass media calling for “muscle” to be deployed against a journalist in a public space!

  In addition to Black Lives Matter, the Palestine solidarity movement is yet another just cause championed by the campus left that is imperiled by threats to speech. Moreover, these threats are emerging on university campuses and are being justified on “social justice” grounds. Like the cops, defenders of the Israeli occupation of Palestine are seeking to restrict speech on an “anti-hate” basis in order to insulate the occupation’s brutality and atrocities from criticism. As Nora Barrows-Friedman recently reported:

  “A member of the University of California’s governing body has called for the expulsion or suspension of students for expressing their views about Israel, under the guise of combating anti-Jewish bigotry.

   

  “This comes as Israel lobby groups, flush with huge new injections of cash, are stepping up their efforts to silence the Palestine solidarity movement on campuses nationwide.

   

  “During a 17 September meeting of the University of California (UC) Regents to discuss a ‘statement of principles against intolerance,’ Richard Blum also threatened to have his wife, US Senator Dianne Feinstein, publicly criticize the university if it did not enforce penalties against perceived bigotry.

   

  “Feinstein’s criticism could put the university system under federal scrutiny.

   

  “Another regent, Hadi Makarechian, agreed, according to The San Francisco Chronicle, saying that without punishment, ‘we’re just stating a lot of stuff on paper.’

   

  “Blum and other regents, backed by Israel lobby groups, are pushing the university to adopt policies that free speech advocates warn could violate the First Amendment.

   

  “The Board of Regents had been due to vote on whether to adopt the US State Department’s definition of anti-Semitism as university policy at its meeting in July.

   

  “That definition is based on a ‘working definition’ of anti-Semitism once considered by a European Union body but later dropped.

   

  “Palestine solidarity and free speech advocates point out that the government definition conflates criticism of Israel with anti-Jewish bigotry. A key strategy of Israel advocates, they say, has been to urge university administrators to treat criticism of Israel and anti-Semitism as one and the same.”

  Just as the cops are blaming Black Lives Matter and viral videos for “inciting” violence against police, the hard-right Israeli government and its champions throughout the world have similarly been accusing the Boycott, Divestment and Sanctions (BDS) movement, and the online dissemination of documented Israeli brutality, of being “incitement” for terrorism against Israel. They are pushing to have such “incitement” restricted.

  And they are succeeding. In October, France’s highest court ruled that advocacy of BDS is illegal “incitement” and “hate speech.” And as Glenn Greenwald wrote in The Intercept:

  “In May, CBC reported that Canadian officials threatened to prosecute BDS activists there under ‘hate speech’ laws, and after those officials denied doing so, we obtained and published the emails proving they did just that. The February Haaretz article described this troubling event in the U.K.: ‘In 2007, the British University and College Union said it would drop plans to boycott Israeli institutions after legal advisers said doing so would violate anti-discrimination laws.’ In 2013, New York City officials joined an (ultimately failed) Alan Dershowitz-led campaign to threaten the funding of Brooklyn College for the crime of hosting pro-BDS speakers.”

  Again, restricting speech is a double-edged sword. As the American Civil Liberties Union (ACLU) warned:

  “Free speech rights are indivisible.

   

  “Restricting the speech of one group or individual jeopardizes everyone’s rights because the same laws or regulations used to silence bigots can be used to silence you. Conversely, laws that defend free speech for bigots can be used to defend the rights of civil rights workers, anti-war protesters, lesbian and gay activists and others fighting for justice.”

  Many campus activists have lashed out in frustration at “free speech purism,” which they regard as misplaced in the context of institutionalized oppression. But it is extremely short-sighted to sacrifice universal principle on the altar of identity politics for the sake of marginalized groups.

  Once you accept the infringement of universal rights as an acceptable political weapon, it will be wielded more effectively by oppressors against the oppressed (cops against blacks, Israeli occupiers against Palestinians, etc.), and not the other way around. Authoritarian restriction is a game much better suited for the mighty than for the marginalized.

  If you replace the power of principle with the principle of power, it is the relatively powerless who will get the worst of it.

  

  

  

  

  

• Friday Humor: Meet Phuc Dat Bich – The Aussie Man Who Is "Irritated" At Facebook Ban

  A 23-year-old from Melbourne had to upload a picture of his passport and vented his frustration on Facebook after they banned his account three times on the grounds his name was “false and misleading.”

  We can perhaps understand why…

  

  “I find it highly irritating the fact that nobody seems to believe me when I say that my full legal name is how you see it,” the post reads.

   

  “I’ve been accused of using a false and misleading name of which I find very offensive. Is it because I’m Asian? Is it?”

   

  “Having my Facebook shut down multiple times and forced to change my name to my ‘real’ name, so just to put it out there. My name.”

  The name, which is pronounced ‘Phoop Dook Bic’, is reportedly a common in Vietnam, despite the spectacular response it has received in Australia.

  * * *

  Of course, the more important question for Facebook is – is he a terrorist?

  

  

  

  

• Even The 1% Is Hurting: Swiss Watch Exports Plunge Most Since Financial Crisis

  As the poor get poorer, so the saying goes, the rich get richer; and until recently that was not just true, but apparently mandated so by The Fed. However, the last few months have seen the so-called "1%" appearing to struggle a little in their largesse. As we noted previously, not only are luxury jet values dropping for the first time since 2009, London mansion prices plunging, San Francisco home sales collapsing, and Sotheby's laying people off, but now, as Bloomberg reports, Swiss watches – the ultimate in luxury extravagance – have seen exports crash by the most since the financial crisis.

   

  Swiss watch exports collapsed 12.3% YoY in October… the worst since the financial crisis and not seen outside of a US recession…

  

   

  “2015 has been one to forget for the watchmakers,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. As Bloomberg reports,

  Swiss watch exports had their biggest decline in six years in October, led by a 39 percent slump in shipments to Hong Kong, the industry’s largest market.

   

  Shipments declined 12 percent to 2 billion Swiss francs ($2 billion), the Swiss customs office said in a statement Thursday.

   

  Exports to the U.S. dropped 12 percent.

  But aside from that, it appears only one thing has really benefited from The Fed's largesse (as demand for Diamonds and Fine Wine has crashed)…

  

   

  The rich appear to be cinching up the purse strings, and as we concluded previously, that is not a good sign…

  So the rich are becoming less rich? To an extent, yes. Recent declines in commodity prices and emerging market debt have no doubt taken a bite out of some big portfolios. Meanwhile hedge funds, the preferred investment management vehicle of the uber-wealthy, have done badly for the past couple of years, with some high-profile implosions generating headlines.

   

  These disappointments have lowered the net worth of some big players and made others more cautious. Hence the lessened demand for the most pretentious assets.

   

  The impact on the global economy? Almost certainly bad, since the 1% are the marginal buyers of so many reference assets like blue-chip stocks and government bonds. To the extent that they grow cautious, the bid for a lot of things will be lower, cutting corporate profits, equity valuations and high-end asset prices.

  Put another way, when the only healthy part of an already-impaired system turns negative, everyone will feel the resulting pain.

  Charts: Bloomberg

  

  

  

  

  

• Paris Attacks: Another False Flag? Sifting Through The Evidence

  Submitted by Joachim Hagopian via Global Research,

  What do the globalists do when they want to create, reignite and keep their war on terror fought indefinitely? They simply carry out a series of false flag attacks using Muslim terrorist stooges as their hired guns to do their damage. That’s what 9/11 was all about in the US, 7/7 in UK, the 3/11 train attack in Spain, the Hebdo Paris attack last January, and now this latest Paris encore reenactment part two.

   

  In any unsolved crime the first question asked is who benefits by motive with an actual means to execute the crime?

   

  In all of these tragic false flag events the global elite benefits in multiple ways. And it most definitely has the means by issuing marching orders to its owned and operated national governments, its favorite being the militaristic, brutal American Empire.

   

  The elite’s agenda to polarize and destabilize the world politically and militarily manifests through the US foreign policy of regime change, nonstop war through divide and conquer methodology (i.e., Shiites vs. Sunnis, Euro-nationals vs. foreign migrants, Christians vs. Muslims, light skins vs. dark skins) and economic austerity through unpayable high interest from predatory IMF bank loans to debtor nations from both the developing and developed world.  Through global theft and destruction, the ruling elite reigns supreme in absolute power.

  For decades after World War II US-NATO-Western European allies conspired and perpetrated state sponsored terrorism murdering their own citizens through a protracted series of Gladio operations originally designed to falsely accuse Communist groups in Italy. Spanning over thirty years with violent incidents throughout Europe and Turkey, Gladio-like false flag operations never stopped. Gladio at home took the form of the US Joint Chiefs of Staff’s Operation Northwoods that JFK abruptly halted, partially resulting in his own self-undoing, killing the diabolical military plot of murdering innocent US citizens in Miami and Washington DC in order to blame and start a war against Cuba. The US especially but numerous governments have regularly engaged in false flag operations killing their own to trigger wars, shape public opinion, conceal and divert attention away from citizens ever catching on to the dirty lowdown truth.

  The Friday the 13^th Paris massacres were highly organized, committed by heavily armed, closely monitored terrorist professionals unleashed onto an unsuspecting, culturally diverse group of young Paris victims. The coordinated attacks seem to carry all the earmarks as state of the art false flag terrorism having had lots of previous practice, most notably the Paris Charlie Hebdo edition. But the growing anomalies stacking up once again turn out to be no different from its predecessors.

  All have promoted the same globalist agenda toward unlimited invasive authoritarian surveillance used to bring about increasing draconian measures in order to gain absolute tyrannical control over the populace. At the same time it exploits xenophobia and islamophobia amongst its citizenry that in turn increase hatred and tensions laying the groundwork for potential civil war. Today the elite is skillfully working its proven divide and conquer formula perfectly. In one fell swoop it creates the unstable conditions fomenting civil unrest and violent backlash that then increasingly justify oppressive, over-the-top counterterrorism and police state tactics that obliterate human rights.

  Finally, false flag terrorism launches a militarized backed by a globally legislative crackdown targeting all dissidence and activism exposing the governments’ false narrative of lies and propaganda, labeling and criminalizing the dissenting truth as homegrown terrorism.

  The surreptitiously obtained Syrian passport found so quickly after the fact in Paris has become a false flag trademark used in both Charlie Hebdo and 9/11. Because this pattern proved a serious liability for establishing any credibility, it was later disclosed that the passport actually came off the body of “a Syrian refugee,” as if that made MSM any more believable.

  Even before the passport fiasco, the alleged terrorist’s quote from a supposed witness “this is for Syria” was obviously disclosed by mainstream media to shape and manipulate public opinion into quickly blaming Syria, ISIS and Syria’s targeted leader Assad. And then long before any of this alleged (dis)info began surfacing, barely an hour into the attacks while still actively underway, President Hollande kept repeating three times in the next several hours what appeared to be his scripted lines already declaring that France was at war against already identified terrorist attackers from Syria before any investigation had even begun. This rapid sequence of events smacked of false flag.

  Furthermore, like the Hebdo attack earlier this year, reports immediately commenced disclosing that French intelligence had long been tracking the perpetrators prior to the attacks. Former antiterrorist judge Marc Trevidic in a Sunday interview claimed that French authorities knew of an impending terrorist attack being planned by Islamic State jihadists “at a French rock concert” as early as August.

  The judge had cross-examined militants three months earlier who revealed this rather critically important piece of information. This strongly suggests French intelligence had prior knowledge of the Friday night massacres. Turkey also warned the authorities in France twice about one of the three alleged suicide bombers but The Guardian reported that France only contacted Turkey for information after the Paris attacks. Again, it seems more than plausible that French security forces knew about the planned attacks but purposely failed to stop them or may have even played a sinister role in allowing them to occur.

  A couple of other striking parallels with 9/11, when the BBC reporter announced that Building 7 went down 20 minutes prior to the event, the Paris attack was described on twitter dated a full two days in advance of the November 13^th killings. Also Wikipedia within two hours from the very onset of the attacks already had posted a fully detailed account complete with footnotes specifying “Syria” being mentioned by a witness, “5 or 6 terrorists”, and “3 suicide bombers” all from the get-go pointing to the big bad Muslim villains yet again. The clinching evidence was Wikipedia running an early story version at 23:06 specifying:

       In a televised statement at approximately 23:58 (local time), French President François Hollande declared

       a state of emergency and closing of borders for the whole of France.

  For that announcement on Wikipedia to be made nearly an hour prior to Hollande’s actual statement could suggest that Wikipedia was in fact being used by the French authorities as an information disseminator of a preplanned event, right away establishing an official narrative from the outset that Arab terrorists from Syria were the guilty murderers behind the attacks far in advance of the start of even a preliminary investigation.

  It’s also been recently learned like in several previous false flags that security forces in Paris were simultaneously undergoing another live action emergency drill earlier that same day (as in Charleston, Baltimore, Boston, 9/11). Patrick Pelloux, an emergency medical services specialist and one of the first responders to the attacks, confirmed in a radio interview that a live drill had been conducted that morning of the 13^th. These co-occurring government events timed perfectly to overlap so called acts of terrorism cannot be considered purely co-incidental.

  Adding more weight to the false flag suspicion is the fact that just two weeks prior to Friday’s attack on October 29^th CIA Director John Brennan met with his French counterpart along with UK’s MI6 former chief and former Israeli national security advisor. Additionally on Monday Brennan admitted that the international intelligence community expected a terrorist attack in Europe. Just as the Islamic terrorist mercenaries always “accidentally on purpose” leave their calling cards behind, so are the dirty CIA-Mossad fingerprints left indelibly written all over virtually every state sponsored terrorism on this planet. For years it’s been repeatedly demonstrated that US and Israeli intelligence forces have been covertly working directly with the Islamic State jihadists. NSA documents show that ISIS leader El Baghdadi was trained by Mossad. A recently captured IDF colonel was caught leading Islamic State forces. Overwhelming evidence has proven the US-Israeli-Saudi-Turkish-Gulf State connection to ISIS terrorists, documenting this intimate partnership in the manufactured war on terror.

  In late September after Putin outed Obama’s fake war against ISIS at the UN, then throughout October actually destroying ISIS where Obama only pretended, the lost face of a humiliated Emperor’s new clothes turned US war policy in the Middle East completely topsy-turvy. Obama’s dubious leadership sank to an international all-time low when Putin exposed America’s deliberately failed MENA policy. Allied nations were cutting their losses and announcing plans to pull out of Syria. US Empire of Chaos and Destruction was fast losing its global control, its coercive power to subjugate its Euro-puppets into blind submission seriously and overtly eroding.  On top of that, while Europe is still reeling from the refugee mass migration crisis directly caused by the US imperial aggression, they were marveling over grandmaster Putin’s bold stroke of finally kicking some Islamic State ass. Stalwart US Euro-ally Germany was already shifting gears warming its relations with Russia, unwilling to follow Washington’s disastrous lead down doomsday road.

  So what do the neocon goons in full damage control mode come up with?

  While US-Israel are holding joint military exercises in the Sinai desert, did they coordinate with ISIS to make sure it shoots down the Russian airliner as immediate Putin payback?  Then came Defense Secretary Carter’s Russia bashing threats from the Ronald Reagan Library followed just hours later a few miles away with the Trident missile’s Saturday night LA bright light show seen around the world as an exclamation threat to Russia and China to back off from challenging US Empire’s global hegemony.

  The DC warmongers are growing increasingly desperate, afraid of losing both their full spectrum dominance in the world as well as their precious proxy terrorist ally while Putin’s aid to Assad is putting the final kibosh on their fanatical OCD regime change operation.

  So Brennan meets up with French and Israeli intelligence to conjure up the next Paris false flag. And since Hollande’s been Washington’s loyal go-to lackey with Hebdo already under his belt, heading up France’s active role in the imperialistic assault on both Libya and Syria, with Paris terrorism #2 France now becomes US Empire’s key catalyst to pull off another massive 9/11-like attack, in fact the biggest in France since WWII and be the justified driving force behind this newest “coalition of the willing” stepping up its next phase of war in Syria against both Assad and Putin. US bombs being dropped over Syria are now being joined by bombs from French jets as well as Israeli and Saudi warplanes. Timed purposely on the heels of the Paris tragedy, the ongoing G-20 meeting with the world’s most powerful nations in Turkey has turned into a war council to drum up intensified world war effort against nemesis Assad and Putin.

  But the Western bombs are making sure that they do not destroy ISIS nor ISIS-controlled oil refineries selling black market oil to NATO member Turkey. Nor are they attacking the critical ISIS supply line in northern Syria that extends back into Turkey. It’s all too obvious that a renewed, heavily fortified allied offensive aggressively going head-to-head with Syrian and Russian forces clearly risks igniting a broader War.

  

  

  

  

  

• Most Americans Hit "Peak Income" More Than 15 Years Ago

  After adjusting for inflation, the majority of Americans are worse off today than they were decades ago. The map below shows that median household income actually peaked at least 15 years ago in 81% of U.S. counties.

   

  

  Courtesy of: Visual Capitalist

   

  This visualization of household incomes is from an interactive map created by the Washington Post that allows users to zoom in on individual counties to see how income has changed over the years.

  Some of the more interesting revelations include:

  • Income peaked one year ago for many of the counties that are a part of the shale boom. This includes much of North and South Dakota, as well as parts of Texas, Nebraska, and Oklahoma. Income in Washington, D.C. and neighboring Arlington County also peaked then.
  • In 1999, a total of 1,623 counties had their households reach peak income. The majority of these counties are in the Midwest and Southeast.
  • The most southern part of California and parts of New England both peaked around 25 years ago.
  • Many states along the Rocky Mountains such as Wyoming and Montana had counties that peaked roughly 35 years ago.
  • Household income peaked in upstate New York, the northern tip of California, and southern Nevada at the same time that humans were first landing on the moon in 1969.

  But we have one simple question…After reading all of the above, what is it exactly The Fed does?

   

  

  

  

  

  

  

• Saudi Arabia Is An ISIS That "Made It": "The West Wages War On One, And Shakes Hands With The Other"

  One interesting thing about Washington’s strategy in the Middle East is the extent to which the US persists in its support of Saudi Arabia and steadfastly refuses to make meaningful strides towards reconciliation with Iran. 

  It’s not so much that anyone realistically expects Tehran to turn a corner on things like expanding press freedom or implementing judicial reform and everyone knows that regardless of how friendly Rouhani tries to be, the Ayatollah casts a long shadow. But at the risk of coming across as crass and/or short on nuance, Saudi Arabia still executes people in the streets with swords and promotes the same hardline ideology as that espoused by ISIS, al-Qaeda, and other Sunni extremists. Tehran and its Shiite crescent are the regional counterbalance to this and yet The House of Saud is welcomed with open arms at The White House, while Iran is forever branded a pariah state even as Riyadh and Doha funnel money to the very same militants who carry out attacks on Western targets. 

  With that in mind, we present the following Op-Ed by Kamel Daoud, a columnist for Quotidien d’Oran, and the author of “The Meursault Investigation.” 

  Originally published in The New York Times

  Saudi Arabia, an ISIS That Has Made It

  Black Daesh, white Daesh. The former slits throats, kills, stones, cuts off hands, destroys humanity’s common heritage and despises archaeology, women and non-Muslims. The latter is better dressed and neater but does the same things. The Islamic State; Saudi Arabia. In its struggle against terrorism, the West wages war on one, but shakes hands with the other. This is a mechanism of denial, and denial has a price: preserving the famous strategic alliance with Saudi Arabia at the risk of forgetting that the kingdom also relies on an alliance with a religious clergy that produces, legitimizes, spreads, preaches and defends Wahhabism, the ultra-puritanical form of Islam that Daesh feeds on.

  Wahhabism, a messianic radicalism that arose in the 18th century, hopes to restore a fantasized caliphate centered on a desert, a sacred book, and two holy sites, Mecca and Medina. Born in massacre and blood, it manifests itself in a surreal relationship with women, a prohibition against non-Muslims treading on sacred territory, and ferocious religious laws. That translates into an obsessive hatred of imagery and representation and therefore art, but also of the body, nakedness and freedom. Saudi Arabia is a Daesh that has made it.

  The West’s denial regarding Saudi Arabia is striking: It salutes the theocracy as its ally but pretends not to notice that it is the world’s chief ideological sponsor of Islamist culture. The younger generations of radicals in the so-called Arab world were not born jihadists. They were suckled in the bosom of Fatwa Valley, a kind of Islamist Vatican with a vast industry that produces theologians, religious laws, books, and aggressive editorial policies and media campaigns.

  One might counter: Isn’t Saudi Arabia itself a possible target of Daesh? Yes, but to focus on that would be to overlook the strength of the ties between the reigning family and the clergy that accounts for its stability — and also, increasingly, for its precariousness. The Saudi royals are caught in a perfect trap: Weakened by succession laws that encourage turnover, they cling to ancestral ties between king and preacher. The Saudi clergy produces Islamism, which both threatens the country and gives legitimacy to the regime.

  One has to live in the Muslim world to understand the immense transformative influence of religious television channels on society by accessing its weak links: households, women, rural areas. Islamist culture is widespread in many countries — Algeria, Morocco, Tunisia, Libya, Egypt, Mali, Mauritania. There are thousands of Islamist newspapers and clergies that impose a unitary vision of the world, tradition and clothing on the public space, on the wording of the government’s laws and on the rituals of a society they deem to be contaminated.

  It is worth reading certain Islamist newspapers to see their reactions to the attacks in Paris. The West is cast as a land of “infidels.” The attacks were the result of the onslaught against Islam. Muslims and Arabs have become the enemies of the secular and the Jews. The Palestinian question is invoked along with the rape of Iraq and the memory of colonial trauma, and packaged into a messianic discourse meant to seduce the masses. Such talk spreads in the social spaces below, while up above, political leaders send their condolences to France and denounce a crime against humanity. This totally schizophrenic situation parallels the West’s denial regarding Saudi Arabia.

  All of which leaves one skeptical of Western democracies’ thunderous declarations regarding the necessity of fighting terrorism. Their war can only be myopic, for it targets the effect rather than the cause. Since ISIS is first and foremost a culture, not a militia, how do you prevent future generations from turning to jihadism when the influence of Fatwa Valley and its clerics and its culture and its immense editorial industry remains intact?

  Is curing the disease therefore a simple matter? Hardly. Saudi Arabia remains an ally of the West in the many chess games playing out in the Middle East. It is preferred to Iran, that gray Daesh. And there’s the trap. Denial creates the illusion of equilibrium. Jihadism is denounced as the scourge of the century but no consideration is given to what created it or supports it. This may allow saving face, but not saving lives.

  Daesh has a mother: the invasion of Iraq. But it also has a father: Saudi Arabia and its religious-industrial complex. Until that point is understood, battles may be won, but the war will be lost. Jihadists will be killed, only to be reborn again in future generations and raised on the same books.

  The attacks in Paris have exposed this contradiction again, but as happened after 9/11, it risks being erased from our analyses and our consciences.

  

  

  

  

  

• Japan To Unleash Inflation… By Fabricating Data

  The great thing about statistics is that you can make them say pretty much whatever you want them to say. 

  Although good statisticians generally try to build in all kinds of safeguards to ensure that when they’re trying to draw conclusions based on data analysis, those conclusions are free of biases, that’s no good if you’re a government agency hell bent on conveying a very specific message to the general public (or to the market). 

  You see, goalseeked data is a key tool in the fight to “prove” that seven years of unconventional monetary policy hasn’t been for naught. After all, both Europe and Japan recently slipped back into deflation despite printing trillions in fiat money…

  

  

  …and earlier this week, Tokyo was forced to admit that despite all of the “Abenomics is working” rhetoric, the country has just entered its fifth recession in five years. 

  

  Clearly, some statistical “massaging” is in order. 

  China has long been the undisputed king of manipulated economic data and earlier this year, the BEA decided it was time to take a page out of the NBS playbook. With the help of Janet Yellen’s old friends at the San Francisco Fed and after an on air assist from Steve Liesman, the US government introduced the market to “residual seasonality” or, double adjusted GDP data.

  In simpler terms, after seeing it work so well for years in China, the US Department of Commerce’s Bureau of Economic Statistics simply replaced all of its Excel models with just one function. The following:

  

  And visually:

  

  The moral of the story is that sometimes, when it’s a choice between everyone realizing that the emperor has no clothes and just making up the numbers, you should just make up the numbers because if you don’t, well, people may start to wonder what the point of printing trillions in fiat currency was other than to inflate the assets of the rich and exacerbate the gap between the haves and the have nots. 

  Sure enough, it now looks like Japan is set to follow in the footsteps of the BEA because as Reuters reports, when you’re stuck in deflation, sometimes the best thing to do is simply omit all the things for which prices are falling from your calculations. Here’s more:

  The Bank of Japan will release a new set of price indicators this month that reconfigures the way price trends are measured as the central bank seeks to show the country’s below-target inflation rate is due to volatile items such as energy.

  
  

  Importantly, a new consumer price index (CPI) will exclude energy costs, which have been falling, but include the costs of items such as processed and imported foods, which have been rising.

  See there? Eliminating Japan’s dreaded “deflationary mindset” is as simple as only including those items in the CPI that are getting more expensive. Back to Reuters: 

  The BOJ currently uses the government’s core CPI, which excludes fresh food but includes energy costs, as its key price measurement in guiding monetary policy.

  
  

  With core CPI now slipping due largely to slumping oil prices, the central bank began internally calculating a new index that conveniently shows inflation exceeding 1 percent in the past few months. That index strips away volatile fresh food and energy costs, but includes processed and imported food prices, which are rising.

   

  The BOJ said on Friday it will start publishing this month the new CPI, as well as other indicators such as one showing the ratio of goods seeing prices rise versus those that are falling, on a regular basis each month.

  Obviously, this is completely ridiculous and speaks to just how desperate Japan truly is now that the time clock on failed state status is about to tick under two years. 

  Of course you can manipulate the numbers all you like, but you can’t manipulate the underlying reality and eventually, papering over the problem with artifically inflated data will cease to be a viable option once things get bad enough and Excel simply crashes under the sheer ridiculousness of what it’s being asked to do.

  

  

  

  

  

• Over-Reaching Government "Enables" Culture Warriors

  Submitted by Roger Barris via Acting-Man.com,

  Dispensing More “Free Stuff”

  I  have just finished reading an opinion entitled “A Birth-Control Morality Play Comes to Supreme Court” by Megan McArdle, the lonely voice of libertarianism over at Bloomberg View.

  The thrust of the article is to use philosophical hypotheticals to explain the violent reaction of some religious groups to the seemingly minor certifications required to escape the contraception mandate in the Affordable Care Act.  But the article makes another point, albeit in an oblique manner, which is more important.   In the “culture wars,” an overreaching government often fires the first shot.

   

  

  Cradle-to-grave nannying by the State has certain small drawbacks, but you’ll get used to them, serf.

   

  As McArdle says “My own intuition is that the Obama administration chose this fight….For one thing, contraception is an inexpensive routine purchase that is exactly the sort of thing that insurance shouldn’t cover (for the same reason your car insurance doesn’t cover routine service: you’d just end up pre-paying the service in the form of higher insurance premiums.)”  Here, McArdle is making the same point and in fact using the same example – great minds thinking alike, and all that – I used in my 2012 blog entitled “Contraceptive ‘Coverage.’”

  As I pointed out earlier, contraception fails any reasonable definition of an insurable risk, being a “random undesirable event, usually of significant consequences.”  Since having sex is neither random nor (typically) undesirable, nor are the costs of contraception that significant, it cannot be “insured.”

  Frankly, using the language of insurance in this context is a transparent attempt to hide the political belief that the government should be dispensing, or forcing others to dispense, more “free stuff” behind a smokescreen of science and health care.  But as the old saying goes, in war, cultural or otherwise, truth is the first casualty.

   

  

  But there is! Gimme!

   

  The Road to Serfdom

  In addition to being economic and linguistic nonsense, contraceptive “coverage” also perfectly illustrates why libertarians like McArdle and me do not want the government engaging in these kinds of activities.  It is a reason advanced at length by Friedrich von Hayek, the Nobel Prize winning economist and social thinker, in his book The Road to Serfdom.  This was written a long time ago, but in today’s environment of heated partisanship, the argument is well worth repeating.

   

  

  In the early 1940s, Hayek became disenchanted with the direction economics had taken after Keynes. As a result, he never penned the definitive book on capital theory he had planned as a follow-up to his initial effort, the “Pure Theory of Capital”. This is a pity, but on the other hand, Hayek then focused on political theory and questions of knowledge, bequeathing us a great many influential and interesting works, inter alia “The Road to Serfdom”, an eloquent attack on the tyranny of the socialist welfare state, social engineering and central planning.

   

  Hayek argues that it is relatively easy to reach societal consensus on the basic functions of government.  A legal system and the police to enforce it.  A national defense.  Roads and other services that can be provided most efficiently by a monopoly.  Even, more controversially (at least among libertarians), support for basic education and some form of social “safety net” for the small portion of society that is truly unable to help itself.  And a relatively modest level of taxation to support all of this.

  However, there is no reason to believe that this consensus can be maintained when government pushes well beyond these bounds.  And this is precisely what we are observing with the contraception mandate, the funding of Planned Parenthood, and many other facets of the “culture wars.”

  Now I personally have no problem with contraception and abortion, but I have to recognize that there are other people who do.  In a libertarian world, people with these differing opinions and values can live side by side in reasonable harmony, each side following the famous Voltairian advice to disapprove of what someone says (or does), but defend to the death his right to say (or do) it.

  But this harmony breaks down when one group or the other seeks to put the heavy finger of government on their side of the scales.  In addition to all the utilitarian arguments for why the government should avoid this type of micro-managed social engineering, we libertarians believe that this is an independent reason for setting a high bar for these practices.

  Those who advocate for policies such as contraception mandates and the funding of Planned Parenthood, which almost certainly don’t belong in the government sphere on purely economic grounds, should also be required to justify the “culture wars” they will inevitably unleash.

   

  

  Home from the war …

   

  This is particularly true when, as in all wars, “tit for tat” quickly becomes the standard.  The left shoves Planned Parenthood and a contraception mandate down the throat of the right.  Then the right feels doubly justified in trying to impose their views on abortion and “intelligent design.”  The end result is a reduced sphere of freedom for everyone, including us innocent bystanders caught in the crossfires of their battles.

  For Hayek, the attempt to expand the sphere of government action, with the inevitable discord it produced, was a major factor behind the rise of anti-democratic politics in Weimar Germany.

   

  

  July 1931: Thousands are queuing at the branch offices of the Post Office Bank in Berlin to withdraw their savings. The Weimar Republic had long ceased to be fun, and both communist and nationalist groups were actively working to bring about its downfall and replace it with a dictatorship. Hitler’s party won this particular contest two years after this photograph was made.

   

  It was a major factor in The Road to Serfdom that led, in the case of Germany, to fascism.  However, we don’t have to go this far.  We only have to look at the gridlock in Washington and the rise of anti-Washington political candidates to realize that the same dynamic is at work in modern-day America.  Although thankfully for now in a less virulent form.

  

  

  

  

  

• Average Annual Cost Of Specialty Drugs Now Exceeds US Median Household Income

  Earlier this month, we reported that Senators Susan Collins (R-Maine) and Claire McCaskill (D-Mo.), who together lead the Senate Special Committee on Aging, have opened a bipartisan investigation into pharmaceutical drug pricing. 

  In the crosshairs are Valeant, Turing, Retrophin, and Rodelis. 

  News of the investigation came after Turing CEO Martin Shkreli (who also founded Retrophin) decided to boost the price of a toxoplasmosis drug he bought by some 5000%. Valeant – also known for jacking up prices on acquired drugs – was thrust into the spotlight after a series of reports prompted scrutiny of the company’s apparently less-than-“limited” relationship with pharmacy Philidor.

  Whether Shkreli – who, you might have noticed, made a few moves this week in KaloBios that cost the E-trading Joe Campbells of the world a small fortune – realized it or not, his decision to raise the price of Daraprim from $13.50 to $750/pill may have been the tipping point for a market that has until now borne the rising cost of prescription drugs.

  “THEY SEE ME ROLLING…” pic.twitter.com/D1mDBEeZMq

  — Martin Shkreli (@MartinShkreli) September 16, 2015

  Of course patients with insurance don’t foot the whole bill, but insurance companies aren’t running charity operations so ultimately, higher costs are passed on to consumers in the form of steeper premiums. 

  It’s against this backdrop that AARP has released a new study which shows that incredibly, the average annual cost of specialty drugs now exceeds the median US household income. As The Washington Post notes, “the study of 115 specialty drugs found that a year’s worth of prescriptions for a single drug retailed at $53,384 per year, on average, in 2013 — more than the median U.S. household income, double the median income of Medicare beneficiaries, and more than three times as much as the average Social Security benefit in the same year.”

  From the report:

  • The average cost of therapy was more than $53,000 per drug per year for specialty prescription drugs at the end-payer (retail) level in 2013. — This average annual cost ($53,384) is more than double the average annual cost ($25,857) for a specialty drug in 2006, the year Medicare implemented Part D
  • The average annual cost of therapy for one specialty drug in 2013 ($53,384) was greater than the median US household income ($52,250), more than twice the median income for a Medicare beneficiary ($23,500), and over 40 times higher than the average Social Security retirement benefit ($1,294) over the same time period.

  

  The report also notes that “retail prices for widely used specialty prescription drugs increased substantially faster than general inflation in every year from 2006 to 2013.” For instance, AARP points out that “in 2013, retail prices for 115 specialty prescription drugs widely used by older Americans, including Medicare beneficiaries, increased by an average of 10.6 percent. In contrast, the general inflation rate was 1.5 percent over the same period.”

  

  Holly Campbell, a spokeswoman for PhRMA, the trade group that represents the pharmaceutical industry, isn’t buying it. Campbell “called the report misleading and inaccurate because it fails to take into account the discounts and rebates that are applied to drugs through the negotiations between drug manufacturers, insurers and pharmacy benefit companies,” WaPo notes, adding that “she also critiqued the study’s methodology and pointed out that specialty medicines are used by a small number of people and account for a small share of total healthcare spending.”

  But that’s about to change, and Campbell probably knows it. Here’s AARP again: 

  Until recently, relatively few patients used specialty drugs. However, the US population is steadily aging and older adults typically use more specialty medications than younger populations. In addition, specialty drugs are increasingly being used to treat common chronic conditions that affect millions of Americans. Drug manufacturers are also developing more specialty drugs, which now represent 42 percent of the late stage research and development pipeline. Overall, these trends indicate that a much larger share of the population will use specialty prescription drugs in the future

   

   Experts have projected that specialty drug spending will increase by more than 16 percent annually between 2015 and 2018, and will comprise more than 50 percent ($235 billion) of total drug spending by 2018.

  And here’s a look at price increases in 2013 for widely used specialty drugs by company:

   

  Of course the industry will continue to insist that prices are generally indicative of how much has been invested during development, but what seems clear from the above and from stepped up lawmaker scrutiny, is that in many cases patients are simply being gouged which leads directly to, as AARP puts it, “increased health care premiums, deductibles, and other forms of cost sharing.” On top of that, “prescription drug price growth also increases spending for taxpayer-funded health programs like Medicare and Medicaid, which will eventually affect all Americans in the form of higher taxes.”

  Yes, “increased health care premiums, deductibles, and higher taxes,” but that’s fine because we’re all happy to subsidize the luxurious lifestyles of the world’s Martin Shkrelis, right?

  

  Meanwhile, the Manhattan U.S. Attorney’s office announced a $390 million civil fraud settlement with Novartis on Friday and just to drive home how underhanded this industry has truly become, we’ll leave you with a few passages from the press release announcing the settlement: 

  Preet Bharara, the United States Attorney for the Southern District of New York,announced a $390 million settlement against NOVARTIS Pharmaceuticals Corp. (“NOVARTIS”) in a civil fraud lawsuit based on claims that NOVARTIS gave kickbacks to specialty pharmacies in return for recommending two of its drugs, Exjade and Myfortic. 

   

  Starting in early 2007, NOVARTIS saw Exjade sales were far below internal targets because of low refill rates due, in significant part, to side effects that were more frequent and more severe than initially expected.  To increase Exjade refills and hit its sales targets, NOVARTIS leveraged its control over patient referrals to pressure BioScrip, Accredo, and US Bioservices to hire or assign nurses to call Exjade patients and, under the guise of education or clinical counseling, encourage patients to order more refills. 

