Today’s News 10th April 2021

• Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control
  Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control

  Authored by Alt-Market.us’ Brandon Smith and originally published at Birch Gold Group,

  The concept of infrastructure stimulus has been hyped for decades as a kind of cure-all for economic decline. The propaganda runs parallel to the narrative of the “savior” of the Great Depression, Franklin Delano Roosevelt. In fact, one cannot examine the presidency of FDR without being bombarded with one sided worship of infrastructure spending and the “New Deal.”

  

  The New Deal is often credited in left-leaning literature as being the singular cure for the depression, and FDR by extension has been handed messiah status among leftists. The New Deal is supposedly proof that massive socialized federal and central bank interventions through public works programs is an economic ambrosia. So, it’s not surprising that nearly every president since the Great Depression has argued for an unprecedented infrastructure bill when faced with economic collapse. A large portion of the public on both sides of the aisle has been trained to think these programs will save us.

  Biden, in particular, has made historic stimulus spending the very first platform of his administration, and consistently cites FDR and Lyndon Johnson as patron saints of his infrastructure bill. If it worked for them, then obviously it will work for him… right?

  Actually, the New Deal wasn’t a great deal

  In reality, the public works and welfare programs of FDR in particular had very little to do with the ending of the Great Depression. In fact, the New Deal actually made the situation worse.

  Roosevelt’s own Treasury Secretary, Henry Morgenthau, lamented on May 6th, 1939 after two full terms of FDR’s presidency and stimulus programs that the New Deal was a complete failure. He stated to fellow Democrats during a session of the House Ways and Means Committee that:

  “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong… somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot!”

  High unemployment and declining living standards were an epidemic in the U.S. throughout the 1930s and well into World War II. The Census Bureau outlines the dismal state of the financial system and the U.S. consumer throughout this period in its “Historical Statistics of the United States.” By 1939 the stock market had crashed on multiple occasions, car sales imploded by 30%, business closures increased by 50%, and real estate foreclosures were still near record highs. The New Deal had achieved minimal benefits of limited scope, but not much else. For the average American, it was as if nothing had changed in a decade.

  That said, for certain major companies and big banks, the gains were incredible. Companies like General Electric, IBM, Proctor and Gamble and JP Morgan saw endless profits during the Great Depression while buying up smaller competitors for pennies on the dollar. Those companies involved in public works programs siphoned government money like a black hole while very little trickled down to American workers. All in all, the Great Depression was a windfall for the corporate elite as wealth was consolidated and centralized into fewer and fewer hands.

  So we have to ask, if the New Deal was a failure and did nothing to solve the depression problem, what did solve it? Some historians and journalists suggest the beginning of World War II and increased defense spending saved America. This is incorrect. As noted by Robert Higgs, the U.S. standard of living continued to decline throughout World War II. It was not the beginning of the war that saved America, but “After the war genuine prosperity returned for the first time since 1929.”

  How the U.S. led the world out of the war

  The U.S. was one of the only industrialized nations on the planet that had been left mostly untouched by the destruction. Because of this, all other nations had to turn to the U.S. for manufacturing during the long rebuilding process. In Europe, this process carried on well into the 1950s. The U.S. had very little competition, so much so that the U.S. dollar’s reserve status increased to the point of complete dominance. If you wanted access to manufactured goods, you had to trade with the U.S., and to trade with the U.S., you had to have a stockpile of U.S. dollars.

  What I see today is a change in the flow of global commerce – in the opposite direction from the post war era. Yes, trillions of dollars in stimulus measures have created a short term reversal of the pandemic collapse. In fact, there is much evidence to suggest the economy is overheating. Price inflation is becoming rampant in numerous sectors.

  In the meantime, U.S. Treasuries are being dumped by foreign investors and the dollar is in decline. Central banks are now dumping the dollar, decreasing their reserves to the lowest level since 1995.

  China is now the world’s largest manufacturing base, leaving very little major industry on U.S. soil. In the background, globalists are calling for a “Great Reset” of the world economy that would centralize monetary policy even further and create the foundation of a cashless society built on a digital reserve currency system.

  What’s the massive infrastructure spending really about?

  I believe, according to the evidence as well as past failures like the New Deal, that Biden’s infrastructure plans will accelerate the U.S. collapse instead of reversing it. The U.S. GDP might increase, but only because it is calculated to include almost every dime the government prints out of thin air and spends. Production of fiat money is not the same as real production within the economy.

  Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.

  Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending. You might recognize this as the recipe that created the 1981-1982 recession, the third-worst in the 20th century.

  In other words, the choice is stagflation, or deflationary depression.

  Finally, I would point out that there may also be an ulterior motive for the deluge of federal dollars into state economies through public works. Currently, Conservative states are increasingly willing to risk the consequences of returning to business as usual, regardless of federal mandates. Resistance is building against pandemic-related restrictions.

  Red states are also seeing a far superior financial recovery when compared to blue states. Blue states have sabotaged themselves with lockdowns while red states have remained more open. However, the Biden Administration is hell bent on keeping pandemic restrictions in place nationwide

  What if infrastructure spending plans are designed to trap red states into compliance with future covid mandates? What if the goal is to bribe these states with trillions in stimulus, but only if they submit to federal authority? I suspect that Biden’s public works bill is partially intended to be a blue state bailout, and money will be withheld from any conservative state that refuses to conform to lockdowns.

  Only time will tell what the true agenda is, but this much is undeniable given the facts at hand: Biden’s plan is either:

  • an act of desperation,

  • a deliberate attempt to pull the rug out from under the U.S. dollar and the economy to jump-start the globalist reset,

  • or a scheme to lock state governments into obedience over pandemic restrictions.

  

  Whatever else Biden’s “New New Deal” is, it is certainly NOT a plan for economic recovery.

  *  *  *

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  Tyler Durden
  Fri, 04/09/2021 – 23:40

• Remains Of Alien Planet Lurk Deep Within Earth's Mantle, Researchers Suggest 
  Remains Of Alien Planet Lurk Deep Within Earth’s Mantle, Researchers Suggest 

  Researchers theorize that the Moon formed when a protoplanet, called Theia, struck Earth billions of years ago. They also say the alien planet’s remains are hiding deep within Earth’s mantle.

  Researchers with Arizona State University’s (ASU) School of Earth and Space Exploration published a paper titled “Giant Impact Origin For The Large Low Shear Velocity Provinces,” which says mysterious continent-sized formations are hiding under the Pacific Ocean and Africa, are, in fact, remnants of Theia.

  The impact, approximately 4.5 billion years ago, is thought to have transformed Earth’s surface into a sea of magma and may be responsible for ejecting enough planetary debris to create the Moon. 

  

  Qian Yuan, the lead researcher behind the new report, studies geodynamics at ASU, explained that “the left-over Theia mantle materials may have sunk to the bottom of Earth’s mantle and caused the Large Low Shear Velocity Provinces (LLSVPs).”

  Yuan told Bussiness Insider the collision preserved parts of Theia’s mantel in the Earth’s mantel – this could only be due to the alien planet’s mantel is denser.

  He said those pieces are “millions of times larger than Mount Everest in terms of volume.” 

  Researchers said the LLSVPs are 1.5% and 3.5% denser than the rest of Earth’s mantle, and hotter.

  If the planet Theia was rich in iron and highly dense, Yuan’s models showed, any pieces of it that broke off when it hit Earth would have sunk deep into our planet’s mantle. There, they could have accumulated undisturbed, rather than getting mixed into the rest of the mantle.

  

  It’s also possible denser chunks of Earth’s crust sank into the mantle and joined them, contributing to the blobs’ growth over time, Yuan said.

  Figuring out what these slabs are made of is challenging. Their deepest parts are 1,800 miles under our feet, in the part of the mantle closest to Earth’s outer core. They’re 621 miles (1,000 kilometers) high and two to three times wider than they are tall. 

  But scientists have figured out that plumes of hot rock and magma from some Icelandic and Samoan volcanoes came from these blobs. By analyzing this magma’s makeup, researchers can glean insight into the composition of these mysterious buried chunks. According to a 2019 study, some elements in the volcanic plumes date back to about 4.5 billion years ago — when Theia supposedly hit Earth. – Bussiness Insider

  Yuan’s findings will soon be published in the journal Geophysical Research Letters. The research may finally offer some proof of the LLSVPs that lurk deep within the Earth and the Moon’s formation. 

  Read the report here:

  Tyler Durden
  Fri, 04/09/2021 – 23:20

• Kissinger Warns Washington: Accept New Global System Or Face A Pre-WWI Geopolitical Situation
  Kissinger Warns Washington: Accept New Global System Or Face A Pre-WWI Geopolitical Situation

  Authored by Paul Antonopoulos via GlobalResearch.ca,

  With the White House continually provoking tensions against Russia and China, the doyen of American foreign policy, Henry Kissinger, dramatically warned Washington last week to either agree to a new international system or continue pushing tensions that are leading to a situation similar to the eve of World War One.

  

  In a recent Chatham House webinar with former British Foreign Secretary Jeremy Hunt, 97-year-old Kissinger called on the U.S. to create a balance with existing global forces, adding

  “if you imagine that the world commits itself to an endless competition based on the dominance of whoever is superior at the moment, then a breakdown of the order is inevitable. And the consequences of a breakdown would be catastrophic.”

  The veteran diplomat urged the U.S. to understand that not every issue has “final solutions” and warned

  “if we don’t get to an understanding with China on that point, then we will be in a pre-World War One-type situation in which there are perennial conflicts that get solved on an immediate basis but one of them gets out of control at some point.”

  However, the idea that the U.S. should stop imposing its will on everyone else will not be easily accepted in Washington. This is attested by the sharp rhetoric and personal insults that U.S. President Joe Biden continually levels against his Russian and Chinese counterparts, Vladimir Putin and Xi Jinping.  

  High-ranking Chinese official Yang Jiechi told U.S. Secretary of State Anthony Blinken on March 18 in Alaska that “the United States does not have the qualification to say that it wants to speak to China from a position of strength.” Then, Russian Foreign Minister Sergei Lavrov and his Chinese counterpart Wang Yi boldly said days later on March 22 during their meeting in Beijing that they “jointly safeguard multilateralism, maintain the international system with the UN at its core and the international order based on international law, while firmly opposing unilateral sanctions as well as interference in other countries’ internal affairs.”

  Kissinger’s career is washed in blood when we remember his backing of Pakistan during Bangladesh’s War of Independence despite the massacre of hundreds of thousands of people and mass rape; orchestrated a military coup in Chile to remove democratically elected Allende in favor of the Pinochet dictatorship; tacitly supported Indonesia’s mass killing of hundreds of thousands of East Timorese; and, blessed Turkey’s invasion of northern Cyprus that led to 200,000 Greek refugees without a right of return – among many other things.

  However, his most recent statement about the U.S. and the international system is actually a mature proposal that would be beneficial for world peace if the Biden administration accepts his advice that the global order is changing. It is unlikely that Washington is ready to unilaterally end its hard and soft power aggression as it falsely believes it can maintain a unipolar order.