   

  More specifically, as the Government contended, NOVARTIS knew that, when the pharmacies called patients, they emphasized the benefits of taking Exjade – for example, by telling patients that not taking Exjade would cause damage to their organs or lead to infertility – while understating the serious, potentially life-threatening risks of taking Exjade – for example, by not mentioning potential side effects like kidney and liver failure.  Indeed, NOVARTIS encouraged the pharmacies to promote Exjade refills in these ways even though FDA had characterized claims about Exjade preventing organ damage as “unsubstantiated.”

   

  In addition, the Government contended that, to incentivize the pharmacies to intensify their efforts to promote Exjade refills, NOVARTIS devised a scheme under which it allocated more patient referrals and gave higher rebates to pharmacies that obtained higher refill rates.  Indeed, NOVARTIS went forward with this scheme – which operated from 2008 to 2012 – even though it knew that the scheme presented risks of violating the Anti-Kickback Statute.

  Incidentally, WSJ reported this evening that Turing is now set to generously cut the price of Daraprim in half for hospitals, which we suppose means it will “only” cost $325 now as opposed to $13.50 before.

  *  *  *

  Full AARP report

  Price Watch Trends in Retail Prices of Specialty Prescription Drugs 2006 to 2013 Nov

  

  

  

  

• Guest Post: The End Of Obamaworld

  Submitted by Patrick Buchanan via Buchanan.org,

  In denouncing Republicans as “scared of widows and orphans,” and castigating those who prefer Christian refugees to Muslims coming to America, Barack Obama has come off as petulant and unpresidential.

  Clearly, he is upset. And with good reason.

  He grossly, transparently underestimated the ability of ISIS, the “JV” team, to strike outside the caliphate into the heart of the West, and has egg all over his face. More critically, the liberal world order he has been preaching and predicting is receding before our eyes.

  Suddenly, his rhetoric is discordantly out of touch with reality. And, for his time on the global stage, the phrase “failed president” comes to mind.

  What happened in Paris, said President Obama, “was an attack on all of humanity and the universal values that we share.”

  And just what might those “universal values” be?

  At a soccer game between Turkey and Greece in Istanbul, Turks booed during the moment of silence for the Paris dead and chanted “Allahu Akbar.” Among 1.6 billion Muslims, hundreds of millions do not share our values regarding women’s rights, abortion, homosexuality, free speech, or the equality of all religious faiths.

  Set aside the fanatics of ISIS. Does Saudi Arabia share Obama’s views and values regarding sexual freedom and the equality of Christianity, Judaism and Islam? Is anything like the First Amendment operative across the Sunni or Shiite world, or in China?

  In their belief in the innate superiority of their Islamic faith and the culture and civilization it created, Muslims have more in common with our confident Christian ancestors who conquered them than with gauzy global egalitarians like Barack Obama.

  “Liberté, egalité, fraternité” the values of secular France, are no more shared by the Islamic world than is France’s affection for Charlie Hebdo.

  Across both Europe and the United States, the lurch away from liberalism, on immigration, borders and security, fairly astonishes.

  But again, understandably so.

  Many of the Muslim immigrants in Britain, France and Germany have never assimilated. Within these countries are huge enclaves of the alienated and their militant offspring.

  Consider the Belgium capital of Brussels. Belgium’s home affairs minister Jan Jambon said his government does not “have control of the situation in Molenbeek.”

  Brice De Ruyver, a security adviser to a former Belgian prime minister says, “We don’t officially have no-go zones in Brussels, but in reality, there are, and they are in Molenbeek.”

  According to The Wall Street Journal, after the Paris attacks, “French security forces … conducted hundreds of antiterror raids and placed more than 100 suspects under arrest. … France has some 11,500 names on government watch lists.”

  How many of those 11,500 are of Arab descent or the Muslim faith?

  The nations of the EU are beginning to look again at their borders, and who is crossing them, who is coming in, and who is already there.

  And the world is reawakening to truths long suppressed. Race and religion matter. To some they are life-and-death matters. Not all creeds, cultures and tribes are equally or easily assimilated into a Western nation. And First World nations have a right to preserve their own unique identity and character.

  When Obama says that to prefer Christian to Muslim refugees is “un-American,” he is saying that all the U.S. immigration laws enacted before 1965 were un-American. And, so, too, were presidents like Calvin Coolidge who signed laws that virtually restricted immigration to Europeans.

  Barack Obama may be our president, but who is this man of the left to dictate to us what is “un-American”?

  Were presidents Harry Truman and Woodrow Wilson, who called ours a “Christian nation,” un-American? Did the Supreme Court uphold our “universal values” with Roe v. Wade in 1973 and the Obergefell decision on same-sex marriage last June?

  The race issue, too, has returned to divide us.

  Half a century after Selma bridge, we have “Black Lives Matter!” on college campuses claiming that universities like Missouri, Princeton, Yale and Dartmouth are riddled with institutional racism.

  Attention must be paid, and reparations made, by white America. And a new generation of academic appeasers advances to grovel and ask how the university might make amends.

  In Europe, tribalism and nationalism are on the march. Peoples and nations wish to preserve who they are. Some have begun to establish checkpoints and ignore the Schengen Agreement mandating open borders. Eastern Europeans have had all the diversity they can stand.

  With Syrian passports missing, with ISIS besieged in its Syria-Iraq laager and urging suicide attacks in New York and Washington, we may be witness to more terrorist massacres and murders in the States.

  The time may be at hand for a moratorium on all immigration, and a rewriting of the immigration laws to reflect the views and values of Middle Americans, rather than those of a morally arrogant multicultural elite.

  Obamaworld is gone. We live again in an us-versus-them country in an us-versus-them world. And we shall likely never know another.

  

  

  

  

  

• Stocks Soar Most In 13 Months After Worst European Terrorist Attack In Over A Decade

  Quite a week eh? "I don't care… I want to trade size and be a big swinging dick… I'm gonna make it rain!!"

   

  A quick summary of the week…

  • Paris Population Down 130 people  – worst European terrorist attack since Madrid (190 people) in 2004
  • S&P Up 3.3% – best week since Bullard Bounce Oct 2014
  • EM Stocks Up 4.5% – best week in 2 months
  • Gold Down 0.4% – 5th weekly drop in a row, lowest since Oct 09
  • Silver Down 0.7% – 5th weekly drop in a row, lowest since July 09
  • Crude Down 0.5% – 5th drop in last 6 weeks, lowest since August
  • Copper Down 5.3% – worst week sicne Dec 2014, down 6 weeks in a row to lowest since April 2009

  *  *  *

  Let's start with stocks… From worst week of the year last week to best week since October 2014's Bullard Bounce…

  

   

  Futures show the real exuberance though… Sunday night's open marked the low after 100-plus people had been killed, and Paris was under martial law…Nasdaq +5% off Sunday night lows!!

  

   

  Which roundtripped stocks perfectly to the October Payrolls print…

  

   

  *  *  *

  The Devil's in the Divergences…

  Bonds and stocks…

  

   

  Credit and stocks…

  

  Trannies and oil…

  

   

  Credit and equity risk… (note the roll)

  

   

  Credit (cash) and equity risk…

  

   

  Stocks and the yield curve…

  

   

  And finally FX carry and stocks…

  

   

  A few individual stocks mattered today…

  Chipotle poisoned some folks…

  

   

  Hope is high that Valeant is fixed (thanks to a Citi debt upgrade)

  

   

  And then there's Netflix!!! Up almost 20% this week!!!! An $8.6bn rise in market cap in one week… the most ever.

  

   

  Tresury yields were extremely mixed – following FOMC Minutes – with 2Y up 8bps and 30Y -3bps on the week… 2Y highest weekly close since April 2010, 30Y yields lower for 2 straight weeks first time since August…

  

   

  For the biggest flattening in 4 months – 2s30s fell 12bps this week – almost to 7 month flats…

  

   

  Credit markets have now fallen 14 days in a row…

  

   

  The USDollar gained on the week – Draghi's whatever it takes today trumping odd post-FOMC weakness yesterday in the USD – AUD shot up this week…

  

   

  Commodities were all lower this week – as The USD gained – but copper was really ugly…

  

   

  Copper Carnage…

  

   

   

  Charts: Bloomberg

  Bonus Chart: Retail Deja Vu…

  

   

  Bonus Bonus Chart: Ponzinormous…

  

  

  

  

  

• Weekend Reading: Differing Diatribes

  Submitted by Lance Roberts via STA Wealth Management,

  As expected, the market rallied from short-term support levels as the year-end rush to chase returns has started in full swing. To wit:

  "With the markets NOW oversold, it will be critically important that support at 2020 is not broken. The next critical level of support is the short-term moving average (dashed blue line) at 2010, and then 1990 at previous support levels from early this year. It will be important for the market to hold these current levels of support without violating it over the next few trading days to set up a more tradeable short-term rally.

   

  As shown in the chart below, the markets did not disappoint. Even with Japan slipping into its fifth recession in the last 5-years, despite massive infusions of capital, and the devastating attacks in Paris over the weekend, the market rallied strongly off of support as expected."

  

  "As we progress through the last two months of the year, historical tendencies suggest a bias to the upside. This is particularly the case given the weakness this past summer which has left many mutual and hedge funds trailing their benchmarks. The need to play "catch-up" will likely create a push into larger capitalization stocks as portfolios are "window dressed" for year-end reporting.

   

  This traditional "Santa Claus" rally, however, does not guarantee the resumption of the ongoing "bull market" into 2016."

  Importantly, while the "bias" of the market is to the upside, primarily due to the psychological momentum that "stocks are the only game in town," the mounting risks are clearly evident. From economic to earnings-related weakness, the "bullish underpinnings" are slowly being chipped away.

  While the Federal Reserve (Fed)'s most recent statement acknowledged continuing concerns around international developments, it left the door open to a December rate hike. With a renewed prospect for monetary policy divergence between the Fed and other central banks is once again pushing the dollar higher.

  Should the trend continue, a stronger dollar would represent a headwind for U.S. inflation, precious metals, and U.S. earnings growth, as discussed yesterday. Furthermore, a stronger dollar combined with a tightening of monetary policy will further impede earnings growth. The problem is that investors are overlooking this fact to their own peril

  But, that is just my opinion. This weekend's reading list is a compilation of interesting diatribes, both bullish and bearish, on the markets, Fed and the economy. 

  ---

  ON THE FED

  Don't Fear Rate Hikes Or Rising Dollar by Anatole Kaletsky via Project Syndicate

  “The US Federal Reserve is almost certain to start raising interest rates when the policy-setting Federal Open Markets Committee next meets, on December 16.

   

  Under these conditions, the direct economic effects of the Fed's move should be minimal. It is hard to imagine many businesses, consumers, or homeowners changing their behavior because of a quarter-point change in short-term interest rates, especially if long-term rates hardly move."

  Easy In, Hard Out  David Merkel via Aleph Blog 

  "Ugh. The conclusions of my last two pieces were nuanced. This one is not. My main point is this: even with the great powers that a central bank has, the next tightening cycle has ample reason for large negative surprises, leading to a premature end of the tightening cycle, and more muddling thereafter, or possibly, some scenario that the Treasury and Fed can't control. Be ready, and take some risk off the table."

  Did Goldman Sachs Find The Smoking Gun by Tyler Durden via ZeroHedge

  "The staff attributed the lower long-run equilibrium rate to a slower rate of potential growth, a consequence of slower population growth and weak productivity growth. These comments might foreshadow another reduction in the median "longer-run" funds rate projection in the Summary of Economic Projections (SEP) in December.

   

  Participants also noted that the lower long-run equilibrium rate implies that the near-zero effective lower bound could become binding more frequently. As a result, "several" participants indicated that it would be "prudent" to consider "options for providing additional monetary policy accommodation" should the economic recovery falter."

  Gundlach – The Psychology Of A Rate Hike by Robert Huebscher via Advisor Perspectives

  Gundlach – Fed Hike "No Go" A Real Possibility by Jennifer Ablan via Reuters

  "'Certainly No-Go more likely than most people think. These markets are falling apart.' Los Angeles-based DoubleLine oversees $80 billion in assets under management.

   

  Gundlach cited a number of asset classes that are signaling deteriorating conditions: The S&P Leveraged Loan Index, which is at a four-year low, the SPDR Barclays High Yield Bond Exchange-Traded Fund "very near a four-year low" and the CRB Commodity Index at a 13-year low. 'You also have the Eurozone doubling down on stimulus. Fed raising rates? Really?'"

   

  

  (Chart courtesy of ZeroHedge)

   

  ON THE MARKETS

  Something Strange Is Happening With Rates by Daniel Kruger, Liz McCormick via Bloomberg

   

  Market Timing Is Back In The Hunt by Cliff Asness via Institutional Investor

  "Market timing, considered by many an investing sin, can be a virtue if employed modestly, using a combination of contrarian and trend-following strategies."

  A Pair Of Popular Stock Market Analogs? by Jesse Felder via The Felder Report

  An Earnings Inflection Point by Sam Ro via Business Insider

  "In a new note to clients, Morgan Stanley's Andrew Sheets writes that the trend in earnings growth is a 'key inflection' that he is watching.

   

  'Are earnings rolling over? We don't think so. Earnings growth has been weak in the US, EM and Europe. Yet on our forecasts, 3Q15 should be the nadir in EPS trends, as the drag from the commodity sector subsides.'"

  

  Without Buy Backs There Has Been NO EPS Growth by Bob Bryan via Business Insider

  The Stock Market Enters Its Final Bull-Market Stage by Simon Maierhofer via MarketWatch

   

  ON THE ECONOMY

  Models, Hemlines & Hamburgers As Economic Indicators by Sue Chang via MarketWatch

  “Since ancient times when Babylonians monitored monthly commodities prices as an economic barometer, mankind has sought to divine the health of the economy from an array of sources. Today, swimsuit models, hemlines, and even Twitter all have something to say about the economy — if we know what to look for.

   

  Some, like the coupon redemption rate, are intuitive. Others are more entertainment than economics: During recessions, for instance, Playboy centerfolds tend to be heavier, taller and older. And something as mundane as a new pair of underwear — particularly if you are a man — could indicate that good times are here."

  If The Economy Is Fine, Why Are So Many Imploding by Michael Snyder via Economic Collapse Blog

  Is The 1% Rolling Over? by John Rubino via DollarCollapse.com

   

  VIDEOS

  The Total Cluelessness Of Student Protesters via Neil Cavuto via Fox News

  EY: Global Economy Uncertain, Fragile & Fragmented via CNBC

   

  ---

  OTHER READING

  • 2016 Outlook & Forecast by Fortune Editors via Fortune
  • Crowdfunding Or Crowdphishing by Robert Shiller via Project Syndicate
  • The Decline Of The West Revisited by Robert Skidelsky via Project Syndicate
  • 15 Books That Will Make Great Xmas Gifts by Fortune Editors via Fortune
  • Impressive Markets Aren't More Unglued by Joe Calhoun via Alhambra Partners
  • MollyCoddled by Tim Knight via Slope of Hope
  • 2015 Tax Year Tax Dodges by William Baldwin via Forbes
  • Expecting A 40-55% Correction by John Hussman via Hussman Funds

  ---

  “If you have large cap, mid cap, and small cap, and the market declines – you are going to have less cap.” – Martin Traux 

  Have a great weekend.

  

  

  

  

  

• Artist's Impression Of Obama's Syrian Resettlement Plan

  “Refugee Roulette…”

   

  

   

  Source: Investors.com
  

  

  

  

  

  

• Is This How The Next Global Financial Meltdown Will Unfold?

  Submitted by Charles Hugh-Smith of OfTwoMinds blog,

  In effect, a currency crisis is simply the abrupt revaluation of the currency to reflect new realities.

  I have long maintained that the structural imbalances of debt and risk that triggered the Global Financial Meltdown of 2008-2009 have effectively been transferred to the foreign exchange (FX) markets.

  This creates a problem for the central banks that have orchestrated the "recovery" by goosing asset bubbles in stocks, real estate and bonds: unlike these markets, the currency-FX market is too big for even the Federal Reserve to manipulate for long.

  The FX market trades roughly the entire Fed balance sheet of $4.5 trillion every day or two.

  Currencies are in the midst of multi-year revaluations that will destabilize the tottering towers of debt, leverage and risk that have propped up global growth since 2009.

  Though the relative value of currencies is discovered in the global FX market, there are four fundamental factors that influence the value of any currency:

  1. Capital flows into and out of the currency (and the nation that issues the currency).

  2. Perceived risk, specifically, will this currency preserve my global purchasing power (i.e. capital) or erode it?

  3. The yield or interest rate paid on bonds denominated in this currency.

  4. The scarcity or over-abundance of the currency.

  If we dig even deeper, we find that currencies reflect the income streams and assets of the issuing nation. Consider the currency of an oil exporting nation that has seen both its income from selling oil and the underlying value of its oil in the ground fall by more than 50%.

  Why shouldn't that nation's currency decline in parallel with the erosion of income and asset valuation? As a nation's income and asset base decline, there is less national income to pay interest on sovereign bonds, less private income to tax, and a reduced asset base for additional borrowing.

  This is especially true if the nation issued debt and/or currency profligately in good times. Recall that debt and currency are one in the same: if someone trades euros for a U.S. Treasury bond, they don't just own a bit of sovereign debt–they own the currency of the nation that issued the bond (in this case, the U.S. dollar).

  This is equally true of corporate bonds–all the debt is denominated in a specific currency, and owners of the bonds are not just betting that the interest will be paid and the bond redeemed at maturity, but that the underlying currency will not lose much of its global purchasing power.

  One proxy for the absolute destruction of commodity-based income streams and assets is the CRB Index. No wonder emerging economies that depend heavily on the export of commodities are cratering, along with the currencies they issue.

  

  Once participants become aware of the rising risk of holding a depreciating currency, the trickle out of a currency quickly becomes a torrent of fleeing capital.

  Once the perceived risk switches from risk-on to risk-off, the only way to prop up the currency is to raise the interest rates that bonds denominated in that currency yield.

  But raising interest rates has a brutally negative effect on the domestic economy, as higher rates choke off domestic lending, which then pushes the economy into recession.

  It's a no-win double bind, though, for doing nothing and letting one's currency implode drains the nation of capital and makes imports unaffordable. That matters when the imports are energy and/or food.

  When those become scarce and unaffordable, social disorder soon follows.

  The currency that has benefited from this reversal of capital flows is the U.S. dollar (USD):

  

  Debt/currency crises tend to trigger defaults and weakness in other currencies. We have a recent example of such a crisis: the Asian Contagion of 1997-98:

  

  Though that crisis was linked to Thailand's failed bid to support its currency's peg to the U.S. dollar, the current situation is actually far more fragile as the destruction of commodity income and valuation raises the risk of sovereign defaults, corporate bond defaults, and capital flight that deepens already severe emerging-market recessions.

  The bone-dry half-dead forest awaiting an igniting lightning strike is the global mountain of debt–debt which is no longer supported by current valuations of commodities and risk.

  In effect, a currency crisis is simply the abrupt revaluation of the currency to reflect new realities. That revaluation then raises the risk premium on debt denominated in that currency or owed in other currencies.

  As emerging market currencies decline, the income streams needed to service all the debt denominated in U.S. dollars declines, a self-reinforcing dynamic: as income and valuations fall, capital flees, pushing the relative value of the currency down even more, which further raises the risk premium that then triggers even more capital flight.

  The sums in play are so staggering (an estimated $11 trillion in emerging market debts denominated in other currencies) that even the Fed won't be able to stop the meltdown.

  

  

  

  

  

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• Caught On Tape: Russian Air Force Destroys Dozens Of ISIS Oil Trucks

  Earlier today we revisited Islamic State’s most important revenue stream: crude oil.  

  When US attack planes destroyed 116 ISIS oil trucks on November 16 (allegedly after dropping leaflets warning “innocent” drivers to scatter), it purportedly marked a shift in strategy. “Somehow”, the Obama administration had grossly underestimated the proceeds ISIS derives from the illicit oil trade while overestimating the damage US warplanes had inflicted on the group’s oil infrastructure. 

  Additionally, Bloomberg suggests the Pentagon routinely declined to take out tanker trucks for fear of collateral damage. “None of these guys are ISIS. We don’t feel right vaporizing them, so we have been watching ISIS oil flowing around for a year,” Michael Knights, an Iraq expert at the Washington Institute for Near East Policy told Bloomberg.

  There are a couple of things that should jump out at you there. First, it’s not exactly clear why it matters that the administration “underestimated” the amount of revenue ISIS derives from oil. That is, the difference between $100 million and $400 million per year would be quite meaningful if you were talking about a corporation here, but this is a terrorist group. Sure, it matters that they’re making four times more than you thought when it comes to assessing their operational capabilities (the more money you have, the more you can do), but it shouldn’t matter when it comes to formulating a strategy to cripple their ability to produce oil. It’s not like you can say “oh, well they’re only making $100 million per year, so that’s fine.. now if it’s $400 million, that’s where we’ll have to draw the line.”

  Second, since when is the US worried about collateral damage when it comes to taking out “terrorists?” As The Intercept laid bare in a series of recent investigative reports, 90% of those killed in drone strikes aren’t the target. It’s not as if the CIA isn’t aware of that statistic each and every time they pull the trigger on an MQ9 Reaper. 

  So sure, perhaps the US overestimated the effect its airstrikes were having on Islamic State’s oil production capabilities and perhaps The Pentagon was concerned with killing innocent truck drivers, but it could also be that, as Sergei Lavrov suggested earlier this week, the US has until now intentionally avoided hitting ISIS where it hurts in order to keep them in the game and ensure they can still be effective at destabilizing Assad. If you cut off the oil trade, they lose the ability to battle the regime.

  In any event, there are other pressing questions about ISIS and oil and we encourage you to read more in “The Most Important Question About ISIS That Nobody Is Asking,” but for now, we turn to Russia and The Kremlin’s efforts to dent Bakr al-Baghdadi’s wallet.

  According to  Russian General Staff spokesman Colonel General Andrey Kartapolov, “around 500 fuel tanker vehicles transporting illegal oil from Syria to Iraq for processing have been destroyed by Russia’s Air Forces.” 

  “In recent years, Islamic State (IS, formerly ISIS/ISIL) and other extremist groups have organized the operations of the so-called ‘pipeline on wheels’ on the territories they control,” Kartapolov continued, adding that “in just the first few days, [Russian] aviation has destroyed 500 fuel tanker trucks, which greatly reduced illegal oil export capabilities of the militants and, accordingly, their income from oil smuggling.” 

  Without further ado, the video from the Russian Defense Ministry:

  

  

  

  

  

• How Islamic Extremism Was Born

  Submitted by Ben Norton via Salon.com,

  

  President Ronald Reagan gestures while talking to Burhaneddin Rabbani, a spokesman for the Afghan Resistance Alliance, at the White House in Washington, June 16, 1986. (AP Photo/Dennis Cook)

  History takes no prisoners. It shows, with absolute lucidity, that the Islamic extremism ravaging the world today was borne out of the Western foreign policy of yesteryear.

  Gore Vidal famously referred to the USA as the United States of Amnesia. The late Chinese Premier Zhou Enlai put it a little more delicately, quipping, “One of the delightful things about Americans is that they have absolutely no historical memory.”

  In order to understand the rise of militant Salafi groups like ISIS and al-Qaida; in order to wrap our minds around their heinous, abominable attacks on civilians in the U.S., France, Syria, Iraq, Lebanon, Nigeria, Turkey, Yemen, Afghanistan and many, many more countries, we must rekindle this historical memory. 

  Where did violent Islamic extremism come from? In the wake of the horrific Paris attacks on Friday, November the 13, this is the question no one is asking — yet it is the most important one of all. If one doesn’t know why a problem emerged, if one cannot find its root, one will never be able to solve and uproot it. 

  Where did militant Salafi groups like ISIS and al-Qaida come from? The answer is not as complicated as many make it out to be — but, to understand, we must delve into the history of the Cold War, the historical period lied about in the West perhaps more than any other.

  How the West cultivated Osama bin Laden

  We needn’t reach back far into history, just a few decades.

  A much-circulated photo of an article published in British newspaper the Independent in 1993 exemplifies the West’s twisted hypocrisy. Titled “Anti-Soviet warrior puts his army on the road to peace,” it features a large photo of Osama bin Laden, who, at the time, was a close Western ally.

  

  The newspaper noted that bin Laden organized a militia of thousands of foreign fighters from throughout the Middle East and North Africa, and “supported them with weapons and his own construction equipment” in their fight against the USSR in the 1980s. “We beat the Soviet Union,” bin Laden boasted.

  The mujahedin, this international Islamic extremist militia organized and headed by bin Laden, is what eventually morphed into both al-Qaida and the Taliban.

  “When the history of the Afghan resistance movement is written,” the Independent wrote, “Mr Bin Laden’s own contribution to the mujahedin… may turn out to be a turning point in the recent history of militant fundamentalism.”

  Portraying bin Laden in a positive light, less than eight years before he would help mastermind the largest terrorist attack on American soil in decades, the British publication claimed that the “Saudi businessman who recruited mujahedin now uses them for large-scale building projects in Sudan.” In reality, bin Laden was setting the stages for what would be become al-Qaida.

  Unheeded warnings

  In Greek mythology, Cassandra was blessed with the power of prophecy, but cursed in that no one would ever heed her warnings. Eqbal Ahmad, the late political scientist, historian and expert in the study of terrorism, was a modern-day Cassandra.

  In a speech at the University of Colorado, Boulder in October 1998, Ahmad warnedthat the U.S. policy in Afghanistan would backfire:

  “In Islamic history, jihad as an international violent phenomenon had disappeared in the last 400 years, for all practical purposes. It was revived suddenly with American help in the 1980s. When the Soviet Union intervened in Afghanistan, Zia ul-Haq, the [U.S.-backed] military dictator of Pakistan, which borders on Afghanistan, saw an opportunity and launched a jihad there against godless communism. The U.S. saw a God-sent opportunity to mobilize one billion Muslims against what Reagan called the ‘Evil Empire.’

   

  “Money started pouring in. CIA agents starting going all over the Muslim world recruiting people to fight in the great jihad. Bin Laden was one of the early prize recruits. He was not only an Arab. He was also a Saudi. He was not only a Saudi. He was also a multimillionaire, willing to put his own money into the matter. Bin Laden went around recruiting people for the jihad against communism.

   

  “I first met him in 1986. He was recommended to me by an American official of whom I do not know whether he was or was not an agent. I was talking to him and said, ‘Who are the Arabs here who would be very interesting?’ By here I meant in Afghanistan and Pakistan. He said, ‘You must meet Osama.’ I went to see Osama. There he was, rich, bringing in recruits from Algeria, from Sudan, from Egypt, just like Sheikh Abdul Rahman. This fellow was an ally. He remained an ally.

   

  “He turns at a particular moment. In 1990, the U.S. goes into Saudi Arabia with forces. Saudi Arabia is the holy place of Muslims, Mecca, and Medina. There had never been foreign troops there. In 1990, during the Gulf War, they went in, in the name of helping Saudi Arabia defeat Saddam Hussein. Osama Bin Laden remained quiet.

   

  “Saddam was defeated, but the American troops stayed on in the land of the Ka’aba [the most sacred site of Islam, in Mecca], foreign troops. He wrote letter after letter saying, ‘Why are you here? Get out! You came to help but you have stayed on.’ Finally he started a jihad against the other occupiers. His mission is to get American troops out of Saudi Arabia. His earlier mission was to get Russian troops out of Afghanistan.”

  For bin Laden, Ahmad added, “America has broken its word. The loyal friend has betrayed. The one to whom you swore blood loyalty has betrayed you.”

  “They’re going to go for you. They’re going to do a lot more,” Ahmad warned, three years before the 9/11 attacks. “These are the chickens of the Afghanistan war coming home to roost.”

  We now know that Ahmad was right. But, like Cassandra, the powerful ignored his sagacious admonition, and suffered the horrific consequences.

  Extremist “freedom fighters”

  In the 1950s and ’60s, Afghanistan was a somewhat secular country in which women were granted relatively equal rights. What turned Afghanistan into the hotbed for extremism it is today? Decades of Western meddling.

  Throughout the 1980s, the U.S. government supported and armed bin Laden and his mujahedin in Afghanistan, in their fight against the Soviet Union. President RonaldReagan famously met with the mujahedin in the Oval Office in 1983. “To watch the courageous Afghan freedom fighters battle modern arsenals with simple hand-held weapons is an inspiration to those who love freedom,” Reagan declared.

  

  Those “freedom fighters” are the forefathers of ISIS and al-Qaida. When the last Soviet troops were withdrawn in 1989, the mujahedin did not simply leave; a civil war of sorts followed, with various Islamist militant groups fighting for control in the power vacuum. The Taliban came out on top, and established a medieval theocratic regime to replace the former “godless” socialist government.

  There are extremists in every religion, but they tend to be few in number, weak and isolated. Salafism, in its modern militarized form, has its origins in the 1920s, and even before. For decades, this movement remained weak and isolated. Yet, in the 1970s and ’80s, Western capitalist governments, particularly the U.S., came up with a new Cold War strategy: supporting these fringe Islamic extremist groups as a bulwark against socialism.

  The U.S. was by no means the only one to pursue such a strategy. Echoing the U.S. policy in Afghanistan, Israel in fact supported Hamas — now its sworn arch-enemy — when the Islamist group was first forming in the 1980s. Israel backed Hamas’ militant founder Sheikh Ahmed Yassin in order to undermine the secular socialist resistance of the Palestine Liberation Organization (PLO).

  “Hamas, to my great regret, is Israel’s creation,” a former Israeli government official told the Wall Street Journal in a 2009 article titled “How Israel Helped to Spawn Hamas.”

  This Cold War strategy ended up being successful: After the fall of the USSR, the secular socialist groups that dominated the resistance movements of the Middle East were replaced by Islamic extremists ones that had previously been supported by the West.

  It is not a coincidence that most of the secular countries in the history of the Middle East have been socialist of some sort. In contrast, the most reactionary countries — the countries where women are not granted equal rights and where the rule of law is based on Sharia — have frequently tended to be close Western allies. Why? The West was much, much more interested in preserving capitalism than it was in allowing secularism, gender equality and relative economic equality to flourish under socialism.

  Orientalist posturing

  Many pundits, including liberals, have argued that the Middle East, North Africa and Muslim-majority parts of South Asia are presently going through their parallel to the West’s Dark Age, a bloody period of religious extremism. They blame the rise of extremist groups like ISIS and al-Qaida on Islam itself, or on the Middle East’s supposedly “backward” culture, yet conveniently gloss over their own countries’ sordid histories and policies.

  There is much more than a tinge of racism in this orientalist idea that, for some reason, Muslims in the Middle East are centuries behind the englightened Christian West. This ludicrous claim does not stand up to even the most superficial historical scrutiny.

  For one, never mentioned is the fact that, only decades ago, most Middle Eastern countries were Western colonies. Their civilian populations were terrorized and brutalized by Western colonial powers.

  And, again, what were the most secular and modern governments in the history of the Middle East? It was almost always the Soviet-aligned or non-aligned leftist governments that were either enemies of the West or non-allies in the Cold War.

  Regardless of the critiques of these governments’ many problems, which is a separate issue, the reality is the Middle East was significantly more progressive and secular during the height of the Cold War than it is today. That’s not a coincidence. The U.S. and its allies destroyed secularism as part of their larger Cold War strategy.

  The Cold War bites back

  This Cold War strategy continues to bite back today, and hard. Because of this policy, we have now ended up with capitalist dystopias like those in Saudi Arabia, Qatar or the UAE — filthy rich oil states where businessmen are drowning in money while the migrant modern-day slaves upon which their economies are built die in droves, and theocratic monarchies imprison or even behead anyone who challenges the regime.

  The Gulf states remain some of the most reactionary and extremist countries on the planet, and they happen to be close Western allies. Saudi Arabia, in particular, is the fountainhead of militant Sunni Islamism — and yet the Obama administration has done more than $100 billion in arms deals with the Saudi monarchy in just five years. In fact, less than three days after the Paris attacks, the U.S. sold another $1.3 billion of bombs to Saudi Arabia — bombs it will likely use to drop on Yemen, where human rights organizations say it is committing egregious war crimes, and where the chaos created by the Saudi-led coalition is helping al-Qaida and ISIS expand into Yemen.

  Former U.S. Sen. Bob Graham has observed that modern Sunni extremist groups like ISIS and al-Qaida are “a product of Saudi ideals, Saudi money, and Saudi organizational support.” Government cables leaked by WikiLeaks demonstrate that the U.S. is well aware that al-Qaida and other Salafi groups are supported by rich Saudis.

  Let us not forget that Osama bin Laden was a millionaire businessman from a fabulously wealthy and prominent Saudi family with close ties to the kingdom’s royalty. He used that wealth to finance an international network of Islamic extremists that coalesced into al-Qaida.

  This doesn’t mean that the Saudi monarchy is pulling the strings above ISIS — which is now its enemy — but rather that its global proselytizing and funding of Wahhabi groups and institutions made these once fringe extremist groups much stronger and more mainstream.

  Ideologies are not devoid from material reality. Yes, there are extremists in every religion, but why do they not have the same power in other faiths? There is no such thing as an ideology independent of the material conditions and social forces that assert that ideology materially — that is to say, politically — in reality. Islamic extremism was violently imposed upon the Middle East through a mixture of imperial machinations and individual radicalization under tyranny and extreme poverty.

  Creating your enemies

  Western imperialism has a tendency to create its own enemies.

  Up until the 1990 Gulf War, throughout the Iran-Iraq War that consumed the 1980s, the U.S. supported Saddam Hussein — the very same dictator it would violently depose in 2003. Declassified CIA files show how the U.S. government helped Hussein when he was unleashing chemical weapons on Iranian civilians. The U.K. government allowed Hussein’s regime to create chemical weapons using agents that were sold to Iraq by British corporations. These Western-provided weapons were also used in Hussein’s campaign of genocide against the Kurds.

  Fast-forwarding two decades later, it is now widely acknowledged that the illegal U.S.-led war in Iraq — a catastrophic occupation that led to the deaths of at least 1 million people — destabilized the entire Middle East, creating the extreme conditions in which militant groups like al-Qaida spread like wildfire, eventually leading to the emergence of ISIS. The former head of intelligence for the U.S. Central Command and Joint Special Operations Command (JSOC), retired Army Lt. Gen. Michael T. Flynn,agrees. U.S. policies in Iraq “absolutely” strengthened Salafi militant groups like al-Qaida, Lt. Gen. Flynn conceded. “We definitely put fuel on a fire,” he lamented.

  New York Rep. Chuck Schumer remarked in 1991 that Saddam Hussein was “created in the White House laboratory with a collection of government programs, banks, and private companies.”

  Saddam Hussein was the first Frankenstein’s monster U.S. policy created in Iraq, al-Qaida was the second, and now ISIS is the third.

  Blaming Islam is projection

  The pundits in the West blaming Islam for the rise of extremism are projecting their own countries’ crimes onto the world’s 1.6 billion Muslims.

  The kinds of people who blame Islam and Muslims for the spread of extremism are the kinds of people who have utmost faith in Western empire. Even if they admit that it “sometimes” engages in problematic behavior, they, deep-down, believe Western empire to be fundamentally rooted in good will, in humanitarianism, in progress, in the proselytizing of civilization.

  This is the same logic that justified genocidal European colonialism, Western expansionism and Manifest Destiny, and the White Man’s Burden. And it is this same logic that promotes militarist policies and anti-Muslim and anti-refugee bigotries in response to Islamist militants’ attacks — only serving to further fuel the fire of extremism.

  These same pundits, the ones who blame Islam for the rise of ISIS and who have utmost faith in the putative good will of Western empire, would have wholeheartedly supported Osama bin Laden in the 1980s; these same pundits would have dubbed the father of al-Qaida a “freedom fighter” in his heroic battle against the evil Soviet Union.

  In the aforementioned speech, Ahmad articulated five kinds of terrorism. He lamented, however, that of these types, the focus in the media and the political system is almost always on just one: “political terror of the private group, oppositional terror” — which he points out is “the least important in terms of cost to human lives and human property.” “The highest cost is state terror,” Ahmad explained. He roughly estimated that the ratio of people killed by state terror versus those killed by individual acts of terror is, conservatively, 100,000 to one.