  

  It is always difficult for Great Powers to accept that the world has changed, especially when it is to their detriment. The behavior of the Biden administration, which deliberately uses threatening and inappropriate rhetoric, demonstrates that it will not rationally accept a multipolar world system, especially since Russophobia and Sinophobia are on the rise.

  Personal insults against Putin and Xi are an expression of American impotence, especially when we consider that the U.S. historically did not engage in this kind of rhetoric when it was at the zenith of its power. The U.S. is no longer the world’s sole superpower and its rivals are no longer accepting such aggression, which is exactly why the Chinese delegation that went to Alaska last month clearly stated that it does not accept any language of force.

  An additional problem for the U.S. is whether its allies will strain their relations with China and Russia, and whether they will accept being pushed into conflicts with them. There are indications that the most important European countries will resist U.S. demands. This is evidenced by the Nord Stream 2 issue where American attempts to prevent its construction are being met with resistance from important European Union countries despite the endless complaints from minnows like Lithuania and Poland.

  Robert Gates, former director of the CIA and U.S. Secretary of Defense, admitted in a recent interview with the Washington Post that sanctions against Russia do not any good for the U.S. In The National Interest, Robert Kaplan describes Russia as a “problem from hell” because it cannot be subdued. Kaplan offered reasons why it is necessary for Russia to “move away from its one-sided alliance with China” and find balance with the U.S.

  Washington’s misguided policy of aggression to maintain a unipolar world order worked in the favor of China and Russia, especially in accelerating their cooperation. The West can no longer suppress China’s economic power or Russia’s military power. Military strategists in the West are aware that the Russo-Sino cooperation cannot be compensated by anything. 

  In the end, Washington will have to resort to a strategy resembling Kissinger’s suggestion of finding equilibrium, whilst also accepting the multipolar reality that has been established.

  Tyler Durden
  Fri, 04/09/2021 – 23:00

• What Was The Vatican Searching For When They Built Secret Tunnel Under Jerusalem Church? 
  What Was The Vatican Searching For When They Built Secret Tunnel Under Jerusalem Church? 

  The Vatican has constructed a secret underground tunnel in Jerusalem that has infuriated a local preservation group who claim the tunnel resides in a sensitive area that may contain antiquities and other artifacts.  

  The Regavim Movement, a research-based think tank and lobbying group dedicated to preserving Israel’s national lands and resources, recently filed a petition with the Jerusalem District Court, demanding the city take action against the illegal underground tunnel. 

  According to the petition submitted to the Jerusalem District Court, the Regavim Movement alleges the church concealed the existence of the 100-meter long tunnel that infringes on public property in an area allegedly known for archaeological remains.

  

  The petition says the tunnel connects the Church of the Dormition on Mount Zion in the Old City of Jerusalem to “Beit Josef,” a nearby guest house. 

  “When the details began to come into focus, we demanded over and over that the Jerusalem Municipality publicize the documentation of its findings, as required by the Freedom of Information Law. We further demanded that oversight, inspection and law enforcement procedures be taken immediately, to restore the site to its previous condition either by sealing off or demolishing the tunnel,” attorneys Avi Segal and Yael Cinnamon of the Regavim Movement told The Jerusalem Post. 

  “We filed this petition only when our repeated requests to the Jerusalem Municipality were not answered,” the attorneys said.

  Naomi Kahn, director of Regavim’s International Division, told Jewish News Syndicate, “the fact that the State of Israel has not protected the antiquities that we know are there and how the digging of the tunnel has disturbed what’s there is outrageous.”

  “To dig a tunnel in such a sensitive area without any oversight, inspection or access to the public is insane,” Kahn added. “They had no right to do so, to begin with.”

  According to a statement by Regavim last year, their “investigation revealed that along the path of the tunnel, underground rooms contain ancient artifacts, and the tunnel itself encroaches to a significant extent on public property.” 

  Watch: The Church’s secret tunnel hidden by the Jerusalem Municipality

  There are many questions about why the Vatican secretly constructed a tunnel through a plot of land known for ancient artifacts. Perhaps the tunnel’s true intent is not for transportation, but rather church officials were searching for something… 

  Tyler Durden
  Fri, 04/09/2021 – 22:40

• Is 2021's Fictional Cyberattack Simulation Prepping Us For A Cyber Pandemic?
  Is 2021’s Fictional Cyberattack Simulation Prepping Us For A Cyber Pandemic?

  Authored by Robert Wheeler via The Organic Prepper blog,

  Many readers are aware of a simulation conducted by the World Economic Forum called Event 201 that preceded the COVID pandemic. Event 201 eerily described and seemed to predict the pandemic. (There was also a pandemic simulation called Clade X that preceded Covid.)

  

  What some readers may not know, however, is that the World Economic Forum conducted a similar simulation, Cyber Polygon 2020. This 2020 event also predicted a global catastrophe.

  A new cyberattack simulation, Cyber Polygon, will occur in July 2021.

  The WEF, Russia’s Sberbank, and its cybersecurity subsidiary BIZONE announced in February that a new cyberattack simulation would occur July 9, 2021. The event will simulate a supply-chain cyberattack similar to the SolarWinds attack that would “assess the cyber resilience” of the exercise participants. 

  From the Article written by Whitney Webb and Johnny Vedmore, “From Event 201 To Cyber Polygon: The WEF’s Simulation Of A Coming Cyber Pandemic” :

  The exercise comes several months after the WEF, the “international organization for public-private cooperation” that counts the world’s richest elite among its members, formally announced its movement for a Great Reset, which would involve the coordinated transition to a Fourth Industrial Revolution global economy in which human workers become increasingly irrelevant. This revolution, including its biggest proponent, WEF founder Klaus Schwab, has previously presented a major problem for WEF members and member organizations in terms of what will happen to the masses of people left unemployed by the increasing automation and digitalization in the workplace.

  New economic systems that are digitally based and either partnered with or run by central banks are a key part of the WEF’s Great Reset, and such systems would be part of the answer to controlling the masses of the recently unemployed. As others have noted, these digital monopolies, not just financial services, would allow those who control them to “turn off” a person’s money and access to services if that individual does not comply with certain laws, mandates and regulations.

  How do the event coordinators describe Cyber Polygon 2021?

  The newly updated event website, Cyber Polygon 2021, ominously warns as the world is more interconnected and global digitalization accelerates “a single vulnerable link is enough to bring down the entire system, just like the domino effect. A secure approach to digital development today will determine the future of humanity for decades to come.”

  From the World Economic Forum site:

  What is Cyber Polygon?

  Cyber Polygon is a unique cybersecurity event that combines the world’s largest technical training exercise for corporate teams and an online conference featuring senior officials from international organisations and leading corporations.

  Cyber Polygon in 2021

  This year discussions during the live-streamed conference will centre on secure development of ecosystems. With global digitalisation further accelerating and people, companies, and countries becoming ever more interconnected, security of every single element of a supply-chain is key to ensuring the sustainability of the whole system.

  During the technical exercise, participants will hone their practical skills in mitigating a targeted supply chain attack on a corporate ecosystem in real time.

  Crises seem to conveniently arise when the people in power want change.

  All this ties right into Universal Basic Income. The very popular UBI, introduced with even more vigor after the COVID 19 pandemic, has popularized consistent “stimulus payments” to survive the crisis. The idea of the UBI has been thrown around as a solution to poverty for some time, with bloggers like Daisy Luther comparing it to modern-day feudalism. With the building blocks of the technological control grid already in place, adding a UBI forms a relatively strong foundation. 

  The WEF has settled on the model of “stakeholder capitalism.” In name and theory, it appears to be an inclusive type of capitalism. However, it would essentially merge the public and private sectors, which would, as Webb and Vedmore write, create “a system much more like Mussolini’s corporatist style of fascism than anything else.” To get to that point, however, the current system must collapse. Its replacement society will be successfully marketed to the general population as being better than its predecessor.

  “When the world’s most powerful people, such as members of the WEF,” write Webb and Vedmore, “desire to make radical changes, crises conveniently emerge—whether a war, a plague, or economic collapse—that enable a “reset” of the system, which is frequently accompanied by a massive upward transfer of wealth.”

  Is there a possible warming of international relations with Russia?

  What’s also notable about the upcoming simulation is Russia’s inclusion as a leader of such an important global event.

  If there is a real cyberattack that disables and disrupts a large portion of the global financial system, who will be blamed? Is the overused Russian hacker narrative coming to an end?

  The answer to that question might be the final nail in the coffin of anything resembling a free society.

  How do we prepare for a real cyberattack?

  Many of you would probably rather not wait for a fictional simulation to tell you how to prepare for this. Here’s what you need to know about them and how to prepare for a cyber attack. Cyber attacks are a growing risk, experts say, with some even suggesting that cyber warfare will be the battleground of the future.

  It’s interesting how simulations, trial runs, and mock attacks often seem to precede actual events.

  Tyler Durden
  Fri, 04/09/2021 – 22:20

• Morning Traffic Congestion Is Returning To New York
  Morning Traffic Congestion Is Returning To New York

  Things are slowly getting back to normal in the Big Apple (or they would be, if any rich people still wanted to live there after Cuomo is done pushing their tax rate near triple digits).

  While peak congestion remains mostly unchanged across the U.S, the morning peak appears to be slowly re-emerging in New York City as commuters begin to return to offices, according to an analysis from Bloomberg.

  

  Elsewhere across North America, traffic levels remain around half of normal levels while outside the U.S., congestion levels have ticked higher across South America, in particular in Sao Paulo and Lima.

  

  It’s a different story in China, where average hourly peak congestion on a five-day rolling average basis in the major Chinese cities (Beijing, Shanghai and Guangzhou) remains close to pre-pandemic levels, with peak morning traffic in Beijing and Shanghai exceeding normal levels, while the recovery remains incomplete only in Guangzhou. At the same time, the recovery is advancing in many parts of South and South East Asia, with the re-emergence of the morning peak in many cities signaling that commuters are returning to offices.

  

  Looking at Europe, the current impact of the latest round of lockdowns across Europe is difficult to discern due to the Easter public holiday affecting normal mid-week travel patterns. As Bloomberg notes, lockdowns of varying stringency remain in force across Italy, France, the U.K., parts of Scandinavia, Iberia and Greece, although the recovery appears to be underway in Spain and Portugal.

  Tyler Durden
  Fri, 04/09/2021 – 22:00

• Canada To Censor "Hurtful" Comments About Politicians, Implement Internet Kill-Switch
  Canada To Censor “Hurtful” Comments About Politicians, Implement Internet Kill-Switch

  Authored by Mark Jeftovic via BombThrower.com,

  …but, constituents to remain fair game for abuse from party apparatchiks.

  A colleague forwarded me the text of an article from Blackrocks Reporter, which covers Canadian politics from Ottawa, our capitol.

  It’s a report on Federal Heritage Minister Steven Guibeault’s ongoing vendetta against non-conforming political speech on the internet, in which he’s calling for censorship of “hurtful” comments against politicians and implementation of an internet killswitch to facilitate it.

   

  Federal Heritage Minister Steven Guibeault

  Blackrocks is behind a paywall, permit me to quote it here:

  ‘Federal internet censors should target hurtful words against politicians, says Heritage Minister Steven Guilbeault. The Minister added pending regulations may include an internet kill switch to block websites deemed hurtful, but called it a “nuclear” option.

  “We have seen too many examples of public officials retreating from public service due to the hateful online content targeted towards themselves or even their families,” said Guilbeault.  “I have seen firsthand alongside other Canadians the damaging effects harmful content has on our families, our values and our institutions. As a dad and a stepdad to six kids, I know more can and should be done to create a safer online environment.”

  Guilbeault made his remarks in a podcast sponsored by Canada 2020, an Ottawa think tank affiliated with the Liberal Party. Legislation to censor internet content will be introduced shortly, he said.

  “I am confident we can get this adopted,” said Guilbeault. “Once the legislation is adopted, clearly creating a new body, a new regulator like that in Canada, would take some time.”’

  The same story is covered here by the Post Millienial (the rest of Canada’s “approved media”, as in the ones who received hundreds of millions in tax breaks and subsidies from the Federal Government in the run up to the last election, are not giving it a lot of airtime for some reason).

  The goal is obviously to silence non-conforming analysis

  Coincidentally or not Guilbeault has been relentlessly pursuing the recommendations of the Canada’s Broadband Telecom Legislative Review (BTLR), which I wrote about last year and tabled a petition to the House of Commons to kill it. Then the whole pandemic thing broke out, and we entered this “New Normal”.

  After BTLR published, Canada’s “approved media”  joined the chorus calling for more regulation against unlicensed news outlets.

  For a political cabinet minister to seriously push forward new rules silencing free speech directed against politicians is quite rich, having just last week been publicly attacked and mocked by a senior advisor to Premier Doug Ford (my transgression? Raising the issue of small business bankruptcies under lockdowns with my MPP).

  

  Under this plan, it will still be perfectly fine for political apparatchiks to hurl insults and ad hominem attacks at constituents raising legitimate issues with their MPPs. But under these impending new regulations against “political taunts” and even “unlicensed internet undertakings” my write up on the entire incident, or even my commentary on the proposal here, might land me afoul of The New Rules.

  (Cue up Jacobs, who will probably come barrelling in here and call me a moron because Guilbeault is Federal and he’s provincial, so I’ll save him the trouble to say: it’s all one political class)

  These are the last gasps of our political overlords

  This global, near ubiquitous ham-fisted reaction to the global pandemic has ushered us into an era of hypernormalization. That’s simply defined as when the mental fatigue and psychic stress of pretending to believe demonstrably false and often contradictory narratives begins to manifest in a kind of mass neurosis.

  Being brainwashed or coerced into accepting ideologies that have been decided by oligarchs and billionaire Sith Lords are an additional antagonizing factor.

  Sooner or later a tipping point will be reached and the public will simply abandon what they see as an increasingly non-functional system, one where the entire might of the state is arrayed against their own interests.

  When this happens it can channel into populism, deteriorate into (arguably deserved) demagoguery, or perhaps more hopefully a type of mass opt-out of the current system into the next iteration of human organization and governance.

  We’re in the early innings of an inexorable transition from the age of nation states into network , or crypto states (“crypto populism”?). How that looks is often the topic of discussion on our AxisOfEasy podcasts, it can be chilling, as in if the Network State is Facebook, or Google. Or it can be liberating, like a decentralized mosaic of Hanseatic Crypto States. That’s a choice we, as people and citizens actually can participate in, right now, today.

  But these cocooned, self-serving elites running these dilapidated nation states? They’re just rigging a game that’s increasingly irrelevant. It doesn’t really matter because their era is over.

  No matter which trajectory things pursue, one thing is certain: the next step is a cascading loss of institutional and political legitimacy, such as what happened in 1989 with the implosion of communism and the Warsaw Pact states. A year earlier, not one geo-political strategist, let alone party apparatchik would have forecasted the coming collapse. Eighteen months later, it was all over.

  I think we’re headed for a similar period over the next few years, and it’s the current leadership and the incumbent elites who brought us here.

  *  *  *

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  Tyler Durden
  Fri, 04/09/2021 – 21:40

• New Neuralink Video Purportedly Shows Monkey Playing Video Games Using Its Mind
  New Neuralink Video Purportedly Shows Monkey Playing Video Games Using Its Mind

  The man who can’t seem to keep his cars (or his recent spaceships) from spontaneously combusting now claims that his mind-machine interface company, Neuralink, can allow a monkey to play video games using only its mind.

  Neuralink released footage this week that purports to show a monkey named Pager, who is nine years old, playing video games in exchange for a banana smoothie delivered through a straw. Pager was hooked up to a Neuralink system six weeks ago, according to RT.

  The video shows links recording activity from more than 2,000 electrodes implanted in the monkey’s motor cortex. The activity is then wirelessly fed to a machine-learning algorithm, which “sensed modulations in the monkey’s neurons and allowed the system to predict intended hand movements via a mathematical model of neural activity and the corresponding joystick movements.”

  Researchers calibrated the system, the report says, by monitoring Pager’s brain waves as it manipulated a joystick. Then, they disconnected the controller without telling the monkey, who wound up playing pong using only its brain, sans the joystick.

  And what would an inch of progress be without Elon Musk taking a mile? Musk quickly took to Twitter to proclaim that Neuralink’s first product would “enable someone with paralysis to use a smartphone with their mind faster than someone using thumbs”. 

  “Later versions will be able to shunt signals from Neuralinks in brain to Neuralinks in body motor/sensory neuron clusters, thus enabling, for example, paraplegics to walk again,” Musk wrote. 

  Later versions will be able to shunt signals from Neuralinks in brain to Neuralinks in body motor/sensory neuron clusters, thus enabling, for example, paraplegics to walk again

  — Elon Musk (@elonmusk) April 9, 2021

  https://platform.twitter.com/widgets.js

  This prompted some critics to inconveniently point out some of Musk’s past predictions, and timelines.

  Hmmm… what happened to this claim?https://t.co/SwcK802goe

  — Gordon Johnson (@GordonJohnson19) April 9, 2021

  https://platform.twitter.com/widgets.js

  We think it must be capital raising time for Neuralink. Either way, it’s starting to smell like the Neuralink SPAC – or perhaps the Neuralink/SpaceX merger, or something equally as heinous – is just right around the corner.

  Tyler Durden
  Fri, 04/09/2021 – 21:20

• Section 230 Isn't The Problem, Payment Networks Are
  Section 230 Isn’t The Problem, Payment Networks Are

  Authored by ‘Josh’ via MadAtTheInternet.com,

  Section 230 of the Communications Decency Act is one of the most important pieces of legislation in American history.  Passed into law in 1996, it has overseen the entirety of the consumer Internet’s development.  Its premise is simple: Internet service providers and platform operators are not responsible for civil damages that result from user-generated content that they host or manage.  These protections are why the United States is the first choice for hosting any digital service.  Without them, the entire world would suffer a less free Internet.

  I have operated a controversial website called the Kiwi Farms for 8 years and was featured in ZeroHedge in 2019 after telling New Zealand police I would not be surrendering my user’s information to them.  My website thrives and doubles in size each year, primarily thanks to Section 230. I can allow my users to say almost anything they want without having to worry about being sued for what they say.  Without these essential protections, I would not be able to host in the United States.

  Unfortunately, Section 230 has been defamed as the reason Facebook, Twitter, Google, et al behave the way they do.  This is not true.  These businesses censor because they have personal motivations to do so.  More importantly, they have financial motivations to do so.

  I hope to convince a reasonable person that:

  1. Payment networks must be regulated to give fair access.

  2. Section 230 is essential and modifying it harms online speech.

  3. Big tech does not need Section 230, but you do.

  4. You should learn how to use cryptocurrencies right now.

  

  The payment networks are more powerful than big tech. 

  Without the consent of all four major payment networks to stay in business, even mighty tech giants are vulnerable to lose billions of dollars in revenue.  The various agreements enforced by the four major payment networks (MasterCard, Visa, Amex, and Discover) impose rules that any business wanting to exist in the digital economy must obey. Not all these rules are written.

  The big payment networks like to stay out of the public eye.  They avoid attention by using blacklists which they claim only banks can add to, but which they manage and share. You also never deal with the payment network directly. An eCommerce site passes your credit card information to a “payment gateway”, which is plugged into a “payment processor”, and that payment processor handles communications with the payment networks. Each of these are usually different companies. When you get banned from processing payments, you are told so by your payment gateway or payment processor, but the decision can come from much higher up. If it were, you’d be lucky to find out.

  Consider a company like Patreon. They are an online crowdfunding service which handles donations from many supporters to many online content creators. Patreon has its own rules, uses Stripe as a payment gateway and payment processor, agrees to Stripe’s terms of service, and then Stripe coordinates with all major payment networks which each have their own set of agreements. That means every creator on Patreon must obey six different sets of rules. If the gateway were its own company, it would be seven. It is no wonder so many people get banned, as only the most tepid and inoffensive content creators could hope to meet so many different standards!

  Patreon must keep Stripe happy to stay in business, and Stripe must keep all four payment networks happy to stay in business.  If any one of MasterCard, Visa, Amex, or Discover pass a rule, then it affects the entire downstream ecosystem.  If Discover (5% of the market) says an industry or behavior is prohibited, then Stripe must enforce that rule on all the merchants on their service (even merchants who do not process Discover).  If Discover were to cut ties with Stripe, then Stripe would lose at least 5% of their transactions over night and any merchants who do want to process Discover cards.  That is a large and dramatic blow to any company operating on small margins.

  I do not claim it is MasterCard’s fault that Twitter banned Trump.  I am sure Twitter makes many stupid decisions all on its own.  The problem is that these rules—how they are enforced, the secrecy in which they are enforced, and unappealable finality of these decisions—stifle competition.  Startups like Gab quickly find themselves told they are not allowed to make money. This problem has never existed before on the scale that it does now.

  This phenomenon transcends the type of startup. All alt-tech is trodden upon equally. Patreon competitor New Project 2 was first banned from a payment processor at the demand of Discover, then after finding a new payment processor was put on MATCH (the MasterCard blocklist), prohibiting the company from ever finding another payment processor.  If Dick Masterson (the owner of NP2) made a new company to try and get around MATCH for the purpose of continuing NP2, he would very likely find his person on that blocklist directly, ending all his businesses at once.

  These blocklists, and the risk management factors which decide who goes on them, are “trade secrets” and you cannot even sue to figure out why you were added to them.  New Project 2 was blacklisted for “Violation of Standards”, which prohibits it from even using so-called high-risk processors. Nobody knows what “Violation of Standards” means. Dick only found some details of New Project 2’s blacklisting because he called the banks and annoyed the right people for days until they reluctantly admitted who was actually at fault.  Payment networks claim they do not add merchants to the blacklists, and that only partner banks can, but they will call these banks and tell them to do it on their behalf, and the banks are not in any position to refuse.