  If we truly want to end the abominable acts of violence perpetrated by extremist groups like ISIS and al-Qaida, we should take to heart the simple yet profoundcounsel of Noam Chomsky, another modern-day Cassandra: “Everybody’s worried about stopping terrorism. Well, there’s a really easy way: stop participating in it.”

   

  

  

  

  

  

• "People Are Worried" – Chinese Authorities Arrest 'King Of IPOs' & 'Hedge Fund Brother No. 1'

  The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeks according to Bloomberg, creating a climate of fear among China’s finance firms and chilling their investment strategies. As one professor of Chinese economy noted, "some in the political leadership sought to find scapegoats to blame" for the market crash which along with massive intervention "created uncertainty and anxiety that can only undermine the effort to make these markets work better."

  The high-drama highway arrest of a prominent hedge fund manager. Seizures of computers and phones at Chinese mutual funds. The investigations of the president of Citic Securities Co. and at least six other employees. Now, add the probe of China’s former gatekeeper of the IPO process himself.

  About a third of China’s futures-focused hedge funds had to stop trading as regulators restricted practices such as short-selling, but as Bloomberg details,

  Howbuy Investment Management Co. in September said it stopped providing data on premature fund liquidations because the information was too sensitive. The Shanghai-based fund research firm had previously said almost 1,300 hedge funds closed this year amid the stock rout.

  The authorities’ goal was to root out practices such as insider trading as part of China’s anti-corruption campaign, and a desire by "some in the political leadership to find scapegoats to blame" for the market crash, according to Barry Naughton, a professor of Chinese economy at the University of California in San Diego.

  “Together these are creating uncertainty and anxiety that can only undermine the effort to make these markets work better,” he said by e-mail.

   

  The government’s response to the market crash was intervention: state-directed purchases of shares, a ban on initial public offerings and restrictions on previously allowed practices, such as short selling and trading in stock-index futures. Next, high-ranking industry figures came under scrutiny as officials investigated trading strategies, decried “malicious short sellers” and vowed to “purify” the market.

   

  Policy makers say “now we’re innovating, so you can all come in — using high-frequency trading, hedging, whatever — to play in our markets,” Gao Xiqing, a former vice chairman of the China Securities Regulatory Commission, told a forum in Beijing on Nov. 6. “A few days later, you say no, the rules we made are not right, there are problems with your trading, and we’re putting you in jail for a while first.”

  At least 16 people have been arrested, are being investigated or have been taken away from their job duties to assist authorities, according to statements and announcements compiled by Bloomberg News.

  In the latest probe announced last week, Yao Gang, a vice chairman at the CSRC, is under investigation for “alleged serious disciplinary violations,” the Communist Party’s Central Commission for Discipline Inspection said. Known as China’s "King of IPOs," he supervised China’s initial public offerings until earlier this year, when he changed to approve bonds and futures, according to Caixin magazine. He joins two other CSRC officials being investigated, one of whom, Zhang Yujun, was formerly the general manager of the Shanghai and Shenzhen stock exchanges.

   

  The securities regulator carried out unannounced inspections of several Chinese investment firms including Harvest Fund Management earlier this month, taking away hard drives and mobile phones, according to people familiar with the seizures. Police in Shanghai also confiscated computers and froze $1 billion of shares in listed companies connected to Xu Xiang, the manager of Zexi Investment known as “hedge fund brother No. 1,” who was arrested Nov. 1 on a highway between Shanghai and Ningbo.

   

  Among Xu’s fellow money managers who performed well this year, anxiety has been palpable following his arrest, according to hedge fund manager Lu Weidong, chairman of Xinhong Investment based in China’s southern city of Dongguan. Lu’s Fuguo No. 1 fund was the best-performer among the 236 Chinese multi-strategy hedge funds from June to August, according to Shenzhen Rongzhi Investment Consultant Co., which tracks the data.

   

  It isn’t uncommon for Chinese money managers to trade on unpublished information, according to Lu. Everybody that ever traded on such tips would “restrain themselves a bit” going forward, Lu said by phone.

   

  “People are worried,” he said.

  "The extent of this round of clampdown in the financial industry has surpassed everybody’s expectations," Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong.said. "Over the longer term, the clampdown on corruption in the financial industry will level the playing field in the market for smaller investors."

  However, the arrests or investigations targeting the finance industry are creating a climate of fear among China’s finance firms and chilling their investment strategies.

  

  

  

  

  

• Understanding The Power-Contest Between Aristocracies

  Authored by Eric Zuesse,

  At the core of global power stands the conflict between the Sauds and their Sunni clergy, versus the Iranians and their Shiite clergy.

  One can’t understand U.S.-Russian relations, nor much else of what is happening in the world, without knowing the relevant historical background; and the origins and nature of the Sunni war against Shiia are arguably the most essential part of that. Just how the United States came to back the Sunnis, and how Russia came to back the Shiites, in this war, will be discussed in subsequent articles.

  This great intra-Islamic conflict, little understood outside the Middle East, came into clearer-than-ever focus on 2 August 2013 when Sami Kleib at al-Monitor headlined "Saudi Arabia Tries to Cut a Deal With Russia Regarding Syria”, and he reported about Saudi Prince Bandar bin Sultan al-Saud’s trip to Moscow, as the Director of Saudi Intelligence. It was an extraordinary private meeting, because the Sauds and the Russians have been enemies ever since the Sauds allied themselves with the Americans against the atheistic Soviet Union in 1945. Kleib wrote that:

  Like all Saudi Arabian leaders, Bandar wants to deal a blow to Hezbollah and weaken Iran. And they will do anything to accomplish that, including hitting President Assad’s regime.

  But why did Saudi Arabia change its mind and decide to send Prince Bandar to a country that “supports the genocide in Syria”?

  To find the answer, first look for Iran.

  Then, Kleib noted the central point:

  Saudi Arabia faced a choice: to reach an understanding with either Iran or Russia.

  Saudi Prince Bandar — sometimes called “Bandar Bush” because he was virtually accepted as a member of the Bush family — had been forced into a position of choosing between Russia and Iran as an ally to join with the Sauds’ war to dislodge Assad from Syria; and he chose Russia to become an ally with the Sauds, instead of choosing the Sauds’ ‘fellow’-Muslims, Shiite  Iran.

  Why did the Sauds choose Russia, over Islamic Iran, to join them?

  Russia, to the Sauds, represents (even today), as Kleib put it, “the ‘capital of communist atheism’.” (After all: Putin had once been a communist, though he was now a follower of the Russian Orthodox Church.) Iran, by contrast, represents the leadership of what to the Sunni Sauds is their real competition:  Shiite Islam.

  The Thirty Years War in Europe was fought between Catholics and Protestants, two competing wings of Christendom. It was a vicious and deadly war. Both sides of it were killing for the same God — just different clergies and their respective aristocracies.

  The civil war in Iraq after Bush invaded Iraq in 2003 was between Shiites and Sunnis; and they too were killing each other for the same God — just different clergies, and their respective aristocracies.

  Before the Sauds-Salafists (Wahhabists) can defeat atheists and former atheists (Russia), and also defeat non-Islamic religionists (such as the vast majority of Europeans and Americans), they must first settle their scores against the Shiites — above all, against Iran.

  Furthermore: the fundamentalist Salafist-Wahhabist Saud family, in 1945, allied with the Christian-majority nation of America, against the atheistic Soviet Union; and, today, Russia is (reverted to its being) an overwhelmingly Christian-majority nation; so, some of the Sauds’ sheer animus against Russians has, indeed, subsided a bit. However, by contrast, Iran has become (after the 1979 ousting of the American stooge Shah) assertively Shiite, which is, perhaps, to the Sauds, even more infuriating than is atheism.

  However, it actually goes much deeper back than that: It goes back to the deal in the year 1744, that the fanatical anti-Shia cleric Muhammad ibn Abd al Wahhab and the ambitious gang-leader Muhammad ibn Saud (the founder of Saudi Arabia) made, which established simultaneously the Saudi-Wahhabist nation and the Wahhabist sect of Islam, both of which are joined-at-the-head with Saud’s descendants, so as to constitute the existing nation of, actually, Saudi-Wahhabist Arabia. (It’s actually not only Saudi. The Sauds fulfill their contract, because, if they didn’t, the Wahhabist clergy would support a revolution to overthrow them.) This deal was the most clearly and succinctly described in the 1992 U.S.-Library-of-Congress-published book by Helen Chapin Metz, Saudi Arabia: A Country Study (and the highlighting of a sentence in it here is by me, not by Metz):

  Lacking political support in Huraymila [where he lived], Muhammad ibn Abd al Wahhab returned to Uyaynah [the town of his birth] where he won over some local leaders. Uyaynah, however, was close to Al Hufuf, one of the Twelver Shia centers in eastern Arabia, and its leaders were understandably alarmed at the anti-Shia tone of the Wahhabi message. Partly as a result of their influence, Muhammad ibn Abd al Wahhab was obliged to leave Uyaynah, and headed for Ad Diriyah. He had earlier made contact with [and won over to his hatred of Shiia] Muhammad ibn Saud, the leader in Ad Diriyah at the time, and two of  [Saud’s] brothers had accompanied  [Saud] when he [in accord with Wahhab’s hate-Shiia teachings] destroyed tomb shrines [which were holy to Shiia] around Uyaynah.

   

  Accordingly, when Muhammad ibn Abd al Wahhab arrived in Ad Diriyah, the Al Saud was ready to support him. In 1744 Muhammad ibn Saud and Muhammad ibn Abd al Wahhab swore a traditional Muslim oath in which they promised to work together to establish a state run according to Islamic principles. Until that time the Al Saud had been accepted as conventional tribal leaders whose rule was based on longstanding but vaguely defined authority.

   

  Muhammad ibn Abd al Wahhab offered the Al Saud a clearly defined religious mission to which to contribute their leadership and upon which they might base their political authority. This sense of religious purpose remained evident in the political ideology of Saudi Arabia in the 1990s.

   

  Muhammad ibn Saud began by leading armies into Najdi towns and villages to eradicate various popular and Shia practices. The movement helped to rally the towns and tribes of Najd to the Al Saud-Wahhabi standard. By 1765 Muhammad ibn Saud's forces had established Wahhabism — and with it the Al Saud political authority — over most of Najd.

  So: Saudi Arabia was founded upon hatred of Shiia Muslims, and it was founded upon a deal that was made in 1744 between a Shiia-hating fundamentalist Sunni cleric Wahhab, and a ruthless gang-leader Saud, in which deal the clergy would grant the Sauds holy legitimacy from the Quran, and the Sauds would finance the spread of Wahhab’s fanatical anti-Shiia sect.

  The Sauds are thus obsessed with Iran, and with its foreign Shiite allies, such as Assad in Syria, Houthis in Yemen, and Hezbollah in Lebanon — and want them all dead, if those Shiites won’t become subservient to Sunni clerics.

  The United States is (and since 1945 has been) allied with the Sauds. But the U.S. was now reaching out to Iran, for a deal on nuclear inspections. This antagonized the Sauds. So: the Sauds were considering the possibility of becoming allied instead with Russia against both Assad and Iran. This despite the fact that America’s aristocracy (such as the Bushes – see below) is obsessed to overthrow or else cripple Russia, so as to give the U.S. aristocracy virtually a power-monopoly over the entire world.

  That meeting between Bandar and Putin on 2 August 2013 was for the big-power stakes; it was for really history-shaping stakes. If Bandar had succeeded, then the post-World-War-II era (the U.S.-Saudi alliance especially) would have definitively ended; and, going forward, a Russia-Saud alliance, including the other Sunni-controlled nations — Qatar, Bahrain, Kuwait, Turkey, etc. — would be at war to defeat Syria and other Shiite nations, especially their leader: Iran.

  The U.S. would have become odd-man-out: desperately trying to get Sunni Pakistan’s military (Pakistan’s aristocracy) to ally with the U.S. instead of with the Sauds. If Pakistan were to go with Saudi Arabia (such as, for example, the Wahhabist Taliban would hope), then Iran would be at war against not only the Arabic aristocracies to the west, but against the Pakistani aristocracy to the east. (Pakistan’s aristocracy mainly run the military, and so in order for Pakistan to go with Saudi Arabia, Pakistan’s aristocracy would be joining with, and would no longer resist, the Taliban and other Wahhabists in Pakistan. Pakistan would become a Saudi satellite state.) Also, the Afghan aristocracy, being Sunni, would be a part of the Saudi alliance (as they already largely have been, since at least 1979; Afghanistan is a Saudi satellite). Virtually the entire Islamic world would be united behind the Sauds.

  The U.S. would lose its influence in both Pakistan and Afghanistan. The EU would be the site of enormous conflicts between the old Christian majority and the flood of new Muslim refugees, most of whom would be Sunnis who would feel torn between their loyalties to Mecca versus to their new Christian-majority home-nation.

  The big losers, in other words, would be not only the clergy and aristocracy in Iran, but also the clergies and aristocracies in Europe and the U.S.

  Bandar Bush was actually angling for the defeat of the U.S., and not only of Iran. (He had been a major donor to Al Qaeda. George W. Bush’s Saudi buddy had contributed to financing the 9/11 attacks.)

  Putin said no. He refused Prince Bandar’s offer.

  The U.S. aristocracy continues trying to overthrow Putin and any nation’s leaders who cooperate with him. Previously, it was Gaddafi in Lybia, then Yanukovych in Ukraine. Now it’s Assad in Syria. Side-coups had also been attempted but failed in Venezuela, Ecuador, and possibly a few other countries.

  After the 13 November 2015 terrorist attacks in Paris, the major world leaders met at the G-20 talks; and, in conclusion of the conference, Russia’s Foreign Minister Sergei Lavrov summed up on November 17th by saying that:

  Analysis of the strikes delivered by the United States and its coalition at terrorist positions [in Syria] over the past year drives us to a conclusion that these were selective, I would say sparing, strikes and in the majority of cases spared those Islamic State groups that were capable of pressing the Syrian army. It looks like a cat that wants to eat a fish but doesn’t want to wet its feet. They want the Islamic State to weaken Assad as soon as possible to force him to step down this or that way, but they don’t want to see Islamic State strong enough to take power.

  In other words: even at the G-20 conference right after the Paris attacks, the U.S. remained more anti-Russian than anti-jihadist. Whereas the American public were vastly more anti-jihadist than anti-Russian, U.S. President Barack Obama was committed to the same policy that he had pretended — both to Russian leaders and to the American public — to be opposed to when he was running against Mitt Romney in 2012; and, as Romney put it: “This [Russia] is without question our number one geopolitical foe.” In America’s dictatorship, Obama’s repudiation of Romney’s statement turned out to have been a lie from Obama — Americans ‘elected’ there Romney merely in blackface.

  *  *  *

  In a previous article, “How America Double-Crossed Russia and Shamed the West,” I quoted the detailed account by Mary Louise Sarotte, about George H.W. Bush’s having double-crossed Soviet leader Mikhail Gorbachev in 1991 by having Bush’s agents tell Gorbachev that the U.S. had no aim of conquering Russia and that if Gorbachev would peacefully let the Berlin Wall fall and East Germany become absorbed into West Germany, then "NATO will not expand itself to the East.” However, when German Chancellor Helmut Kohl tried then to proceed that way to the end of the Soviet Union, Bush brought Kohl to Camp David and told him in private there, “To hell with that! We prevailed, they didn’t.” Kohl from that moment on worked as part of the American aristocracy’s continuing sub-rosa war to take over Russia — and NATO now virtually surrounds the eastern half of Russia. Kohl’s protégé Angela Merkel continues this.

  Bush’s successor Bill Clinton followed through on the senior Bush’s double-cross by bringing into NATO Hungary, Poland and Czech Republic. Bush’s son then brought in Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Obama brought in Albania and Croatia, and he’s still trying to bring in Ukraine, after his coup there in February 2014, whose aim was largely to get that big one into NATO — plus to cut off Russia’s gas-supplies into Europe, which pass through Ukraine.

  Anyone who would deny that the U.S. aristocracy aren’t rabid to take over Russia is ignoring a lot of recent history, especially the most important parts.

  As regards the Saudi obsession to defeat Iran: The billionaire Saudi Prince al-Waleed bin Talal was reported on 2 July 2015 to have said in Saudi Arabia’s newspaper Okaz (with highlighting here by myself, to indicate what I see as the most important parts):

  All my Muslim brothers and sisters must understand that it became a moral imperative for all inhabitants of war-torn Middle-East, namely Arabs, to desist their absurd hostility toward Jewish people.

   

  My sovereign, King Salman has instructed me to open a direct dialogue with Israel's intellectuals building amicable ties with our Israeli neighbors.

  The same English-language site then reported on 27 October 2015 that he said in Kuwait’s newspaper Al Qabas:

  I will side with the Jewish nation and its democratic aspirations in case of outbreak of a Palestinian Intifada (uprising) and I shall exert all my influence to break any ominous Arab initiatives set to condemn Tel Aviv, because I deem the Arab-Israeli entente and future friendship necessary to impede the Iranian dangerous encroachment. … The whole Middle-East dispute is tantamount to life and death for the Kingdom of Saudi Arabia from my vantage point, and I know that Iranians seek to unseat the Saudi regime by playing the Palestinian card, hence to foil their plots Saudi Arabia and Israel must bolster their relations and form a united front to stymie Tehran's ambitious agenda.

  I have been unable to find in English any record of a repudiation by Saudi King Salman of either of those comments. Talal’s statements come at a time when the U.S., Obama Administration, had negotiated an agreement with Iran about nuclear issues. A re-alignment of the key global aristocracies might result from this situation. The U.S. is willing to negotiate with Iran but refuses even to work together with Russia to defeat jihadists in Syria. (Or at least refused prior to the 13 November 2015 ISIS terrorism in Paris.) America’s attitude toward Russia has been unremittingly hostile, as if Russia had done anything that threatened the United States (except to respond to America’s/NATO’s aggressive moves against Russia, such as its overthrow of Ukraine’s government, next door). Clearly, America’s aristocracy have played their public as suckers; but a big debate in American politics these days is whether the U.S. should temporarily reduce its anti-Russian focus in order to increase its anti-jihadist focus after the November 13th Paris terrorist attacks.

  In order for the U.S. to end its war against Russia, a basic re-alignment of aristocracies would occur. The U.S., like Russia, would be aligned with Iran. Israel doesn’t want that to happen. Israel is aligned with the Sauds. Does Israel control U.S.? Will the American public continue to favor America’s being controlled by Israel? Will even American Jews continue to support America’s being controlled by Israel? America’s aristocratic Jews do, but will the vast majority, the others, or will they instead repudiate their aristocracies, not only American but Israeli? Or, instead, will America abandon Saudi Arabia and the other Sunni aristocracies, and Israel’s aristocracy; and, so, abandon the fundamentalist-Jewish apartheid state, and re-assert its own democracy?

  These are not only questions about America’s ideology — whether to be democratic, or instead aristocratic (as it has been since at least 1981). These questions are about America’s military and economic position in the world.

  The United States remains a part of the Saudi-Israeli-U.S. alliance; it remains fundamentally inimical to democracy. It remains as an aristocratically controlled nation, which accepts control of the public by a theocratic-aristocratic alliance via the state, and rejects control of both the aristocracy and the clergy by the public via the state. It sides especially with the aristocracy against democracy.

  However, even secular-democratic nations, such as Russia and a few others in Europe, are constantly under both aristocratic and theocratic threats. Much of Russia’s aristocracy crave to return to the Yeltsin years when the U.S. aristocracy controlled there. And Russia’s alliance with Iran is with a theocratic Shiite state, no authentic democracy.

  The key decision is for the U.S. aristocracy: whether to continue as dictators there, or, instead, abandon both the Sauds who control Arabia, and the Orthodox Jews who have come to control Israel. Barring that, there is no way in which the current soaring ‘defense’ budgets will head down again: ‘defense’ stocks will continue to rise, and services to the public will continue to erode. The world is headed for an increase in wars.

  The last U.S. President before 1981, Jimmy Carter, said recently that the United States is “just an oligarchy with unlimited political bribery being the essence of getting the nominations for president or being elected president.” Changing this will be difficult if not impossible. The global aristocracies might not ‘win,’ but dislodging them from power is extremely unlikely. Their wars will continue to be our wars.

  The world’s 80 wealthiest individuals own half of the world’s wealth, and the way that this was calculated ignored the very wealthiest people entirely, including the wealthiest of all, King Salman of Saudi Arabia, whose actual wealth is certainly well in excess of a trillion dollars. So, the true number there wouldn’t be 80 individuals, but perhaps more like only 40, many of whose personal fortunes aren’t even calculated by Forbes, etc. But regardless of whether it’s instead as large as, say, 70, the wealthiest people need to grab wealth from some of the other wealthiest people in order raise their respective rank, as studies indicate to be the main motivation for the super-rich — rank instead of money per se. For example, “the richest 8.6% own $224.5T (trillion), while the poorest 91.4% own only $38.7T.” So, stealing from even a large number of individuals in the poorest 91.4% won’t likely increase the rank of a person who is in the top 100 worldwide — they’ve got to steal from each other, in order to raise their rank. Wars are the way that’s done. It’s an essential business for the global aristocracy, especially at the global top; and so, as the world’s wealth becomes more and more concentrated, more and more weapons will be sold. There’s just no other way for it to happen. Whether any of them are willing to go so far as nuclear war is another question. Bluffing is one thing; willingness to follow through with it, is something very different.

  *  *  *

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

   

  

  

  

  

  

• Over Half Of New Yorkers Struggle To Make Ends Meet As "Tale Of Two Cities" Deepens

  Despite two years of liberal redistribution from Mayor de Blasio, the majority of New Yorkers continue to struggle to make ends meet mirroring his 2013 "tale of two cities" campaign theme. The NYTimes poll finds that only 20% are living comfortably while 51% are just getting by or finding it difficult to manage, and shows even greater disparities in quality of life across the city’s five boroughs.

   

  

   

  As The New York Times reports, an atmosphere of economic anxiety pervades all areas of the city…

  Residents of the Bronx and Brooklyn shared the most pronounced sense of economic insecurity, and the lowest confidence in local government and the police — a distinctly different experience from the rest of the city.

   

  In those boroughs, nearly three in five residents said they were straining to make ends meet. In the Bronx, 36 percent said there had been times in the past year when they did not have the money to buy enough food for their family; only one in five said they and their neighbors had good or excellent access to suitable jobs.

   

  But if the city appears divided into broad camps of haves and have-nots, it was, perhaps surprisingly, the less privileged segments of New York that shared the most positive outlook on the future.

   

  Four in 10 Brooklyn residents said their neighborhood was getting better, and 36 percent of Bronx residents said the same. Manhattanites and Staten Islanders were most likely to say things were getting worse in their area.

  Government is not seen as addressing the problems that trouble these areas: In the Bronx, only one in five respondents gave local government high marks for meeting their needs. In Brooklyn, that figure was a bit higher, at 26 percent, compared with roughly a third in Manhattan, Queens and Staten Island.

  “I feel like people who were born in this neighborhood stay here our whole lives,” Ms. Thomas said. “If it was true that we had opportunities for advancement, then all of us wouldn’t still be here 20 years from now.”

  Which reminds us of Margarent Thatcher's infamous line…

  

  

  

  

  

  

• The Beginning Of The End For The Affordable Care Act? Largest US Health Insurer May Exit ObamaCare

  Tracking the slow motion trainwreck of Obamacare has become one of our preferred hobbies: below is just a random sample of headlines covering just the most recent tribulations of the “we have to pass it to find out what’s in it” Unaffordable Care Act:

  • In Latest Obamacare Fiasco, Most Low-Income Workers Can’t Afford “Affordable Care Act”
  • The Stunning “Explanation” An Insurance Company Just Used To Boost Health Premiums By 60%
  • Your Health Insurance Premiums Are About To Go Through The Roof -The Stunning Reason Why
  • Obama Promised Healthcare Premiums Would Fall $2,500 Per Family; They Have Climbed $4,865
  • Largest Health Insurer On Colorado Exchange Abruptly Collapses
  • Co-Op Insurers Across America Are Collapsing, And Now There Is Fraud
  • “$19,000 Premiums, Up 4x Since Passage”: The ‘Crippling Effect’ Of Obamacare On The Middle Class
  • Meet The Family That Just Spent Half Its Annual Income Paying For Obamacare

  But the most surprising article we wrote was our explanation from three weeks ago explaining why “Your Health Insurance Premiums Are About To Go Through The Roof” showing that even insurance companies have been unable to earn a profit under Obamacare, as shown in the following chart:

  

   

  This was a stunning revelation because, after all, the Affordable Care Act was largely drafted by the insurance industry itself, and if for whatever reason, it itself was unable to capitalize on Obamacare, then it has truly been a disaster.

  Today we got confirmation of this when none other than the U.S.’s biggest health insurer, UnitedHealth, cut its 2015 earnings forecast with a warning that it was considering pulling out of Obamacare, just one month after saying it would expand its presence in the program.

  According to Bloomberg, “UnitedHealth Group would scale back marketing efforts for plans it’s selling this year under the Affordable Care Act, and may quit the business entirely in 2017 because it has proven to be more costly than expected.“

  This was precisely what we cautioned on November 2.

  Fast forward to today when UnitedHealth said in a statement that “the company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.”

  Needless to say, the implications for Obamacare – which has seen a surge in tangential problems in recent months – are dire: “A pull-back would deal a significant blow to President Barack Obama’s signature domestic policy achievement. While UnitedHealth has been slower than some of its rivals to sell Obamacare policies since new government-run marketplaces for the plans opened in late 2013, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.

  “If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said.

  UnitedHealth further said it suspended marketing its individual exchange plans and is cutting or eliminating commissions for brokers who sell the coverage.

  What is surprising is that for UnitedHealth, its Obamacare-facing exposure is relatively limited: the company covers fewer than 550,000 people on the Obamacare exchanges. About 9.9 million people had insurance through the U.S.- and state-run insurance markets as of June 30. This means that all other insurance companies must be getting crushed, something which the market also noticed earlier today hitting the stocks of not only hospitals, such as CYH, HCA, LPNT, THC and UHS but also home health care providers as well such as AFAM, AMED, GTIV and LHCG.

  What is perhaps even more perplexing is the abrupt shift in posture: just last month, UnitedHealth had struck a more optimistic note. I think we’ll see strikingly better performance on the insurance exchange business” next year, Chief Financial Officer David Wichmann told analysts on an Oct. 15 conference call.”

  Perhaps he had not seen the P&L? Oh well, he certainly did in the subsequently 4 weeks.

  The rest of the story is well-known and has been covered here extensively in the past: the inability of businesses to turn a profit from Obamacare has meant that about a dozen non-profit “co-op” plans created under the Affordable Care Act have failed, after charging too little to cover the cost of patients’ medical care, and because an Obama administration fund designed to stabilize the market paid out just 12.6 percent of what insurers requested. And Anthem last month said some rivals were offering premiums too low to provide the coverage patients require and book a profit.

  At the end of the day, the worst news is not for the corporations, since Obamacare is not going away any time soon. It simply means that what until now were supposedly Affordable plans under Obamacare, will soon become (even more) Unaffordable as insurer after insurer hikes premiums dramatically in order to make the biggest US governmental intrusion into the private sector in recent decades profitable to shareholders.

  Or, as we explained three weeks ago, “Your Health Insurance Premiums Are About To Go Through The Roof“

  

  

  

  

  

• The Great Fall Of China Started At Least 4 Years Ago

  Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

  Looking through a bunch of numbers and graphs dealing with China recently, it occurred to us that perhaps we, and most others with us, may need to recalibrate our focus on what to emphasize amongst everything we read and hear, if we’re looking to interpret what’s happening in and with the country’s economy.

  It was only fair -perhaps even inevitable- that oil would be the first major commodity to dive off a cliff, because oil drives the entire global economy, both as a source of fuel -energy- and as raw material. Oil makes the world go round.

  But still, the price of oil was merely a lagging indicator of underlying trends and events. Oil prices didn‘t start their plunge until sometime in 2014. On June 19, 2014, Brent was $115. Less than seven months later, on January 9, it was $50.

  Severe as that was, China’s troubles started much earlier. Which lends credence to the idea that it was those troubles that brought down the price of oil in the first place, and people were slow to catch up. And it’s only now other commodities are plummeting that they, albeit very reluctantly, start to see a shimmer of ‘the light’.

  Here are Brent oil prices (WTI follows the trend closely):

  

  They happen to coincide quite strongly with the fall in Chinese imports, which perhaps makes it tempting to correlate the two one-on-one:

  

  But this correlation doesn’t hold up. And that we can see when we look at a number everyone seems to largely overlook, at their own peril, producer prices:

  

  About which Bloomberg had this to say:

  China Deflation Pressures Persist As Producer Prices Fall 44th Month

  China’s consumer inflation waned in October while factory-gate deflation extended a record streak of negative readings [..] The producer-price index fell 5.9%, its 44th straight monthly decline. [..] Overseas shipments dropped 6.9% in October in dollar terms while weaker demand for coal, iron and other commodities from declining heavy industries helped push imports down 18.8%, leaving a record trade surplus of $61.6 billion.

  44 months is a long time. And March 2012 is a long time ago. Oil was about at its highest since right before the 2008 crisis took the bottom out. And if you look closer, you can see that producer prices started ‘losing it’ even earlier, around July 2011.

  Something was happening there that should have warranted more scrutiny. That it didn’t might have a lot to do with this:

  China’s debt-to-GDP ratio has risen by nearly 50% in the past four years.

  The producer price index seems to indicate that trouble started over 4 years ago. China dug itself way deeper into debt since then. It already did that before as well (especially since 2008), but the additional debt apparently couldn’t be made productive anymore. And that’s an understatement.

  Now, if you want to talk correlation, compare the producer price graph above with Bloomberg’s global commodities index:

  

  World commodities markets, like the entire global economy, were propped up by China overinvestment ever since 2008. Commodities have been falling since early 2011, after rising some 60% in the wake of the crisis. And after the 2011 peak, they’ve dropped all the way down to levels not seen since 1999. And they keep on falling: steel, zinc, copper, aluminum, you name it, they’re all setting new lows almost at a daily basis.

  

  Moreover, if we look at how fast China imports are falling, and we realize how much of those imports involve (raw material) commodities, we can’t escape the conclusion that here we’re looking at not a lagging, but a predictive indicator. What China doesn’t purchase in raw materials today, it can’t churn out as finished products tomorrow.

  Not as exports, and not as products to be used domestically. Neither spell good news for the Chinese economy; indeed, the rot seems to come from both sides, inside and out. And no matter how much Beijing points to the ‘service’ economy it claims to be switching towards, with all the debt that is now deflating, and the plummeting marginal productivity of new debt, most of it looks like wishful thinking.

  And that is not the whole story either. Closely linked to the sinking marginal productivity, there is overleveraged overcapacity and oversupply. It’s like the proverbial huge ocean liner that’s hard to turn around.

  There are for instance lots of new coal plants in the pipeline:

  China Coal Bubble: 155 Coal-Fired Power Plants To Be Added To Overcapacity

  China has given the green light to more than 150 coal power plants so far this year despite falling coal consumption, flatlining production and existing overcapacity. [..] in the first nine months of 2015 China’s central and provincial governments issued environmental approvals to 155 coal-fired power plants — that’s 4 per week. The numbers associated with this prospective new fleet of plants are suitably astronomical.

   

  Should they all go ahead they would have a capacity of 123GW, more than twice Germany’s entire coal fleet; their carbon emissions would be around 560 million tonnes a year, roughly equal to the annual energy emissions of Brazil; they would produce more particle pollution than all the cars in Beijing, Shanghai, Tianjin and Chongqing put together [..]

  And new car plants too:

  China’s Demand For Cars Has Slowed. Overcapacity Is The New Normal.

  For much of the past decade, China’s auto industry seemed to be a perpetual growth machine. Annual vehicle sales on the mainland surged to 23 million units in 2014 from about 5 million in 2004. [..] No more. Automakers in China have gone from adding extra factory shifts six years ago to running some plants at half-pace today—even as they continue to spend billions of dollars to bring online even more plants that were started during the good times.

   

  The construction spree has added about 17 million units of annual production capacity since 2009, compared with an increase of 10.6 million units in annual sales [..] New Chinese factories are forecast to add a further 10% in capacity in 2016—despite projections that sales will continue to be challenged. [..] “The players tend to build more capacity in hopes of maintaining, or hopefully, gain market share. Overcapacity is here to stay.”

  These are mere examples. Similar developments are undoubtedly taking place in many other sectors of the Chinese economy (how about construction?!). China has for example started dumping its overproduction of steel and aluminum on world markets, which makes the rest of the world, let’s say, skittish. The US is levying a 236% import tax on -some- China steel. The UK sees its remaining steel industry vanish. All US aluminum smelters are at risk of closure in 2016.

  The flipside, the inevitable hangover, that China will wake up to sooner rather than later, is the debt that its real growth, and then it’s fantasy growth, has been based on. We already dealt extensively with the difference between ‘official’ and real growth numbers, let’s leave that topic alone this time around.

  Though we can throw this in. Goldman Sachs recently said that even if the official Beijing growth numbers were right -which nobody believes anymore- ”Chinese credit growth is still running at roughly double the rate of GDP growth”. And even if credit growth may appear to be slowing a little, though we’d have to know the shadow banking numbers to gauge that (and we don’t), that hangover is still looming large:

  China Bad Loans Estimated At 20% Or Higher vs Official 1.5%

  

  [..] While the analysts interviewed for this story differ in their approaches to calculating likely levels of soured credit, their conclusion is the same: The official 1.5% bad-loan estimate is way too low.

   

  The Bank for International Settlements cautioned in September that China’s credit to gross domestic product ratio indicates an increasing risk of a banking crisis in coming years. “A financial crisis is by no means preordained, but if losses don’t manifest in financial sector losses, they will do so via slowing growth and deflation, as they did in Japan,” said Chu. “China is confronting a massive debt problem, the scale of which the world has never seen.”

  Charlene Chu [..]

   

  and her colleagues at Autonomous Research in Hong Kong take a top-down approach. They estimate how much money is being wasted after the nation began getting smaller and smaller economic returns on its credit from 2008. Their assessment is informed by data from economies such as Japan that have gone though similar debt explosions. While traditional bank loans are not Chu’s prime focus – she looks at the wider picture, including shadow banking – she says her work suggests that nonperforming loans may be at 20% to 21%, or even higher.

  Looking at the producer price graph, we see that the downfall started at least 44 months ago, and that 52 months is just as good an assumption. And we know that debt rose 50% or more since the downfall started. That does put things in a different perspective, doesn’t it? (Probably) the majority of pundits and experts will still insist on a soft landing at worst.

  But for those who don’t, please consider the overwhelming amount of deflationary forces that is being unleashed on the world as all that debt goes sour. As the part of that debt that was leveraged vanishes into thin air.

  It’s ironic to see that it’s at this very point in time that the IMF (Christine Lagarde seems eager to take responsibility) seeks to include the yuan in its SDR basket. Xi Jinping’s power over the exchange rate can only be diminished by such a move, and we’re not at all sure he realizes to what extent that is true. Chinese politics are built on hubris, and that goes only so far when you free float but don’t deliver.

  To summarize, do you remember what you were doing -and thinking- in mid-2011 and/or early 2012? Because that’s when this whole process started. Not this year, and not last year.

  China’s producers couldn’t get the prices they wanted anymore, as early as 4 years ago, and that’s where deflationary forces came in. No matter how much extra credit/debt was injected into the money supply, the spending side started to stutter. It never recovered.

  

  

  

  

  

• Subprime Auto Lending Soars As Fed Report Shows Spike In Loans To Underqualified Borrowers

  When last we checked in on America’s auto loan bubble (which recently ballooned past the $1 trillion mark) the “visionary” ex-Santander execs over at Skopos Financial had just finished selling some $154 million in paper backed by a collateral pool wherein 75% of the loans were made to borrowers with credit scores less than 600. 

  14% of the loans were made to borrowers with no credit score at all.

  That deal followed a $150 million securitization the company sold earlier this year in which a fifth of the borrowers had FICOs between 351 and 500. 

  What this represents is the resurrection of the infamous originate to sell model that was instrumental in exacerbating the housing bubble. Put simply: if you can offload the credit risk to investors, you don’t really care who you’re loaning money to. It’s moral hazard at its finest and it’s enabled by Wall Street’s securitization machine. 