  PayPal has not been mentioned so far, but rest assured they are one of the most egregious and will drop you first.  BitChute, a video platform competing with YouTube, was banned from PayPal.  ZeroHedge itself is banned from using PayPal.  To this day, because of my association with the Kiwi Farms, I cannot use the Uber app to get a taxi because Uber uses PayPal to process credit cards and I am banned from PayPal.

  Before we regulate the Internet, why don’t we try to regulate the payment networks? 

  Give the market a fair chance at competing with tech giants by enforcing fair access to credit and debit card processing!

  The Office of the Comptroller of Currency proposed new regulation which would require banks (and the services they run, including payment networks) to stop industry blacklisting and require specific examples of risk to ban a merchant from processing cards.  It was called Fair Access to Financial Services (OCC-2020-0042-0001).

  These “fair access” rules were finalized on January 14th, 2021.  They were set to take effect on April 1st.  Placing this on April Fool’s Day was a bit too prescient, because the Chairman immediately resigned after passing this rule, and the fair access rule was formally put on an indefinite pause on January 28th, 2021 – one week after Biden assumed office.

  This rule was politicized as a way for Republicans to force poor, innocent multinational trillion dollar banking institutions to do business with ‘evil’ industries like oil drilling and the NRA.  The Chairman of the OCC made note that it should be an act of congress to regulate those industries, not unilaterally enforced by nameless risk management committees behind closed doors.

  It is unlikely that payment network regulation will find bipartisan support.  The payment networks do a good job of picking their targets.  Controversial but left-leaning organizations like Nation of Islam appear to have no issue processing cards, despite their virulent antisemitism rivaling anything found on Gab.  Perhaps if Planned Parenthood suddenly needed cash upfront to perform abortions things would change.  Until then, free speech will be clustered alongside weapons and Alaskan oil prospecting as an industry that is safe to punch down at.

  So, if bankers are above regulation for now, why not regulate social media?

  We have already amended Section 230 and it sucked. 

  There are holes poked into Section 230 protections already.  When Section 230 was first passed in 1996, Congress effectively legalized piracy.  Platforms were immunized even from copyright infringement damages.  So, if pirates could stay anonymous, there was no one to sue for distributing copies of movies.

  To patch the piracy loophole, in 1998, we passed the DMCA.  This act created the process for the copyright takedown system that is infamous on websites like YouTube.  Rights Holders can now take down copyrighted content and sue the services directly if they refuse to comply. Unfortunately, the process created is so sloppy and awful it is a continuous nightmare for a host like me (and everyone on YouTube) to deal with.

  For one, there is no recourse for flagrant or malicious DMCA takedowns.  There is no requirement that the person sending the DMCA prove they own the copyright, to have a copyright ID, to be an attorney, or anything to that effect.  I routinely receive copyright complaints that I must take seriously for content they don’t even own.  OnlyFans (a Grand Cayman company) makes it clear in their Terms of Service that they do not own the content they host. Despite that, OnlyFans routinely sends me DMCA takedown notices for their 3rd party content through a man out of California who is not an attorney.  This is a total farce, and there is nothing I can do.  I still must reply with a counter notice, but they never take it to court and I never even hear back.  I have no legal recourse against this abuse.

  This will be everything online if further loopholes were carved into Section 230.  Imagine if defamation was handled the same way the copyright system is.  Random trolls could issue takedowns for your Tweets and Facebook posts. You would have to send a legal counter notice with your real name and address to the troll to reinstate your messages.  There would be no validations in place.  Your speech would be at the mercy of the whims of insane people online.

  In this environment where platforms could be held liable for things said on their websites, only the richest of them could afford survival.  I am currently dealing with two lawsuits.  They are completely baseless, insane ramblings from insane people, but they will still cost a lot of money to deal with.  There is no way to get fees from them because they have nothing to take. Without Section 230, I would lose a layer of protection enabling me to deal with these lawsuits for much less than it would if we had to take it to trial.  It would destroy the site, especially since I cannot charge cards normally to generate consistent revenue to fund my defenses with.

  President Trump and people in general seem desperate just for revenge.  The rabble directed towards Section 230 is out of anger.  “If only this blow were delivered and 230 were repealed,” they think, “Twitter would be plunged into financial ruin overnight.”  Maybe a Samson Option is what we need?

  Unfortunately, it is not so simple.  Twitter would adapt and become more censorious to reduce its civil liabilities.  All US search engines would have their results curated by anyone willing to complain about defamation—including, and perhaps especially, by public figures with something to hide.  The smaller and less profitable sites hosted out of the US (Gab, Parler, 4chan, 8kun, Kiwi Farms, Encyclopedia Dramatica, thousands of small, federated services and communities) would either be destroyed outright, forced go private, or driven out of the United States. It would be a total disaster for the little guys.

  Jack Posobiec made a comment recently that Justice Clarence Thomas had ruled Section 230 was unconstitutional.  This is not true.  The opinion he cited as ‘sauce’ was not case law, but rather an opinion in the strictest sense.  Thomas did not even claim Section 230 was unconstitutional.  This misinformation was seen hundreds of thousands of times and further defamed the public perception of a law we rely on to even conduct these conversations about Section 230 online.

  So, if we can’t regulate the banks and Section 230 is actually good, what can we do?  

  What Clarence Thomas actually suggested was that we might have to regulate the supermassive tech companies as ‘common carriers’ or utilities.  Regulating only the largest social media networks could work.  You can either be a monopoly, or you can be unregulated, you cannot be both.  I maintain that regulating payment networks first would be ideal, but that will not happen.

  There is some hope that FedNow, an atrociously named US answer to SEPA, could offer some relief to this payment network bottleneck on speech. I am not optimistic for it, but it is good for more people to know it is supposedly in development.

  Cryptocurrencies bypass the payment network bottleneck now. 

  The more people who know how to transact in cryptocurrency, the freer the Internet will be. Sites like buybitcoinworldwide.com (not an affiliate url) contain simple guides on how to get into the ecosystem regardless of your country.  You do not have to invest any money in. Just learn how crypto works, how to get it, and how to send it. That knowledge cannot be taken away from you—and it might prove useful, sooner rather than later.

  Tyler Durden
  Fri, 04/09/2021 – 21:00

• Top Carbon-Credit-Seller Launches Internal Probe After Selling "Worthless" Offsets To JPMorgan, Disney
  Top Carbon-Credit-Seller Launches Internal Probe After Selling “Worthless” Offsets To JPMorgan, Disney

  Back in December, Bloomberg published a sweeping expose that raised serious questions about the ESG investing craze sweeping the world. In the piece, Bloomberg detailed how the Nature Conservancy, the world’s biggest environmental group and a prominent seller of carbon offsets, had sold “worthless” credits to JPMorgan, Disney and BlackRock as the corporations sought to finance the protection of carbon-absorbing forest land to absolve them of their sins tied to fossil fuel usage.

  Carbon credits and so-called “green” bonds are some of the most popular ESG-focused products that are being purchased by corporations, or ESG investment funds. But as Bill Blain pointed out in his Morning Porridge a couple of weeks back, it looks like the ESG craze is already becoming too ‘woke’ for its own good, as companies and institutional investors are chiefly concerned with virtue signaling, and less concerned with whether the products they’re buying are actually making a difference in the fight against climate change.

  

  Fast forward to Monday, and Bloomberg is reporting that the Nature Conservancy is launching an investigation into its procedures for selling carbon credits to try and address the criticisms raised by Bloomberg.

  The self-examination follows a Bloomberg Green investigation last year that found the world’s largest environmental group taking credit for preserving trees in no danger of destruction. The internal review is a sign that it’s at least questioning some practices that have become widespread in the environmental world, and could carry implications for the broader market for carbon credits.

  While the Nature Conservancy declined to answer specific questions about the review, it said in a statement that it aims to meet the highest standards with its carbon projects and that the inquiry will be led by scientists and a “team of experts with deep project knowledge.”

  Selling credits for well-protected trees potentially undermines the sustainability efforts of some of the world’s biggest companies. Each carbon offset is supposed to represent the reduction of one ton of planet-warming emissions that would have otherwise spewed into the atmosphere without intervention. Around the world, a wide variety of offset projects do everything from protect mangrove forests to destroy heat-trapping gases from landfills and coal mines. But offset payments channeled to already safe ecosystems don’t fundamentally change the amount of carbon dioxide in the atmosphere.

  Considering the investing public’s growing interest in ESG, with talk of an ESG boom driving EV stocks higher (while companies like Deliveroo flop on concerns about governance issues and the outlook for more restrictive labor laws for “gig economy” firms), the details about the market for carbon offsets aren’t well understood. As Bloomberg explains, every carbon offset project is measured against a “baseline scenario”, an estimate of what would have happened if preservation efforts weren’t undertaken. When the project involves a forest, the manager of the project calculates the difference between the existing ‘preserved’ trees, and the “baseline scenario”, and uses that to determine the amount of carbon credits that can be sold.

  Since there’s virtually no oversight or review of these calculations by a third party, carbon-credit producers have carte blanche to make up the rules as they go along. Project developers can make unlikely claims about the huge numbers of well-protected trees that were supposed to be cut down, and in that way produce a surfeit of credits.

  In this case, the Conservancy claims the forest land it protects would have been aggressively harvested if it weren’t for carbon payments. But while this allows the nonprofit to earn more money by selling more credits, those credits aren’t actually offsetting pollution. “In a sense, you’re giving a polluter a license to emit a very large quantity of pollution based on these things,” says Charles Canham, a forest ecologist at the Cary Institute of Ecosystem Studies and a longtime board member of a local chapter of the Conservancy who has acted as a whistleblower, repeatedly and publicly criticizing the Conservancy’s tactics, telling BBG  that “the way the Nature Conservancy has gone about this is unconscionable.”

  For its part, the Conservancy claims its projects have been vetted by third parties and comply with nonprofit registries that supervise offsets. “As our understanding of climate change science and policy evolves, changes, and grows, we strive to ensure our projects do the same so we can achieve our goals for a low-carbon future,” the group said.

  Since megacorps like Amazon, Google-owner Alphabet and Microsoft (along with some of the West’s biggest banks, like JP Morgan, have vowed to achieve “net zero” emissions within a few decades. To accomplish this, carbon credits will be essential (because not even the most dedicated uranium bull expects the US to go all-in on nuclear power in the foreseeable future). In 2020, carbon offset sales increased by roughly one-third vs. the prior year.

  Carbon offsets have become an increasingly popular method way for corporations looking to reduce their emissions, as some aim to achieve “net zero” emissions in the not-too-distant future.

  In 2020, companies purchased more than 93 million carbon credits, equivalent to the pollution from 20 million cars in a year. That’s a 33% increase over 2019, according to clean-energy research firm BloombergNEF. The market is poised to grow sharply in the coming years as heavy emitters such as Royal Dutch Shell Plc, Delta Air Lines Inc., and JetBlue Airways have vowed to negate pollution by acquiring more carbon offsets. Mark Carney, the former Bank of England governor who is an organizer of this year’s COP26 climate talks in Glasgow, Scotland, has said that the global market for carbon offsets can be expected to grow to $100 billion in the decades ahead.

  But the biggest problem facing governments, regulators etc. seeking to ensure carbon credits have the intended environmental impact is this: they must ensure that the activities that carbon projects take credit for weren’t already occurring. The biggest sin committed by the Conservancy is it essentially sells too many credits backed by the same patches of “preserved” forestland – although the organization has protected more than 125M acres since it was founded 70 years ago, before carbon credits were even a twinkle in the eye of environmental activists.

  “Carbon offsets are not a donation to a nonprofit group, it’s a purchase of a product,” says Eli Mitchell-Larson, a University of Oxford climate researcher and co-author of the Oxford Offsetting Principles, which provides guidance for how offsets should be used by companies with zero-emission targets. “The purchaser is getting the ability to say they’ve neutralized one ton of their emissions.”

  While Mitchell-Larson applauds conservation groups for protecting and restoring lands, he says they hinder the world’s response to climate change when they sell offsets on land that was going to be preserved anyway. “One of my frustrations is the slowness of some conservation groups to take seriously the credibility of carbon claims they are making,” he says.

  To be sure, the Conservancy isn’t the only well-known environmental group selling carbon credits against land that was already set to be preserved. Bloomberg cited some examples of the National Audubon Society using similar tactics.

  The Conservancy isn’t the only environmental group selling offsets from acreage it didn’t intend to harvest. For instance, in the swampy tidal region of South Carolina, the National Audubon Society has been preserving an ancient forest since 1970. Some of the towering cypress trees have stood for more than 1,000 years. On its website for the sanctuary, known as Beidler Forest, Audubon describes a “pristine ecosystem untouched for millennia.”

  In 2013, Audubon began selling carbon credits from this natural sanctuary, with the project’s documents describing a rapacious baseline scenario of “clearcuts and thins.” The majority of its trees would have been felled within 25 years in the absence of carbon payments, stated the documents.

  In reality, nothing of the sort would have happened, according to Norman Brunswig, who helped launch the carbon project and managed the sanctuary for Audubon for decades before retiring a few years ago. “We never intended to cut that forest,” he says.

  Retrofitting American infrastructure with more emissions-friendly materials and technologies is a major theme from President Biden’s “American Jobs Plan”. Biden and his team have set a goal for the US to reach “net zero” emissions by 2050. Part of the plan will harness the largess of the federal budget is to build charging ports for electric vehicles, electric heat pumps for residential heating and advanced nuclear reactors. But there’s little doubt that, for most companies and governments, achieving “net zero” will be impossible without the purchase of offsetting credits. Expect scrutiny of the space to intensify in the coming years.

  Tyler Durden
  Fri, 04/09/2021 – 20:40

• Japan Comes Clean, Admits Dumping Fukushima Radioactive Water In Pacific Ocean Is Now "Unavoidable"
  Japan Comes Clean, Admits Dumping Fukushima Radioactive Water In Pacific Ocean Is Now “Unavoidable”

  Authored by Elias Marat via TheMindUnleashed.com,

  While Japan last month marked the 10th anniversary of the devastating 2011 Tohoku earthquake and tsunami with solemn ceremonies, the government has also been stressing the successes of its recovery efforts in the country’s northeast.

  

  In truth, however, the country is still coping with the aftermath of the Fukushima Daiichi disaster, which has already cost Japan trillions of yen and whose exclusion zone will require up to 40 more years to fully rehabilitate.

  And with contaminated water continuing to build up at the ruined Fukushima Daiichi Nuclear Power Plant, Prime Minister Yoshihide Suga says that the government must finally begin dumping it into the Pacific Ocean.

  With nuclear waste and fuel rods still contaminating the area, over one million tons of radioactive waste water continue to seep from the facility, according to The Japan Times, forcing authorities into what Suga describes as the “unavoidable” position of having to dump the water.

  Officials claim that the water would be purified to the maximum extent possible, but environmentalist groups like Greenpeace warn that the water contains hazardous material that could damage human DNA and the health of marine life.

  #Fukushima water release could change human DNA, Greenpeace warns: a “major contributor to collective human radiation dose and has the potential to damage human DNA.” https://t.co/S0864I4Vns

  — Jasper Teulings (@Patagorda) October 27, 2020

  https://platform.twitter.com/widgets.js

  Fishermen also fear that consumers will refuse to buy fish caught in contaminated waters, worsening their plight amid a restriction of imports from Fukushima prefecture imposed by 15 countries and regions.

  Regardless, authorities argue they must deal with the cards that have been dealt.

  “What to do with the [treated] water is a task that the government can no longer put off without setting a policy,” Japanese trade minister Hiroshi Kajiyama said on Wednesday.

  Suga is expected to formally decide on the course of action by next Tuesday. If he proceeds, authorities will dilute tritium to 2.5 percent of the maximum concentration allowed by the country before it is dumped.

  But while Japanese officials say that the water will be safe, it remains an open question whether people will trust their word.

  Tyler Durden
  Fri, 04/09/2021 – 20:20

• Melvin Capital Down Another 7% In March, Brings Q1 Loss To 49%
  Melvin Capital Down Another 7% In March, Brings Q1 Loss To 49%

  Just two questions: i) is Melvin Capital still short Gamestop and ii) how does it still have any clients left?

  That’s what we would like answered first and foremost after Bloomberg just reported that Gabe Plotkin’s notorious Melvin Capital Management, best known for being blown up by a bunch of WallStreetBet redittors over its Gamestop short, and which lost billions of dollars requiring a $2.75BN bailout from Ken Griffin and Steve Cohen, ended the first quarter down 49% after dropping another 7% last month. 

  The sharp drop – which “mysteriously” coincided with a sharp surge in Gamestop stock in March – reversed a gain of almost 22% in February – when Gamestop plunged after its historic January surge, which caused Melvin to lose a record 53% of AUM.

  

  Another firm which was also caught in the cross hairs of the GameStop saga – Maplelane Capital – which we first profiled here, is reportedly “starting to recover” after losing 45% in January. The fund rose 6.5% in February and 2.1% in March, according to people familiar with the matter, and ended the first quarter with a loss of 39.5%.

  The fund benefited from its long and short wagers on technology and consumer-focused companies, a Bloomberg source said. It also appears that unlike some others who claimed the opposite, Maplelane actually did close out its Gamestop short.

  Still, after such historic and furious plunges, it’s amazing that anyone is still an LP in either of the two funds, which will take many months if not years of high aggressive – and flawless – performance to recover the January losses. In fact, it’s far more likely that the two funds will lose everything as they aggressively double down with Archegos-style leverage to recover their record losses.

  As for our first question of whether Melvin is still short GME, we will have to wait until mid-April when its 13F hits. Assuming the fund is still around by then and hasn’t been converted into a Credit Suisse-special family office.

  So how did everyone else do? Well, Senvest – which orchestrated the entire Gamestop squeeze and made a killing on it – remains the top performing hedge fund according to HSBC, with a bunch of familiar names rounding out the top 20 including Odey Europe, Maverick, Glenview, Mudrick and the perfectly titled Tulip Trend fund. On the other side, there are quite a few systematic hedge funds in addition to the public-facing Renaissance fund, RIEF B, which continues to suck unlike its “friends and family only” cousin, Medallion.

  

   

  Tyler Durden
  Fri, 04/09/2021 – 20:00

• Into The Swarm #1: Archegos In The Coal Mine
  Into The Swarm #1: Archegos In The Coal Mine

  Submitted by Romain Bocher of The Swarm Blog

  While the S&P 500 keeps rallying and hitting new records, the spectacular collapse of Archegos family office brought a sharp reminder of the consequences of excessive leverage in the financial system.

  

  As always, Warren Buffet had already warned us: “Having a large amount of leverage is like driving a car with a dagger on the steering wheel pointed at your heart. If you do that, you will be a better driver. There will be fewer accidents but when they happen, they will be fatal.”

  I do not know what the worst part of that story is. Whether it is the fact that Bill Hwang had a criminal record. Or that Archegos used the same collateral to enter contracts with up to seven banks boosting leverage as high as 500%. Or if it is Nomura’s reaction, saying basically that whatever happens central banks will rescue banks if needed. Nothing seems to matter anymore for a system accustomed to perpetual bailouts since the LTCM failure.

  But beyond those ethical considerations, the Archegos collapse has taught a few interesting things about US capital markets.

  The first lesson for investors is the fact that years of lose monetary policy have laid the ground for moral hazard and very risky bets, as evidenced by the  record of margin debt. And the higher the leverage ratio, the bigger the vulnerability to unexpected moves.

  

  The subprime crisis was a perfect illustration of that issue, as it “only” took a 11% drop of US home prices and a 1.5 expansion of the delinquency rate on mortgages to funnel the global banking industry toward the cliff in September 2008. In a highly leveraged system, you do not necessarily need a violent crash to generate significant losses and trigger a bigger crisis.

  Using debt to go all-in on stocks on like ViacomCBS which had already started to move vertically was not the smartest thing to do in my opinion, as such technical patterns often signal imminent ruptures. It is hard to believe that professionals who managed those amounts of money got caught in such an absurd situation, but I do think that other players will exhibit similar losses sooner or later, as most participants have caved to the mania and have assumed that equities cannot go down anymore.

  More and more participants display “Gaussian-like behavior,” meaning that they tend to unconsciously underestimate the probability of occurrence of large volatility spikes (i.e. significant drawdowns). And I am not only talking about retail investors. The whole market has turned extremely bullish, and everyone believes that “the Fed has our backs” and that there will always be someone to bid if necessary.

  That brings us to the second lesson of the Archegos collapse, which is how illiquid can assets suddenly become when a big seller comes out.

  The concept of liquidity can be very misleading, as past trading volume is no guarantee of future liquidity. Indeed, the convexity of the order book means that if the selling flows become too big, then there may be no bid unless the price adjusts significantly to the downside (I recommend the following thread on Twitter by @FadingRallies).

  

  In fact, there is a nonlinear and negative relationship between depth and instantaneous volatility, meaning that the liquidity of equities is likely to shrink whenever the VIX spikes. Therefore, the idea that there will always be someone to bid and to buy the dip, even on large cap shares, can be proven wrong.

  As the S&P 500 is trading above 4k, it is important to bear in mind that any unexpected situation leading to forced selling could trigger a problematic situation. And even though people tend to naturally display “Gaussian-like behavior,” everyone should remember that volatility spikes are distributed following some form of power law (see my paper on that topic), meaning that extreme fat-tail events occur more frequently than what the general public thinks.

  And in my opinion, there is not much the Fed can do about it.