  Skopos’ latest abomination of an ABS deal came just weeks after Comptroller of the Currency Thomas Curry warned that what’s happening in the auto loan market “reminds [him] of what happened in mortgage-backed securities in the run-up to the crisis.”

  Obviously the market isn’t nearly as large, but auto loan-backed ABS supply is expected to grow 25% this year. Here’s an up to date look at consumer ABS supply:

  

  Auto loan-backed issuance will only grow as the bubble expands … and boy oh boy, is it expanding: 

  

  Of course in order to keep the US car sales “miracle” alive and thus perpetuate the ridiculous myth of an American auto renaissance, lenders will need to continue to lower their underwriting standards. After all, the pool of creditworthy borrowers is finite and so in order to expand it, you need to make inelligible borrowers eligible and that means the proliferation of subprime lending. 

  In what amounts to evidence that the subprime auto problem is indeed growing, The New York Fed’s Quarterly Report on Household Debt and Credit (out today) shows that lenders extended more than $110 billion in auto loans to borrowers with credit scores below 660 over the past six months alone. You can view that figure in context by taking a look at the following chart:

  

  But don’t worry, because Phil Lebeau and Experian’s perma-auto-loan bull and senior director of automotive finance Melinda Zabritski will tell you that talk of a subprime auto loan bubble is nonsense (from a CNBC interview earlier this month): 

  Zabritski: “I don’t see a bubble in subprime loans. This is a very steady market in terms of loans to high-risk borrowers.”

  

  

  

  

  

• The Greatest Racket Of All Time

  Submitted by Pater Tenebrarum via Acting-Man.com,

  The Successes of the Global War on Terror

  One would think that the so-called “Global War on Terror”, which has been given fresh impetus by the Paris attacks, must be going swimmingly. What else could explain the great enthusiasm with which it is pursued? It may be recalled that it started in earnest after the WTC attack – also a declaration of war, as it was put at the time.

  As is often the case when Islamist fundamentalists strike, the actual attackers immolated themselves on occasion of the attack itself, making it impossible to exact retribution. Except by proxy, that is. This was playing right into the hands of those who had planned the attacks. It seems to us that they have ultimately succeeded beyond their wildest dreams. Not to put too fine a point to it, our wise political leaders have evidently been outfoxed by a bunch of turbaned cave dwellers and goat buggerers in the Hindu Kush.

   

  

  Steve Bell on the reaction to the Paris attacks.

  To wit, between 2013 and 2014, the global death toll from terrorist attacks has increased by yet another 80%, setting a new sad record. So 15 years of bombing places far and wide to smithereens, engaging in extremely costly “nation building” exercises, droning assorted terrorist groups so thoroughly that selected Al Qaeda leaders can by now boast of having been killed up to 17 times (only to miraculously reappear again), have produced this by way of bottom line results:

   

  The result to date of 15 years of “Global War on Terrorism” – there is more terrorism than ever before – click to enlarge.

   

  This is eerily reminiscent of the US government’s “War on Poverty”, which stopped the decline in poverty dead in its tracks the moment it began, or the even worse effort known as the “War on Drugs”, which has done nothing to decrease the drug epidemic, but has given birth to the largest and most brutal criminal cartels the world has ever seen. Can people really be that stupid? Unfortunately the answer is yes, they can. This is only half of the answer though.

   

  

  Death by terrorism in 2014. Not a single Western country even makes the list (and even now, France would not make it). The biggest number of victims can be found in places like Iraq and Nigeria. Boko Haram has killed even more people than ISIS in 2014 (the deaths in Iraq are not exclusively attributable to IS) – click to enlarge.

   

  The Greatest Racket of All Time

  The other half of the answer has been already been supplied decades ago by the legendary Smedley Butler: War is a racket. However, most people are blissfully unaware of how big a racket it actually is. It is in fact the greatest scam ever – even the more recent “climate change” scam is comfortably put in the shade by it.

  Why are all Republican presidential candidates (apart from two exceptions) and Democratic front-runner Billary alike loudly screeching for more war, in spite of the sobering evidence? When confronted with such seemingly intractable questions, it is usually a good idea to follow the money. Should the mafia be aware of the associated statistics, it is presumably green with envy. Readers should definitely take the time to read Tom Engelhardt’s recent article “It’s a $cam” in its entirety. Below we are presenting just a handful of morsels from the first few paragraphs:

  “Let’s begin with the $12 billion in shrink-wrapped $100 bills, Iraqi oil money held in the U.S. The Bush administration began flying it into Baghdad on C-130s soon after U.S. troops entered that city in April 2003. Essentially dumped into the void that had once been the Iraqi state, at least $1.2 to $1.6 billion  of it was stolen and ended up years later in a mysterious bunker in Lebanon. And that’s just what happened as the starting gun went off.

   

  It’s never ended. In 2011, the final report of the congressionally mandated Commission on Wartime Contracting estimated that somewhere between $31 billion and $60 billion taxpayer dollars had been lost to fraud and waste in the American “reconstruction” of Iraq and Afghanistan.

   

  In Iraq, for instance, there was that $75 million police academy, initially hailed “as crucial to U.S. efforts to prepare Iraqis to take control of the country’s security.” It was, however, so poorly constructed  that it proved a health hazard. In 2006, “feces and urine rained from the ceilings in [its] student barracks” and that was only the beginning of its problems. When the bad press started, Parsons Corporation, the private contractor that built it, agreed to fix it for nothing more than the princely sum already paid.

   

  […]

  Typically enough, the Khan Bani Saad Correctional Facility, a $40 million prison Parsons also contracted to build, was never even finished.

   

  […]

  And why stick to buildings, when there were those Iraqi roads to nowhere paid for by American dollars? At least one of them did at least prove useful  to insurgent groups moving their guerrillas around (like the $37 million bridge  the U.S. Army Corps of Engineers built between Afghanistan and Tajikistan that helped facilitate the region’s booming drug trade in opium and heroin).

   

  […]

  The U.S. Agency for International Development (USAID) hired  an American nonprofit, International Relief and Development (IRD), to oversee an ambitious road-building program meant to gain the support of rural villagers. Almost $300 million later, it could point to “less than 100 miles of gravel road completed.” Each mile of road had, by then, cost U.S. taxpayers $2.8 million, instead of the expected $290,000, while a quarter of the road-building funds reportedly went directly to IRD for administrative and staff costs. Needless to say, as the road program failed, USAID hired IRD to oversee other non-transportation projects.”

  (emphasis added)

   

  

  Snapshot taken at a meeting of death merchant cronies.

   

  The article continues in this vein and believe it or not, the above was just the harmless stuff. It becomes even more absurd as one reads on. Not only do the numbers become ever more staggering, the failures become concomitantly greater and more bizarre (such as the $43 million compressed natural gas station in Afghanistan, similar to one built in neighboring Pakistan for $300,000, located in an area bereft of infrastructure capable of delivering natural gas; or the $8.4 billion pumped into an Afghan “drug eradication program”, which was followed by a hitherto unbroken string of record opium harvests).

  That is however not all. Even more astounding is the fact that most of the individuals who demonstrably bear personal responsibility for these cases of fraudulent theft of taxpayer funds have not only not been sanctioned, but have in fact been rewarded and promoted. As Engelhardt puts is:

  “In short, there turns out to be much good fortune in the disaster business, a fact which gives the whole process the look of a classic swindle in which the patsies lose their shirts but the scam artists make out like bandits.”

  We have long had a cynical view of government and its endless follies and outrages. There is little that can surprise us anymore. We must confess though that the sheer size and audacity of this racket still manages to impress us.

  The war on terror is the best racket yet – it is a gift that will likely keep on giving for a very long time. It possesses a certain fateful inevitability: Western governments go about poking assorted hornet’s nests, until the hornets come swarming out to sting us, providing fresh reasons to expand the war.

   

  

  Vicious circle

   

  This is not meant to imply that one shouldn’t defend oneself against terrorism, but it might be a good idea to reevaluate the strategy (as Justin Raimondo noted, at this juncture, simply quarantining IS may be worth considering). Doing more of what clearly hasn’t worked so far is certainly likely to keep the above mentioned racket going, but based on the evidence it isn’t going to achieve much else.

   

  Miscalculations Coming Home to Roost

  The conflict in Syria specifically has been characterized by miscalculations galore. It seems everybody is finally realizing that IS may be more of a threat than was hitherto assumed. As a number of governments in the region that are allied with the West have found out, they are in a situation akin to that the sorcerer’s apprentice found himself in. The spirits they have summoned are now ignoring their commands – and they can no longer get rid of them.

   

  

  Good doggie…doggie?

   

  Arab potentates aren’t the only ones in the region beginning to wonder what they have cultivated next door in their eagerness to see Syrian tinpot despot Assad toppled. Even the Grand Poobah of Turkey has recently begun to sound a bit worried.

   

  

  Lettuce water this tender green shoot a bit….ouch!

  Cartoon via tribune.gr

   

  Addendum: Deep State Piping Up, Resurgent Putin

  Meanwhile, Deep State representatives are once again sensing an opening. They have already reiterated their nonsensical, nay, downright dangerous demand to do away with encryption on a “just trust us” basis (see the assessment of cyber-security specialist Brian Krebs here). The idea is totally hare-brained, i.e., par for the course for government bureaucrats.

  And wouldn’t you know, it’s all Edward Snowden’s fault, for having provided proof of the unconstitutional misdeeds of certain spook agencies. Presumably he has magically caused the French authorities to ignore warnings about the terrorists and the planned attacks they received from at least three different foreign intelligence services by inundating them with his traitor-rays from Moscow.

  Finally, in an exceedingly amusing development, Vladimir Putin appears to have morphed overnight from pariah and enemy du jour to the “go to man”/ “hottest ticket in town” on fighting IS (or the “problem solver who cannot be ignored”, as the FT averred). Not that he is doing anything different – he is also poking the hornet’s nest and getting stung in return. However, everybody knows he is different in at least one respect.

  As we remarked to a friend recently, whatever one thinks of Putin, it is clear that he is an implacable enemy of Islamist radicals. The Chechen war stands as a monument to his Machiavellian ruthlessness in dealing with such people. So-called collateral damage definitely wasn’t on his mind much. In order to pacify the place, he simply ordered his military to raze the capital Grozny. Once Grozny was reduced to sufficiently small pieces of rubble, the army combed the surrounding landscape and shot everything that moved funny. Then a sort of local mafia boss was installed as the new governor, to ensure the place remained pacified.

   

  

  Grozny after Putin makeover.

  Photo via hubpages.com

   

  We suspect that the Middle East is a different kettle of fish though. Restoring something akin to the decades of pan-Arab nationalist oppression seems a highly dubious proposition. Too much has happened, and the place is packed with armed groups that will continue to be at each other’s throats no matter what.

  Putin is merely acting in line with old KGB traditions though. Here is an excerpt from a 20 year old newspaper report on how the KGB treated Islamist kidnappers aligned with Hezbollah who had taken Soviet diplomats hostage in Lebanon and had made the mistake of killing one of them:

  “The incident began when four Soviet diplomats were kidnapped last September by Muslim extremists who demanded that Moscow pressure the Syrian government to stop pro-Syrian militiamen from shelling rival Muslim positions in the northern Lebanese city of Tripoli. The militiamen, the Jerusalem paper said, did not cease their attacks, and the body of one of the Soviet diplomats, Arkady Katkov, was found a few days later in a field in Beirut.

   

  The KGB then apparently kidnapped and killed a relative of an unnamed leader of the Shi’ite Hezbollah (Party of God) group, a radical, pro-Iranian group that has been suspected of various terrorist activities against Western targets in Lebanon.

   

  Parts of the man’s body, the paper said, were then sent to the Hezbollah leader with a warning that he would lose other relatives in a similar fashion if the three remaining Soviet diplomats were not immediately released. They were quickly freed.

   

  The newspaper quoted “observers in Jerusalem” as saying: “This is the way the Soviets operate. They do things – they don’t talk. And this is the language Hezbollah understands.”

  (emphasis added)

  One could probably call that an exchange of messages of increasing intensity.

   

  

  G 20 meeting – Putin the rediscovered “problem solver”. As an old KGB hand, he can at least be relied on to be utterly ruthless when combating Islamic extremists.

  Photo credit: FOCUS Online/Wochit

   

  Of course there remain differences over Assad’s fate, but they may be smaller than appears on the surface. Perhaps Syria will end up partitioned at some point, with Assad’s Alawite clan controlling the part that contains Russia’s Mediterranean port.

   

  Conclusion

  It seems it is high time for a strategic rethink in the GWoT, but powerful forces are arrayed against it. Apart from the fact that a truly huge racket is at stake, the situation is also reminiscent of the proverbial guy with the hammer – everything looks like a nail to him. So we should reasonably expect more of the same, only in even grander style (as the so-called “surge” has shown, any successes tend not only to be temporary, but have a habit to soon give way to even greater disasters).

  At least we can all be comforted by recent news that there is no reason to worry about the euro zone. As Mish relates, Keynesian economist Nouriel Roubini has rediscovered the broken window fallacy by arguing that the Paris attacks will “help the euro zone economy”. What is it with these geniuses? Paul Krugman has made similar arguments after the WTC attack and the Katrina hurricane. Obviously, it would be best if we just nuked all our cities. We’d have growth out the wazoo!

  However, this is perhaps less surprising than it should be. No-one can accuse Keynesians (regardless which prefixes adorn them by way of sect differentiation, i.e., New, neo-, post-,…) of being founts of economic literacy. After all, their master thought aimless ditch digging and pyramid building were viable “economic policies”.

   

  

  

  

  

  

• China's "Minksy Moment" – $1.2 Trillion In Ponzi Financing

  Early last month in “Chinese Cash Flow Shocker: More Than Half Of Commodity Companies Can’t Pay The Interest On Their Debt,” we highlighted a report from Macquarie which showed that for many Chinese corporates, debt service payments have simply become too much to bear in the current environment.

  As Macquarie put it “more than half of the cumulative debt in [the commodities space] was EBIT-uncovered in 2014, and all sub-sectors have their share in the uncovered part, particularly for base metals (the big gray bar on the right stands for Chalco), coal, and steel.”

  

  In short, last year about CNY2 trillion in debt was in danger of imminent default. 

  To be sure, this shouldn’t exactly come as a surprise. Lackluster demand (both domestic and international) combined with an acute excess capacity problem and an enormous amount of leverage spells disaster and as the growing number of defaults we’ve seen in China this year underscores, Beijing’s habit of bailing out anyone and everyone and the unspoken directive that compels Chinese banks to roll bad debt may no longer be enough to keep a lid on things. Meanwhile, multiple rate cuts are proving to be too little, too late. 

  So what do you do when you can’t service your debt? Well, you either default or you go into full ponzi mode and take out new loans to pay the interest on your old loans. Don’t look now, but that’s exactly what’s happening in China. 

  As Bloomberg reports, Chinese borrowers are set to take out some CNY7.6 trillion in new loans this year just to pay interest on their existing borrowings. That’s according to Beijing-based Hua Chuang Securities Co., whose data Bloomberg used to construct the following chart:

  

  Here’s more: 

  Chinese companies are struggling to generate the cash flow needed to service their obligations as economic growth slows to the weakest pace in 25 years and corporate profits shrink. While the debt burden has been eased by six central bank interest-rate cuts in 12 months and a tumble in corporate borrowing costs to five-year lows, the number of defaults in China’s onshore corporate bond market has increased to six this year from just one in 2014.

   

  China Shanshui Cement Group Ltd. became the latest company to default on yuan-denominated domestic notes last week as overcapacity in the industry hurt profits and a shareholder dispute stymied financing. State-owned steelmaker Sinosteel Co., which pushed back an interest payment on a bond last month, postponed it again this week.

  And so, as we pointed out more than 18 months ago, China is about to reach its Minsky Moment. Recall what Morgan Stanley said last March:

  It is clear to us that speculative and Ponzi finance dominate China’s economy at this stage. The question is when and how the system’s current instability resolves itself. The Minsky Moment refers to the moment at which a credit boom driven by speculative and Ponzi borrowers begins to unwind. It is the point at which Ponzi and speculative borrowers are no longer able to roll over their debts or borrow additional capital to make interest payments. Minsky states this usually occurs when monetary authorities, in order to control inflationary impulses in the economy, begin to tighten monetary policy. We would add that this monetary tightening often begins to occur at the time when the size of speculative and Ponzi borrowings have become so large that the demand for additional capital to keep these borrowers afloat becomes greater than the supply of such capital. We believe that China finds itself today at exactly this juncture.

  To be sure China is is certainly doing its best to forestall this eventuality. The PBoC for instance, is not seeking to tighten monetary policy and deflation is a bigger risk than inflation. Additionally, the local government debt swap program is a sweeping effort to address provincial governments’ inability to make interest payments on LGVF financing which in many cases came with punitive rates. 

  So while we may not have reached the breaking point just yet (i.e. the point at which borrowers can no longer obtain new financing to pay the interest on their existing obligations), we’re getting there and were it not for the flood of liquidity (the tightening effect of PBoC FX interventions notwithstanding) unleashed by a series of RRR cuts and the implementation of various short- and medium-term lending ops, China probably would have gone over the edge long ago. For a preview of what comes next (and some of what you’ll read below is already happening), here’s Morgan Stanley again:

  The unwind of this credit boom is likely in progress, and we expect it to pick up speed over the coming months and quarters. It will likely involve a steady drip of defaults and near-defaults as insolvent borrowers finally become illiquid. Market rates for all assets except central government bonds and central bank bills will likely continue to rise, reflecting increasing market fears of default by shaky borrowers. Asset values will likely begin to deteriorate as stressed borrowers attempt to sell assets to stay afloat. As a result, banks and other financial entities could begin to increase provisioning for bad debts and to reduce credit availability by gradually tightening credit standards. This could lead to a credit crunch where credit to the economy is choked off for all but the safest borrowers.

  Xi’s determination to show the world that China is set to liberalize capital markets will only serve to accelerate this dynamic as a free(er) market means allowing for more defaults.

  You were warned.

  We close with a quote from Shi Lei, the Beijing-based head of fixed-income research at Ping An Securities Co. who spoke to Bloomberg and who we imagine may be “summoned” for daring to offer the following assessment of the situation:

  “Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast. As a result, leverage will be rising and zombie companies increasing.”

  

  

  

  

  

• What Money Means

  Submitted by Adam Taggart via PeakProsperity.com,

  There's no doubt that money is important. There's good reason why most of us devote a huge percentage of our lives to pursuing it.

  But there's much about money that is misunderstood.

  Many among the masses don't realize the intense and coordinated efforts currently being waged by central planners to trap and devalue our savings through financial repression. They're being fleeced without being aware of it — working harder and harder for less and less.

  Many others overvalue the impact money has on our happiness. They make all sorts of sacrifices in pursuit of money, but remain poor in the things that truly matter.

  In our new book Prosper!: How to Prepare for the Future and Create a World Worth Inheriting, we examine closely what true wealth is. Yes, money absolutely plays a critical part in it; but it is only one of several pillars — one of 8 Forms of Capital — that we identify as required for a rich life. Good health, purposeful work, meaningful relationships, a resilient lifestyle, self-worth, a supportive community — all of these ingredients are as important as money for overall happiness.

  We wrote Prosper! as a resource that those already "awake" to these insights can use to share with family and friends who aren't yet aware of them.

  And since money is a universal attention-grabber as a topic, we're making our chapter on Financial Capital available here for free — as a means of engaging someone you care about in the discussion. We think it's one of the best digests of what happening right now with our money system:

   

  

  

  

  

  

• THe LoNe RaNGeR…

  .

  Leader of the “Free World”

  

  

  

  

• American Police Kill 3 People Per Day, Over 1000 So Far In 2015

  Submitted by Jennifer Baker via TheAntiMedia.org,

  The Guardian’s effort to track fatal shootings by American police, known as ‘The Counted,’ reached the 1000 mark this week. With an average of more than three Americans shot and killed by police per day, this shocking statistic should be a wake-up call to the gun-toting vigilante justice that’s being trained into United States police forces.

  In a country where its citizens are innocent until proven guilty in a court of law, the nation’s police force operates as the judge, jury, and executioner at least three times a day by taking the lives of citizens without significant accountability for their actions.

  The United States government and U.S. citizens have never before had a comprehensive record of the number of people killed by law enforcement. Former U.S. attorney general, Eric Holder described the absence of a National data collection system to track fatal police shootings as “unacceptable.”

  Until journalists began tracking fatal police shootings this year, the only way that information was collected was by a ‘voluntary’ program run by the FBI through which law enforcement agencies may or may not choose to submit their annual count of “justifiable homicides,” which it defines as “the killing of a felon in the line of duty.”

  Between 2005 and 2012 just 1,100 of America’s 18,000 police agencies chose to voluntarily report a “justifiable homicide” to the FBI.

  For comparison, according to the National Law Enforcement Officers Memorial Fund, 35 Police Officers have died on the job in firearm-related incidents in 2015.

  Saudi Arabia, known worldwide for its public beheadings, executed only 90 people in the entire year of 2014 according to reports by Amnesty International, when an average of over 90 people are killed by American police forces every 30 days.

  To further put the scale of this crisis into perspective, as the world rushes to war over the tragic deaths of 129 people killed earlier this week in Paris, United States police forces kill that many American citizens about every 40 days.

  The crisis is clear. The United States trains its police officers to act as public executioners with a laundry list of worn out excuses and aggressive police unions at the ready to battle any public backlash and assist Officers with avoiding accountability for their actions.

  A complete dismantling and total reconstruction of current policing systems seem the only available answer.

  

  

  

  

• Dear Syrian Refugees: You Are Welcome In Baltimore, Mayor Says

  If there’s one thing that’s become abundantly clear in the six days since ISIS operatives turned the streets of Paris into a warzone and massacred dozens of concertgoers at the Bataclan, it’s that when it comes to lawmakers’ support for the sheltering of Syrian refugees, murdering Westerners on camera is one thing, but staging an all-out assault on civilians in the French capital is entirely another. 

  As of Thursday, more than half of US state governors have come out against the Obama administration’s plan to resettle 10,000 Syrian asylum seekers in the US and a recent poll suggests that some 53% of Americans oppose the plan as well. 

  You can expect the backlash to grow with each new ISIS propaganda clip threatening attacks on US soil. There have been two this week alone, with the first containing an explicit threat against Washington DC and the second a veiled threat against New York. How credible those threats are we have no idea (ask Langley), but both of the videos were plastered all over the mainstream US media which probably drove a metaphorical stake through the heart of Obama’s refugee plan. 

  While it’s true that states can’t physically prevent refugees from being relocated within their borders, House Speaker Paul Ryan is moving to stop the resettlement plan in its tracks and you can bet that GOP governors will do everything in their power to make the relocation process as difficult as possible for the federal government and that resistance could well be contagious, creating ill-will towards refugees. 

  However, in a world where hostility towards Syrian migrants is growing by the day, there’s one city that wants asylum seekers to know that they are welcome: Baltimore. 

  Here’s a statement out earlier this week from Mayor Stephanie-Rawlings Blake:

  Baltimore, Maryland and the United States have proud traditions of welcoming refugees seeking assistance from crises around the world. There are few among us who can claim that their ancestors were indigenous to the United States. Welcoming immigrants and New Americans is a critical part of my strategy to grow Baltimore, and I hope that refugees from Syria will look to our city as a potential place to call home.

   

  

  So there you go Syrian refugees, there’s hope for you in America after all. 

  That said, we do encourage you to scope out the neighborhood before deciding that Baltimore is the place you want “to call home,” because depending on where you are in the city and what the current state of race relations happens to be, you might wonder why you ever left the Middle East…

  

  

  

  

  

  

• Hillary Clinton's Aides Demand Comedy Club Remove Video Making Fun Of Her

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  The one upside of Hillary Clinton becoming President, is that her endless stream of stupidity will result in more content for this writer than I could ever imagine.

  Hot off her recent debate performance in which she claimed that the reason she is owned by Wall Street is because of 9/11, her aides are now demanding a Hollywood comedy club take down a video of comedians mocking her.

  Just in case you have any doubt about what a Hillary presidency would look like, we learn from Judicial Watch:

  In what appears to be a first for a serious presidential contender, Hillary Clinton’s campaign is going after five comedians who made fun of the former Secretary of State in standup skits at a popular Hollywood comedy club.

   

  A video of the short performance, which is less than three minutes, is posted on the website of the renowned club, Laugh Factory, and the Clinton campaign has tried to censor it. Besides demanding that the video be taken down, the Clinton campaign has demanded the personal contact information of the performers that appear in the recording. This is no laughing matter for club owner Jamie Masada, a comedy guru who opened Laugh Factory more than three decades ago and has been instrumental in launching the careers of many famous comics. “They threatened me,” Masada told Judicial Watch. “I have received complains before but never a call like this, threatening to put me out of business if I don’t cut the video.”

   

  Masada told Judicial Watch that, as soon as the video got posted on the Laugh Factory website, he received a phone call from a “prominent” person inside Clinton’s campaign. “He said the video was disgusting and asked who put me up to this,” Masada said. The Clinton staffer, who Masada did not want to identify, also demanded to know the names and phone numbers of the comedians that appear in the video. Masada refused and hung up. He insists that the comedy stage is a sanctuary for freedom of speech no matter who is offended. “Just last night we had (Emmy-award winner) Dana Carvey doing Donald Trump and it was hilarious,” Masada said.

  Now watch the video, accurately titled: Hillary Clinton vs. the First Amendment

   

   

   

   

  Let’s now make sure this video benefits from a huge Streisand effect.

   

  Should someone this thin-skinned, someone so weak she demands a safe space from humor, ever be considered for the Presidency?

   

  

  

  

  

  

• Fed's Fischer Unleashes Schrodinger's FedSpeak – We Dare You To Make Sense Of This

  If you had any confidence in your ability to understand The Fed's future course of action, Fed vice-chair Stanley Fischer just destroyed it in a speech in San Francisco that beggars belief in its CYA hedgedness…

  While we continue to scrutinize incoming data, and no final decisions have been made, we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market (and other) central bankers have, for some time, been telling the Fed to "just do it."

   

  Fed meetings are now 'getting interesting' as possible rate hike discussed

   

  In the relatively near future probably some major central banks will begin gradually moving away from near-zero interest rates

  All of this was said without a big "wink."

  So let's break down the confusion:

  First, this…

  • FISCHER: FED HAS TAKEN NO FINAL DECISION ON TIMING OF LIFTOFF (ok makes sense, data-dependent and all that)

  But…

  • *FISCHER: SOME MAJOR CENTRAL BANKS TO RAISE RATES IN NEAR FUTURE (well The ECB, BoJ, PBOC aren't so that means The Fed will? But you just said you hadn't decided yet?)

  Then this…

  • *FISCHER: FED HAS DONE EVERYTHING IT CAN TO AVOID SURPRISING MKT (by telegraphing a rate-hike in December – just like you did in September – even though you 'surprised' everyone then and just seconds ago said you hadn't decided… and had)

  And finally this…

  • *FISCHER SAYS FOREIGN CENTRAL BANKERS HAVE TOLD FED 'JUST DO IT'

  Ok, so greenlight from everyone else – it's on – do not be surprised… but then again we haven't decided yet so don't bet on it.

  * * *

  Is it any wonder that Gold and Treasuries were bid today as it becomes ever more clear that The Fed is entirely lost and a policy error is looming.

  

  

  

  

  

• The Stunning Visualization Of The World's 3 Billion Barrel Oil Glut

  While talk of record backlogs of supertankers and an unprecented 3 billion barrels of crude oil stock-piles sound impressive – and are weighing on crude prices – the following stunning image provides some context for just what this means…

   

  If the 3 billion barrels of crude oil gluttiness was put into tankers, the line would reach a stunning  530 kilometers…

  

  Source: @JavierBlas

  *  *  *

  As we previously noted, via Bloomberg,

  Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency.

   

  This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry.

   

  “Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.”

   

  Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline, according to the agency.

   

  

   

  The pace of gains slowed to 1.6 million barrels a day in the third quarter, from 2.3 million a day in the second, although growth remained “significantly above the historical average.” There are signs the some fuel-storage depots in the eastern hemisphere have been filled to capacity, it said.

  And the backlog of SuperTankers continues to surge – to record highs for this time of year…

  31 very large crude carriers head to U.S. ports, highest since last May and most for time of year in data going back to 2013, ship tracking information compiled by Bloomberg shows.

   

  

   

  In fact some firms ar enow breaking charters…Frontline terminates long term charter for tanker Mindanao

   

  Frontline agreed with Ship Finance International Limited to terminate the long term charter for Suezmax tanker Mindanao, and will receive a compensation payment of approximately $3.3 million from Ship Finance for termination of current charter

   

  Following this termination, the number of vessels on charter from Ship Finance will be reduced to 14 vessels, including 12 VLCCs and two Suezmax tankers

   

  The stock buffer is bearish and will probably set a lid on how much higher prices can go in 2016,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “There’s a sizeable risk that we could run totally full,” in terms of storage capacity, he said

  

  

  

  

  

• The Most Important Question About ISIS That Nobody Is Asking

  The question of how the Islamic State funds its sprawling caliphate has been discussed in the past: we first broke down the primary driver of ISIS revenue well over a year ago, in September 2014, when we explained that “ISIS uses oil wealth to help finance its terror operations.”

  

  Daily Signal’s Kelsey Harkness explained the breakdown as follows:

  According to the Iraq Energy Institute, an independent, nonprofit policy organization focused on Iraq’s energy sector, the army of radical Islamists controls production of 30,000 barrels of oil a day in Iraq and 50,000 barrels in Syria. By selling the oil on the black market at a discounted price of $40 per barrel (compared to about $93 per barrel in the free market), ISIS takes in $3.2 million a day.

   

  The oil revenue, which amounts to nearly $100 million each month, allows ISIS to fund its military and terrorist attacks — and to attract more recruits from around the world, including America.

  Most importantly, we added that to be successful in counterterrorism efforts, “the U.S. and its allies must “push the Islamic State out of the oil fields it has captured and disrupt its ability to smuggle the oil to foreign markets.”

  None of this was surprising to anyone, but what was quite surprising is that it took the allied forces over a year to take the oil revenue threat seriously and begin targeting the Islamic State’s oil infrastructure in earnest.

  Today, in an article titled “Why US Efforts to Cut Off Islamic State’s Funds Have Failed” Bloomberg tries to explain just how it is that despite a more than a year long campaign, ISIS funding remains as strong as ever, and notes that “the latest round of airstrikes are directly related to the administration’s new math. “You have to go after the oil, and you have to do it in a serious way, and we’ve just begun to do that now,” citing Benjamin Bahney, an international policy analyst at the Rand Corp., a U.S. Department of Defense-funded think tank.

  To be sure, there are other sources of revenue: Bloomberg correctly notes that “even if the U.S. finally weakens the group’s oil income, Bahney and other analysts in the U.S., the Middle East, and Europe contend, Islamic State has resources beyond crude—from selling sex slaves to ransoming hostages to plundering stolen farmland—that can likely keep it fighting for years.”

  Still, without a doubt, the dominant source of funds for the terrorists is oil, and not just oil, but a well-greased logistical machine that keeps thousands of barrels moving from unknown pumps to even refineries, and ultimately to smugglers who operated out of Turkey and other countries.

  Here is Bloomberg:

  Most often refined in Syria, the group’s oil is trucked to cities such as Mosul to provide people living under its black banner with fuel for generators and other basic needs. It’s also used to power the war machine. “They have quite an organized supply chain running fuel into Iraq and [throughout] the ‘caliphate,’ ” says Michael Knights, an Iraq expert at the Washington Institute for Near East Policy, using the militant group’s religiously loaded term for itself. Because the U.S. apparently believed the real money for Islamic State came primarily via selling refined oil, rather than crude, last year’s strikes heavily targeted refineries and storage depots, says Bahney. He and other experts say that strategy missed an important shift: Militants increasingly sell raw crude to truckers and middlemen, rather than refining it themselves. So while Islamic State probably maintains some refining capacity, the majority of the oil in IS territory is refined by locals who operate thousands of rudimentary, roadside furnaces that dot the Syrian desert.

  Here is where it gets interesting: Bloomberg cites Pentagon officials who acknowledge “that for more than a year they avoided striking tanker trucks to limit civilian casualties. None of these guys are ISIS. We don’t feel right vaporizing them, so we have been watching ISIS oil flowing around for a year,” says Knights. That changed on Nov. 16, when four U.S. attack planes and two gunships destroyed 116 oil trucks.

  So any qualms about vaporizing “innocent civilians” promptly disappeared when the Pentagon realized that its 1+ year long campaign had been an epic debacle, that a suddenly surging ISIS was stronger as ever, and most importantly, that its critical revenue lifelines had been largely untouched for years. Perhaps they weren’t innocent civilians after all.

  It is still unknown if this recent crackdown on “dumping oil”, or crude which dramatically lowers the price of oil in global markets – it certainly is an odd coincidence that the price of Brent and WTI began its tumble last fall, just when the Islamic State made its dramatic appearance on the world scene – will have an effect and cut off the primary source of funds to ISIS.

  But what we have been wondering for months and what we hope some enterprising journalist will soon answer, is just who are the commodity trading firms that have been so generously buying millions of smuggled oil barrels procured by the Islamic State at massive discounts to market, and then reselling them to other interested parties.

  In other words, who are the middlemen.

  What we do know is who they may be: they are the same names that were quite prominent in the market in September when Glencore had its first, and certainly not last, near death experience: the Glencores, the Vitols, the Trafiguras, the Nobels, the Mercurias of the world.

  To be sure, funding terrorist states is not something that some of the most prominent names in the list above have shied away from in the past.
  

  Which one (or ones) are the guilty parties – those who have openly breached terrorism funding laws – we don’t know: it may be one, or more of the above, or someone totally different.

  At this point, however, three things are certain: whoever the commodity trading house may be that is paying ISIS-affiliated “innocent civilians” hundreds of millions of dollars for their products, they are perfect aware just who the source of this deeply discounted crude is. Crude so deeply discounted, in fact, it results in massive profits for the enterprising middleman who are engaging in openly criminal transactions.

  The second certainty: whoever said middleman is, it is very well known to US intelligence services such as the NSA and CIA, and thus to the Pentagon, and thus, the US government.

  The third certainty is that while the US, and Russia, and now France, are all very theatrically bombing something in the Syrian desert (nobody really knows what), the funding of ISIS continues unabated as someone keeps buying ISIS oil.

  We wonder how long until someone finally asks the all important question regarding the Islamic State: who is the commodity trader breaching every known law of funding terrorism when buying ISIS crude, almost certainly with the tacit approval by various “western alliance” governments, and why is it that these governments have allowed said middleman to continue funding ISIS for as long as it has?

  

  

  

  

  

• Nike Just Did It

  Having suffered a little recently on the heels of retailer concerns, Nike – the best performer in The Dow this year – is surging back towards all-time record highs after unleashing a new share buyback program (upping the limit from $8bn to $12bn), a stock split and a dividend boost.

  • *NIKE SETS $12B SHARE BUYBACK, 2-FOR-1 STOCK SPLIT, BOOSTS DIV
  • *NIKE SEES CURRENT $8B SHARE BUYBACK COMPLETED BEFORE FY16 END
  • *NIKE, 14% BOOST IN QTRLY DIV & 2-FOR-1 STOCK SPLIT

   

  

   

  Statement:

  NIKE, Inc. (NYSE:NKE) announced today that its Board of Directors approved a new four-year, $12 billion program to repurchase shares of NIKE’s Class B Common Stock. The Company anticipates that the current $8 billion share repurchase program will be completed before the end of fiscal 2016, and the new program will commence upon the completion of the current program.*

  Repurchases under the Company’s new program will be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. This share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be suspended at any time at the Company’s discretion. NIKE had approximately 678 million shares of Class B Common Stock outstanding as of November 16, 2015.

  “In a growing sports industry, NIKE is the clear leader,” said Mark Parker, President and CEO of NIKE, Inc. “We are built for growth, while also staying committed to creating shareholder value over the long term. We’ve proven it time and again, having returned over $23 billion to shareholders over the last 14 years through share repurchases and dividends. Moving forward, we see even greater potential for NIKE as we continue to unlock new markets, new experiences and new products.”