  Red Queens Narratives

  I often say that financial markets are all about intersubjective narratives. Thus, I have created this second section to analyze the narratives at play.

  The past months have been characterized by a once-in-a-lifetime buying frenzy, with millions of retail investors entering the market as wannabee gurus like Dave Portnoy kept saying that “stocks ony go up.” The corollary of this phenomenon has been the “you only live once” philosophy (YOLO), justifying any risky trade by the idea that nothing really matters anymore on markets.

  For months, we have seen people chasing stocks like Tesla, Virgin Galactic, Zoom, or Peloton, whatever the price. Then, we have seen them rushing to purchase out-of-the-money call options to maximize their profits, leading to the so-called “gamma squeeze.”

  However, while everyone expected Americans to massively spend their second check on the market, the YOLO trade has started to exhibit signs of weakness recently. And as already mentioned in a previous post, the launch of the Buzz ETF may have coincided with the top of the retail mania (see Whale Beaching).

  But beyond the lower volume on equity call options, it is worth highlighting the recent disappointing performance of indices tracking IPOs or SPACs (see charts below).

  

  The thing is, there has been a record level of equity issues, and most of them were YOLO names. And not only on the stock market, as there have also been record amounts issued on the convertible bonds segment, most of the issuers being companies like Beyond Meat, Airbnb, Peloton, etc.

  After all, maybe the market is reaching its digestive limits.

  Even if the Nasdaq managed to bounce back to mid-February levels, the recent moves have been characterized by negative internals, meaning that US tech indices have been mainly driven by FAANGs, while many YOLO stocks have struggled to recapture the powerful trend of the past months.

  Does it mean that the party is over? I have learned to be careful about calling the top, but I do believe that a bubble is all about a narrative, and thus when the dominant narrative starts to weaken, it is time to seriously question the validity of the bull thesis.

  Tyler Durden
  Fri, 04/09/2021 – 19:40

• Biden's Border Czar Abruptly Quits Despite 'No Crisis'
  Biden’s Border Czar Abruptly Quits Despite ‘No Crisis’

  While the Biden-Harris administration continues to insist there’s ‘no border crisis‘ (as they take over seven hotels near the US-Mexico border), the departure of ‘Border Czar’ Roberta Jacobson, suggests otherwise.

  

  Jacobson, a former US ambassador to Mexico who criticized the White House for sending ‘mixed messages‘ to asylum seekers over whether they should head for the border (which Biden absolutely implied during the 2020 election), is stepping down after less than three months on the job.

  Suggesting her services were no longer needed (as ICE commandeers seven border-area hotels because government facilities have run out of space), National Security Adviser Jake Sullivan said on Friday that Jacobson’s departure was “consistent with her commitment at the outset to serve in the Administration’s first 100 days,” according to the New York Post.

  The move comes as the Biden administration is reportedly considering sending cash payments to Central Americans in a bid to prevent them from making the trek north and as Vice President Kamala Harris, tapped by Biden to handle the crisis, still has yet to visit the border. 

  Meanwhile, migrant parents already in the United States say they are not being given regular — if any — updates about the location or well-being of their children in federal custody. And it’s reportedly costing US taxpayers more than $60 million a week to care for 16,500 unaccompanied migrant teenagers and children now in federally run shelters. -NY Post

  Despite thousands of migrant children sitting in US Border Patrol detention facilities – White House officials have maintained that there’s no crisis – because to do so would mean Biden sparked the crisis when he presented himself as an immigrant-friendly antithesis to President Trump – who he now blames for the border surge.

  Biden’s Press Secretary Jen Psaki can’t name any “numerical” or “tangible” goal or measure that the Biden Administration has in dealing with the border crisishttps://t.co/VVMfLCBVsg pic.twitter.com/6ftE9rZu9P

  — RNC Research (@RNCResearch) April 7, 2021

  https://platform.twitter.com/widgets.js

  Last month White House press secretary Jen Psaki accidentally referred to the “crisis at the border,” only to correct herself when pressed – calling them “challenges on the border.”

  Tyler Durden
  Fri, 04/09/2021 – 19:20

• The Two Faces Of Joe Biden: Taibbi
  The Two Faces Of Joe Biden: Taibbi

  Authored by Matt Taibbi via TK News,

  On April Fool’s Day, CNN ran an “analysis” of Joe Biden’s presidency:

  Will JRB take his place alongside FDR and LBJ?

  CNN explained “JRB” had just unveiled a $2 trillion infrastructure plan “to boost ordinary working Americans rather than the wealthy,” a program that together with his $1.9 trillion Covid rescue doubles “as a bid to lift millions of Americans out of poverty.”

  

  The news is like high school. One day, one kid comes in wearing Dior sneakers and Nike X Ambush pants, and two days later, that’s all you see in the halls. The “Biden-as-FDR” stories raced around News High, with headlines like “With nods to FDR, JFK and LBJ, Biden goes big on infrastructure plan” (Yahoo!) and “Can Biden achieve an FDR-style presidency? A historian sees surprising parallels” (Washington Post). Even the New Yorker’s naysaying take, “Is Biden Really the Second Coming of F.D.R. and L.B.J.?” read at first glance like an affirmation.

  That this high-flown language came on the heels of Biden’s people whispering F.D.R. comparisons in the ears of reporters for weeks, and Biden himself calling his plan “a once-in-a-generation investment in America,” seemed not to bother anyone. We live in a time when a president can be said to have “sharply cut poverty” the moment he signs a relief bill, so why not say, as CNN editorialists Stephen Collison and Caitlin Hu did, that this new bill’s passage would immediately allow Biden to “lay claim to a spot in the Democratic pantheon alongside Franklin Roosevelt and Lyndon Johnson?”

  This would only be natural, they said, since “Scranton Joe” has long despaired over the silver spoon inequities of Donald Trump’s trickle-down economy:

  The President complained as he unveiled his plan in Pittsburgh — the kind of gritty blue-collar city he loves — that the top 1% saw their wealth rise by $4 trillion during the pandemic while millions of Americans lost jobs. “Just goes to show you how distorted and unfair our economy has become,” Biden said. “Wasn’t always this way. Well, it’s time to change that.”

  Left unmentioned was that the same gritty, blue-collar president oversaw the TARP bailout, which resulted in a similar Trumpian windfall for the 1%. The richest saw their share of America’s wealth increase from 30% in 2010 to 39% in 2016. Median household net worth fell 34% from a peak in 2007 to the end of the Obama-Biden presidency, while banks in 2009 had the best year they would have until 2020, that “unfair” bailout year Biden complained about.

  Pundits have long been working on revising that history. By last summer, the Atlantic was writing this about Biden’s management of the other bailout:

  Critics on the left faulted him and Obama for not making the stimulus package bigger (though keeping it below $1 trillion was the price of winning necessary Republican votes for its passage in the Senate).

  That’s just not true. Certainly, Republicans would have hammered Obama for a stimulus of any size, but Obama officials decided on those levels on their own. We’ve known this since 2012, when the New Yorker published a piece outing the fact that Larry Summers advised the incoming president to prioritize deficit reduction over stimulus. You can read the 57-page secret Summers memo here.

  With a partisan divide wedded to a hyper-concentrated landscape, commercial media companies can now sell almost any narrative they want. They can disappear the past with relative ease, and the present can be pushed whichever way a handful of key decision-makers thinks will sell best with audiences.

  In the case of Biden, we’ve seen in the first few months that the upscale, cosmopolitan target audiences of outlets like CNN, the New York Times, and the Washington Post want to believe they’re living through a “radical,” “transformative” presidency, the political antidote to the Trump years. The same crowd of West Wing power-tweeters was leading the charge against “purity” in politics about eight minutes ago.

  In fact, in the 2019-2020 primary season, Bernie Sanders was regularly lambasted by the same blue-leaning press outlets for trying to re-imagine F.D.R. through programs with names like the “Green New Deal.” Proposal after proposal that had been directly inspired by F.D.R. was described as too expensive, unrealistic, or a political non-starter heading into a general election.

  Now that the real version of that brand of politics has been safely eliminated, a new PR campaign is stressing that Democrats did elect F.D.R. after all. Moreover, a legend is being built that crime-bill signing, PATRIOT-Act inspiring, Iraq-war-humping Joe Biden wanted all along to be a radical progressive, but was held back by the intransigence of the evil Republicans. Is that even remotely true?

  Observe, for instance, the hilarious Ezra Klein editorial that just ran in the New York Times, called “Four Ways to Look at the Radicalism of Joe Biden” (someone actually wrote that headline!):

  Before Biden, Democratic presidents designed policy with one eye on attracting Republican votes, or at least mollifying Republican critics. That’s why a third of the 2009 stimulus was made up of tax cuts, why the Affordable Care Act was built atop the Romneycare framework, why President Bill Clinton’s first budget included sharp spending cuts…

  Over the past decade, congressional Republicans slowly but completely disabused Democrats of these hopes. The long campaign against the ideological compromise that was the Affordable Care Act is central here…

  The result is that Obama, Biden, the key political strategists who advise Biden and almost the entire Democratic congressional caucus simply stopped believing Republicans would ever vote for major Democratic bills. 

  Question for Ezra: did Obama also accelerate the drone program, expand the surveillance state, and abandon enforcement of white-collar crime to a degree that made John Ashcroft look like Eliot Ness, in a similar effort to reach across the aisle? Or were those Executive Branch behaviors just expressions of unrequited love?

  Obama as a presidential candidate in 2008 contrasted himself with Hillary Clinton by insisting he would be the guy to stop kowtowing to special interests. On health care, he was incredibly specific: he would green-light drug re-importation from Canada and allow Medicare to negotiate bulk pharmaceutical prices, insisting also he was a “proponent” of single-payer.

  Obama went so far as to do an ad blasting former Louisiana congressman Billy Tauzin, who went from helping write the ban on Medicare bargaining to going to “work for the pharmaceutical industry making two million dollars a year” at the lobbying group PhRMA.

  “Imagine that,” said Obama. “That’s an example of the same old game‐​playing in Washington. I don’t want to learn how to play the game better. I want to put an end to the game‐​playing.”

  The year after this ad ran, Obama was meeting with that same Billy Tauzin in, ironically, the Roosevelt Room of the White House (Tauzin would end up visiting a dozen times). There, they hammered out a deal: Tauzin’s group, PhRMA, would fund a $150 million ad campaign boosting Obama’s health care program, in exchange for the Obama White House agreeing to kill the reimportation idea and leave the ban on Medicare negotiation in place.

  Tauzin later described the deal, saying it had been “blessed” by the White House, and emails later released showed a union official who was part of health care bill negotiations explaining how Obama’s White House planned on paying for its PR campaign: “They plan to hit up the ‘bad guys’ for most of the $.”

  Obama in other words won a contentious primary against Hillary Clinton by snowing reporters like me into hyping him as the clean hands guy who’d push aside Clintonian transactional politics. Then he turned around a year later and passed his signature program with help from the worst industry actors, paying for it by killing the progressive parts of the plan.

  This history — important history — is now being rewritten by people like Klein as an “ideological compromise” inspired by the Obama/Biden White House’s misguided desire to govern with Republican votes. The fact that the Affordable Care Act passed with a grand total of zero such votes is apparently irrelevant, as was Biden’s ignored and erroneous (do we only say “lie” in some cases?) insistence as a candidate last year that he found “Republican votes” for “Obamacare.”

  Something like Obama’s PhRMA one-two is happening again, and predictably, it’s not getting much press. A hundred countries have formally asked the World Trade Organization to waive intellectual property laws that only allow companies like Pfizer, Moderna, and AstraZeneca to make Covid-19 vaccines. Favoring the waiver: Sanders, Elizabeth Warren, and hundreds of millions of poor and mostly nonwhite folks in other countries who are nervous about the whole dying thing.

  Opposing (drumroll, please): that same PhRMA lobbying group, which says such waivers would “undermine the global response to the pandemic, including ongoing effort to tackle new variants.” Meaning, industry will stop developing vaccines now, and certainly won’t develop any the next time, if you don’t let it cash in.

  Without the ability to make generics, countries like Mexico have to be grateful for handouts of some of the tens of millions of excess vaccine doses we have sitting in storage. In fact, in what the New York Times called a “notable step into vaccine diplomacy,” Biden agreed to send 2.5 million doses to Mexico in return for Mexico promising to increase patrols on its southern border with Guatemala.

  To recap: while waffling on patent waivers, Biden traded 2.5 million doses of vaccine to Mexico for a promise to crack down on the Central American migrants who have become a pain in this administration’s public relations tuchus. Perhaps Biden eventually will push for the patent waivers, but for now, does anyone even have to ask what the headlines describing that kind of lives-for-fewer-immigrants deal would have looked like if Trump brokered it?

  This has so much been the story of Biden’s presidency, which is certainly less chaotic than Trump’s and does have some clearly different ambitions, but in many ways represents continuity with both his predecessor and his predecessor’s predecessor.

  What would we have said if Trump promised to stop wall construction, then went ahead and kept building it anyway? Candidate Biden promised not to build “another foot of wall,” and although it is true that he’s frozen Defense Department funding for Trump’s project, his Homeland Security Secretary Alejandro Mayorkas said the decision left “room” for the administration to “make decisions” about “areas of the wall that need renovation and “particular projects that need to be finished.” So F.D.R. is building more wall.

  Others have made plenty of hay about the discrepancies in covering unaccompanied child detainees now, versus a few years ago. Agencies from the AP to the Washington Post are using the word “challenge” instead of “crisis” or “horror.” It’s of course only a coincidence that this is the word Press Secretary Psaki started using back on March 18th (correcting the use of “crisis”).

  The cries of hypocrisy about the non-use of the term “kids in cages” is, I think, overblown, because separating children from families was an intentional aim of the Trump administration — remember, Trump officials were hoping for a lot of media coverage about separated kids, with the specific aim of producing a “substantial deterrent effect.” That was substantially more deranged than any Biden policy. That doesn’t make it not ridiculous that the Washington Post called the following structures “migrant facilities”:

  

  When pressed on the absurdity, the Post noted that it hadn’t necessarily said what was happening at the border was a good thing, even quoting activists saying it was a “huge step backward.” The Post hastened to add that the same activist said of the Carrizo Springs, Texas facility, “I consoled myself with the fact that it was considered the Cadillac of [migrant child] centers.”

  Again, is it hard to imagine what the response would have been if anyone, inside or outside the Trump administration, had tried to sell us on the idea that immigrant kids were staying in the “Cadillac” of detention centers? The “Cadillac cages” and “Cadillac concentration camps” jokes would have written themselves.

  The dull truth about Biden is that he’s governed, domestically, as a slightly more progressive version of the Obama administration, with a more ambitious bailout, while his foreign policy is a notch or two more hawkish — a wash, overall, though most of the stories about policy continuity from Afghanistan to Iran to Ukraine and beyond, don’t get headlines.

  During the recent all-consuming furor over the Major League Baseball all-star game, for instance, news that the federal defense budget under Biden will likely remain at the same astronomical levels they reached under Trump went mostly unnoticed. A few outlets that paid attention used the common defense industry talking point that the numbers actually represented a cut, since the increase was smaller than the rate of inflation. Same with Biden’s continuation of the storied presidential tradition of punting on withdrawal of support for Israel’s occupation of Palestine territories, reported via headlines like, “Joe Biden is not planning to solve the Israeli-Palestinian conflict.”

  Read the rest here.

  Tyler Durden
  Fri, 04/09/2021 – 19:00

• White House Eases US Officials' Ability To Freely Meet With Taiwan Counterparts
  White House Eases US Officials’ Ability To Freely Meet With Taiwan Counterparts

  On Friday the White House issued a statement on spiraling tensions with China over the Taiwan issue, saying that the US is “not looking for confrontation with China” but that it’s concerned over Beijing’s “potentially destabilizing” actions in the region.

  The statement came after White House Press Secretary Jen Psaki was asked whether the administration believed that China is on the cusp of invading Taiwan. But in terms of avoiding “confrontation” – another announcement Friday all but ensures that confrontation is exactly what we’re headed toward: the Biden admin has just opened up the ability of American officials to freely meet with their Taiwan counterparts. 

  

  While for decades the US has maintained stringent rules and restrictions on its own diplomats and officials regarding such meetings in accord with keeping its ‘One China’ policy, these have now been largely lifted.

  FT relates the following details in the wake of Friday’s published guidelines: “US officials will be able to meet more freely with their Taiwanese counterparts under new Biden administration guidelines, the latest move by the White House aimed at checking increased aggression by Beijing in the region.”

  “The new rules, which are to be issued by the US state department on Friday, according to American officials, will ease decades-old restrictions that have hampered meetings between American and Taiwanese diplomats.”

  However, there will still be “guardrails” in place – for example regarding meeting on particular holidays in Taiwan which would be considered especially brazen, which would surely earn Beijing’s rebuke of violating the One China stance. Regardless China has of late frequently leveled this charge, particularly with multiple and unprecedented US delegations that visited the island within the last 6 months of the Trump administration. And last month under Biden the US envoy to Palau become to first American ambassador to be received in Taiwan since 1979.

  China sends more fighter jets into Taiwan’s air defense zone as Taipei’s FM Joseph Wu says his country will fight to the end if Beijing attackshttps://t.co/6OU1eE2axq

  — DAILY SABAH (@DailySabah) April 7, 2021

  https://platform.twitter.com/widgets.js

  FT continues to review: “While Biden reviewed the guidelines in recent months, there were signs he would take a looser approach than during the Obama administration. Joseph Young, the acting US ambassador to Japan, recently welcomed his Taiwanese counterpart to his Tokyo residence and publicized the visit on Twitter, echoing a similar move by Trump’s ambassador to the Netherlands after Pompeo’s announcement.”

  Beijing’s reaction and imminent protest of the relaxing of the guidelines will no doubt be fierce, and could involve a continued escalation of aerial and naval incursions of Taiwan-claimed territory, also as the US “answers” these threatening moves by sending its own warships into the South China Sea. 

  Tyler Durden
  Fri, 04/09/2021 – 18:40

• Stimmy Bonanza: Here Comes Another Blockbuster Retail Sales Print
  Stimmy Bonanza: Here Comes Another Blockbuster Retail Sales Print

  Bank of America’s economists have been on a roll in the past two months.

  Back in February, the bank looked at its credit and debit card spending data and concluded that consensus was far, far too low, predicting that the Jan retail sales print would be above 4.1%.

  

  Not only was BofA’s outlier forecast right, but the headline retail sales number came in even higher: at a whopping 5.3%, nearly 5x higher than the consensus estimate of a 1.1% rise.

  One month later, when the Wall Street herd scrambled to make up for its clueless January forecast by being overly optimistic, Bank of America once again took the contrarian approach, not because it wanted to but because that’s what the data showed: spending on BofA branded credit and debit cards tumbled in February, prompting BofA to predict a -3.0% retail sales print.

  

  Once again, BofA was spot on to the dot, with the official retail sales print coming at -3.0%.

  So with the March retail sales on deck, Wall Street can take its perpetually wrong consensus estimate and shove it, all that matters is what BofA’s economists expect. And that, according to the latest note from BofA economist Michelle Meyer, is nothing short of March Madness, which just so happens is what the bank titled its retail sales preview…

  

  … which expects the March retail sales to print a blowout 11.1% (ex-autos, and 11.5% headline), which would be the third highest monthly print on record (and nearly 3x the consensus estimate for retail sales ex-autos of 4.4%).

  

  Here are the details: based on aggregated BAC credit and debit card data, total card spending increased 67% on a 1-year change and 20% on a 2-year change, over the 7-days ending April 3rd. The 2- year change, which captures the underlying trend, was steady compared to last week and roughly double the growth rate prior to the stimulus distribution. More remarkable was the monthly data: based on aggregated card spending, retail sales ex-autos increased 11.1% mom SA (seasonally adjusted) in March.

  

  A breakdown of spending by category saw the biggest jump in airline spending, which rose 37.5% sequentially, with groceries up just 1.9% M/M, even though travel spending has yet to return to pre-pandemic level. That said, goods spending is now running well above pre-pandemic levels!

  

  Of course, the reason for the surge is simple: stimmy checks. As BofA notes, over the 7-days ending April 3rd total card spending was up 33% yoy over a 2-year period for stimulus recipients vs. a 14% gain for non-recipients (defined as those who did not receive the stimulus payment through direct deposit on Mach 17). On Day 17 after stimulus distribution, stimulus recipients are spending 24% more than others.

  

  A big driver of the incremental spending is restaurants, where spending was up 13% over the 7-day period (2-year change) vs. mid-March when it was still in negative territory. Notably, NYC in-person dining is now running at -39% over a 2-year period vs. nearly -70% in the beginning of February.

  

  BofA also looked at activity in Florida where there was a boost from travel: in-person dining in Florida by out-of-state residents is up 21% on a 2-year basis vs. 10% on a 2-year rate for FL residents

  

  Another interesting observation from the latest BofA data: investors are starting to turn their back on online spending, and after a year of lockdowns, are now far more interested to spend their moeny at traditional brick and mortar outlets.

  

  Going back to the monthly data which pro subs can find in the usual place, BofA concludes that the blistering 11.1% surge in March “showed the impact of stimulus, reopening and better weather” and “should set up for a very strong Census Bureau report” indeed, BofA sees upside for the official Census number even relative to the bank’s 11% growth rate. As the chart below shows, the Census showed an even bigger gain following the last two stimulus distributions than BofA data.

  

  According to BofA economists, “this reflects the likely increase in cash usage which is consistent with the relatively larger gain in debit vs. credit spending during stimulus distribution months.”

  Finally, here is what the retail sales data will look like chart in historical context:

  

  Since by now we have little reason to doubt BofA data, which is derived directly from spending patterns, expect the third biggest jump (and maybe second if there is enough upside) in retail sales on record. The question, of course, is what then – with far fewer direct stimmies on the horizon, is this as good as it gets for a long, long time?