  The Board of Directors also declared a quarterly cash dividend on the Company’s outstanding Class A and Class B Common Stock of $0.32 per share, on a pre-split basis, payable on January 4, 2016 to shareholders of record at the close of business on December 9, 2015. The dividend represents a 14 percent increase over the previous pre-split quarterly rate of $0.28 per share. This is the fourteenth year in a row the Company has increased its annual dividend, over which time the dividend has increased by a factor of more than 10.

  The Board of Directors also approved a two-for-one split of both NIKE’s Class A and Class B Common shares. The stock split will be in the form of a 100 percent stock dividend payable on December 23, 2015 to shareholders of record at the close of business December 9, 2015.

  Upon completion of the split, the outstanding shares of NIKE’s Class A and Class B Common Stock will increase to approximately 353 million and 1.36 billion, respectively, based on the outstanding shares as of November 16, 2015. The Company expects its common stock to begin trading at the split-adjusted price on December 24, 2015.

  

  

  

  

  

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• Meet The Institution Most Intent On Destroying American Freedom (Hint: It's Not ISIS)

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  In time of actual war, great discretionary powers are constantly given to the Executive Magistrate. Constant apprehension of War, has the same tendency to render the head too large for the body. A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defence against foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people.

   

  – James Madison, Founding Father and 4th President of these United States

  No outside force can end freedom in America. The only force that can end freedom in America, is the American government itself. This is the main lesson of the 15 years since 9/11.

  The notion that we must preemptively give up our freedoms to protect our freedoms is so remarkably infantile and irrational you’d think almost no one would fall for it. Yet fall for it they do.

  On the other hand if you are a serious person and want to examine where the real threat to American freedom and liberty resides, look no further than Washington D.C..

  From Foreign Policy:

  CIA Director John Brennan said Monday he suspects the Islamic State is currently working on more terrorist plots against the West following Friday’s attack in Paris that killed at least 129 people and injured hundreds more. He also criticized new privacy protections enacted after Edward Snowden’s disclosures about U.S. government surveillance practices.

   

  In his remarks, Brennan said the attacks should serve as a “wake-up call” for those misrepresenting what intelligence services do to protect innocent civilians. He cited “a number of unauthorized disclosures, and a lot of handwringing over the government’s role in the effort to try to uncover these terrorists.”

  Perhaps next time you shouldn’t unconstitutionally spy on everyone and lie about it.

  Brennan also said the United States had “strategic warning” about the terrorist attack in Paris, but did not provide details, other than to say it was “not a surprise.” He said he believed the attack was planned over “several months.”

  Sure, just give up a little more freedom and we’ll protect you next time. What an asshole.

  

  

  

  

  

• Texan Turmoil – Visualizing The Growing (& Shrinking) Local Economies Across America

  The Bureau of Economic Analysis (BEA) recently released its statistics on gross domestic product by metropolitan area for 2014. HowMuch.net built a map to provide a 3D visualization of the GDP growth by metropolitan area, seen below. The higher the cone rising out of the map, the greater the GDP growth in that area.

  (click image for huge legible version)

  

   

  Source: HowMuch.net

  Take a look to the top 5 metro areas with highest growth:

  • Midland, TX had the highest GDP growth for any metropolitan area in the country at 24.1%.
  • Another Texas metro area, San Angelo, came in second with 11.4% GDP growth. San Angelo had 1.85% growth in durable goods manufacturing and 1.09% growth in professional services.
  • Lake Charles, LA came in third with 10.3% GDP growth. Lake Charles saw growth of 3.76% in the construction industry.
  • Greeley, CO was fourth in GDP growth at 9.9% with 3.65% growth in natural resources and mining.
  • Wheeling, WV rounded out the top five with 9.5% growth. Wheeling saw 7.93% growth from natural resources and mining.

  Furthermore, the Dallas metropolitan area had the highest GDP growth at 8.5% out of the top 10 metro areas by GDP.

  Which is a problem, as opposed to what Dick Fisher said – that the collapse in oil prices was a net positive for Texas – it has not been, at all…

  

   

  Which means all those superlatives above from 2014's economic growth are now gone! And not coming back anytime soon.

  

  

  

  

• Indians Refuse To Give Their Gold To The Government: Only 30 Kilograms Take Part In "Gold Monetization Scheme"

  Two months ago we gave our most recent review of what we dubbed the soft launch of India’s gold confiscation program, when the government’s “voluntary”gold-to-paper backed bonds conversion went, well, gold: back then, Modi’s government approved the gold monetization plan and sale of sovereign bonds proposed several months ago by the Reserve Bank of India.

  The plans were first announced by Finance Minister Arun Jaitley in February as measures to woo Indians away from physical gold. As Jaitley explained the deposited gold would be auctioned, used to replenish the Reserve Bank of India’s reserves or be lent to jewelers. Subsequently, gold “depositors” can redeem in gold or cash depending on the tenure. Said otherwise, an attempt to “fractionally-reserve” gold, which would then be used a source of gold rehypothecation in the country that despite all the government’s efforts, remains starved for physical gold.

  Now, one week after the gold scheme’s official launch, we take a look at how has it has done so far. In one word, so far the “gold monetization” plan has been a disaster with a laughable 30 kilograms in gold tendered by the people from physical into “government-backed” form.

  The Times of India has the details, and reports that in the first-week “collection by the government’s sovereign gold bond scheme has been rather tepid with less than Rs 10 crore being reported to the Reserve Bank of India (RBI). The scheme, which closes on November 20, allows investors to purchase between 2 and 500 grams of gold-equivalent.

  The spin was immediate: “bankers say that in any issue, savvy investors – including high net worth individuals – usually hold off until the closing date before locking in their funds.” Or maybe they don’t lock in their funds at all since giving the government your physical gold in exchange for a interest payment – in other words, converting gold into a paper asset with the government’s blessing – is about as stupid as it gets. 

  TofI adds that “the money raised through the sale of these bonds will form a part of government borrowing. According to sources, the RBI, which manages government borrowings, is keeping track of the collections and it has got a number of below Rs 8 crore until last weekend. Of this, around Rs 6.5 crore has been reported by banks and another Rs 1.35 crore by the Post Office. The government has fixed the issue price at Rs 2,684 per gram, which means that the gold-equivalent of the bonds is less than 30kg.”

  The government has been aggressively marketing the scheme on three main points:

  • It is more remunerative than buying gold as the investor gets an interest of 2.75% in addition to getting returns equivalent to the value of gold on maturity. Incidentally this is far below the rate of inflation, so the nominal interest does not even cover rising prices). 
  • Second, there is no risk of theft since the gold is held in dematerialized form.
  • Thirdly, although the bond has an eight-year tenure, it offers liquidity as it is accepted as collateral and there is also a premature exit option at the end of five years.

  Alas, none of these appear to have had any impact on people’s willingness to part with bullion.

  

  Which brings us to our conclusion from two months ago, when we said that “the one thing to watch for is a shift in the posture of the Indian government: for now participation in the gold monetization scheme is voluntary, and largely geared to the general public with the 500 gram/year limit. But if and when the Modi cabinet starts “urging” the population, and certainly when threats of fines and/or prison time emerge, that is when we will finally have confirmation that the second coming of Executive Order 6102 has arrived.“

  If and when that happens, expect a full-blown global press to obliterate the price of gold as the gold confiscation wave is finally unleashed, first in India then everywhere else.

  

  

  

  

  

• The 1% Is Rolling Over

  Submitted by John Rubino via DollarCollapse.com,

  Today’s financial world is a tough place for the average person but paradise for rich guys. As easy money raises asset prices, the owners of those assets make effortless profits. Then they buy expensive toys and trophy properties. Hence the recent boom in fine art, high-end real estate, yachts and private jets.

  But like all financial trends, this one has a limit, and that limit is now in sight. The 1%, it seems, is rolling over:

  Sotheby’s Offers Employees Voluntary Buyouts to Cut Costs

  (Bloomberg) – Sotheby’s is offering employees voluntary buyouts to cut costs after a drop in third-quarter revenue grabbed more attention from the company’s investors than its largest ever semiannual auction season.

   

  The auction house told employees in an e-mail Friday that if not enough employees make use of the buyouts, it may have to resort to layoffs. Sotheby’s didn’t say how many jobs it plans to cut.

   

  Shares of Sotheby slumped as much as 16 percent this week after the firm reported a 9 percent decline in third-quarter revenue.

   

  “Sotheby’s costs of doing business – increased staff, more expensive catalogue production, huge marketing and promotional costs, etc. – have to be balanced against the declining revenue from commissions,” said David Nash, co-owner of Mitchell-Innes & Nash gallery in New York and former head of Impressionist and modern art at Sotheby’s.

   

  San Francisco in housing ‘correction’

  (CNBC) – San Francisco homes are still some of the priciest in the nation, but sales of those houses are showing significant weakness. September sales were down 19.5 percent in the city from a year ago, according to the California Association of Realtors.

   

  "We’re going through a kind of correction, as we have a lot of new developments being built right now. The supply is definitely on the rise,” said Justin Fichelson, an agent at Climb Real Estate Group in San Francisco. “The market is not going to continue going up like we’ve seen in the past two years, because prices are already high.”

   

  London Mansion Prices Fall 11.5% as Home `Bubble’ May Have Burst

  (Bloomberg) – Prices of homes valued at 5 million pounds ($7.6 million) or more fell 11.5 percent on a per square foot basis in the third quarter from a year earlier, according to Richard Barber, a director at broker W.A. Ellis LLP, a unit of Jones Lang LaSalle Inc. Sales volumes across all homes in the best parts of central London dropped 14 percent in the period, the realtor said on Thursday.

   

  “The bubble may already have burst” for the most expensive homes, Barber said. Now, “36 percent of all properties currently on the market across prime central London are being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5 percent.”

   

  Luxury-Jet Market Value Seen Slipping for First Time Since 2009

  (Bloomberg) – Global long-term spending on private jets is starting to slow for the first time since 2009 as slumping commodity prices sap demand in emerging markets, according to an industry forecast.

   

  Deliveries for the 11 years ending in 2025 will be valued at $270 billion, Honeywell International Inc. said Sunday in its annual survey of the luxury-aircraft market. That’s down 3.6 percent from last year’s comparable projection, and snapped a streak of gains since the last U.S. recession ended.

   

  The decline reflects weakness in Brazil, Russia, India and China, the group known as the BRIC countries, and the impact of political conflicts in the Middle East and Africa, according to Brian Sill, chief of Honeywell’s business and general aviation unit. Delays in some new plane models are also pushing back demand, he said.

   

  Jet shipments will drop 2.6 percent to 9,200 planes, according to Honeywell, whose forecast had predicted fluctuations in deliveries but no drop in the planes’ list value in the post-recession years. Large planes that had spearheaded the recovery are now seeing slower growth.

   

  “We’re just slogging along,” said Janine Iannarelli, president of Par Avion Ltd., a Houston based plane brokerage. “There is a shortage of buyers, there’s limited activity and prices keep correcting.”

  So the rich are becoming less rich? To an extent, yes. Recent declines in commodity prices and emerging market debt have no doubt taken a bite out of some big portfolios. Meanwhile hedge funds, the preferred investment management vehicle of the uber-wealthy, have done badly for the past couple of years, with some high-profile implosions generating headlines.

  These disappointments have lowered the net worth of some big players and made others more cautious. Hence the lessened demand for the most pretentious assets.

  The impact on the global economy? Almost certainly bad, since the 1% are the marginal buyers of so many reference assets like blue-chip stocks and government bonds. To the extent that they grow cautious, the bid for a lot of things will be lower, cutting corporate profits, equity valuations and high-end asset prices.

  Put another way, when the only healthy part of an already-impaired system turns negative, everyone will feel the resulting pain.

  

  

  

  

  

• BOHICA 2015

  

  

  

  

  

• Brazil GDP In "Free Fall Mode", Get Ready For "Terrible" Q3 Print, Analysts Warn

  On Sunday in “Depression Tracker: Brazil Braces For Big Week Of Bad Data,” we warned that this was likely to be a rather harrowing week for anyone hoping to see a light at the end of the tunnel for the trainwreck that is Brazil’s collapsing economy. 

  Specifically, we previewed three data points, i) the IBC-Br monthly real GDP indicator, ii) IPCA-15 inflation, and iii) the IBGE October labor market report. The latter two prints are due tomorrow. We got the GDP tracker today. It was not pretty. 

  The the central bank’s output proxy showed real activity falling 0.5% m/m, the fourth straight month of declines. Here’s Goldman’s full breakdown:

  In annual terms, the monthly indicator of activity declined by a large 6.1% yoy in September and on a 12-month cumulative sum basis, real GDP contracted 2.8% yoy, close to the lows reached in 3Q2009.

   

  According to the IBC-Br, the statistical carry-over for growth in 2015 dipped to -3.6% (i.e., if the economy remains flat throughout 2015 at the September level real GDP will record a 3.6% contraction on average during the year).

   

  According to the central monthly real GDP indicator, which has been an imperfect indicator of the National Accounts quarterly GDP, real GDP declined 1.4% QoQ sa during 3Q2015 (adding to the-2.1% qoq sa variation recorded during 2Q2015). Hence,real GDP has now declined by four consecutive quarters. Finally, the carry-over for 4Q real GDP is at -0.6%, that is, were GDP to remain flat during Oct-Dec at the September level, real GDP would decline 0.6% qoq sa during 4Q2015.

   

  

   

  Barclays simply called it “free fall mode”, noting that “today’s result is due to the strong contraction in industrial production (-1.3% m/m sa) and retail sales (-1.5% m/m sa).” 

  

  Finally, here’s FT, quoting Capital Economics:

  Economic activity fell by 6.2 per cent in September from the same period a year earlier.

   

  That’s the biggest year-on-year drop on record, according to Capital Economics, and points to a third quarter contraction of nearly 5 per cent.

   

  Edward Glossop at Capital Economics said he expects Brazil’s third quarter GDP numbers “to be terrible”. He added:

   

  “Conditions are unlikely to have improved much at the start of Q4. October’s PMI data suggest that the slump in industry deepened, while the further deterioration in labour market conditions over the past couple of months suggests that consumption remained under pressure.”

  Q3 data is due on December 1.

  Bear in mind that this comes against a backdrop of worsening inflation. As we noted on Sunday, Goldman sees IPCA-15 inflation coming in at 0.87%. The implication: inflation would print somewhere in the neighborhood of 10.3% y/y (the worst in more than 10 years) and you when you put that together with everything noted above you get a stagflationary nightmare. 

  Truthfully, this is an unmitigated disaster of epic proportions and it just keeps getting worse. Until now, Goldman’s Alberto Ramos has been the undisputed king when it comes to producing lists of the country’s economic problems that are so long they induce riotous laughter. Well watch out Alberto, BofAML’s David Beker may be coming for your spot: 

  Leading activity indicators are persistently posting negative prints throughout the year, despite already being at record low levels, corroborating our call for a 3.3% yoy contraction in 2015. Tightened credit markets, high household indebtedness level, rising inflation and the ongoing labor market loosening should continue to drive purchasing power and confidence levels down, preventing a rebound in the near term. Accordingly, industrial production declined 10.9% yoy in September, posting the 19th consecutive negative print and returning to production levels from a decade ago. At the same time, retail sales contracted for the sixth time in a row in year-over-year terms, reaching a negative 6.2% yoy print. All in, these results indicate that activity indicators should continue to decline next year, reflecting a deeper and longer economic recession, with economic activity only starting to recover in late 2016.

  
  

  

  

  

  

  

• Dead Unicorn Walking: Square IPOs At $9, 42% Below Latest Private Financing Valuation

  If having to slash valuations by 30% from the latest private financing round was not bad enough, Square's IPO just priced notably below the expected (already lowered) range of $11-13 (and even further below the $15.46 at which it raised private money last year):

  • *SQUARE SAID TO PRICE 27M IPO SHARES AT $9 EACH, REUTERS REPORTS

  So from a private valuation around $6 billion to this, and along with Fidelity marking down its SnapChat valuation, it appears that without another massacre in a major city, risk appetite for these paper-behemoths may have gone the way of the mythical unicorn itself.

  Square most recently raised $180 million in private funding at $15.46 per share, in a multi-stage Series E round stretching from September 2014 through just last month.

  

  As Fortune reports,

  Square’s IPO comes at a time when it appears the company’s losses are growing and revenue growth is slowing. In its original S-1 filing with the SEC, Square reported a $77.6 million loss for the first six months of this year compared to a $79 million loss during the same period in 2014. Meanwhile, revenues rose to $560.5 million from $372 million during the same six months.

   

  In a more recent third quarter filing, Square posted a loss of $53.9 million on $332.2 million in revenue, indicating slower revenue growth and widening losses than before.

  As The Wall Street Journal reports,

  Skeptical investors forced Square Inc. to sell shares in its initial public offering for less than the mobile payments startup had hoped, dealing another setback to the battered market for new technology-company stock.

   

  The six-year-old company, founded and run by  Twitter Inc.  Chief Executive  Jack Dorsey, priced its shares at $9 late Wednesday. That is beneath the projected offering range of $11 to $13 and even farther below the $15.46 at which Square raised money last year from private investors.

   

  …

   

  “This deal is representative of companies that are falling out of favor with investors,” said Jeremy Abelson, portfolio manager at Irving Investors. “These are companies that are spending a lot to grow their top line but still have a tough path to profitability.”

  *  *  *

  A bigger question, as we noted previously, is whether it will be a controlled demolition as unicorns everywhere are demoted to what we first dubbed "zerocorn" status in the coming days. To be sure, the VCs are desperate for a controlled demolition, and hoping the broader market ignores the euphoria that took place in Silicon Valley over the past 3 years, is now over, and that giddy investors overshot by at least 25-35% to the upside in the past several private funding rounds as everyone was rushing to pass the valuation hot potate to ever greater, and richer, fools.

  It remains to be seen how successful they will be, and just what the source of capital for hundreds of "$1+ billion"-valued, cash burning companies will be in lieu of generous VCs, and just how viable the second tech bubble will be if these hundreds of companies suddenly are forced to generate cash flow to fund themselves.

  One thing we know: there sure are many of them, as this infographic from the WSJ proves:

  

   

  *  *  *

  Which raises one interesting question…

  When is $TWTR buying Square? @Jack

  — 3:30 Ramp Capital™ (@RampCapitalLLC) November 19, 2015

  

  

  

  

  

• Do you believe in terrorists?

  Westerners have a deep history of a culture of myths (see Joseph Campbell).  We love to believe in Santa Claus, “The American Dream,” the Tooth Fairy, housing market always goes up, and countless others.  So it’s easy for us to be ‘terrorized’ by a myth; that hiding behind every corner are evil ‘terrorists’ waiting to blow themselves up because ‘they hate our freedoms.’ 

  Already, evidence surfaces that doesn’t match our traditional image for what a terrorist act should look like, as pointed out by George Washington’s article on ZH:

  What do you think? False flag? Light-skinned, clean-shaven ISIS jihadis who went undercover to carry out the terrorist attack? Or local Europeans who were radicalized into jihad?

  Postscript:  The Mirror also notes that the terrorists looked like professional soldiers:

  “I would describe him as tall, with dark hair and also quite muscular.

   

  “They looked like soldiers or mercenaries and carried the whole thing out like a military operation.

  Military operation or not, let’s take a step back how we got here, for those who can read and don’t have a TV.

  World War 2 and it’s climax defined the modern age and the century.  It is the most significant event, historically speaking for the last 500 – 1000 years.  How this event shaped the markets and modern capitalism; specifically – global trade, Forex, emerging markets, the concept model of the nation-state, and in one word – a complete paradigm shift.  

  Before WW2, nation-states waged war – these wars were all different but had several distinct characteristics.  There was always a winner, the winner basically wrote the terms of the agreement to end the war (taking various resources or land for themselves); it was usually financed through taxes or Rothschild type loans, and both sides were well defined.  Even when mercenaries participated, it was clear whose side was who.  Also it was clear, what the war was about – there was no ‘false flag’ events.  People mostly participated in war for survival, because they were forced to, or needed money and enlisted, or because their king told them to and they obey.  There was no TV, internet, or cameras attached to missiles.

  After WW2, only one single country remained intact, with infinite industrial capacity that easily switched to the consumer economy.  The United States of America had lost millions of lives in WW2, but the US was never invaded, factories remained, cities were not burned and bombed, a baby boom quickly expanded the population.  Resources were plentiful, and for 20 years the US was basically the only industrial superpower in the world.  This eventually led to the US Dollar based global Forex & payments system as we have today.  Breton Woods certainly would not have been in New Hampshire had it not been for this post WW2 dominance.  For all its benefits, this circumstantial gift left with it a seed of destruction; the military industrial complex.  

  Because now for the first time in history – war became a business.  Corporate America knew how to profit from war, in all manners.  Wall St. cozied up to Washington to form what would become the most powerful alliance of business & government in history (that ironically was a lot stronger form of Facism that these same forces destroyed in Europe a generation prior).  

  The peace after WW2 presented a problem for the military industrial complex – if there was no war, how could they profit from the war machine?  Enter Vietnam and George Morrison (father of Doors singer Jim Morrison):

  Daniel Ellsberg, who was on duty in the Pentagon the night of August 4, receiving messages from the ship, reported that the ship was on a secret electronic warfare support measuresmission (codenamed “DESOTO“) near Northern Vietnamese territorial waters.^[12] On July 31, 1964, USS Maddox had begun its intelligence collection mission in the Gulf of Tonkin. Captain George Stephen Morrison (father ofDoors singer Jim Morrison) was in command of local American forces from his flagship USS Bon Homme Richard. Maddox was under orders not to approach closer than eight miles (13 km) from the North’s coast and four miles (6 km) from Hon Nieu island.^[13] When the SOG commando raid was being carried out against Hon Nieu, the ship was 120 miles (190 km) away from the attacked area.^[13]

  So now we had a nice little war, where we could sell bell helicopters, and created the modern model for making ‘war business.’  After Vietnam it was easy to create an enemy.  Fast forward several conflicts and enter the ultimate enemy: Terrorists.  Terrorists are the dream of Neocons, warmongers, and anyone profiting from the war machine – because they are not connected to any ‘country’ – are always changing, nearly impossible to identify, have motives no one clearly understands, and can easily be bribed and manipulated to carry out the whims of Washington (in the case of Washington supported ISIS, to disrupt the Assad regime who has been on the black list since Libya.)  Who are Terrorists?  They can be anyone, operate anywhere, and always can be blamed on any mistakes made.  Plane crash, false flag – must be Terrorists!  They are the perfect enemy for the ‘war machine’.  And the middle east – a perfect playground.  “Washington” now can be replaced with some proper term for ‘global alliance’ enter recently to this game Russia, just learning how profitable war can be.

  Because practically, war is outdated.  A conventional war between any 2 nuclear powers would only create utter devastation, calculating which side would be more devastated is pointless, as the fallout would spread around the globe.  Also, countries such as Russia, the US, Germany, UK, have no real state enemies because of this, so keeping and maintaining a standing army of any kind – completely wasteful (except to keep the domestic population controlled by fear and opression, and the occasional cleansing of the genetic herd via in theater operations).  Hence the need for terrorists.

  In other words, false flag or not – Terrorists are the last frontier for the war machine created (and thus the modern Forex system).  It’s impossible to kill them, as they are an idea.  To end ‘terrorism’, we must end the war machine – dismantling this is very tricky!  Who are the real terrorists, suicide bombers, or news anchors constantly ‘terrorizing’ the population by making them afraid and worried around every corner a bomb will explode.  If we can overcome this huge mental challenge, we can really create a global panacea, a world without war, without currencies, without fraud.

  Just like with any system, the war machine needs our support.  To stop it – we need to stop being afraid, stop believing in it! Stop participating in it!  (But that’s not practical, because we like it.  It’s entertainment!)  So the philosophical question of the day is:  Do you believe in Terrorists?  At least have some decency if you do – don’t tell this fairy tale to your children.  Maybe they’ll grow up in a better world.

  Or to quote George Carlin, let’s accept it as a form of entertainment:

  The odds of your being killed by a terrorist are practically zero. So I say, relax and enjoy the show.

  You have to be realistic about terrorism. Ya gotta be a realist: Certain groups of people – Muslim fundamentalists, Christian fundamentalists, Jewish fundamentalists, and just plain guys from Montana – are going to continue to make life in this country very interesting for a long, long time. That’s the reality. Angry men in combat fatigue talking to God on a two-way radio and muttering incoherent slogans about freedom are eventually going to provide us with a great deal of entertainment.

  Especially after your stupid fuckin economy collapses all around you, and the terrorists come out of the woodwork. And you’ll have anthrax in the water supply and sarin-gas in the air conditioners; there’ll be chemical and biological suitcase bombs in every city, and I say, “Enjoy it, relax! Enjoy the show! Take a fuckin chance. Put a little fun in your life.”

   

  To me, terrorism is exciting. It’s exciting! I think the very idea that someone might set off a bomb in Macy’s and kill several hundred people is exciting and stimulating, and I see it as a form of entertainment! Entertainment that’s all it is. Yeah! But – but I also know most Americans are soft, frightened, unimaginative they don’t realize there’s such a thing as dangerous fun. And they certainly don’t recognize good entertainment when they see it. I have always been willing to put myself at great personal risk for the sake of entertainment. And I’ve always been willing to put you at great personal risk for the same reason.

  As far as I’m concerned, all of this airport security, all the searches, the screening, the cameras, the question it’s just one more way of reducing your liberty and reminding you that they can fuck with you any time they want, as long as you put up with it. As long as you put up with it. Which means, of course, any time they want. Because that’s what Americans do now. They’re always willing to trade away a little of their freedom for the feeling, the illusion–of security.   -GEORGE CARLIN

  If state-sponsored armies left the middle east permanently (Now speaking of the US, UK, ‘coalition of the willing’ and now Russia), including the US support of Israel, ‘terrorism’ as we know it at least, would cease to exist.  We’ve been sold a load of snake oil, that somewhere lurking in the shadows of these elephant oil fields, are crazed muslims who believe in killing infidels.  Nothing could be farther from the truth!   

  When a company is discovered for wrongdoing – often a boycott can succeed in getting their attention (the other alternative, being lawsuits & litigation).  It is not different with the war machine.  It feeds off our energy, our fears, which determines our need to finance and support the military through taxes and other means (and supports our local TV companies through advertisements).  The point is that there is no winning ‘the war on Terrorism’ – it’s a paradox.  It’s a genius invention by the war machine akin to “Terminator” films – now for every $1 we put into the military the profit can be $2 or $3 – because the more wars we launch in the middle east, the more terrorists are created, thus a need for even more security & war spending.  If even a small % of our tax dollars was funneled through various CIA shells to finance ISIS (even if the purpose was to overthrow Assad or other Terrorists) – technically speaking it is financed by the American taxpayer (at least in part).  Again, technically speaking – that would put the US Government on the OFAC list (which they publish) – and would be severe AML violations.  All these paradoxes are the ultimate ‘fog of war’ to enable the war machine to go on, now a self-replicating artificial intelligence of its own.  The ultimate paradox – this situation has made it impossible to stand up against the defense industry (literally) – ensuring it’s nearly infinite survival.  

  Or – here’s an investing idea – if you think this is all a bunch of left wing nonsense – time to go long Defense stocks!  And at least you won’t have to worry about any class action lawsuits or other problems with an angry and disgruntled public (they can be disapeared by outsourced foreign sub-contractors).

  Think about this next time you’re listening to ‘riders on the storm’.

  “Riders On The Storm”

  Riders on the storm

  Into this house we’re born

  Into this world we’re thrown

  Like a dog without a bone

  An actor out on loan

  Riders on the storm

   

  There’s a killer on the road

  His brain is squirmin’ like a toad

  Take a long holiday

  Let your children play

  If you give this man a ride

  Sweet family will die

  Killer on the road, yeah

  Support an ad free internet and visit our sponsors!

  

  

  

  

• The World's First Cashless Society Is Here – A Totalitarian's Dream Come True

  Submitted by Nick Giambruno via InternationalMan.com,

  Central planners around the world are waging a War on Cash. In just the last few years:

  • Italy made cash transactions over €1,000 illegal;
  • Switzerland proposed banning cash payments in excess of 100,000 francs;
  • Russia banned cash transactions over $10,000;
  • Spain banned cash transactions over €2,500;
  • Mexico made cash payments of more than 200,000 pesos illegal;
  • Uruguay banned cash transactions over $5,000; and
  • France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.

  The War on Cash is a favorite pet project of the economic central planners. They want to eliminate hand-to-hand currency so that governments can document, control, and tax everything.

  This is why they’re lowering the threshold for mandatory reporting of cash transactions and, in some instances, simply making it illegal to pay cash.

  In the U.S., central planners ratchet up the War on Cash every time the government declares a made-up war on something else…a war on crime, a war on drugs, a war on poverty, a war on terror…

  They all end with more government intrusion into your financial affairs.

  Thanks to these made-up wars, the U.S. government is imposing an increasing number of regulations on cash transactions. Try withdrawing more than $10,000 in cash from your bank. They’ll treat you like a criminal or terrorist.

  The Federal Reserve is at the center of the War on Cash. Its weapons are inflation and control over the currency denominations.

  Take the $100 note, for example. It’s the largest bill in circulation today. This was not always the case. At one point, the U.S. had $500, $1,000, $5,000, and even $10,000 notes. But the government eliminated these large notes in 1969 under the pretext of fighting the War on Some Drugs.

  Since then, the $100 note has been the largest. But it has far less purchasing power than it did in 1969. Decades of rampant money printing have inflated the dollar. Today, a $100 note buys less than a $20 note did in 1969.

  Even though the Federal Reserve has devalued the dollar over 80% since 1969, it still refuses to issue notes larger than $100. This makes it inconvenient to use cash for large transactions, which forces people to use electronic payment methods.

  This, of course, is what the U.S. government wants.

  It’s exactly like Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

  Policymakers or Central Planners?

  On stories related to the War on Cash, you may have noticed that the mainstream media often uses the word “policymakers,” as in “policymakers have decided to keep interest rates at record low levels.”

  When the media uses “policymakers,” they are often referring to central bank officials. It’s a curious word choice. As far as I can tell, there is no difference between a policymaker and central planner.

  Most people who want to live in a free society agree that central planning is not a good idea. So the media uses a different word to put a more neutral spin on things.

  To help you think more clearly, I suggest substituting “central planners” every time you see “policymakers.”

  The World’s First Cashless Society

  In 1661, Sweden became the first country in Europe to issue paper money. Now it’s probably going to be the first in the world to eliminate it.

  Sweden has already phased out most cash transactions. According to Credit Suisse, 80% of all purchases in Sweden are electronic and don’t involve cash. And that figure is rising.

  If the trend continues – and there is nothing to suggest it won’t – Sweden could soon be the world’s first cashless society.

  Sweden’s supply of physical currency has dropped over 50% in the last six years. A couple of major Swedish banks no longer carry cash. Virtually all Swedes pay for candy bars and coffee electronically. Even homeless street vendors use mobile card readers.

  Plus, an increasing number of government restrictions are encouraging Swedes to dump cash. The pretexts are familiar…fighting terrorism, money laundering, etc. In effect, these restrictions make it inconvenient to use cash, so people don’t.

  So far, Swedes have passively accepted the government and banks’ drive to eliminate cash. The push to destroy their financial privacy doesn’t seem to bother them. This is likely because the average Swede places an unreasonable amount of trust in government and financial institutions.

  Their trust is certainly misplaced. On top of the obvious privacy concerns, eliminating cash enables the central planners’ latest gimmick to goose the economy: Negative interest rates.

  Making The Negative Interest Rate Scam Possible

  Sweden, Denmark, and Switzerland all have negative interest rates.

  Negative interest rates mean the lender literally pays the borrower for the privilege of lending him money. It’s a bizarre, upside down concept.

  But negative rates are not some European anomaly. The Federal Reserve discussed the possibility of using negative interest rates in the U.S. at its last meeting.

  Negative rates could not exist in a free market. They destroy the impetus to save and build capital, which is the basis of prosperity.

  When you deposit money in a bank, you are lending money to the bank. However, with negative rates you don’t earn interest. Instead, you pay the bank.

  If you don’t like that plan, you can certainly stash your cash under the mattress. As a practical matter, this limits how far governments and central banks can go with negative interest rates. The more it costs to store money at the bank, the less inclined people are to do it.

  Of course, central planners don’t want you to withdraw money from the bank. This is a big reason why they want to eliminate cash…so you can’t. As long as your money stays in the bank, it’s vulnerable to the sting of negative interest rates and also helps to prop up the unsound fractional reserve banking system.

  If you can’t withdraw your money as cash, you have two choices: You can deal with negative interest rates…or you can spend your money. Ultimately, that’s what our Keynesian central planners want. They are using negative interest rates and the War on Cash to force you to spend and “stimulate” the economy.

  If you ask me, these radical and insane measures are a sign of desperation.

  The War on Cash and negative interest rates are huge threats to your financial security. Central planners are playing with fire and inviting a currency catastrophe.

  Most people have no idea what really happens when a currency collapses, let alone how to prepare…

  How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.

  

  

  

  

  

• If We Want To Stop Terrorism, We Should Stop SUPPORTING Terrorists

  In the wake of the barbaric Paris terror attacks, everyone is arguing over what we should do to stop further terrorism.

  Some say we need more war against Islamic countries … or more spying … or more crackdowns on our liberties.

  In reality – despite what the talking heads may say – the methods for stopping future attacks are well known …

  I. Stop Overthrowing the Moderates and Arming the Crazies

  We know it’s a difficult concept to grasp, but if we want to stop terrorism we should – wait for it – stop supporting terrorists.

  Specifically, we’re arming the most violent radicals in the Middle East, as part of a really stupid geopolitical strategy to overthrow leaders we don’t like (more details below). And see this, this, this, this and this. And – strangely – we’re overthrowing the moderate Arabs who stabilized the region and denied jihadis a foothold.

  Indeed, the U.S. and its allies are directly responsible for creating and supplying ISIS.  As an internal Defense Intelligence Agency (DIA) document produced recently shows, the U.S. knew that the actions of “the West, Gulf countries and Turkey” in Syria might create a terrorist group like ISIS and an Islamic CALIPHATE.

  Indeed, the former head of the DIA explained:

  It was a willful decision [by America] to … support an insurgency that had salafists, Al Qaeda and the Muslim Brotherhood ….

  If we want to stop terrorism, we need to stop supporting the terrorists.

  II. Stop Supporting the Dictators Who Fund Terrorists

  Saudi Arabia is the world’s largest sponsor of radical Islamic terrorists.  The Saudis have backed ISIS and many other brutal terrorist groups. And the most pro-ISIS tweets  allegedly come from Saudi Arabia.

  According to sworn declarations from a 9/11 Commissioner and the Co-Chair of the Congressional Inquiry Into 9/11, the Saudi government backed the 9/11 hijackers (see section VII for details).

  Saudi Arabia is the hotbed of the most radical Muslim terrorists in the world: the Salafis (both ISIS and Al Qaeda are Salafis).

  And the Saudis – with U.S. support – back the radical “madrassas” in which Islamic radicalism was spread.

  And yet the U.S. has been supporting the Saudis militarily, with NSA intelligence and in every other way possible for 70 years.

  In addition, top American terrorism experts say that U.S. support for brutal and tyrannical countries in the Middle east – like Saudi Arabia – is one of the top motivators for Arab terrorists.

  U.S. and NATO-supported Turkey is also massively supporting ISIS, provided chemical weapons used in the jihadi’s massacre of civilians, and has been bombing ISIS’ main on-the-ground enemy – Kurdish soldiers – using its air force.  And some of the Turkish people also seem to be unsympathetic to the victims of terrorism.

  The U.S.-backed dictatorships in Qatar and Bahrain also massively fund ISIS.

  So if we stop supporting the tyrannies in Saudi Arabia, Turkey, Qatar and Bahrain, we’ll get a two-fold reduction in terror:

  (1) We’ll undermine the main terrorism supporters

   

  And …

   

  (2) We’ll take away one of the main motivations driving terrorists: our support for the most repressive, brutal Arab dictatorships

  What a concept!

  III. Stop Bombing and Invading When a Negotiated Settlement Is Offered

  The U.S. rejected offers by Afghanistan, Iraq and Syria to surrender … and instead proceeded to wage war.

  Security experts – including both conservatives and liberals – agree that waging war in the Middle East weakens national security and increases terrorism. See this, this, this, this, this, this, this and this.

  For example, James K. Feldman – former professor of decision analysis and economics at the Air Force Institute of Technology and the School of Advanced Airpower Studies – and other experts say that foreign occupation is the main cause of terrorism. University of Chicago professor Robert A. Pape – who specializes in international security affairs – agrees.

  So negotiating peaceful deals will drain the swamp of terrorists created by war and invasion.

  IV. Stop Imperial Conquests for Arab Oil

  The U.S. has undertaken regime change against Arab leaders we don’t like for six decades. We overthrew the leader of Syria in 1949, Iran in 1953, Iraq twice, Afghanistan twice, Turkey, Libya … and other oil-rich countries.

  Neoconservatives planned regime change throughout the Middle East and North Africa yet again in 1991.

  Top American politicians admit that the Iraq war was about oil, not stopping terrorism (documents from Britain show the same thing). Much of the war on terror is really a fight for natural gas. Or to force the last few hold-outs into dollars and private central banking.

  And the U.S. military described terror attacks on the U.S. as a “small price to pay for being a superpower“:

  A senior officer on the Joint Staff told State Department counter-terrorism director Sheehan he had heard terrorist strikes characterized more than once by colleagues as a “small price to pay for being a superpower”.

  We’ve fought the longest and most expensive wars in American history … but we’re less secure than before, and there are more terror attacks than ever (update).

  Remember, Al Qaeda wasn’t even in Iraq until the U.S. invaded that country. And the West’s Iraq war directly led to the creation of ISIS.

  If we want to stop terrorism, we have to stop overthrowing Arab leaders and invading Arab countries to grab their oil.

  V. Stop Drone Assassinations of Innocent Civilians

  Top CIA officers say that drone strikes increase terrorism (and see this).

  The CIA – the agency in charge of drone strikes – even told Obama that drone kills can increase terrorism.

  If we want to stop creating new terrorists, we have to stop the drone strikes.

  VI. Stop Torture

  Top terrorism and interrogation experts agree that torture creates more terrorists.

  Indeed, the leaders of ISIS were motivated by U.S. torture.

  Once again, we have a very current example: Charlie Hebdo-murdering Frenchterrorist Cherif Kouchi told a court in 2005 that he wasn’t radical until he learned about U.S. torture at Abu Ghraib prison in Iraq.

  If we want to stop creating new terrorists, we have to stop torturing … permanently.

  VII. Stop Mass Surveillance

  Top security experts agree that mass surveillance makes us MORE vulnerable to terrorists.

  Indeed, even the NSA admits that it's collecting too MUCH information to stop terror attacks.

  Stop it.

  VIII. Stop Covering Up 9/11

  Government officials agree that 9/11 was state-sponsored terrorism … they just disagree on which state was responsible.

  Because 9/11 was the largest terror attack on the U.S. in history – and all of our national security strategies are based on 9/11 – we can’t stop terror until we get to the bottom of what really happened, and which state was behind it.

  Many high-level American officials – including military leaders, intelligence officials and 9/11 commissioners – are dissatisfied with the 9/11 investigations to date.

  The Co-Chair of the congressional investigation into 9/11 – Bob Graham – and 9/11 Commissioner and former Senator Bob Kerrey are calling for either a “permanent 9/11 commission” or a new 9/11 investigation to get to the bottom of it.

  The Co-Chair of the Congressional Inquiry into 9/11 and former Head of the Senate Intelligence Committee (Bob Graham) said that the Paris terror attack, ISIS, and other terrorist developments are a result of failing to stand up to Saudi Arabia and declassify the 9/11 investigation’s report about Saudi involvement in 9/11:

  The 9/11 chairs, Ron Paul, and numerous other American politicians have called for declassification, as well.

  Again, others have different ideas about who was behind 9/11. But until we get to the bottom of it, terror attacks will continue.

  IX.  Stop Doing It Ourselves

  The director of the National Security Agency under Ronald Reagan – Lt. General William Odom said:

  By any measure the US has long used terrorism. In ‘78-79 the Senate was trying to pass a law against international terrorism – in every version they produced, the lawyers said the US would be in violation.

  (audio here).

  The Washington Post reported in 2010:

  The United States has long been an exporter of terrorism, according to a secret CIA analysis released Wednesday by the Web site WikiLeaks.

  Wikipedia notes:

  Chomsky and Herman observed that terror was concentrated in the U.S. sphere of influence in the Third World, and documented terror carried out by U.S. client states in Latin America. They observed that of ten Latin American countries that had death squads, all were U.S. client states.

   

  ***

   

  They concluded that the global rise in state terror was a result of U.S. foreign policy.

   

  ***

  In 1991, a book edited by Alexander L. George [the Graham H. Stuart Professor of Political Science Emeritus at Stanford University] also argued that other Western powers sponsored terror in Third World countries. It concluded that the U.S. and its allies were the main supporters of terrorism throughout the world.

  Indeed, the U.S. has created death squads in Latin America, Iraq and Syria.

  Some in the American military have intentionally tried to “out-terrorize the terrorists”. As Truthout notes:

  Both [specialists Ethan McCord and Josh Stieber] say they saw their mission as a plan to “out-terrorize the terrorists,” in order to make the general populace more afraid of the Americans than they were of insurgent groups. In the interview with [Scott] Horton, Horton pressed Stieber:

  “… a fellow veteran of yours from the same battalion has said that you guys had a standard operating procedure, SOP, that said – and I guess this is a reaction to some EFP attacks on y’all’s Humvees and stuff that killed some guys – that from now on if a roadside bomb goes off, IED goes off, everyone who survives the attack get out and fire in all directions at anybody who happens to be nearby … that this was actually an order from above. Is that correct? Can you, you know, verify that?

  Stieber answered:

  “Yeah, it was an order that came from Kauzlarich himself, and it had the philosophy that, you know, as Finkel does describe in the book, that we were under pretty constant threat, and what he leaves out is the response to that threat. But the philosophy was that if each time one of these roadside bombs went off where you don’t know who set it … the way we were told to respond was to open fire on anyone in the area, with the philosophy that that would intimidate them, to be proactive in stopping people from making these bombs …”

  Terrorism is defined as:

  The use of violence and threats to intimidate or coerce, especially for political purposes.

  So McCord and Stieber are correct: this constitutes terrorism by American forces in Iraq.  And American officials have admitted that the U.S. has engaged in numerous false flag attacks.

  Indeed, many top experts – including government officials – say that America is the largest sponsor of terror in the world … largely through the work of the CIA. And see this.

  Stop Throwing Bodies In the River

  Defenders of current government policy say: “we have to do something to stop terrorists!”

  Yes, we do …

  But we must also stop doing the 9 things above which increase terrorism. We have to stop “throwing new bodies in the river.”

  But the powers-that-be don’t want to change course … they gain tremendous power and influence through our current war on terror strategies.

  For example, the military-complex grows rich through war … so endless war is a feature – not a bug – of our foreign policy.

  Torture was about building a false justification for war.

  Mass surveillance is about economic and diplomatic advantage and crushing dissent.

  Supporting the most radical Muslim leaders is about oil and power … “a small price to pay” to try to dominate the world.

  A leading advisor to the U.S. military – the Rand Corporation – released a study in 2008 called “How Terrorist Groups End: Lessons for Countering al Qa’ida“. The report confirms what experts have been saying for years: the war on terror is actually weakening national security (see this, this and this).

  As a press release about the study states:

  “Terrorists should be perceived and described as criminals, not holy warriors, and our analysis suggests that there is no battlefield solution to terrorism.”

  We, the People, have to stand up and demand that our power-hungry leaders stop doing the things which give them more power … but are guaranteed to increase terrorism against us, the civilian population.

  Postscript:  It’s not yet clear whether any of the terrorists were “refugees”, and some say that ISIS WANTS to stop all refugees from leaving Syria and Iraq. However, we also take the risk of infiltration of refugee groups by terrorists very seriously.

  The bottom line is that we have to stop throwing new bodies in the river, so that we drastically reduce the amount of terrorists in the first place.

  

  

  

  

• RBS Lays Out 10 Key Points For 2016, Warns "Political Risk" Will "Break" QE-Infinity Equilibrium

  As the global economy limps into 2016, the prospects for a sustained pickup in worldwide trade and/or a return to robust growth are decidedly grim. 

  Global trade growth has lagged the already tepid pace of global output expansion for three years running, averaging just 3% per year. That’s half of the rate witnessed from 1983 to 2008. 

  Meanwhile, inflation expectations in developed economies have not rebounded, despite the best efforts of DM central bankers. And yet housing costs have soared in tandem with round after round of policy rate cuts and the global proliferation of QE, reflecting two things, i) central banks have learned nothing from the US housing bubble (that is, when you artificially suppress borrowing costs, housing prices soar), and ii) when you intentionally inflate bubbles in the assets most likely to be concentrated in the hands of the wealthy (i.e. financial assets), those bubbles spill over into other asset classes like real estate and high end art. 

  What should be apparent from the above is that all the Mario Draghis and Haruhiko Kurodas of the world are doing at this point is blowing bubbles on the way to creating more inequality and embedding ever greater amounts of risk into capital markets not only by driving up prices, but by sucking out liquidity.

  As for Main Street, there’s no “wealth effect” (where “wealth effect” refers to a kind of neo-trickle down economics catalyzed by QE). There’s only persistently slow growth, a jobs market that churns out more waiters and bartenders than it does breadwinner jobs, and a noticeably wider gap between the rich and the poor as exemplified by the fact that the billionaires of the world are paying $170 million for Modiglianis. 

  But the game is almost up. Central banks have monetized everything that isn’t tied down. Hell, Kuroda owns half of the entire Japanese ETF market. Rates are below zero and there’s only so much more NIRP banks are going to be able to stand before negative rates get passed on to depositors. Put simply: we’re approaching the Keynesian endgame and there’s still no growth, and no inflation (well, unless you count housing) and trade is collapsing. 

  Against this backdrop, RBS is out with 10 key points for 2016 and as you’ll see below, the overarching message is that the entire world is about to discover that the emperor(s) have no clothes.

  Note the last point (#10) as it, i) goes along with a previous note from Alberto Gallo in which RBS takes a close look at support for “radical” political parties in Europe (more on this here), and ii) makes a connection between recent economic outcomes in Europe, the ECB’s evolving experience with ZIRP, NIRP, and QE, and Japan’s lost decade.

  *  *  *

  From RBS

  These are our key views for 2016:

  1. There are limits to monetary policy. Central bankers will be tested in 2016. The economic equilibrium based on monetary stimulus, but lack of other measures is circular and fragile. Central bank balance sheets cannot grow indefinitely and forward guidance cannot target asset prices, without damaging credibility. Investors are growing increasingly wary of central bankers’ credibility, and worried about the effectiveness of further stimulus (ECB, BoJ) and their ability to reverse policy (Fed, BoE). 

  2. Fiscal stimulus, reforms and investment remain scarce. The result is more QE in Europe and Japan, and a very shallow reversal of policy in the US and UK. We expect the ECB to deploy more QE in December, extending the length of the programme and the list of eligible assets. We think the BoJ will continue expanding its balance sheet as well. Conversely, exiting QE will be difficult even in the regions where it is deemed most successful – the US and UK – given lack of balance sheet  deleveraging, or re-leveraging. Our economists expect the Fed to start hiking in December and to end at 1.5% at the end of 2016, with risks skewed to the dovish side, and the Bank of England to start hiking in August 2016. We think the impact of ECB QE2 will be temporary, as for QE1, due to persistent structural issues in the Eurozone economy. Despite convergence in periphery-core financial spreads, investment and loan volumes continue to decline, according to ECB data. The opportunity for US and European governments to build on the recovery is infrastructure investment and reforms, respectively. But what we are seeing is still too little, too late. 

  3. More QE means central banks will own an increasing share of assets markets. The ECB has already bought much of the free-float in European covered bonds, and the BoJ owns half of some stock ETFs in Japan. Without sovereign bond issuance, ECB QE demand will outpace bond supply by 2:1. This means the ECB will have to look for more assets (regional bonds, corporates), or that investors will be squeezed with lower yields or into other assets. However, given investment regulation, not every investor can move from asset to asset: some will have to learn to live with lower yields. 

  4. Market liquidity will decline further, also due to central bank buying of assets. This reduces both the free-float available, and the number of factors driving prices. Regulation will also continue to reduce dealers’ ability to make markets. 

  5. China’s top priority is reform, not stimulus: the slowdown will continue. A largescale stimulus is unlikely – instead, a long-series of reforms aimed at restructuring local governments, the financial sector, state-owned firms and at reducing corruption is what we are likely to see. If needed, Chinese policymakers have dry powder to smooth the landing, with cuts to the policy rate, bank reserve requirements or by using reserves. But the dry powder is not as much as it looks, compared to the length of the multi-year readjustment period for the Chinese economy. 

  6. China-dependent economies will get hurt: Brazil and Australia in particular. Brazil is the most vulnerable EM, on a combination of China exposure, dependence on $ debt, and political risk. Australia, still trading as a safe haven, is instead sitting on a very levered housing market and an export sector completely geared to China. 

  7. Banks will need to live with low interest rates. More disruption and consolidation is coming. This will challenge investment bank focused business models, and generally low-profitable banks. We see some opportunities from consolidation, e.g. in the Italian popolari. We are long, but avoid investment banks and EM-exposed banks. 

  8. Asset managers: liquidity optimisation and bye bye to passive investing. We see disruption in the asset management industry also. Passive strategies, IG in particular, will be replaced by ETFs. Active strategies will be increasingly detached from benchmarks. We look at liquidity optimisation as a way to build more efficient portfolios. 

  9. Deeper capital markets are part of the solution, but the solution is far away. A more flexible financial system, where debt restructuring is quicker and more efficient, could help economies to get out more quickly from a balance sheet recession. Despite the United Nations’ call for a common framework for sovereign restructuring, Greek restructuring will continue to be a purely political decision and to be procrastinated. 

  10. The equilibrium, for now, is QE infinity – but political risk could be the breaking point. Political risk could be the breaking point for the QE infinity equilibrium. Europe, unlike Japan, will not be able to go through a “lost decade” intact, given its political dynamics, elevated youth unemployment and rising radical parties. 

  

  

  

  

  

• Why The Status Quo Is Doomed: Income Stagnates, Costs Rise

  Submitted by Charles Hugh-Smith of OfTwoMinds blog,

  Why are costs rising inexorably? The answer in most cases is simple: cartels.

  Even if nothing else doomed the status quo, the widening gap between household incomes and costs will push the corrupt contraption over the cliff by itself. The status quo (whatever you wish to call it) requires "growth" to sustain itself–growth in consumption, spending, sales, debt, asset valuations, profits and of course taxes, and ultimately all of those "growths" depend on household incomes.

  Incomes even for the most highly educated workers are stagnating:

  

  Adjusted for inflation, median household income is down significantly in the 'recovery":

  

  Some observers quibble that since this doesn't include food stamps and other transfer payments, it isn't accurate: in other words, it's not so bad if we include social welfare.

  If the status quo now depends on government payments to households to sustain "growth," then the system is nearing the cliff edge.

  Another trend that pushes the contraption closer to oblivion is income disparity: virtually all the non-welfare gains in income have gone to the top 5%, with most of those gains concentrated in the top 1%:

  

  We all know what's happened to major household expenses such as higher education, healthcare, rent/housing: they're soaring to the moon. Here's higher education:

  

  The status quo views additional healthcare spending as an unalloyed good thing, but as this chart (courtesy of B.C.) shows, rising healthcare costs correlate to recessions: it turns out paying $500 for a medication that cost $10 a few years ago isn't the kind of "growth" that the system needs to survive:

  

  Here's urban area rents:

  

  Why are costs rising inexorably? The answer in most cases is simple: cartels. Cartels and quasi-monopolies create artificial scarcities by limiting competition (usually via regulatory collusion with the government). This artificial scarcity enables the cartels to raise prices because consumers have no choice: the "competition" (i.e. the other members of the cartel) have the same prices for the same services.

  Take college as an example. The artificial scarcity is accreditation: if the institution isn't accredited, the diplomas it issues are worthless.

  Suppose (as I propose in my book The Nearly Free University and the Emerging Economy) that college diplomas were awarded on the basis of standardized exams and essay questions: the only thing that matters is what the student learned, not what bureaucratic hoops the cartel has erected to protect itself from real competition.

  As for healthcare, the cartel hides behind opaque pricing and complex billing that is paid by insurers or the government; the consumer has no choice and no access to the real costs.

  Many cartels are obscured by complex ownership arrangements. The majority of the mainstream media is famously owned by six corporations; this concentration of ownership (and thus of political influence) dominates the cartel-state-dominated American economy.

  Cartels will fight to the death to retain their privileges and profits. The status quo works just fine for them, and they will never let reform reduce their privileges, power or profits.

  But once the average household depends on government handouts just to remain nominally solvent, the slide over the cliff has already started.

  

  

  

  

  

• Did Goldman Sachs Just Find The Smoking Gun In Today's FOMC Minutes?

  The market’s reaction to today’s FOMC Minutes was, to some, a little odd given the “December is on” hawkish narrative being sold to the public. Stocks rallied, longer-dated bonds rallied, gold managed gains, and the US Dollar sold off… not exactly the reaction one would expect from a ‘hawkish’ Fed statement. But there is one thing that would explain those moves… and it appears Goldman Sachs found it buried deep inside the 12 pages of Minutes…

   

  First, we know that macro and micro data had deteriorated notably from the September meeting to the October meeting…

   

  

   

  Second, the reaction across asset classes was ‘odd’ – Bonds and Stocks bid, Dollar down and gold up (and crude up)…

   

  

   

  So, what would create that kind of market response? We’ll let Goldman Sachs explain…

  Minutes from the October 27-28 FOMC meeting indicated that most FOMC participants thought that the conditions for liftoff “could well be met by the time of the next meeting.” The minutes also noted staff estimates that the short-run equilibrium real interest rate is currently around zero and the long-run equilibrium rate would likely remain lower than was the case in previous decades.

   

  1. Minutes from the October 27-28 FOMC meeting indicated that most Fed officials thought that the conditions for liftoff “could well be met by the time of the next meeting.” However, in part due to worries about “weaker-than-expected readings on measures of labor market conditions,” FOMC members agreed to wait for further information before raising policy rates. We expect that the stronger-than-expected October employment report will have assuaged many of these concerns, and that the committee now has a strong baseline to raise rates next month.

   

  2. The minutes noted that “a number of participants” pointed to various other reasons for avoiding a further delay in raising the funds rate. The reasons included signaling confidence in the economic outlook, reducing uncertainty in financial markets, reducing the risk of a buildup of financial imbalances caused by low interest rates, and avoiding a loss of credibility.

   

  3. The minutes included a discussion of staff presentations on the concept of “equilibrium” real interest rates (also known as the neutral/natural rate or r*). Consistent with earlier public comments from Fed officials, including Chair Yellen, the staff presentations estimated that the short-run equilibrium real rate was currently around zero. FOMC participants expected the short-run equilibrium real rate to rise over time, “but probably only gradually.” The minutes also suggested that participants’ views on longer-run equilibrium rates may be evolving: “it was noted that the longer-run downward trend in real interest rates suggested that short-run r* would likely remain below levels that were normal during previous business cycle expansions, and that the longer-run normal level to which the nominal federal funds rate might be expected to converge in the absence of further shocks to the economy … would likely be lower than was the case in previous decades.” The staff attributed the lower long-run equilibrium rate to a slower rate of potential growth, a consequence of slower population growth and weak productivity growth. These comments might foreshadow another reduction in the median “longer-run” funds rate projection in the Summary of Economic Projections (SEP) in December.

   

  4. Participants also noted that the lower long-run equilibrium rate implies that the near-zero effective lower bound could become binding more frequently. As a result, “several” participants indicated that it would be “prudent” to consider “options for providing additional monetary policy accommodation” should the economic recovery falter.

  In other words – as the bolded sections highlight –

  The Fed is admitting that the neutral rate (to which they will theoretically raise rates before re-easing) will remain lower for longer…

  …and therefore will reach ZIRP more frequently going forward…

  …which means, as they state, using “additional monetary policy accomodation.”

  Which means, unless The Fed wants to implement NIRP (which it appears it does not), they will have to do more QE, more frequently going forward…

  …basically admitting that the rate manipulation transmission channel is defunct for all intent and purpose.

  *  *  *

  So what Goldman discovered was the ‘smoking gun’ admission that this is no normal recovery and what was once entirely extreme and experimental monetary policy will be the new normal… and that may be why stocks and bonds rallied and why the dollar dropped and gold and crude gained.

  Incidentally, all of this talk about the long-run equilibrium rate reminds us quite a bit of something Narayana Kocherlakota said back in July (that is, before he was replaced by Goldman alum and bailout architect Neel Kashkari). Recall this from Bloomberg:

  Increasing the supply of assets available to investors “would push downward on debt prices, and so upward on the long-run neutral real interest rate,” Kocherlakota said Thursday in Frankfurt in remarks prepared for delivery at a conference hosted by Germany’s Bundesbank.

  Lifting the so-called neutral rate, which prevails when Fed policy is neither stimulating nor restraining growth, would in turn benefit Fed policy makers by creating more space between the benchmark federal funds rate and zero, he said.

   

  “I want to be clear at the outset that I am not saying that it is appropriate for fiscal policymakers to increase the long-run level of public debt. I am simply pointing to one benefit associated with such an increase: It allows the central bank to be more effective in mitigating the impact of adverse shocks to aggregate demand.”

  So when the Fed talks about considering “options” in light of a lower long-term neutral rate, will one of those “options” be to encourage the Treasury to issue more debt? If so, we know a new regional Fed President that’s in good with the folks at Treasury…

  

  

  

  

  

  

• "What Happens In Syria, Doesn't Stay In Syria"

  Obama drops that ‘C’ word again…

   

  

   

  Source: Investors.com

  

  

  

  

  

• European Union Challenged From Right And Left, "Maybe Too Much To Endure"

  Submitted by John Browne via Euro Pacific Capital,

  The heinous ISIS attack in Paris is a game changer in Europe. In addition to the horrific amount of individual casualties, the attack has also threatened severe damage to the long term survivability of the European Union as a political entity. Based on the unpopularity and unfeasibility of immigration controls under the EU's Schengen Plan, the events have opened up the Union to renewed attacks from the right, just as its support from the left is crumbling as a result of opposition to EU-mandated fiscal austerity. This two-front onslaught may be too much for the Union to endure.

   

  Over the decades, Western Europeans had come to rely on the power of the United States to shield them from the chaos of the East. But it has become abundantly clear that America, particularly under President Obama, is not up to the task. Obama's now infamous claim that ISIS was merely a "JV Team" combined with his enduring lassitude in dealing head on with the growing threat of a radical Islamist proto-state in the heart of the Middle East has forced Europeans to consider taking the reins of their own defense.

   

  Unlike the lone wolf attacks in Boston and underwear bombers on planes in the United States, the Paris attack last week (as well as the Charlie Hebdo attack earlier this year) was highly sophisticated. (The explosives used in the attack, while simple to produce, are extremely difficult to handle once they are in their final form. The fact that its use was coordinated in simultaneous attacks while evading detection by anti-terrorist signals monitoring demonstrates an alarmingly high level of planning and control.) Initial evidence suggests the strategy was conceived in Syria, planned in Belgium and executed in France, reinforcing the idea that a high degree of transnational reach was available to the terrorists.

   

  In this environment, EU border control has become an issue of vital security. But the border control regulations that are part of the fiber of the European experiment are simply inadequate to stop the free flow of terrorists, both into the EU from abroad, and within the EU. Germany's stated goal of accepting 800,000 refugees from Syria this year, a policy that throws the door wide open for the immigration of potential terrorists, cannot coexist with the Continent's growing concern about Islamist terror attacks.

   

  In France, President Francois Hollande appears to have wrested from a hesitant President Obama the leadership of a frustrated West. France has now taken the lead in airstrikes against ISIS positions and has shown a greater willingness to work with Russia to do so. However, with regional elections in three weeks, Hollande faces a renewed challenge from Marine Le Pen, leader of the right wing National Front (NF) party. Despite facing charges for an anti-Islamic remark, Le Pen stands to make large electoral gains based on her Eurosceptic anti-immigration stance. The FN has been gaining traction for years, and last week's attacks could provide them with the fuel to become the most powerful party in France.

   

  In particular, it is surprising how the NF has also taken up some of the anti-EU sentiment usually reserved to the left wing. Le Pen has called for greater government welfare spending, austerity reductions, and increased trade protectionism, causes that have been championed by the left, especially in Southern Europe.

   

  Last week, Portugal's center-right minority government led by Prime Minister Pedro Passos Coelho was forced out of office after just two weeks. The prospect of continued EU-mandated austerity forced Coelho's Socialist partners to leave the coalition to join forces with the Communist and Green parties.

   

  Germany, Europe's economic engine long-admired for efficiency, high productivity and sound monetary views, recently has experienced a major internal political shock. Chancellor Angela Merkel emerged last year as the most powerful woman in the world and the undisputed leader of the 503 million people of the European Union, the world's third largest population after China and India. However, Merkel appears to have miscalculated massively with her pledge to accept so many refugees from the war-ravaged Middle East. In response to horrified public opinion, her center-right coalition has appeared to break political ranks, giving the impression even of chaos within Merkel's administration.

   

  The immigration situation is so bad that it has encouraged discussion of a possible early German election. The prospect has been raised that Finance Minister Wolfgang Schaeuble, a very tough moneyman keen on austerity, might re-challenge Merkel for the leadership of their Christian Democratic Union party. Replacement of the pro-EU Angela Merkel by Wolfgang Schaeuble likely would increase austerity pressures and ignite further strong left wing feelings against the EU. Austerity measures in Portugal and Greece are exposing already increasingly deep-seated Eurosceptic feelings.

   

  Further, the planned December EU summit meeting faces increasing opposition to the further integration of a single state. Increased German focus on internal politics will divert energy from forging a closer EU. Without German support, the Eurozone may quickly become a thing of the past.

   

  Rising Eurosceptic feelings and voting power are storm clouds for international investors. Increased doubts about EU solidarity could threaten even the perceived future of the euro, now the world's second currency. Signs of weakening EU cohesion could affect the value of many investments within the EU and around the world. In particular, absent their ECB subsidy, the prices of sovereign bonds of highly indebted periphery EU nations could come under intense pressure and thereby cause liquidity problems for EU banks.

   

  Even before the attacks in Paris, the world appeared to be entering a period of slow growth, with Japan, the Eurozone, and even the United States flirting with recession. Given the slowing trajectory economy, it is logical to suggest that the attacks in Paris could help pave the way for even greater activism from The Bank of Japan, The Federal Reserve, and the ECB. The monetary authorities would surely seek to help bolster economies that are being rocked by fiscal, political and strategic crises. In other words, the era of permanent global stimulus may continue for the foreseeable future.

   

  

  

  

  

  

• Russia Explains To Clueless US Public Why Obama Can't Defeat ISIS

  Earlier this week, CNN’s senior White House correspondent Jim Acosta asked President Obama the following question at a press briefing: 

  “A lot of Americans have this frustration that they see the United States has the greatest military in the world, it has the backing of nearly every other country in the world when it comes to taking on ISIS. I guess the question is, and if you’ll forgive the language, but why can’t we take out these bastards?”

  Well Jim, the answer is quite simple and indeed, if you – or any other member of the mainstream media for that matter – would bother to look at things like the declassified Pentagon report that Judicial Watch turned up earlier this year, you’d be less confused.

  Allow us, once again, to provide you with the answers you seek, straight from the Pentagon ca. 2012: 

  …there is the possibility of establishing a declared or undeclared Salafist Principality in eastern Syria (Hasaka and Der Zor), and this is exactly what the supporting powers to the opposition want, in order to isolate the Syrian regime, which is considered the strategic depth of the Shia expansion (Iraq and Iran).”

  Translation: if Sunni extremists were to establish a proto-state in eastern Syria that would be great because it would destabilize Assad and cut off Iran from Hezbollah thus endangering the preservation of Tehran’s Shiite crescent. 

  For those who need a still simpler formulation: ISIS started out no different than any of the other rebels the US supports in Syria. They likely received guns, money, and training if not directly from the US, then from Saudi Arabia and Qatar. Washington seems to have had some idea that they would seek to capture and hold territory and as far as the Pentagon was concerned, that was just fine. Whether or not the CIA anticipated what would come next is up for debate, but make no mistake, US intelligence knew good and well this was a possibility and let it happen because ousting Assad was (and still is) the top priority. 

  So when the Jim Costas of the world ask “why can’t we take out these bastards?”, the answer is that if if we did, one of the main forces destabilizing the Assad regime would be gone and not only that, the US would no longer have an excuse to be in Syria, which would leave the country’s political future entirely up to Russia and Iran and that is a decidedly unpalatable outcome not only for Washington, but for Riyadh and Doha as well.

  It’s Occam’s Razor Jim: look for the simplest possible explanation and go with that. 

  Of course that explanation is simply too bad to be true for most Americans and so the public and the mass media will continue to exists in a state of perpetual bewilderment as to why 13 months of aerial bombardment hasn’t done anything to degrade the group.

  In case any of the above isn’t clear enough, Sergei Lavrov has commentary which may help to drive the point home, presented below without further comment:

  “Despite announcing ambitious plans for its coalition against Islamic State (IS, formerly ISIS/ISIL), the analysis of those [US-led] airstrikes during over a year lead to conclusion that they were hitting selectively, I would say, sparingly and on most occasions didn’t touch those IS units, which were capable of seriously challenging the Syrian army.”

  
  

  “Apparently, it’s a kind of a ‘honey is sweet, but the bee stings’ situation: they want IS to weaken Assad as soon as possible to make him leave somehow, but at the same time they don’t want to overly strengthen IS, which may then seize power.”

   

  “The US stance seriously weakens the prospects of Syria to remain a secular state, where the rights of all ethnic and religious groups will be provided and guaranteed,” 

   

  “Russia’s assessment of the US-led anti-terror operation in Syria is based on observations of specific results and there are little results, not to say there are none – except the fact that during this period [since August 2014] the Islamic State has grown on the territories they control.”

  Clear enough?

  

  

  

  

  

• ISIS Posts Photo Of Bomb That Brought Down Russian Plane

  Moments ago, ISIS released the 12th issue of its magazine profiled here previously, which had a cover page with a clear enough title: “Just Terror“

  

   

  But while it has the usual content full of pro-Jihad propaganda, some 66 pages of it, as well as numerous images to commemorate the martyrs for the ISIS cause, what was most stunning about this edition was ISIS admission of how it brought down the Russian airplane above Egypt’s Sinai peninsula, which as even Russia admitted yesterday, was the result of an ISIS bomb.

  On page 3, we find the following two photos: one shows what Dabiq alleges are passports belonging to the “dead crusaders obtained by mujahidin”…

  

  … and more troubling, is the image of the IED used to bring down the Russian airliner: a bomb concealed in a can of Gold beer.

  

  This corroborates what Russia FSB chief Aleksandr Bortnikov said: “traces of a foreign-made explosive substance” have been found.  “During the flight, a homemade device with the power of 1.5 kilograms of TNT was detonated.”

  And something else which is perhaps just as surprising: in the foreword to its magazine, ISIS says it had originally planned to bring down a plane “belonging to a nation in the American-led alliance” but changed its mind to blow up the Russian plane instead.

  On “30 September 2015,” after years of supporting the Nusayr in the war against the Muslims of Sham, Russia decided to participate directly with its own air force in the war. It was a rash decision of arrogance from Russia, as if it held that its wars against the Muslims of al-Qawqz were not enough offence. And so after having discovered a way to compromise the security at the Sharm el-Sheikh International Airport and resolving to bring down a plane belonging to a nation in the American-led Western coalition against the Islamic State, the target was changed to a Russian plane. A bomb was smuggled onto the airplane, leading to the deaths of 219 Russians and 5 other crusaders only a month after Russia’s thoughtless decision.

  For those curious about the authenticity of the photo, or to learn more about ISIS’ propaganda, the complete latest edition of the magazine can be found here, and is reposted below.

  

  

  

  

  

• "We Should All Be Afraid" Of The 'Brutal' Commodity & Credit Volatility

  "The signals across asset classes are diverging incredibly," warns Macro Risk Advisors' Dean Curnutt, "and we should all be afraid." All of that volatility is rolling back into corporate credit and that, inevitably will dramatically impact equity markets (explicitly through higher funding costs weighing on earnings or implicitly through lower buybacks and higher risk premia), "the illiquidity and implied defaults that we are seeing in credit markets are not at all priced into a 2060 S&P."

   

   

  With commodities now glued at a 2-standard-deviation limit down trend (just as it was a limit-up trend into the last crash), volatility in this crucial asset class is literally exploding…

  

   

  and, if leveraged loans are any indication, crushing corporate credit markets…

  

   

  Curnutt is right that equities are massively mispriced.

   

  Charts: Bloomberg

  

  

  

  

  

• ISIS Goes Full "Jackass", Tries To Shoot Down Fighter Jet With Pickup Truck Machine Gun

  The thing about ISIS is that for every time they do something absolutely horrific like say, massacre 50 people in the streets of Paris before gunning down another 80 in a concert hall, or blowing up a passenger jet, or say, drowning “confessed spies” in a cage, they do something completely ridiculous.

  It’s a dichotomy that makes the whole thing feel kind of surreal at times. 

  Case in point, around the same time the group released a clip of a captured SAA soldier being run over by a tank, they also released a video of themselves making flying landmines out of condoms which they apparently thought could be used to create a kind of sky minefield that would deter Russian fighter jets. 

  Then, for those who watched the video the militants released earlier this week threatening to attack Washington, you might have noticed that in the scenes with the soldiers standing in front of the armored truck, the guy on the right falls asleep standing up at least four separate times as the man in the center delivers an impassioned speech. 

  

  Well, in the true spirit of ISIS buffoonery, we present the following classic video which appears to depict ISIS militants attempting to shoot down a Russian fighter jet using only a truck-mounted machine gun and a spotter who uses his thumbs to gauge the distance. 

  But perhaps the best part is the narrator. Or actually, the captions which frame the entire spectacle as though it were a terrorist episode of Jackass. 

  Enjoy.

  

  

  

  

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• Heevy Gunfire, Injuries Reported In Northern Paris Amid Alleged "Police Raid" Seeking 9th Assailant

  Reports of heavy gunfire, substantiated by several videos appearing on Twitter and a local reporter,  has woken residents in the northern Paris region of Saint-Denis. Beginning at around 430am local time, lasting around 15 minutes, Le Parisien reporter Jean Gabriel Bontinck assumed the shooting was part of an ongoing police raid. Police are telling residents to stay indoors.

  Fusillade à Saint-Denis, au nord de Paris, lors d'une opération policière #AFP

  — Agence France-Presse (@afpfr) November 18, 2015

   

  French police earlier said that video footage of the Paris attacks reveals the presence of a ninth, previously unnoticed, jihadi, who could still be at large.

   

  The video shows the new suspect in a black Seat car with two other attackers, opening fire with assault rifles through its window at customers at a bar in central Paris. The car was later found abandoned in Paris suburb of Montreuil, with three AK-47 rifles in it.

  As CBS12 reports,

   There are multiple reports of heavy gunfire and possible explosions in the Saint-Denis area of Paris, CNN affiliate BFMTV is reporting.

   

  Swarms of police have an area of Saint-Denis blocked off and residents are being told to stay inside.

   

  French journalists are reporting this may be connected to a police raid in search of wanted fugitive in connection to the Paris attacks.

   

  CNN and AFP are reporting officers have been shot.

   

  The gunfire erupted around 4:30 a.m.

  The Guardian adds, What we know so far…

  “Heavy gunfire” has been reported in St Denis, a northern Paris suburb. St Denis is where the Stade de France, one of the targets of Friday’s attacks, is located.

  Shooting took place during a police operation reported to be linked to the search for the so-called “ninth attacker” – believed to be on the run.

  Some local media reports that a number of police officers have been injured in the operation; this has not been confirmed.

  Roads have been closed off and the police operation appears to be ongoing, with large numbers of police officers and police vehicles in the area.