  Tyler Durden
  Fri, 04/09/2021 – 18:20

• Iran Finally Releases Seized S.Korean Tanker As Vienna Talks Start On "Positive Note"
  Iran Finally Releases Seized S.Korean Tanker As Vienna Talks Start On “Positive Note”

  Iran has finally released a South Korean-flagged tanker that the IRGC had siezed back in January, which developed into a diplomatic standoff over billions of dollars in frozen Iranian funds held in South Korean banks due to US-led sanctions.

  While some of the crew of the Hankuk Chemihad had been allowed to leave in February, a dozen along with the captain stayed on in order to conduct maintenance with the hope of eventually being able to sail it home. On Friday South Korea’s foreign ministry issued a statement confirming the ship’s detention had been lifted and that it “departed safely today”.

  

  The month before the Hankuk Chemihad was seized in the Strait of Hormuz with the official charge being that it had “violated rules of pollution”, Tehran had mounted protest with Seoul for freezing close to $10 billion in Iranian assets (according to foreign ministry figures), though the governor of the Central Bank of Iran had estimated it at $7BN.

  Regardless, the tanker seizure did bring significant leverage and pressure to bear against the South Koreans, and upon Friday’s freeing of the tanker the country signaled headway was made. Details have not been released or confirmed, but the Associated Press had the following update:

  But an official from South Korea’s Foreign Ministry, speaking on condition of anonymity under regulations, said Seoul’s willingness to resolve the issue of Iranian assets tied up in South Korea “possibly had a positive influence” in Iran’s decision to release the vessel.

  The official said Iran had acknowledged South Korea’s attempts to resolve the dispute as it became clear the issue was “not just about South Korea’s ability and efforts alone” and was “intertwined” with negotiations over the return to Tehran’s foundering nuclear deal.

  It does indeed also appear a good faith gesture to ensure talks go well in Vienna, where the US and Iran are engaging “indirectly” via the other signatories to the 2015 JCPOA nuclear deal, mainly through European mediators. 

  Meanwhile, The New York Times reports that things in Vienna are surprisingly on a “positive” track following weeks of threatening rhetoric and demands from the US and Iranian sides…

  Talks on the Iran nuclear deal have made progress, participants say, and will continue next week https://t.co/akPpDbwOba

  — New York Times World (@nytimesworld) April 9, 2021

  https://platform.twitter.com/widgets.js

  In particular it is now being reported that working groups set to tackle uranium enrichment issues at the summit are “making progress” and will resume next week.

  Early on in the Vienna talks the Biden administration reportedly offered some level of quick sanctions relief in order to compel Iran back into compliance with uranium enrichment caps and other stipulations. 

  Tyler Durden
  Fri, 04/09/2021 – 18:00

• Luongo: A Rising Dollar Sinks All Boats
  Luongo: A Rising Dollar Sinks All Boats

  Authored by Tom Luongo via Gold, Goats, ‘n Guns blog,

  Every day I open up my web browser to see yet another example of the basic functions of society breaking down.  Last week it was the vaporization of Archegos capital. I told you what I thought of this in a post that I hope, got people thinking.

  Previous to Archegos, over the past two months we’ve seen the electrical grid collapse in Texas, hedge funds blown up over a meme stock.  Bitcoin is screaming that the national fiat currencies are all hyperinflating at the same time.

  In the case of the recently solved Suez Canal incident, it doesn’t matter if it was incompetence or malicious behavior which caused the Ever Given to stick in the mud, in a world this fragile the smallest mistake can have outsized consequences.

  The few days the canal was blocked caused an enormous pile up and re-routing of basic supplies and fundamentally important goods to Europe and North America that, to me, is a harbinger of where we are headed.

  An overly complex world is an inherently fragile one.  Global trade is dependent on a handful of chokepoints remaining clear, like the Suez or the Straits of Malacca.  Jam up one of them and watch our everyday life we take for granted collapse.

  And that brings me to the conundrum the central banks face. 

  

  Their decades of interference in capital markets have created multiple points of failure for a global financial system that is still dependent on major chokepoints for liquidity: the prime brokerages and clearinghouses.

  That’s why Archegos’ collapse was so spooky. A small family office acquired enough levered capital to threaten the solvency of eight major prime brokers including Nomura, Credit Suisse and Morgan Stanley.

  And the reverberations haven’t died down. Every day we hear of another aftershock of the the Archegos tac nuke which nearly detonated these systemically important firms. Now it’s Tiger Capital, JP Morgan Chase and millions of shares of Academy Sports and Outdoors (NYSE:ASO).

  From Zerohedge this morning:

  Since this is virtually identical to what happened two Fridays ago when similar public BWICs by Goldman and other banks proceeded to unwind the Archegos portfolio, the immediate question on everyone’s lips is whether a second highly levered family office has blown up.

  There are more similarities: the block offered by JPM is massive: the 9MM shares represents almost a quarter of ASO’s float and roughly 10% of ASO’s total outstanding shares.

  In a notable tangent, it [is] worth noting that ASO, which was IPOed by PE firm KKR in October, has Tiger Global as one of its top holders. Granted, nobody but KKR has a public stake worth 9 million shares.

  To this end, one false step or misplaced word by Powell can send markets careening off course creating massive logjams in the plumbing of the global financial system as everyone tries to get out of a position at the same time.

  This is why the recent FOMC policy statement Chairman Jerome Powell was careful to sound dovish but change nothing about monetary policy.  Powell knows he is walking a tightrope right now.

  If he is too dovish, he’ll spook the capital markets that there’s something terribly wrong.

  If he’s too hawkish it will drain the world of dollar liquidity too quickly causing panic in major markets like Japan or Germany. 

  Despite Powell’s best efforts, however, the U.S. dollar, after more than a year of weakening versus the other major currencies like the euro, British pound, Japanese yen and Chinese yuan, has reversed course sharply.   

  And that reversal is causing all sorts of problems. 

  A strong dollar is exactly what the financial markets can’t handle right now and that’s exactly what we’re getting, despite Powell’s attempts to talk it down, which he did at today’s conference call with the IMF.

  Even though, the only thing more boring than watching the Fed’s balance sheet since last summer has been Joe Biden’s lame attempts at completing sentences in public.

  Ultimately, there isn’t much Powell can do as long as there isn’t an imminent crisis, lest he sound the alarm too early like his counterpart at the ECB, Christine Lagarde, did the week before, who literally dared markets earlier this week to test her resolve.

  Oh, don’t worry Chrissy, it will.

  Lagarde finally admitted that the euro-zone wasn’t recovering and greatly expanded the ECB’s various bond-buying programs.  And it immediately set the euro into a tailspin, falling more than 3% in a couple of weeks.

  And no matter how hard she tries, interest rates on core sovereign debt in the euro-zone keep rising.  Bellwethers like the German 10-year bund keeps pushing back up against Lagarde’s line in the sand at -0.3%.

  That’s how fragile and weak the European bond market is. It can’t handle interest rates on its most powerful economy’s most important bond market getting anywhere close to yielding investors a positive return on capital.

  It speaks to just how screwed up these markets are and calls into question both the competence and the maliciousness of those in charge of them.

  Projecting confidence is the first job of a central banker. Balancing the impulses within the overly complex systems is a task far beyond the crude tools of the central banks.

  Savvy market analysts understand this basic point.  Too bad our markets aren’t governed by such folks anymore but rather the dumbest of dumb headline-scanning algorithms which the central banks shamelessly manipulate through language which belies their actions.

  Humans, however, in the aggregate are far cleverer than those that try to control them. And the central banks’ interventions and financial regulations continually create the very problems that eventually destroy them. 

  All of their theories about capital have failed and yet we are still prisoners of their crazy schemes.

  Despite that and their throwing their weight around like the proverbial bull in a china shop, the debt markets are finally calling their bluff.

  The amount of leverage they have pushed into the capital markets, especially the equity markets, is astounding.  But what else is there to do if you’re a fund manager or family office except try to find the safest harbor possible for your money?

  Since last summer one of those harbors has been Chinese blue-chip stocks.  The MSCI China Large Cap 50 Index nearly doubled off last March’s low, outperforming even the Dow Jones Industrials.  But since February, when the dollar began firming it has given back more than 40% of those gains.

  And that’s had the knock-on effect of blowing Archegos. 

  Archegos through leverage used off-exchange transactions called CFD’s – contracts for difference — to accumulate massive synthetic positions in a few companies, which didn’t have to be reported to regulators because they didn’t actually own the stock.

  They owned bets on the movements of the stocks.

  When markets reversed, thanks to a rising dollar draining Chinese capital markets, Archegos got a margin call forcing huge blocks of stocks like Tencent and Discover onto the market by the millions, cratering their prices into last week’s close.

  What’s astounding here is how a small family office’s implosion could create liquidity problems for prime brokers who lent them the money.

  It was Morgan Stanley reportedly frantically selling huge blocks of Discover at massive discounts raise the capital needed.  Archegos was gone by that point.

  It reminds me of the weekend Bear Stearns evaporated in March 2008 and we all know how that turned out later that year.

  This begs the question how many more Archegos-like ships are out there ready to run the world financial system into the ground?

  Because last month it was GameStop.  This month Archegos?  Who’s next month’s victim?  Is Tiger Global this week’s?

  No wonder Bitcoin continues spiking and 80% of Americans plan on saving or paying debt with their stimulus checks. 

  The money isn’t circulating, it’s circling the drain.

  And when does Powell come off the sidelines to declare that inflation expectations are still contained even though the real economy is grinding to a halt thanks to rising gas and commodity prices? Housing prices just spiked as migrations out of major urban centers is pushing up the cost of all basic commodities like lumber and steel?

  There are chip shortages everywhere causing the car industry to shut down production with cars 99% completed and Apple to finally admit even it can’t manage supply chain disruptions like we’ve seen. And Tim Cook is literally the best the world has ever seen at such things.

  Every time I see another story like this, I’m reminded of the last act of Ayn Rand’s Atlas Shrugged.  Its formerly brilliant society which effortlessly coordinated the labor and time of millions grinds to a halt as perpetual interference and the elevation of politics over performance makes even the basic functions of society difficult to produce.

  Civilization is supposed to create the opportunity for boredom.  Things are supposed to be so stable that we should have the luxury of taking a day for ourselves rather than constantly worrying about what these idiots will do tomorrow, whether the lights will come on, and if there’ll be toilet paper when we go to the store.

  And if these are the effects of the smallest uptick in the strength of the U.S. dollar today, it doesn’t hold out much hope for the rest of 2021.

  So, while the Ever Given was finally sent on its way and we (may have) dodged a bullet with Archegos, the rising dollar is draining out of the monetary chokepoints and leaving dozens more firms like it and the central banks with zero margin for navigational error.

  *  *  *

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  Tyler Durden
  Fri, 04/09/2021 – 17:40

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