  *  *  *

  French #RAID commandos in a huge firefight with terrorists in Saint Denis suburb of Paris. pic.twitter.com/N4mmPAkf11

  — Jeff Gauvin (@JeffersonObama) November 18, 2015

  Bon c'est sur c'est une intervention de la police… rue barrée, officiers etc.. #SaintDenis pic.twitter.com/JSARgbaM9w

  — Female Khal (@Chelmih) November 18, 2015

  Ça reprend! pic.twitter.com/S6vlFICu2z

  — STOPdaech (@STOPdaech) November 18, 2015

  

  

  

  

  

• Caught On Tape: Russian Cruise Missile Flies Above Syria As Moscow Deploys Strategic Bombers

  Putin wasted no time to expand Russian military presence over both Syria and the middle east, when as reported earlier today, the Russian president expanded the military campaign against ISIS bombing targets in conjunction with the French air force.

  That was not the surprise.

  What was, is that for the first time since the launch of the Russian air campaign Russia used strategic, long-range bombers, the kind that can deliver not only cruise missiles but tactical nuclear weapons. The Russian Defense Minister Sergei Shoigu confirmed as much when he said that Tupolev Tu-160, Tu-95MS strategic bombers are used in the strikes on ISIL targets in Syria.

  According to Interfax, “Tu-160, Tu-95MS, Tu-22 long-range aviation warplanes are used in the destruction of the gangs in addition to operational tactical aviation from the Russian territory,” Shoigu said at a meeting in the Defense Ministry chaired by Russian President and Supreme Commander-in-Chief Vladimir Putin on Tuesday.

  The Russian strategic bombers are using the Hmeimim airbase in Syria as their primary base.

  The commander of the Russian Long-Range Aviation Lt. Gen. Anatoly Zhikharev reported to Putin that all types of attack planes, which the Long-Range Aviation is armed with, are used, namely Tu-160 and Tu-95MS strategic missile carriers and Tu-22M3 long-range bombers to perform combat tasks in Syria.

  “The crews of strategic and long-range bombers are accomplishing the tasks to strike the sites in strict compliance with the plan of delivering the first massive air strike. Tu-160 and Tu-95MS strategic missile carriers have landed on their airfields upon accomplishing the combat mission. The maintenance and preparations of aircraft for future sorties are being conducted, the objective control materials are being analyzed,” Zhikharev said.

  The Aviationist blog adds that according to one of its sources “the long-range bombers the Russian Air Force has used against ground targets in Syria early in the morning on Nov. 17 were Tu-22M Backfire strategic bombers.” It adds that “the aircraft were allegedly launched from Mozdok airbase, in Ossetia, where as many as 6 Tu-22 Backfires were spotted on a recent deployment.”

  Curiously, Russia appears to have left a calling card that it has deployed strategic bombers: earlier today, social networks were abuzz showing images which were the alleged remains of a KH-555 missile found in Syria, the type of air-launched missile which, according to the Aviationist, “is mainly carried by Tu-95 Bear and Tu-160 Blackjack bombers (Tu-22s have been tested with the KH-555 but full integration is not completed or at least unknown), the long-range bombers that launched the attack on ground targets using those missiles may have been the Tu-95s or Tu-160s flying alongside the Backfires.”

  @Azematt ???? ???? ??? ?? ???? ?? ??? ???? ????? ???? ??? ??? ?? ?? ?? ??? ?? ????? ?? ??? ????? ??? ? ???? ????? pic.twitter.com/bSYfJ9qWLf

  — Azim (@Azematt) November 17, 2015

  And here a clip of what is a Russian cruise missile (it may or may not have been the one whose remains are shown above) launched by one of the Russian strategic bombers currently operating above Syria.

  

  

  

  

  

• Benjamin Netanyahu Will Be Arrested If He Ever Sets Foot In Spain Again

  Submitted by Claire Bernish via TheAntiMedia.org,

  Should Israeli Prime Minister Benjamin Netanyahu ever set foot inside Spain, he – and six other current and former Israeli government officials – would be subject to arrest, thanks to a Spanish judge who effectively issued an arrest warrant for the group late last week.

  As to be expected, the Israeli Foreign Ministry was less than thrilled, as spokesperson Emmanuel Nachshon responded, according to The Jerusalem Post, “We consider [the judge’s order] to be a provocation. We are working with the Spanish authorities to get it canceled. We hope it will be over soon.”

  At the heart of the matter for Spanish National Court Judge José de la Mata — and humanitarians worldwide — lies the 2010 attack by Israeli commandos on the civilian humanitarian ship, the Mavi Marmara, one of six vessels, carrying around 500 passengers total, in the Gaza Freedom Flotilla.

  The fleet was attempting to break through the Israeli blockade of Gaza to deliver humanitarian aid and construction materials on a small yet necessary scale, when the Mavi Marmara was attacked by Israeli security forces — commandos — who boarded and then shot and killed nine activists. A tenth activist died from injuries sustained during the raid — which occurred in international waters — after spending four years in a coma.

  In July, the International Criminal Court harshly criticized Gambian-born prosecutor Fatou Bensouda for failure to re-open the Mavi Marmara case despite a “reasonable basis” to believe war crimes had been committed. As the ICC judges stated,

  “The prosecutor should have accepted that live fire may have been used prior to the boarding of the Mavi Marmara, and drawn the appropriate inferences. This fact . . . may reasonably suggest that there was, on the part of the IDF [Israel Defense Forces] who carried out the identified crimes, a prior intention to attack and possibly kill passengers on board.”

  A UN Human Rights Council investigation into the raid found “clear evidence to support prosecutions” of war crimes under the Geneva Conventions based on willful killing, torture, or inhuman treatment, and willfully causing great suffering or serious injury to body or health. Youngest of the victims, 18-year-old Furkan Dogan, had been shot five times, including one shot to his face as he lay on his back, the UNHCR report concluded.

  According to The Latin American Herald Tribune, besides Netanyahu, de la Mata ordered police and civil guard to notify him should former Defense Minister Ehud Barak, former Foreign Minister Avigdor Lieberman, former Minister of Strategic Affairs Moshe Yaalon, former Interior Minister Eli Yishai, former Minister without Portfolio Benny Begin, and Vice Admiral Maron Eliezer (who headed the operation) ever step foot on Spanish soil.

  Though Netanyahu claimed at the time IDF forces had been attacked by the activists and thus acted in self-defense, the investigation found no medical evidence to substantiate that story. In fact, the UNHCR went a step further — echoing human rights organizations and activists worldwide — calling Israel’s blockade of the Gaza Strip “totally intolerable and unacceptable in the 21st century.”

  

  

  

  

  

• To France From A Post-9/11 America: Lessons We Learned Too Late

  Submitted by John Whitehead via The Rutherford Institute,

  “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.” ? Benjamin Franklin

  “Voice or no voice, the people can always be brought to the bidding of the leaders. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.”—Hermann Goering, German military commander and Hitler’s designated successor

  For those who remember when the first towers fell on 9/11, there is an unnerving feeling of déjà vu about the Paris attacks.

  Once again, there is that same sense of shock. The same shocking images of carnage and grief dominating the news. The same disbelief that anyone could be so hateful, so monstrous, so evil as to do this to another human being. The same outpourings of support and unity from around the world. The same shared fear that this could easily have happened to us or our loved ones.

  Now the drums of war are sounding. French fighter jets have carried out a series of “symbolic” air strikes on Syrian targets. France’s borders have been closed, Paris has been locked down and military personnel are patrolling its streets.

  What remains to be seen is whether France, standing where the United States did 14 years ago, will follow in America’s footsteps as she grapples with the best way to shore up her defenses, where to draw the delicate line in balancing security with liberty, and what it means to secure justice for those whose lives were taken.

  Here are some of the lessons we in the United States learned too late about allowing our freedoms to be eviscerated in exchange for the phantom promise of security.

  Beware of mammoth legislation that expands the government’s powers at the citizenry’s expense. Rushed through Congress a mere 45 days after the 9/11 attacks, the USA Patriot Act drove a stake through the heart of the Bill of Rights, undermined civil liberties, expanded the government’s powers and opened the door to far-reaching surveillance by the government on American citizens.

   

  Pre-emptive strikes will only lead to further blowback. Not content to wage war against Afghanistan, which served as the base for Osama bin Laden, the U.S. embarked on a pre-emptive war against Iraq in order to “stop any adversary challenging America’s military superiority and adopt a strike-first policy against terrorist threats ‘before they're fully formed.’” We are still suffering the consequences of this failed policy, which has resulted in lives lost, taxpayer dollars wasted, the fomenting of hatred against the U.S. and the further radicalization of terrorist cells.

   

  War is costly. There are many reasons to go to war, but those who have advocated that the U.S. remain at war, year after year, are the very entities that have profited most from these endless military occupations and exercises. Thus far, the U.S. taxpayer has been made to shell out more than $1.6 trillion on “military operations, the training of security forces in Afghanistan and Iraq, weapons maintenance, base support, reconstruction, embassy maintenance, foreign aid, and veterans’ medical care, as well as war-related intelligence operations not tracked by the Pentagon” since 2001. Other estimates that account for war-related spending, veterans’ benefits and various promissory notes place that figure closer to $4.4 trillion. That also does not include the more than 210,000 civilians killed so far, or the 7.6 million refugees displaced from their homes as a result of the endless drone strikes and violence.

   

  Advocating torture makes you no better than terrorists. The horrors that took place at Abu Ghraib, the American-run prison in Iraq, continue to shock those with any decency. Photographs leaked to the media depicted “US military personnel humiliating, hurting and abusing Iraqi prisoners in a myriad of perverse ways. While American servicemen and women smiled and gave thumbs up, naked men were threatened by dogs, or were hooded, forced into sexual positions, placed standing with wires attached to their bodies, or left bleeding on prison floors.” Adding to the descent into moral depravity, the United States government legalized the use of torture, including waterboarding, in violation of international law and continues to sanction human rights violations in the pursuit of national security. The ramifications have been far-reaching, with local police now employing similar torture tactics at secret locations such as Homan Square in Chicago.

   

  Allowing the government to spy on the citizenry will not reduce acts of terrorism, but it will result in a watched, submissive, surveillance society. A byproduct of this post 9/11-age in which we live, whether you’re walking through a store, driving your car, checking email, or talking to friends and family on the phone, you can be sure that some government agency, whether the NSA or some other entity, is listening in and tracking your behavior. This doesn’t even begin to touch on the corporate trackers such as Google that monitor your purchases, web browsing, Facebook posts and other activities taking place in the cyber sphere. We are all becoming data collected in government files. The chilling effect of this endless surveillance is a more anxious and submissive citizenry.

   

  Don’t become so distracted by the news cycle that you lose sight of what the government is doing. The average American has a hard time keeping up with and remembering all of the “events,” manufactured or otherwise, which occur like clockwork and keep us distracted, deluded, amused, and insulated from the reality of the American police state. Whether these events are critical or unimportant, when we’re being bombarded with wall-to-wall news coverage and news cycles that change every few days, it’s difficult to stay focused on one thing—namely, holding the government accountable to abiding by the rule of law—and the powers-that-be understand this. In this way, regularly scheduled trivia and/or distractions that keep the citizenry tuned into the various breaking news headlines and entertainment spectacles also keep them tuned out to the government’s steady encroachments on their freedoms.

   

  If you stop holding the government accountable to the rule of law, the only laws it abides by will be the ones used to clamp down on the citizenry. Having failed to hold government officials accountable to abiding by the rule of law, the American people have found themselves saddled with a government that skirts, flouts and violates the Constitution with little consequence. Overcriminalization, asset forfeiture schemes, police brutality, profit-driven prisons, warrantless surveillance, SWAT team raids, indefinite detentions, covert agencies, and secret courts are just a few of the egregious practices carried out by a government that operates beyond the reach of the law.

   

  Do not turn your country into a battlefield, your citizens into enemy combatants, and your law enforcement officers into extensions of the military. A standing army—something that propelled the early colonists into revolution—strips the citizenry of any vestige of freedom. How can there be any semblance of freedom when there are tanks in the streets, military encampments in cities, Blackhawk helicopters and armed drones patrolling overhead? It was for this reason that those who established America vested control of the military in a civilian government, with a civilian commander-in-chief. They did not want a military government, ruled by force. Rather, they opted for a republic bound by the rule of law: the U.S. Constitution. Unfortunately, we in America now find ourselves struggling to retain some semblance of freedom in the face of police and law enforcement agencies that look and act like the military and have just as little regard for the Fourth Amendment, laws such as the NDAA that allow the military to arrest and indefinitely detain American citizens, and military drills that acclimate the American people to the sight of armored tanks in the streets, military encampments in cities, and combat aircraft patrolling overhead.

   

  As long as you remain fearful and distrustful of each other, you will be incapable of standing united against any threats posed by a power-hungry government. Early on, U.S. officials solved the problem of how to implement their authoritarian policies without incurring a citizen uprising: fear. The powers-that-be want us to feel threatened by forces beyond our control (terrorists, shooters, bombers). They want us afraid and dependent on the government and its militarized armies for our safety and well-being. Most of all, they want us distrustful of each other, divided by our prejudices, and at each other’s throats.

   

  If you trade your freedom for security, the terrorists win. We’ve walked a strange and harrowing road since September 11, 2001, littered with the debris of our once-vaunted liberties. We have gone from a nation that took great pride in being a model of a representative democracy to being a model of how to persuade a freedom-loving people to march in lockstep with a police state. And in so doing, we have proven Osama Bin Laden right. He warned that “freedom and human rights in America are doomed. The U.S. government will lead the American people in — and the West in general — into an unbearable hell and a choking life.”

  To sum things up, the destruction that began with the 9/11 terror attacks has expanded into an all-out campaign of terror, trauma, acclimation and indoctrination aimed at getting Americans used to life in the American Police State. The bogeyman’s names and faces change over time, but the end result remains the same: our unquestioning acquiescence to anything the government wants to do in exchange for the phantom promise of safety and security has transitioned us to life in a society where government agents routinely practice violence on the citizens while, in conjunction with the Corporate State, spying on the most intimate details of our personal lives.

  The lesson learned, as I document in my book Battlefield America: The War on the American People, is simply this: once you start down the road towards a police state, it will be very difficult to turn back.

  

  

  

  

  

• From Iraqi Jails To Paris Carnage – The Complete ISIS Timeline

  As it seems The West is losing its 'war on terror', with jihadi recruitment accelerating dramatically in the last few years, we thought the following timeline of how ISIS got here may be a useful reminder for when Washington once again reinserts itself 'on the ground' in the Middle-East…

  As BloombergBriefs notes, groups such as al-Qaeda and Islamic State call their violent campaigns jihad — holy war waged on behalf of Islam. Mainstream Muslims argue that jihad is mostly a spiritual obligation involving internal struggle. In this view, violent jihad is permissible only in extreme cases when sanctioned by legitimate authorities. Nevertheless, the militant jihadists are winning recruits.

  The number of groups engaged in violent jihad with the goal of creating their idea of purified Islamic societies grew to 49 in 2013 from three in 1988, a Rand Corp. study says. Their stated aim is to emulate Islam as practiced by the Prophet Muhammad’s early followers, known as the Salaf.

   

  

   

  The biggest jump in recruitment started in 2010 and corresponds with the Arab uprisings, which weakened government control in parts of North Africa and the Mideast. That gave jihadist groups opportunities to expand that trumped the power of any theological position. 

  But ISIS had been growing long before that…

  

   

  Source: BloombergBriefs

  

  

  

  

  

• Every Position On The Spectrum Supports The Government's Propaganda

  Authored by Paul Craig Roberts,

  This excellent article by Glenn Greenwald…

  Given all this, is there any mystery why “U.S. officials” and the military-intelligence regime, let alone Iraq War-advocating hacks like Jim Woolsey and Dana Perino, are desperate to shift blame away from themselves for ISIS and terror attacks and onto Edward Snowden, journalism about surveillance, or encryption-providing tech companies? Wouldn’t you if you were them? Imagine simultaneously devoting all your efforts to depicting ISIS as the Greatest and Most Evil Threat Ever, while knowing the vital role you played in its genesis and growth.

   

  The clear, overwhelming evidence — compiled HERE — demonstrates how much deceit their blame-shifting accusations require. But the more important point of inquiry is to ask why they are so eager to ensure that everyone but themselves receives scrutiny for what is happening. The answer to that question is equally clear, and disturbing in the extreme.

  …reminded me that I have meant to write about how every sort of interest attaches to the government’s propaganda in order to make its point.

  Greenwald shows how the Snowden haters in the US media seized on the Paris attack in order to blame Snowden. The American, indeed Western, media consists of the scum of the earth, and they all together are no match for Glenn Greenwald. Greenwald shows that they are so dimwitted that they cannot remember their previous stories long enough to save them from making laughing stocks of themselves when they gang up on Snowden.

  The presstitutes that constitute the Western media had a great incentive to buy in to the false story of the Paris attack, because they saw an opportunity to blame the attack on Snowden, who showed them up for what they are — whores who lie for the government for money.

  Likewise, anti-immigration web sites and political parties have a great stake in the false story of the Paris attack, because they can use it to emphasize the perils of allowing into a country people who don’t belong there.

  The leftwing buys into the government’s lies, because it proves their point that Western imperialism and neo-colonialism brings blowback. The oppressed colonies rise up and send death and destruction to the imperialist’s homelands. This is emotionally satisfying to the left even though it hands over to the government control over the population.

  As for the fearful, if the blacks are not going to murder them in their beds, surely the terrorists will. Only the government can make them safe by repealing all civil liberties. TV program after TV program — even RT — presents citizens testifying how they welcome being searched by the police, because it makes them safe. As Benjamin Franklin once said, those who give up liberty for safety will have neither. But this is over the heads of the fearful and the presstitutes.

  By now, my readers should be able to finish this story on their own.

  The Nazis and others have made it very simple and clear: fear is a control mechanism. Terrorism creates fear, and fear drives fools into the hands of the government that created the terrorism that created the fear.

  Go watch the movie, V For Vendetta. The British government unleashes a disease outbreak and uses the resulting fear to turn Britain into a police state. Movie producers, such as those who made V for Vendetta and The Matrix understand what is going on, but what percentage of the audience gets it?

  We have had by my last count 150 false FBI “sting operations,” that is, FBI orchestrated “terror plots” in which the FBI recruits half-wits to do such things as blow up the Sears Tower with fake bombs handed to them by the FBI.

  We have had the false flag 9/11 operation, the false flag Boston Marathon Bombing, the false flag Charlie Hebdo, the false flag Paris attack. All of these false flag operations were scripted long ago by Operation Gladio, by the Northwoods Project (use google and read about them), and so on.

  The Western world consists of a tyranny in which brainwashed nonentities live in a constructed reality.

  Can enough of these people be rescued to make a difference? That is the question.

  

  

  

  

  

• The Fed's Failed Communication Strategy – More Than Half Of FedSpeak Is "Not Useful"

  Having recently shown The Fed to go 6 for 6 in a day of FedSpeak failures to spark animal spirits, it appears this is actually not so unusual for some members of The Fed. As WSJ found, when it comes to watching the Federal Reserve, it’s a good idea to keep an eye on Atlanta and San Francisco but for 9 of the policy-makers, economists rank their 'FedSpeak' as less than useful… with soon-to-be-replaced Kockerlakota the least useful Fed speaker of all…

  A day of Fed Fails..

   

  

   

  But, as The Wall Street Journal reports,

  Public statements by the 17 policy makers who participate in Federal Open Market Committee discussions are closely watched for clues to the likely course of central-bank policy. But not all speeches are equally helpful for Fed prognostication. Some officials speak from places near the consensus-driven committee’s center, while others air personal views that are at odds with the Fed’s likely course of policy.

   

  Even sophisticated Wall Street traders often are tripped up—making trades that briefly move markets on the basis of remarks from officials with little influence or little indicative value.

   

  To help cut through the cacophony of voices, the Journal surveyed 42 private forecasters on how useful they found individual officials’ public remarks as they gauged the course of Fed policy.

   

  

  The red shaded region is Fed members who are less than useful

   

  Toward the bottom were two freshly minted Fed presidents, Robert Steven Kaplan of Dallas and Patrick Harker of Philadelphia. Both officials took office this year and neither has yet staked out public positions on monetary policy.

   

  Ranked last was the Minneapolis Fed’s Narayana Kocherlakota. He is set to retire at the end of the year after a tenure that saw his monetary-policy views undergo dramatic evolution; he went from dissenting against Fed stimulus efforts to becoming the Fed’s most vocal advocate for even more stimulus.

   

  He speaks frequently on monetary policy, but that hasn’t translated into influence. “I wish I had done a better job,” he told the Journal earlier this year. “I think we’d be better positioned policy-wise if I had done a better job of being persuasive.”

   

  Mr. Kocherlakota will be succeeded Jan. 1 by Neel Kashkari, the Minneapolis Fed announced Tuesday.

  *  *  *

  We suspect the red shading will drift further and further to the left as fed credibilty disappears as December looms.

  

  

  

  

  

• Blowback – The Washington War Party’s Folly Comes Home To Roost

  Submitted by David Stockman via Contra Corner blog,

  Exactly 26 years ago last week, peace was breaking out in a manner that the world had not experienced since June 1914. The Berlin Wall – the symbol of a century of state tyranny, grotesque mass warfare and the nuclear sword of Damocles hanging over the planet – had come tumbling down on November 9, 1989.

  It was only a matter of time before the economically decrepit Soviet regime would be no more, and that the world’s vast arsenal of weapons and nuclear bombs could be dismantled.

  Indeed, shortly thereafter according to Gorbachev, President George H.W. Bush and Secretary Baker promised that NATO would not be expanded by “as much as a thumb’s width further to the East” in return for acquiescing to the reunification of Germany.

  So with its “mission accomplished” there was no logical reason why NATO should not have been disbanded in parallel with the Warsaw Pact’s demise, and for an obvious and overpowering reason: On November 9, 1989 there were no material military threats to US security anywhere on the planet outside of the suddenly vanishing front line of the Cold War.

  As it turned out, however, there was a virulent threat to peace still lurking on the Potomac. The great general and president, Dwight Eisenhower, had called it the “military-industrial complex” in his farewell address, but that memorable phrase had been abbreviated by his speechwriters, who deleted the word “congressional” in a gesture of comity to the legislative branch.

  So restore Ike’s deleted reference to the pork barrels and Sunday afternoon warriors of Capitol Hill and toss in the legions of beltway busybodies that constituted the civilian branches of the cold war armada (CIA, State, AID etc.) and the circle would have been complete. It constituted the most awesome machine of warfare and imperial hegemony since the Roman legions bestrode most of the civilized world.

  In a word, the real threat to peace circa 1990 was that Pax Americana would not go away quietly in the night.

  Ronald Reagan had called the dying Soviet Union an Evil Empire, but it was actually a passing freak of history. It had arisen by a fluke 72 years earlier—–almost to the day of the Berlin Wall’s fall—–only because Imperial Russia had been reduced to anarchy by the carnage of the Great War, enabling Lenin to storm the Winter Palace and install his own special Bolshevik brand of hell on earth.

  So the demise of the Soviet Union in 1991 meant the world could have reverted to the status quo ante. That is, to a normalcy of peace, liberal commerce and a minimum of armaments that had prevailed in the late 19th century. The 20th century curse of militarism, totalitarianism and global warfare was over.

  Needless to say, the sudden end to 20th century history posed an existential threat to Imperial Washington. A trillion dollar complex of weapons suppliers, warfare state bureaucracies, intelligence and security contractors, arms exporters, foreign aid vendors, military bases, grand poobahs and porkers of the Congressional defense committes, think tanks, research grants and much more——were all suddenly without an enemy and raison d’etre.

  As it has happened, Imperial Washington did find its necessary enemy in the rise of so-called “global terrorism”.

  But the everlasting truth is that the relative handful of suicidal jihadi who have perpetrated murderous episodes of terror like 9/11 and this weekend’s carnage in Paris did not exist in November 1989; and they would not be marauding the West today save for the unrelenting arrogance, stupidity, duplicity and mendacity of Imperial Washington.

  That is, the gates of hell have been opened by Washington’s senseless destruction of regimes in Libya, Syria, Iraq, Yemen, Somalia, Afghanistan and elsewhere that refused to do its bidding. Yet not one of these backwaters of tyranny and economic and military insignificance posed any threat whatsoever to the safety and security of American citizens in Lincoln NE or Manchester NH.

  That the middle east and the Arab/Islamic world in particular is now a burned out zone of failed states and an incubator of barbaric religious and sectarian fanaticism is because Imperial Washington made it that way.

  So what has metastasized from the ruins left by American intervention is not an organized military threat or a tide of state sponsored attacks on the civilian life of the West; it is random blowback of the suicidal flotsam and jetsam that have been puked from the very same jaws of hell which Washington so foolishly opened.

  It did so under the banner of two stunningly false predicates. One of these was the long-standing Washington error that America’s security and economic well-being depends upon keeping an armada in the Persian Gulf in order to protect the surrounding oilfields and the flow of tankers through the straits of Hormuz.

  That doctrine has been wrong from the day it was officially enunciated by one of America’s great economic ignoramuses, Henry Kissinger, at the time of the original oil crisis in 1973. The 42 years since then have proven in spades that its doesn’t matter who controls the oilfields, and that the only effective cure for high oil prices is the free market, not the Fifth Fleet.

  Every tin pot dictatorship from Libya’s Muammar Gaddafi to Hugo Chavez in Venezuela to Saddam Hussein, to the bloody-minded chieftains of Nigeria, to the purportedly medieval Mullahs and fanatical Republican Guards of Iran has produced oil—-and all they could because they desperately needed the revenue.

  For crying out loud, even the barbaric thugs of ISIS milk every possible drop of petroleum from the tiny, wheezing oilfields scattered around their backwater domain. So there is no economic case whatsoever for Imperial Washington’s massive military presence in the middle east, and most especially for its long-time alliance with the despicable regime of Saudi Arabia.

  The truth is, there is no such thing as an OPEC cartel——virtually every member produces all they can and cheats whenever possible. The only thing that resembles production control in the global oil market is the fact that the Saudi princes treat their oil reserves not much differently than Exxon.

  That is, they attempt to maximize the present value of their 270 billion barrels of reserves, but ultimately are no more clairvoyant at calibrating the best oil price to accomplish that than are the economists at Exxon or the IEA.

  The Saudis over-estimated the staying power of China’s temporarily surging call on global supply; and under-estimated how rapidly and extensively the $100 per barrel marker reached in early 2008 would trigger a flow of investment, technology and cheap debt into the US shale patch, the Canadian tar sands, the tired petroleum provinces of Russia, the deep offshore of Brazil etc. And that’s to say nothing of solar, wind and all the other government subsidized alternative source of BTUs.

  Way back when Jimmy Carter was telling us to turn down the thermostats and put on our cardigan sweaters, those of us on the free market side of the so-called energy shortage debate said the best cure for high oil prices is high prices. Now we know.

  So the Fifth Fleet and its overt and covert auxiliaries should never have been there—–going all the way back to the CIA’s coup against Iranian democracy in 1953. It was in the name of protecting the oil fields that the Washington war machine installed the monstrous Mohammad Reza Pahlavi on the Peacock Throne and thereby inaugurated 25 years of plunder and Savak terror.

  Likewise, it was the Washington war machine that decided upon the “tilt to Saddam” in his 1980s war on the Islamic Republic, and which provided him with satellite based tracking and targeting services when he rained chemical weapons on barely armed Iranian forces.

  The truth is, there never were any Iranian “terrorists” at time the Berlin Wall fell. What existed was the smoldering hostility and nationalism that had arisen among the Iranian people after four decades of Washington intervention in their internal affairs, and a theocratic Shiite regime that had come to power owing to Washington’s foolish embrace of a brutal megalomaniacal tyrant.

  Even then, the rulers of Tehran had been ratified twice in honest elections. And they were far more civilized, constitutionally-minded and economically egalitarian than the absolute monarchs of the House of Saud, whose gluttonous opulence was unspeakable and whose medievalist Wahhabi regime of social repression and religious intolerance was (and is) deeply offensive to every value America represents.

  But having turned Iran into an enemy, Imperial Washington was just getting started when 1990 rolled around. Once again in the name of “oil security” it plunged the American war machine into the politics and religious fissures of the Persian Gulf; and did so on account of a local small potatoes conflict that had no bearing whatsoever on the safety and security of American citizens.

  As US ambassador Glaspie rightly told Saddam Hussein on the eve of his Kuwait invasion, America had no dog in that hunt.

  Kuwait wasn’t even a country; it was a bank account sitting on a swath of oilfields surrounding an ancient trading city that had been abandoned by Ibn Saud in the early 20th century. That’s because he didn’t know what oil was or that it was there; and, in any event, it had been made a separate protectorate by the British in 1913 for reasons that are lost in the fog of diplomatic history.

  Likewise, Iraq’s contentious dispute with Kuwait had been over its claim that the Emir of Kuwait was “slant drilling” across his border into Iraq’s Rumaila field. Yet it was a wholly elastic boundary of no significance whatsoever.

  In fact, the dispute over the Rumaila field started in 1960 when an Arab League declaration arbitrarily marked the Iraq–Kuwait border two miles north of the southernmost tip of the Rumaila field.

  And that newly defined boundary, in turn, had come only 44 years after a pair of English and French diplomats had carved up their winnings from the Ottoman Empire’s demise by laying a straight edged ruler on the map. So doing, they thereby confected the artificial country of Iraq from the historically independent and hostile Mesopotamian provinces of the Shiite in the south, the Sunni in the west and the Kurds in the north.

  In short, it did not matter who controlled the southern tip of the Rumaila field—–the brutal dictator of Baghdad or the opulent Emir of Kuwait. Not the price of oil, nor the peace of America nor the security of Europe nor the future of Asia depended upon it.

  But Bush the Elder got persuaded by Henry Kissinger’s  economically illiterate protégés at the national security council and his Texas oilman Secretary of State that the will-o-wisp of “oil security” was at stake, and that 500,000 American troops needed to be planted in the sands of Arabia.

  That was a catastrophic error, and not only because the presence of crusader boots on the purportedly sacred soil of Arabia offended the CIA-trained Mujahedeen of Afghanistan, who had become unemployed when the Soviet Union collapsed.

  The 1991 CNN glorified war games in the Gulf also revived another group of unemployed crusaders. Namely, the neocon national security fanatics who had mislead Ronald Reagan into a massive military build-up to thwart what they claimed to be an ascendant Soviet Union bent on nuclear war winning capabilities and global conquest.

  All things being equal, the sight of Boris Yeltsin, Vodka flask in hand, facing down the Red Army a few months later should have sent them into the permanent repudiation and obscurity they so richly deserved. But Dick Cheney and Paul Wolfowitz managed to extract from Washington’s pyric victory in Kuwait a whole new lease on life for Imperial Washington.

  Right then and there came the second erroneous predicate. To wit, that “regime change” among the assorted tyrannies of the middle east was in America’s national interest, and that the Gulf War proved it could be achieved through a sweeping interventionist menu of coalition diplomacy, security assistance, arms shipments, covert action and open military attack and occupation.

  What the neocon doctrine of regime change actually did, of course, was to foster the Frankenstein that became ISIS. In fact, the only real terrorists in the world which threaten normal civilian life in the West are the rogue offspring of Imperial Washington’s post-1990 machinations in the middle east.

  The CIA trained and armed Mujahedeen mutated into al-Qaeda not because Bin Laden suddenly had a religious epiphany that his Washington benefactors were actually the Great Satan owing to America’s freedom and liberty.

  His murderous crusade was inspired by the Wahhabi fundamentalism loose in Saudi Arabia. This benighted religious fanaticism became agitated to a fever pitch by Imperial Washington’s violent plunge into Persian Gulf political and religious quarrels, the stationing of troops in Saudi Arabia, and the decade long barrage of sanctions, embargoes, no fly zones, covert actions and open hostility against the Sunni regime in Bagdad after 1991.

  Yes, Bin Laden would have amputated Saddam’s secularist head if Washington hadn’t done it first, but that’s just the point. The attempt at regime change in March 2003 was one of the most foolish acts of state in American history.

  The younger Bush’s neocon advisers had no clue about the sectarian animosities and historical grievances that Hussein had bottled-up by parsing the oil loot and wielding the sword under the banner of Baathist nationalism. But Shock and Awe blew the lid and the de-baathification campaign unleashed the furies.

  Indeed, no sooner had George Bush pranced around on the deck of the Abraham Lincoln declaring “mission accomplished” than Abu Musab al-Zarqawi, a CIA recruit to the Afghan war a decade earlier and small-time specialist in hostage-taking and poisons, fled his no count redoubt in Kurdistan to emerge as a flamboyant agitator in the now disposed Sunni heartland.

  The founder of ISIS succeeded in Fallujah and Anbar province just like the long list of other terrorist leaders Washington claims to have exterminated. That is, Zarqawi gained his following and notoriety among the region’s population of deprived, brutalized and humiliated young men by dint of being more brutal than their occupiers.

  Indeed, even as Washington was crowing about the demise of Zarqawi, the remnants of the Baathist regime and the hundreds of thousands of demobilized Republican Guards were coalescing into al-Qaeda in Iraq, and their future leaders were being incubated in a monstrous nearby detention center called Camp Bucca that contained more than 26,000 prisoners.

  

  As one former US Army officer, Mitchell Gray, later described it,

  You never see hatred like you saw on the faces of these detainees,” Gray remembers of his 2008 tour. “When I say they hated us, I mean they looked like they would have killed us in a heartbeat if given the chance. I turned to the warrant officer I was with and I said, ‘If they could, they would rip our heads off and drink our blood.’ ”

   

  What Gray didn’t know — but might have expected — was that he was not merely looking at the United States’ former enemies, but its future ones as well. According to intelligence experts and Department of Defense records, the vast majority of the leadership of what is today known as ISIS, including its leader, Abu Bakr al-Baghdadi, did time at Camp Bucca.

   

  And not only did the US feed, clothe and house these jihadists, it also played a vital, if unwitting, role in facilitating their transformation into the most formidable terrorist force in modern history.

   

  Early in Bucca’s existence, the most extreme inmates were congregated in Compound 6. There were not enough Americans guards to safely enter the compound — and, in any event, the guards didn’t speak Arabic. So the detainees were left alone to preach to one another and share deadly vocational advice.

   

  …….Bucca also housed Haji Bakr, a former colonel in Saddam Hussein’s air-defense force. Bakr was no religious zealot. He was just a guy who lost his job when the Coalition Provisional Authority disbanded the Iraqi military and instituted de-Baathification, a policy of banning Saddam’s past supporters from government work.

   

  According to documents recently obtained by German newspaper Der Spiegel, Bakr was the real mastermind behind ISIS’s organizational structure and also mapped out the strategies that fueled its early successes. Bakr, who died in fighting in 2014, was incarcerated at Bucca from 2006-’08, along with a dozen or more of ISIS’s top lieutenants.

  The point is, regime change and nation building can never be accomplished by the lethal violence of 21st century armed forces; and they were an especially preposterous assignment in the context of a land rent with 13 century-old religious fissures and animosities.

  In fact, the wobbly, synthetic state of Iraq was doomed the minute Cheney and his bloody gang decided to liberate it from the brutal, but serviceable and secular tyranny of Saddam’s Baathist regime. That’s because the process of elections and majority rule necessarily imposed by Washington was guaranteed to elect a government beholden to the Shiite majority.

  After decades of mistreatment and Saddam’s brutal suppression of their 1991 uprising, did the latter have revenge on their minds and in their communal DNA?  Did the Kurds have dreams of an independent Kurdistan that had been denied their 30 million strong tribe way back at Versailles and ever since?

  Yes, they did. So the $25 billion spent on training and equipping the putative armed forces of post-liberation Iraq was bound to end up in the hands of sectarian militias, not a national army.

  In fact, when the Shiite commanders fled Sunni-dominated Mosul in June 2014 they transformed the ISIS uprising against the government in Baghdad into a vicious fledgling state in one fell swoop. It wasn’t by beheadings and fiery jihadist sermons that it quickly enslaved dozens of towns and several million people in western Iraq and the Euphrates Valley of Syria.

  Its instruments of terror and occupation were the best weapons that the American taxpayers could buy. That included 2,300 Humvees and tens of thousands of automatic weapons, as well as vast stores of ammunition, trucks, rockets, artillery pieces and even tanks and helicopters.

  And that wasn’t the half of it. The newly proclaimed Islamic State also filled the power vacuum in Syria created by its so-called civil war. But in truth that was another exercise in Washington inspired and financed regime change undertaken in connivance with Qatar and Saudi Arabia.

  The latter were surely not interested in expelling the tyranny next door; they are the living embodiment of it. Instead, the rebellion was about removing Iran’s Alawite/Shiite ally from power in Damascus and laying gas pipelines to Europe across the upper Euphrates Valley.

  In any event, ISIS soon had troves of additional American weapons. Some of them were supplied to Sunni radicals by way of Qatar and Saudi Arabia. More came up the so-called “ratline” from Gaddafi’s former arsenals in Benghazi through Turkey. And still more came through Jordan from the “moderate” opposition trained there by the CIA, which more often than not sold them or defected to the other side.

  So that the Islamic State was Washington’s Frankenstein monster became evident from the moment it rushed upon the scene 18 months ago. But even then the Washington war party could not resist adding fuel to the fire, whooping up another round of Islamophobia among the American public and forcing the Obama White House into a futile bombing campaign for the third time in a quarter century.

  But if bombing really worked, the Islamic State would be sand and gravel by now. Indeed, as shown by the map below, it is really not much more than that anyway.

  The dusty, broken, impoverished towns and villages along the margins of the Euphrates River and in the bombed out precincts of Anbar province do not attract thousands of wannabe jihadists from the failed states of the middle east and the alienated Muslim townships of Europe because the caliphate offers prosperity, salvation or any future at all.

  What recruits them is outrage at the bombs and drones being dropped on Sunni communities by the US air force; and by the cruise missiles launched from the bowels of the Mediterranean which rip apart homes, shops, offices and mosques containing as many innocent civilians as ISIS terrorists.

  

  The truth is, the Islamic State was destined for a short half-life anyway. It was contained by the Kurds in the north and east and by Turkey with NATO’s second largest army and air force in the northwest. And it was surrounded by the Shiite crescent in the populated, economically viable regions of lower Syria and Iraq.

  So absent Washington’s misbegotten campaign to unseat Assad in Damascus and demonize his confession-based Iranian ally, there would have been nowhere for the murderous fanatics who pitched a makeshift capital in Raqqa to go. They would have run out of money, recruits, momentum and public acquiesce in their horrific rule in due course.

  But with the US Air Force functioning as their recruiting arm and France’s anti-Assad foreign policy helping to foment a final spasm of anarchy in Syria, the gates of hell have been opened wide. What has been puked out is not an organized war on Western civilization as Hollande so hysterically proclaimed in response to the mayhem of last weekend.

  It was just blowback carried out by that infinitesimally small salient of mentally deformed young men who can be persuaded to strap on a suicide belt.

  Needless to say, bombing wont stop them; it will just make more of them.

  Ironically, what can stop them is the Assad government and the ground forces of its Hezbollah and the Iranian Republican Guard allies. Its time to let them settle an ancient quarrel that has never been any of America’s business anyway.

  But Imperial Washington is so caught up in its myths, lies and hegemonic stupidity that it can not see the obvious.

  And that is why a quarter century after the cold war ended peace still hasn’t been given a chance and the reason that horrific events like last week’s barbarism in Paris still keep happening.

  

  

  

  

  

• How The Turks Really Feel – A Moment Of (Un)-Silence

  Observing a moment of silence for the victims of last Friday’s massacre in the streets of Paris has become something of a global phenomenon at everything from sporting events to stock exchanges and generally speaking, everyone has been outwardly happy to oblige.

  Well, not Turkish soccer fans. 

  As Reuters reports (and as you’ll see below), the moment of silence for France was booed on Tuesday before what ended up being a disappointing match between Turkey and Greece.

  Turkish fans booed during the minute’s silence for the victims of the Paris attacks before their national team drew 0-0 with Greece in a friendly international soccer game on Tuesday.

   

  The mark of respect was observed at matches across Europe, including at Wembley where France faced England, after Islamic State militants struck Paris on Friday killing 129 people.

   

  Turkish Prime Minister Ahmet Davutoglu and Greek counterpart Alexis Tsipras watched the game together, in a sign of reconciliation between the two neighbours, whose relationship has suffered from hostilities in the past.

   

  It was the first time the two teams had met for eight years and the Turkish Football Federation had announced a string of additional security measures before the match at the Istanbul Basaksehir stadium, which was a 17,000 sell out.

   

  However, the occasion was a disappointment with both teams trying out new players in a game of few chances with former European champions Greece, who failed to qualify for the Euros, having just one goal attempt against Turkey’s 12.

  Perhaps the Turks are angry that there was no worldwide moment of silence observed after bombings in Ankara killed 102 and injured more than 400 just last month.

  

  

  

  

  

• The World According To Trump

  With The Donald once again standing alone at the top of the polls (as Carson drifts lower)…

   

  

  Source: RealClearPolitics

  Perhaps it is time to refresh one’s opinion on Trump’s view of the world…

  

  Source: Fusion.net

  

  

  

  

  

• In Baltimore, Race Is The Deciding Factor In Mortgage Lending

  In many ways, the riots that left parts of Baltimore smoldering in late April were the culmination of 9 months of worsening race relations in the US. 

  The death of Eric Garner, the unrest in Ferguson, and the shooting of Walter Scott all served to create a palpable sense of distrust between African Americans and white police officers and when Freddie Gray died, the stage was set for a night of anarchy in the streets. A “purge” as it were. 

  

  In the wake of the riots, some were quick to point out that while much of what took place on the night of April 27 is inexcusable regardless of any mitigating socioeconomic factors, the anger and frustration in some predominantly African American communities emanates from a lack of opportunity. Put simply, social mobility for some minorities is severely constrained by myriad hurdles that in many cases prove to be all but insurmountable. That’s not an attempt to excuse antisocial behavior, and it’s certainly not to say that those who possess an iron will and uncanny resolve can’t succeed despite all odds, it’s simply to say that “equality of opportunity” doesn’t exist in America. Plain and simple.

  Recall that back in May, The New York Times (drawing on research from Harvard economists Raj Chetty and Nathaniel Hendren) took a look at income mobility and, by extension, the best and worst places to live in America.

  Here’s how we described the study at the time: The goal of the study (and its predecessors) is to determine the most effective way to imporove economic outcomes for low-income children. Here, the researchers “focus on families who moved across areas to study how neighborhoods affect upward mobility.” Unsurprisingly, Chetty and Hendren “find that every year of exposure to a better environment improves a child’s chances of success.”

  Here are some screenshots from the interactive map presented by The Times which should tell you all you need to know about social/ income mobility and Baltimore:

  

  

  In this context, we present a few excerpts from a New York Times piece out Monday which takes a look at a new study by the National Community Reinvestment Coalition who looked at mortgage lending in Baltimore. 

  Perhaps not surprisingly, the Coalition found that the most important determinate for loans was the racial composition of the neighborhood. Not income. Not credt. But race. 

  Here’s more:

  The black population of Baltimore is double that of the white population. Yet in 2013, banks made more than twice as many mortgage loans to whites in the city as they did to blacks.

  
  

  The stark difference in mortgage lending, derived from the most recent government mortgage data, is the focus of a new study that will be released on Tuesday by the National Community Reinvestment Coalition, a consumer advocacy group.

   

  
  

  
  

  Still, the coalition says its analysis shows that the racial makeup of a neighborhood — and not income, for instance — is the most significant predictor of whether a loan gets made in Baltimore.

  
  

  “If lenders are not making loans in a community, the opportunities for people to work their way out of poverty is pretty slim,” said John Taylor, the coalition’s president. “In Baltimore, the prevailing factor behind who gets a mortgage is the racial composition of the neighborhood.”

  As The Times notes, “it has long been the case that the rate at which blacks get denied a mortgage is higher than that for whites” and indeed, there appear to be legitimate reasons for this. “According to the Fed’s analysis of the government mortgage data from 2013, banks said credit history was the reason behind 30 percent of their denials of black borrowers. For whites, banks said it was the cause in 22.5 percent of the cases,” NYT adds.

  But that’s not what’s going on in Baltimore. 

  First, here are the raw numbers (which should themselves give you pause even if you’re skeptical about the study itself):

  In 2013, 797 loans were made to blacks in the city, a seemingly tiny number considering that Baltimore’s black population totals almost 400,000. Some 2,000 loans were made to the city’s 175,000 whites.

  Here’s where it gets bad:

  In lower-income areas of Baltimore where minorities made up 10 to 19 percent of the population, 72 percent of mortgage applications were approved. But in lower-income areas where minorities made up more than 80 percent of the population, only 59 percent of applicants were approved.

  So we’re talking about low-income borrowers in both cases. In other words, t’s not about the borrowers’ ability to service the debt. Banks simply don’t want you buying houses in black neighborhoods. It looks to be as simple as that.

  Incredibly, the numbers are even worse for high-income borrowers:

  Higher-income borrowers in Baltimore were approved for 64 percent of the loans they applied for in areas where the minority population exceeded 80 percent. But the approval rate was 82 percent for higher-income borrowers in areas where minorities made up less than 10 percent of the population.

  In other words, even if you make a lot of money, the bank is far less likely to give you a loan for a house in a black neighborhood in Baltimore.

  Now admittedly, banks are likely just protecting their interests. That is, you don’t want to end up sitting on a book full of loans you made for homes that you think are likely to fall in value.

  But bear in mind that you can’t have it both ways. You can’t say, “ok take some initiative, work, build credit, buy a home, and do your part to lift your community out of the proverbial gutter“, and then at the same time say “well, then again, we can’t give you a loan because your neighborhood is mostly black.” That won’t work and will only serve to perpetuate the status quo. Here’s The Times again: 

  One of the chief concerns among consumer advocates is that banks have effectively written off certain neighborhoods. Lenders, for instance, may shun creditworthy borrowers in neighborhoods where blacks are the majority because they may not believe that house prices will rise by much in such areas. But if banks avoid economically challenged areas for that reason, it could make it more unlikely that house prices will rise.

  As always, we’re not taking one side or the other, but what the above does underscore is the fact that changing the circumstances which contribute (note we did not say “cause” we said “contribute“) to the types of social unrest we witnessed last April can be exceptionally difficult when the deck is stacked.

  

  

  

  

  

• And Then There Were 13… Bobby Jindal 'Suspends' Presidential Campaign As Trump Tops Post-Paris Polls

  Louisiana Gov. Bobby Jindal on Tuesday said he was ending his presidential bid, saying “this is not my time.”

  Jindal had struggled to gain traction in the race, often failing to poll at even 1 percent in some surveys. He also underwhelmed in the money race, and had just $261,000 in the bank heading into October.

  As Politico reports, Jindal is the third Republican to suspend his campaign, after former Texas Gov. Rick Perry and Wisconsin Gov. Scott Walker dropped out earlier this year.

   

  

   

  And as most of America says "Bobby who?", The Donald takes a commanding lead in post-Paris polls… (as The Hill reports)

  Donald Trump’s voter support is rising nationwide after last week’s terrorist attacks in Paris, a new poll says.

   

  Trump commands a 19-point lead over his competition for the GOP’s 2016 presidential nomination, according to the Morning Consult survey.

   

  The New York business mogul earns 38 percent of Republicans and Republican-leaning independents, it said Tuesday.

   

  “Pundits have gotten rich declaring the impending decline of Donald Trump — and they’ve been consistently wrong,” said James Wyatt, Morning Consult’s director polling.

   

  “Morning Consult isn’t the only poll that shows Trump still has life, and that the rest of the field needs to work overtime to catch him,” he added Tuesday.

   

  Retired neurosurgeon Ben Carson trails the outspoken billionaire with 19 percent of that demographic.

   

  Sens. Marco Rubio (R-Fla.) and Ted Cruz (R-Texas) are next, tying for third with 7 percent apiece.

   

  Former Gov. Jeb Bush (R-Fla.) rounds out the field’s top five, garnering 6 percent among respondents.

   

  Morning Consult said Tuesday that Trump’s poll numbers are surging from a dip last month.

  As RealClearPolitics noted,

   

  

  

  

  

  

• World Gold Council Continues To Hide Insatiable Chinese Gold Demand

  Submitted by Koos Jansen via BullionStar.com,

  The amount of gold withdrawn from the vaults of the Shanghai Gold Exchange (SGE), which equals Chinese wholesale gold demand, accounted for 45 tonnes in the trading week that ended on 6 November. Year to date SGE withdrawals have reached an astonishing 2,210 tonnes, which is more than the full year record set in 2013 at 2,197 tonnes. With nearly two months of trading left in the Chinese gold market, SGE withdrawals are estimated to reach more than 2,600 tonnes.

  

  Please read The Mechanics Of The Chinese Domestic Gold Market for a comprehensive explanation of the relationship between SGE withdrawals and Chinese wholesale gold demand.

  If Chinese gold import will be higher than in 2013 remains to be seen. Two years ago China imported 1,507 tonnes in standard gold bars. According to my estimates China is on track to import 1,400 tonnes in 2015. This year’s SGE withdrawals can have been supplied by more recycled gold than in 2013 that in part replaces gold import.

  SGE withdrawals = mine + import + recycled gold supply.

  SGE withdrawals can only be supplied by domestically mined gold, imported gold or recycled gold (ie scrap). Because China is one of the few countries that doesn’t disclose its gold trade data we must estimate Chinese gold import from data provided by gold exporters such as the UK, Switzerland, Hong Kong and Australia. Their foreign trade statistics show China has net imported more than 1,032 tonnes of gold in the first three quarters of 2015. In addition, Chinese domestic mining output has been 357 tonnes, according to the China Gold Association, which is prohibited from being exported. Without counting scrap supply apparent physical gold supply in China was 1,389 tonnes in the first nine months of 2015, yet, the World Gold Council disclose Q1-Q3 Chinese gold demand at 736 tonnes. Again, for years in a row now, there is more than twice as much physical gold being supplied to China than what is presented as demand to the average gold investor by the authority on gold (the World Gold Council).

  

  How can so much gold be supplied to China without someone buying it and thus being genuine demand? It cannot. Chinese gold demand as disclosed by the World Gold Council (WGC) is fallacious.

  Western consultancy firms have presented numerous arguments to explain the difference between SGE withdrawals and Chinese consumer gold demand, but none of them have proven to be complete. First it was industrial demand that should have caused the difference (WGC 2013), then it was stock movement change (GFMS 2013), then it was round tripping (WGC 2014), then it was gold leasing (WGC 2014), then it was official purchases (WGC 2013), then it was recycled gold (CPM Group 2014, GFMS 2015), even gold export from China has been tested to fool gold investors (PMI 2015). Although some of these arguments are partially true (read this post for an overview) they cannot fully explain the difference, which is at least 2,500 tonnes.

  Does the mainstream media ever investigate this odd discrepancy? Of course not, according to them gold is just a pet rock. Nobody cares about 2,500 tonnes of gold that have vanished into a black hole somewhere in China. Whilst, coincidentally, China is the second largest economy in the world that has stated the US dollar should be replaced as the world reserve currency. At the same time the global economy is still struggling to recover from the biggest financial crisis in recent history by printing money, which seems to do nothing more than buy time. But Western media refuse to connect the dots.

  Also note, none of the arguments listed above have been carefully described by the consultancy firms that presented them. A few sentences in a report from the World Gold Council were enough to convince the Financial Times to copy-paste the conclusion, although being factually incorrect. Never do the firms thoroughly describe the process of gold leasing or round tripping. Please, show me how gold leasing has inflated SGE withdrawals by 2,500 tonnes and I would be happy to further investigate the flows of gold through the SGE. The most recent sign from mainstream analysts with respect to this topic was communicated through a tweet. 140 characters achieved to set in motion a renewed wave of believe Chinese gold demand numbers make perfect sense.

  Numbers complex, but huge gap between SGE withdrawals and demand data is simple – leasing + round tripping #LBMA

  — BullionVault (@bullionvault) October 20, 2015

  Doesn’t this subject deserve a little more debate? By the way, isn’t there a contradiction in “numbers complex” and “huge gap between SGE withdrawals and demand data is simple”?

   

  And there is more. Some analysts speculate the PBOC is the secretive buyer of the ‘surplus’ imported gold in China. I would not agree (click here, here and here for my posts on this subject) and I suppose the WGC agrees with me. From the WGC in 2014 [brackets added by me]:

  China’s authorities have a range of options when purchasing gold. They may acquire some of the gold which flows into China [required to be sold through the SGE]…. but there are reasons why they may prefer to buy gold on international markets: gold sold on the SGE is priced in yuan and prospective buyers – for example, the PBoC with large multi-currency reserves – may rather use US dollars than purchasing domestically-priced gold. The international market would have a lot more liquidity too.

  The WGC suggests the PBOC does not buy gold through the SGE, which implies official Chinese gold demand complements SGE withdrawals and thus the difference of 2,500 tonnes. But then the supply and demand balance from the WGC is still missing 2,500 tonnes. Or is it…?

  After six year of silence China’s central bank, the PBOC, announced in July 2015 it had accumulated 604 tonnes in official gold reserves (that jumped from 1,054 to 1,658 tonnes). In the books from the PBOC the 604 tonnes were added to their reserves in the month of June. Subsequently, in July, August and September the PBOC increased its reserves by 50.5 tonnes in total.

  The World Gold Council includes all official gold purchases in their Gold Demand Trends (GDT) reports. Below is the total supply and demand table from the WGC released in the GDT report released for Q3 2015.

  

  As we can see central bank purchases are included, though if we look at total official gold demand for Q2 2015 it states 127.9 tonnes (Q3 2015 is 175 tonnes). Apparently, the World Gold Council did not include the 604 tonnes increment from the PBOC in their total supply and demand balance – and likely will not in any forthcoming balance. But the PBOC must have bought it from somewhere right? 604 tonnes couldn’t have fallen from the sky, it must have been supplied by disinvestment, mining output or scraps. Shouldn’t this demand by the PBOC have been disclosed somewhere in a supply and demand overview? We were already missing 2,500 tonnes from the WGC numbers and now we have to add another 604 tonnes.

  From the GDT Q3 report we can read:

  The People’s Bank of China (PBoC) confirmed in July that its gold reserves had expanded by over 50% since its last announcement in 2009. At 1,658t, that put China at number six in the global rankings. Subsequently, the PBoC has begun regularly to report changes to its gold holdings and has confirmed an additional 50.1t of purchases between July and September.

  Did you notice the WGC refrains from mentioning the PBOC bought 604 tonnes, but conveniently writes the PBOC had “its gold reserves … expanded by over 50 %”? This way another 604 tonnes are hidden from the World Gold Council’s total supply and demand balance, which in my opinion is nothing more than a vague mirage of true global gold supply and demand.

  

  

  

  

  

  

• Mollycoddled

  From the Slope of Hope: I’ve been puzzling over the peculiar reaction the market had on Monday to the savage attacks that took place in Paris. Never would I have dared imagine that assets across the board would excitedly zoom upward following this brutal mass killing in one of the most beloved cities in the world. It just made no sense.

  This morning, as I was doing my usual 5:30 a.m. walk of my big dogs, it dawned on me:  the market rallied because it knew it was going to get pampered. Over the past several decades – – and the last seven years in particular – – the market as a whole has been trained by the central banks and national governments of the world that Big Daddy Is Going To Make Things Better, and that if bad things happen (like Long Term Capital Management, or the Internet bubble bursting, or AIG going up in flames, or the twin towers falling, or civilians in Paris being mowed down by automatic rifles) then the paternal overseers that are ostensibly our leaders will give us a kiss, put a band-aid on our boo-boo, and make it all go away.

  Let me digress by introducing you to this gentleman:

  

  A chubby old dude shaking hands with a Marine, right? Well, this is Mr. Jack Lucas. Let me tell you a bit about him.

  In the summer of 1942, World War II was heating up, and young Jack wanted to join the fight. The problem was that he was a 14 year old kid. He was a tough-looking hombre, though, so without even asking his mother, he went off to the Marine recruit depot, lied about his age, and was shipped off to Parris Island.

  Although he did superbly well in training, he grew weary of not getting involved in any actual fighting, so he went AWOL in early 1945 (a reward was posted for his capture). He sneaked aboard a boat and told an officer who he was. Instead of arresting him, the commander allowed him to stay, and Jack turned 17 years old (the age he claimed to be when he originally signed up) while at sea.

  A few days later, the craft landed off the coast of Iwo Jima. He and three other guys got on to the island and, hunkered down in a trench, they were attacked by Japanese. A grenade fell near them, and Jack Lucas threw his body over it. Observing a second grenade nearby, he grabbed it and shoved that under his body as well. (I think most of us would admit doing this would not be our first instinct). He quickly pushed the grenades into the volcanic ash beneath him, and they exploded.

  His buddies were certain he was dead, and they got the hell out of there, but, incredibly, Jack survived the blasts. He was evacuated to a hospital ship and was sent back to the United States. He underwent 21 different rounds of surgery, and the doctors deliberately left over 200 pieces of metal in his body (meaning, among other things, Mr. Lucas could never pass through an airport’s metal detector without some serious explaining).

  He was, at the age of 17, award the Medal of Honor by Harry Truman………..and then he went back to finish freakin’ high school. He went on the other military adventures later in life, including an instance in which neither of his parachutes deployed (he survived, naturally). So the old fellow you see above was a complete badass.

  Contrast that with today’s college students who are whining and screaming about “micro-aggression” and are all worked up that the victims in Paris are getting all the limelight while their bitch-fest has been shunted aside as uninteresting.

  

  Indeed, I had never heard the term “safe space” until just a few days ago, but apparently it’s a big deal these days. From what a gather, it’s a zone in which free speech is completely forbidden, for fear of hurting the feelings of some special snowflake. For instance:

  

  Two-spirited? I feel out of step with the times, I must say. And then there’s this:

  

  I could look up cisgender, but I’m not going to bother. Considering me “questioning”, which apparently entitles me to visit the aforementioned safe space.

  And let me be clear about something: I am anti-bullying, pro-civil-rights all the way. But, sweet Jesus on a cornbread muffin, people, don’t you think this is all a bit much?

  The way college students are demanding to be mollycoddled aligns perfectly with the attitudes of investors as well. They simply will not tolerate any meaningful down-move in the market, and the central bankers have pandered for so many years to this kind of thinking, they simply keep doing the same things month after month, year after year. The equity markets have become the ultimate “Safe Space” for adults.

  Thus, after the Paris attacks, the knee-jerk reaction (which lasted only moments, and was actually quite sensible in a normal world) was to sell everything except gold, which itself got bid up nicely. The collective mind, however, knew that the succubus Janet Yellen and her kind would swoop in and let equity investors suckle at the dangling teats of fiscal accommodation, thus eradicating any true price discovery and any risk for the soft-as-downy-fur traders out there.

  There is no free lunch, however, although it’s easy to understand after all this years why one might think otherwise. But if parents protect their kids too much, never letting them stand on their own two feet, you wind up with a guy in his mid-30s still living with his parents and trying to find himself. Such a man will, in fact, ultimately fail, because he was never allowed to grow up (and I daresay would have had his ass kicked all over the yard by 14-year-old Jack Lucas).

  So, too, will equity markets. They have been mollycoddled into a state of moral flabbiness. If in 2008 all support was taken away and the market was forced to cleanse itself as God intended, we would on this very day be enjoying true prosperity and be many trillions less in debt. As it is now, though, we have to simply wait it out, anticipating the day when equity “investors” finally realize that the safe space around them has disappeared, and there’s no brave soul around them who is going to throw their body on the grenades tumbling down around them.

  

  

  

  

• Following Paris Terror Attacks, Only Three Things Are Guaranteed

  Submitted by Nick Bernabe via TheAntiMedia.org,

  France was victimized by a bloody terror attack on the evening of November 13th, 2015. ISIS, the self-proclaimed “Islamic caliphate,” has taken credit for the Paris terror attacks, which claimed the lives of at least 129 people and wounded another 415.

  The world is grieving, with millions on social media declaring their solidarity with France. Millions more are asking why so many are outraged now, when thousands of people are killed daily in conflicts the world over.

  In the aftermath of the attack, several realities have become clear. Taking history into account, three things will undoubtedly occur in response to the terror attacks in Paris.

  Yet More War

  The world is plagued by war, and following the Paris attacks, there is about to be a lot more of it. French President Francois Hollande quickly declared Friday’s terror attacks acts of war, making it clear through his actions over the weekend what the answer to those acts will be: bombs — and a lot of them.

  France carried out over 100 airstrikes in Syria on Sunday, with many more sure to come in Hollande’s “pitiless war” against those responsible for the attacks. France has already been involved with the civil war in Syria, fighting alongside the U.S. At the same time, it has stuck to the West’s talking point that Assad must be deposed for there to be a political solution to the conflict.

  On the other side of the Atlantic, the U.S. is gearing up to exploit the attacks in Paris by calling for more military intervention in Syria. First it was politicians, then the establishment media who called for a more direct response from the United States — up to and including a full-scale invasion of Syria.

  President Obama has already stymied such calls for a full-scale military operation in Syria, ruling out a ground invasion. “It’s best that we don’t shoot first and aim later,” he said. The president continued:

  “We play into the ISIL narrative when we act as if they are a state and we use routine military tactics that are designed to fight a state that is attacking another state. That’s not what’s going on here.”

  While this rhetoric is rather rational, it’s hard to believe the president will stick to his words, especially considering he proclaimed the U.S. would not deploy boots on the ground in Syria at least 16 times — only to do just that months later.

  As Anti-Media noted earlier today, Sunday’s entire Democratic presidential debate was intentionally shifted to focus on foreign policy and anti-terror measures — and the candidates responded with forcefully hawkish rhetoric (with the exception of Bernie Sanders).

  The information that seems to be missing from the entire conversation is that it was forceful foreign policy, accelerated by George W. Bush and continued by President Obama, that is directly responsible for the rise of ISIS in the first place. The short-sighted rhetoric political figures and media pundits are now spouting is highly reminiscent of post-9/11 fervor — and could lead to more of the same foreign policy blunders made in the years following 2001.

  Islamophobia, Xenophobia, and Anti-Immigrant Sentiment

  When an Islamic terrorist group attacks, the masses are quick to indict the entire religion — and the right-wing media is always there to fuel the flames of distrust and fear. The fact of the matter is that only a tiny minority of people who identify as Muslim commit terrorist acts. The likelihood of white Europeans and Americans alike committing an act of terror is exponentially greater than that of Islamic extremists (cops in the U.S. kill exponentially more than both of these groups combined).

  Distrust of Muslims has been growing in France for several years, and the Paris attacks have only served to amplify this xenophobia. Rallies for peace and solidarity in Paris over the weekend were interrupted by anti-Muslim protesters shouting, “throw out Islamists!”

   

   

  The “Jungle” refugee camp in Calais, France, which largely houses Muslims fleeing the war-torn Middle East, caught fire on Friday night. While the cause of the fire is still unknown, anti-immigrant groups in France took to social media to applaud the fire’s destruction.

  In the United States, many media outlets are fear mongering with anti-immigrant propaganda, and right-wing politicians are feeding right into it. At least half a dozen Republican governors have already announced plans to resist the settlement of Syrian refugees in their states in the wake of the Paris terror attacks. However, many people on social media are countering the fear mongering:

  To people blaming refugees for attacks in Paris tonight. Do you not realise these are the people the refugees are trying to run away from..?

  — Dan Holloway (@RFCdan) November 13, 2015

   

  Loss of Liberties in France and at Home

  The immediate response to the terror attacks in France was one of blatant militarism. As Anti-Media reported earlier today, the French government has deployed 10,000 troops to patrol the streets of France. President Francois Hollande announced his intention to extend the state of emergency for another three months, and a curfew has been enacted in Paris for the first time since WWII. These actions make a state of near-martial law a reality for Parisians. The French government also ordered 150 raids across the country against suspected terrorists, placing 104 people under house arrest.

  In the long-term, the French can expect to see their liberties eroded as their government continues to replace freedom with security, much like the U.S. did following 9/11 (see: Patriot Act). Prior to Friday’s attacks, the French government had already banned some forms of free speech and established an extensive surveillance apparatus, but further amplifications of these intrusions are likely to follow. Militarized police, “stop and frisk”-style tactics, and loss of privacy are all on the menu as the French government capitalizes on this tragedy to increase its control over the public.

  In the U.S., calls to increase already intrusive surveillance of the public have already begun. Republican presidential candidate Jeb Bush, appearing on MSNBC’s Morning Joe, said, “I think we need to restore the metadata program, which was part of the Patriot Act.” Though the bulk collection of the metadata of U.S. citizens was ruled unconstitutional last week by District Court Judge Richard Leon, CIA director John Brennan echoed Bush-era sentiments: speaking to the Center for Strategic and International Studies, Brennan claimed that in the wake of the Paris attacks, the U.S. should roll back recent reforms made to protect the privacy of Americans from the NSA’s surveillance dragnet.

  While the world mourns the deaths of the innocent people who fell victim to the terror attacks in France, Western governments are busy making plans to wage further war and to reduce the freedoms of the very people victimized by the attacks in the first place. Meanwhile, misled patriots everywhere are clamoring to express their nationalistic fervor, bashing and attacking the very refugees their own governments created through foreign policy riddled with hubris.

  

  

  

  

  

• Anonymous Kills 5,500 ISIS Social Media Accounts After Paris Terror Attack

  The "hacker collective" known as Anonymous is waging an all-out war against ISIS.

  So far, they've taken down more 5,500 ISIS-associated Twitter accounts  since the Paris terror attacks.

  

  This is crucial, since ISIS does a lot of its recruiting through social media.

  It seems like Anonymous is doing a lot more to unplug ISIS than the NSA and other Western intelligence services.

  Indeed, the top NSA official who created the NSA's global surveillance program told Washington's Blog that we should fire the U.S. intelligence agencies .. and hire Anonymous to protect us, instead.

  

  

  

  

• Baltic Dry Index Crashes Near Record Low

  The Baltic Dry Index staged a recovery mid-year, hopefully rising amid promises of stability in China and an 'escape' velocity USA. All that centrally-planned hope and hype faith has been eviscerated on the altar of economic reality. With no ability to directly manipulate the Baltic Dry Index to 'pretend' everything is awesome, it remains among the best 'real' indicators of the state of the global economy… and it's in the toilet…

   

  From hope to nope…

  

   

  The Batlc Dry nears all-time record lows once again…

  

   

  In fact, for this time of year, it has never been lower…

  

   

  But apart from that, buy stocks because terrorism rocks and The Fed would not be raising rates unless everything was awesome, right?

   

  Charts: Bloomberg

  Bonus Chart: It's not just The Baltic Dry (or the China Containerized Feight Index), HARPEX has also collapsed to 2008 levels…Harpex for the 6,500 and 8,500 TEU ships are at the exact same level as their 2009 lows and trending lower

  

  But don't worry as talking heads will tell you it is all a supply problem… and nothing to do with demand… MAYBE they'll forget to mention the 'why' there is over-supply – because the freaking manipulations of market-based signals of demand create a massive mal-investment boom in shipbuilding!!!! </rant>

  

  

  

  

  

• Crude Jumps After API Reports Modest Inventory Draw (First In 8 Weeks) Despite Another Big Build At Cushing

  After seven straight weeks of significant inventory builds, API reported a modest 482k draw. That was all the algos needed and WTI immediately ramped back above $41.00. However, what they likely missed was the 2nd weekly (huge) build in Cushing (1.5mm barrels) as we warned earlier on land storage starting to really fill…

  Cushing saw another big build…

  

   

  And crude reacted…

  

   

  As we noted earlier,

  In short: "The US is the last place with significant onshore crude storage space left."

   

  Which leads directly to Citi's conclusion: "'Sell the rally' near-term as fundamentals remain very sloppy and inventory constraints are becoming increasingly more binding."

  Charts: Bloomberg

  

  

  

  

  

• Ted Cruz Prepares Refugee-Rejection Bill, Slams Obama's Plan As "Nothing Short Of Lunacy"

  Earlier today in “Refugee Blowback: More Than Half Of America’s Governors Oppose Entry Of Syrians,” we brought you a look at just how much effort the nation’s Republican governors are putting into fighting a losing battle against the Obama administration’s plan to settle some 10,000 Syrian asylum seekers.

  As a refresher, here’s a look at which states oppose the plan: 

  

  As we noted, this is all for political points, because in the final analysis, it’s not up to state and local officials as they “cannot”, to quote WaPo, “physically prevent refugees from being resettled in their areas.” And even if they could, why would they really want to? After all, these refugees were properly “vetted,” much like the “moderate” Syrian rebels the Pentagon sought to train earlier this year. 

  Of course the Paris attacks virtually ensure that no matter what federal law says, there’s going to be a fight over this and now, GOP Presidential candidate, Sen. Ted Cruz is set to introduce a bill that would prevent Syrian refugees from coming into the US. Here’s WaPo:

  Cruz (R-Tex.) said after a campaign event here that the legislation is still being drafted and wouldn’t offer details of exactly what it would say. According to reports, Cruz told CNN that it would bar Syrian Muslim refugees from entering the United States.

   

  Cruz has said numerous times in the past few days that Muslim refugees from Syria should be resettled in majority Muslim countries in the Middle East.

   

  Cruz has said it is “nothing short of lunacy” to allow Syrian Muslim refugees  into the country, particularly after Friday’s Paris attacks.

  But while Muslims aren’t welcome under the Cruz plan, Christians apparently are:

  “There is no meaningful risk of Christians committing acts of terror. If there were a group of radical Christians pledging to murder anyone who had a different religious view than they, we would have a different national security situation,” Cruz said Sunday in Myrtle Beach, S.C.

  And here’s an incredulous Obama: 

  “That’s not American. That’s not who we are. We don’t have religious tests to our compassion,” Obama said.

  Maybe “we” don’t, but Ted Cruz does: 

  “I’ll tell you what’s shameful is that the president after seven years still refuses to utter the words radical Islamic terrorism [and] claims that somehow [it’s] a religious test. [It’s] not that at all. It is understanding the nature of the evil we face.”

  But it’s not just Ted Cruz (whose religious based test isn’t likely to win the day even among the GOP). New House Speaker Paul Ryan is also out calling for a review of the refugee plan. Here’s The New York Times:

  House Speaker Paul D. Ryan called Tuesday for the suspension of a program to accept Syrian refugees into the United States, and two influential senators announced a renewed push for a formal authorization of military force against the Islamic State as Congress moved to respond to the terrorist attacks in Paris.

   

  The developments on Tuesday suggested that the attacks in Paris had shifted the calculations on Capitol Hill, with potentially greater support for authorizing military force against the Islamic State. But there was also a fast-rising backlash, particularly among Republicans, against allowing Syrian refugees into the United States.

   

  Led by Mr. Ryan, the Republicans said there were grave reasons to fear that terrorists would be permitted to enter the country posing as refugees.

   

  “Our nation has always been welcoming,” Mr. Ryan said at a news conference. “But we cannot allow terrorists to take advantage of our compassion. This is a moment where it is better to be safe than to be sorry. So we think the prudent, the responsible thing is to take a pause in this particular aspect of this refugee program in order to verify that terrorists are not trying to infiltrate the refugee population.”

  You can see how that comes across as a bit more measured and (importantly) much more feasible than “maybe we should only let in the Christians”, because after all, what’s to keep a terrorist from simply lying and checking the “Christian” box on the entry form right along with the “Not A Suicide Bomber” box? 

  Not to be outdone, GOP frontrunner Ben Carson is out with a new anti-refugee ad in which the former neurosurgeon hilariously threatens to “defund Obama’s breakfast”: 

  And then finally there’s poor Jeb Bush, who is desperately seeking to come across as an island of sanity in a political arena gone batshit crazy on both sides of the aisle (via Bloomberg):

  “The answer to this is not to ban people from coming,” Bush said Tuesday in an interview with Mark Halperin and John Heilemann for Bloomberg Politics’ With All Due Respect. “The answer is to lead, to resolve the problem in Syria.”

   

  Bush stressed the United States shouldn’t allow in refugees “if there’s any kind of concern.” 

   

  “But I don’t think we should eliminate our support for refugees,” Bush added. “It’s been a noble tradition in our country for many years.”

  So yes folks, this has become a circus inside the Beltway and the sad thing about it is that at the end of the day, nearly (and we only say “nearly” because we would certainly hope that at least someone, either Republican or Democrat has actually taken the time to rationally weigh the importance of both national security and alleviating human suffering) everyone involved is simply jockeying for political points among their various constituents. 

  And this will go on and on and will invariably end up being inextricably linked to Obama’s executive action on immigration and, by extension, to the man who knows better than anyone that you can never let a good crisis go to waste, The Donald.

  Finally, we leave you with some food for thought, which we’ll let readers assess in the context of the current situation and interpret as they see fit: