- To Avoid A Collapse Means Restoring Glass-Steagall (Without The Green New Deal)
Authored by Matthew Ehret via The Strategic Culture Foundation,
With the recent discussion of the collapse of the western system of banking (and neo-liberal ‘post-truth’ values more generally) a serious overview of the post-WWII stripping down of nation states is in order. Over the past couple of weeks, various figures like France’s Finance Minister Bruno Le Maire and American Senator Elizabeth Warren have called for a re-organization of the banking system with Le Maire saying on July 13 that the Bretton Woods “has reached its limits”, and Warren stating on July 22 that “the country’s economic foundation is fragile. A single shock could bring it all down.” It is no secret that the western nations sit atop the largest financial bubble in human history with global derivatives estimated at $550 trillion to $1.2 quadrillion.
As refreshing as it is to hear such candid admissions of the system’s failure from high level political figures, when asked what they wish will replace this bankrupt order, neither Le Maire nor Warren have any desire to work with the Russia-China Belt and Road alliance and are unfortunately on record supporting policies cooked up by the very same oligarchs they appear to despise in the form of the Green New Deal. In spite of what many of its progressive proponents would wish, such a global green reform would not only impose Malthusian depopulation upon nation states globally were it accepted, but would establish a the supranational authority of a technocratic managerial elite as enforcers of a “de-carbonization agenda”.
Due to the rampant lack of comprehension of how this crisis was created such that such idiotic proposals as “green new deals” are now seriously being suggested as remedies to our current ills, a bit of history is in order.
Some necessary background
“The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”
– Franklin Delano Roosevelt, first Inaugural Address 1933
Knowing that the “money changers” had only been able to create the great bubbles of the 1920s via their access to the deposits of the commercial banks, Franklin Roosevelt made the core of his battle against the abuses of Wall Street centre around a 1933 legislation entitled “Glass-Steagall”, named after the two federally elected officials who led the reform with FDR. This was a bill which forced the absolute separation of productive from speculative banking, guaranteeing via the Federal Deposit Insurance Corporation (FDIC) only those commercial banking assets associated with the productive economy, but forcing any speculative losses arising from investment banking to be suffered by the gambler. The striking success of this law inspired other countries around the world to establish similar bank separation. Alongside principles of capital budgeting, public credit, parity pricing and a commitment to scientific and technological development, a dynamic had been created that would express the greatest hope for the world, and the greatest fear for the financial empire occupying the City of London and Wall Street.
The death of John F. Kennedy ushered in a new age of pessimism and cultural irrationalism from which our society has never recovered. The destruction of a long term vision as exemplified by the space program, the St. Lawrence Seaway and the New Deal projects had resulted in a tendency within the population to increasingly look upon present pleasures as the only reality, and future goods as the mystical expression of the sum of present pleasures. In this new philosophical setting, so alien in previous epochs, money was permitted to act as a power unto itself for short term gains instead of serving the investments into the real productive wealth of society. With this new paradigm shift into the “now”, a new economic model was adopted to replace the industrial economic model which had proven itself in the years preceding and following World War II.
The name for this system was “post-industrial monetarism”. This would be a system ushered in by Richard Nixon’s announcement of the destruction of the fixed-exchange rate Bretton Woods system and its replacement by the “floating rate” system of post 1971 fame. During that same fateful year of 1971, another ominous event took place: the formation of the Rothschild Inter-Alpha Group of banks under the umbrella of the Royal Bank of Scotland, which today controls upwards of 70% of the global financial system. The stated intention of this Group would be found in the 1983 speech by Lord Jacob Rothschild: “two broad types of giant institutions, the worldwide financial service company and the international commercial bank with a global trading competence, may converge to form the ultimate, all-powerful, many-headed financial conglomerate.”
This policy demanded the destruction of the sovereign nation-state system and the imposition of a new feudal structure of world governance through the age-old scheme of controlling the money system on the one side, and playing on the vices of credulous fools who, by allowing their nations to be ruled by the belief that hedonistic market forces govern the world, would seal their own children’s doom.
All the while, geopolitical structures foreign to the United States constitutional traditions were imposed by nests of Oxford-trained Rhodes Scholars and Fabians who converted America into a global “dumb giant” enforcing a neo colonial program under a “Anglo-US Special Relationship”. The Dulles brothers, McGeorge Bundy, Kissinger, and Bush all represent names that advanced this British directed plan throughout the 20th century.
The Big Bang
The great “liberalization” of world commerce began with a series of waves through the 1970s, and moved into high gear with the interest rate hikes of Federal Reserve Chairman Paul Volcker in 1980-82, the effects of which both annihilated much of the small and medium sized entrepreneurs, opened the speculative gates into the “Savings and Loan” debacle and also helped cartelize mineral, food, and financial institutions into ever greater behemoths. Volcker himself described this process as the “controlled disintegration of the US economy” upon becoming Fed Chairman in 1978. The raising of interest rates to 20-21% not only shut down the life blood of much of the US economic base, but also threw the third world into greater debt slavery, as nations now had to pay usurious interest on US loans.
In 1986, the City of London announced the beginning of a new era of economic irrationalism with Margaret Thatcher’s “Big Bang” deregulation. This wave of liberalization took the world by storm as it swept aside the separation of commercial, deposit and investment banking which had been the post-world war cornerstone in ensuring that the will of private finance would never again hold more sway than the power of sovereign nation-states.
After decades of chipping away at the structure of regulation that FDR’s bold intervention into history had built, the “Big Bang” set a precedent for similar financial de-regulation into the “Universal Banking” model in other parts of the western world.
The Derivative Time Bomb is Set
In September 1987, the 20 year foray into speculation resulted in a 23% collapse of the Dow Jones on October 19, 1987. Within hours of this crash, international emergency meetings had been convened with former JP Morgan tool Alan Greenspan introducing a “solution” which would have the future echoes of hyperinflation and fascism written all over it.
“Creative financial instruments” was the Orwellian name given to the new financial asset popularized by Greenspan, but otherwise known as “derivatives”. New supercomputing technologies were increasingly used in this new venture, not as the support for higher nation building practices, and space exploration programs as their NASA origins intended, but would rather become perverted to accommodate the creation of new complex formulas which could associate values to price differentials on securities and insured debts that could then be “hedged” on those very spot and futures markets made possible via the destruction of the Bretton Woods system in 1971. So while an exponentially self-generating monster was created that could end nowhere but in a meltdown, “market confidence” rallied back in force with the new flux of easy money. The physical potential to sustain human life continued to plummet.
NAFTA, the Euro and the End of History
It is no coincidence that within this period, another deadly treaty was passed called the North American Free Trade Agreement (NAFTA). With this Agreement made law, protective programs that had kept North American factories in the U.S and Canada were struck down, allowing for the export of the lifeblood of highly skilled industrial workforce to Mexico where skills were low, technologies lower, and salaries lower still. With a stripping of its productive assets, North America became increasingly reliant on exporting cheap resources and services for its means of existence. Again, the physically productive powers of society would collapse, yet monetary profits in the ephemeral “now” would skyrocket. This was replicated in Europe with the creation of the Maastricht Treaty in 1992 establishing the Euro by 1994 while the “liberalization” process of Perestroika replicated this agenda in the former Soviet Union. While some personalities gave this agenda the name “End of History” and others “the New World Order”, the effect was the same.
Universal Banking, NAFTA, Euro integration and the creation of the derivative economy in a space of just several years would induce a cartelization of finance through newly legalized mergers and acquisitions at a rate never before seen. The multitude of financial institutions that had existed in the early 1980s were absorbed into each other at great speed through the 1990s in true “survival of the fittest” fashion. No matter what level of regulation were attempted under this new structure, the degree of conflict of interest, and private political power was uncontrollable, as evidenced in the United States, by the shutdown of any attempt by Securities and Exchange Commission head Brooksley Born to fight the derivative cancer at its early stages.
By 1999 a politically castrated Bill Clinton found himself signing into law a treaty authored by then Treasury Secretary Larry Summers known as the Gramm-Leach-Bliley Act, which would be the final nail in the coffin for the Glass-Steagall separation of commercial and investment banking in the United States. The new age of unregulated trading and creation of over-the-counter derivatives caused these strange financial instruments to grow from $60 trillion in 2000 to $600 trillion by 2008.
The 2000-2008 Frenzy
With Glass-Steagall now removed, legitimate capital such as pension funds could be used to start a hedge to end all hedges. Billions were now poured into mortgage-backed securities (MBS), a market which had been artificially plunged to record-breaking interest rate lows of 1-2% for over a year by the US Federal Reserve making borrowing easy, and the returns on the investments into the MBSs obscene. The obscenity swelled as the values of the houses skyrocketed far beyond the real values to the tune of one hundred thousand dollar homes selling for 5-6 times that price within the span of several years. As long as no one assumed this growth was ab-normal, and the unpayable nature of the capital underlying the leveraged assets locked up in the now infamous “sub-primes” and other illegitimate debt obligations was ignored, then profits were supposed to just continue infinitely. Anyone who questioned this logic was considered a heretic by the latter-day priesthood.
The stunning “success” of securitizing housing debts immediately induced a wave of sovereign wealth funds to come into prominence applying the same model that had been used in the case of mortgage-backed securities (MBS) and collateralized debt obligations (CDO) to the debts of entire nations. The securitizing of bundled packages of sovereign debts that could then be infinitely leveraged on the de-regulated world markets would no longer be considered an act of national treason, but the key to easy money.
Conclusion
This is the system which died in 2008. Contrary to popular belief, nothing was actually resolved. For all the talk of an “FDR revival” under Obama, speculation wasn’t actually regulated under the Dodd-Frank Act or the Volker Rule of 2010. No productive credit was created to grow the real economy under a national mission as was the case in 1933-1938. Banks were not broken up while derivatives GREW by 40% with the new bubble concentrated in the corporate/household debt sector now collapsing. During this time, nation states continued to be stripped, as austerity was rammed down the throats of nations.
It should be no surprise that in the midst of this despair, a creative alliance was consolidated in defense of the interests of sovereign nation states and humanity at large led by the leadership of Russia and China.
This leadership took the form of the China-led Belt and Road Initiative which has grown to embrace over 130 countries today and looking more and more like an Asian-led version of the New Deal of the 1930s. Indeed, China’s capacity to unleash long term credit for thousands of international long term infrastructure projects was made possible by the fact that it was the only country on the globe which had not given up the principles of bank separation which were destroyed in every other nation. Very few western figures stood up to this self-induced destruction over the decades, but one notable exception here worth mentioning is the figure of the late American economist Lyndon LaRouche (1922-2019) who not only resisted this process for over four decades, but fought alongside the Schiller Institute to promote New Silk Road as early as 1996.
With the 2016 Brexit and election of President Trump, a new wave of nationalist spirit has become a fire which the technocrats have lost their capacity to snuff out. Increasingly, the idea that nation states have a power over the private banking system has become revived and discussion for reforming the now dead Trans-Atlantic system is increasingly shaped not by the calls for a “New World Order” as Sir Kissinger would have liked, but rather for a New Silk Road and a true New Deal. The Eurasian nations are already firmly committed to this new system, and if the west is to qualify morally to take part in this new epoch, then the first step will be a return to a Glass-Steagall.
- Watch "Blind" Robot Cheetah Climb Stairs Littered With Obstacles
MIT’s Cheetah 3 is very light on its feet, it can now “leap and gallop across rough terrain, climb a staircase littered with debris, and quickly recover its balance when suddenly yanked or shoved,” all while it doesn’t have cameras to track its surroundings, reported MIT News.
Weighing in at 90 pounds, the cheetah robot is designed to navigate almost any kind of terrain without tracking camera. Instead, the robot “feels” its surroundings, as described by MIT engineers as “blind locomotion,” sort of like feeling for a light switch in the dark.
“There are many unexpected behaviors the robot should be able to handle without relying too much on vision,” says the robot’s designer, Sangbae Kim, associate professor of mechanical engineering at MIT. “Vision can be noisy, slightly inaccurate, and sometimes not available, and if you rely too much on vision, your robot has to be very accurate in position and eventually will be slow. So we want the robot to rely more on tactile information. That way, it can handle unexpected obstacles while moving fast.”
In the event a motor or limb malfunctions, the cheetah is designed with modular components: Three electric motors power each of the robot’s legs. Each motor can easily be swapped out for a new one, or even the leg can be replaced.
MIT engineers will present the cheetah’s vision-free capabilities in October at the International Conference on Intelligent Robots, in Madrid.
Kim expects in the future that the robot could conduct tasks that would otherwise be too dangerous or inaccessible for humans.
“Cheetah 3 is designed to do versatile tasks such as power plant inspection, which involves various terrain conditions including stairs, curbs, and obstacles on the ground,” Kim says.
“I think there are countless occasions where we [would] want to send robots to do simple tasks instead of humans. Dangerous, dirty, and difficult work can be done much more safely through remotely controlled robots.”
According to MIT News, the robot can blindly walk up staircases and through unstructured terrain and can immediately recover its balance if unexpected forces knocked it over. This capability is due to two new algorithms developed by Kim’s team: a contact detection algorithm, and a model-predictive control algorithm.
The contact detection algorithm supports the robot in decision making for the best time to jump or step around an object. For example, if the robot steps on a twig versus a large rock, it will understand how to react and make the proper adjusts so that it can continue forward.
“When it comes to switching from the air to the ground, the switching has to be very well-done,” Kim says. “This algorithm is really about, ‘When is a safe time to commit my footstep?'”
The algorithm calculates these probabilities based on data from gyroscopes, accelerometers, and joint positions of the legs, which record the leg’s angle and height concerning the ground.
Engineers tested the algorithm in experiments with the robot trotting on a laboratory treadmill and climbing on a staircase. Both surfaces had irregular objects placed on it to simulate a construction site.
“It doesn’t know the height of each step, and doesn’t know there are obstacles on the stairs, but it just plows through without losing its balance,” Kim says. “Without that algorithm, the robot was very unstable and fell easily.”
The model-predictive control algorithm calculates the robot’s body and legs a half-second into the future.
In tests, researchers introduced unexpected forces by physically abusing the robot with kicks and shoves as it trotted on a treadmill, and even pulled on a leash to make it fall down a staircase.
Engineers discovered that the model-predictive algorithm allowed the robot to instantly create counter-forces to regain the center of balance and keep moving forward after a fall.
Engineers have also added tracking cameras to some of the robots to give it an understanding of its surroundings. The cameras will enable it to map out its environment and pre-determined plan of action for more considerable obstacles such as doors and walls. Engineers told MIT News that they’re further progressing the robot’s blind locomotion capabilities.
- How Asylum Is Abused Every Day
Authored by Peter van Buren via The American Conservative,
Economic migrants use it as an easy means into the country, but Trump has options…
America’s asylum laws, meant to help the most vulnerable, have instead become a clogged backdoor for economic migrants. The Trump administration is restoring asylum to its correct role in American immigration policy. It’s the right thing to do, but almost nobody is satisfied.
Here’s why.
Asylum is a very old concept, dating back to the ancient Greeks. It recognizes that a person persecuted by his own country can be offered residence and protection by another country. The actual conditions vary considerably across the globe (the U.S. considers female genital mutilation grounds for asylum while in many nations it is an accepted practice). But in most cases, asylum is offered to people who face a well-founded fear of persecution if sent home on account of their race, religion, nationality, political opinion, or social group.
The definition of those five protected grounds have also varied greatly based on shifts in American domestic politics. Since 1994, for example, LGBT status has been, and remains under Trump, a possible claim to asylum. Domestic violence was granted consideration as grounds under the Obama administration, only to be rolled back under Trump.
But even as those criteria have changed with the political winds, asylum has never been simply about wanting a better life. Poverty, for all its horrors, has never fallen alongside race, religion, nationality, political opinion, or social group (though it is often assumed to by progressive journalists without access to the Internet and certain Democratic legislators from the Bronx).
The reality of 2019 is that the asylum system has evolved into a cheater’s backdoor, a pseudo-legal path to immigration not otherwise available to economic migrants. They lack either the skills for working visas or the ties to qualify for legal immigration under America’s family reunification system. So they walk to the border and ask for asylum, taking advantage of previous administrations’ look-the-other-way “solution” to their ever-growing numbers. Affirmative asylum claims, made at ports of entry, have jumped 35 percent over the last two years, even as refusal rates for those cases along the Southern border have run into the 80th percentile.
It works—for them. A Honduran on the border who says he came to work is sent back almost immediately. However, should he make a claim to asylum, the U.S. is obligated to adjudicate his case. Since detaining asylum seekers and their families while the processes play out is expensive and politically distasteful (kids in cages!), until recently most asylum seekers were instead released into American society to wait out their cases. They then became eligible for work authorization if their cases extended past 150 days, as almost all did. The number of pending cases in early 2019 was 325,277, more than 50 times higher than in 2010.
Eventual approval rates for all nationalities over the past decade average only 28 percent. (In some places, the approval rate is as low as 15 percent, which someargue is because of unfairness in the system rather than illegitimate claims. Others claim the approval rate is bogus, reflecting clever coaching by immigration lawyers instead of legitimate fears.) Yet even after they’re denied, applicants can either refile as defensive asylum claims or simply disappear into the vast underground of illegals.
Previous administrations’ plans to create expedited asylum processes have proven ineffective, as numbers just increase endlessly to fill the available opportunities. Simply making a claim to asylum has often been enough to live and work in America. Trump is changing that.
The most visible change is that asylum seekers and their families are being detained at the border rather than released into society. Detention is a deterrent to economic migrants making false claims to asylum, statistically somewhere between seven to nine out of 10 persons plus their families.
The next change was for the Trump administration to negotiate for asylum seekers to wait out their processing times not in American society or a detention facility, but in Mexico through a program called the Migrant Protection Protocols. People at the border make their asylum claims, and are then nudged a step backward to wait for an answer in Mexico. This relieves the U.S. of costs both monetary (the House just voted an additional $4.6 billion to be spent on beds and baths for detainees) and political.
Mexican officials estimate that about 60,000 people will be sent to Mexico by the end of August under the Migrant Protection Protocols. The policy seems to be effective in weeding out economic migrants, as many, denied the chance in America to work off their debts to the human traffickers they paid for the journey north, choose to return home to Central America, abandoning their previous sworn assertions that such a return would imperil their lives.
A more significant Trump change to U.S. policy has been to bring it in line with the European standard (the Dublin Convention) of country of first refuge. Most of Europe subscribes to this model, which requires asylum claims to be made in the first country that can offer refuge. The idea is that a person legitimately fleeing a repressive government would want safety as soon as possible. If the person is really an economic migrant, this will stop him from “forum shopping” to see if the benefits are better in Italy or Austria—or Mexico versus the United States.
In the American context, if someone is fleeing gang vengeance in Honduras, Mexico would become his refuge even though his cousin needs help at the restaurant in Chicago. The U.S. will thus not consider asylum seekers who pass through another country before reaching the United States (the order is being challenged in the courts).
To put the plan into practice, the U.S. reached a deal with Guatemala for that nation to take in more asylum seekers from other Central American nations, and is expected to sign similar agreements with El Salvador and Honduras. Washington has had an identical but little-noticed arrangement in place with Canada for many years, allowing it to not consider asylum applications from persons who did not apply first while in Canada. Despite the media hysteria about cruelty, this idea is nothing new.
The impact of these changes will be significant. Though Mexico does not yet have a formal, safe, third country agreement with the U.S., its Commission for Aid to Migrants projects 80,000 asylum requests this year, up from only 2,137 five years ago. Mexico and other Central American nations are expected to also become places of first refuge for the many Haitians, Cubans, and Africans who previously just passed through en route to America.
This illustrates an ancillary benefit to moving some of the costs of housing migrants to Mexico and asking for more asylum processing by Guatemala and other nations: it gives them a reason to police their own borders. Until recently, there was no incentive for these countries to stop migrants headed north, and indeed much incentive to pass on the problems by opening their own borders to northbound traffic. This same thinking allowed human traffickers and drug dealers to operate with near impunity.
Following all this, the newest change concerns derivative claims to asylum. Spouses and minor children of those approved for asylum continue to be granted asylum alongside principal applicants. Attorney General Barr, however, recently overturned a decision by the Board of Immigration Appeals saying a Mexican adult man could apply for asylum on the basis of his father being targeted by a cartel. Previous administrations held that such an adult, while obviously not a dependent minor, would still automatically “inherit” asylum as the member of a particular social group, his extended family. Barr says now that the adult can still apply today for asylum, but now has to prove his case independent of his father.
Americans broadly favor immigration in general. But the gap between orderly immigration and unfettered immigration based on how many people can slip through physical holes in the border and loopholes in the law has grown too wide, to the point that a quarter of the 45 million foreign-born people currently in the U.S. arrived here illegally. Some 60 percent of likely voters support efforts to “prevent migrants from making fraudulent asylum claims and being released into the country.” As Europe has acknowledged and America is learning, modern immigration comes with considerable social and political costs, which will be accounted for by society one way (good and thought out) or another (violent and chaotic).
As David Frum melodramatically wrote, “if liberals won’t enforce borders, fascists will.” Rewriting that a bit, if Congress will not reform immigration policy in line with a broad national consensus, then whoever is in the White House will, albeit in a piecemeal fashion. This is why Obama’s DACA reforms didn’t outlast his administration, and why if a Democrat wins in 2020, Trump’s changes to asylum processing will also be rolled back. Nothing gets permanently resolved that way, and it needs to be.
- Bunker Chaos: Global Shipping-Fuel Price Plunges Amid Slowdown Fears
Bunker fuel is the primary type of fuel used to power large shipping vessels. In the crudest of terms, bunker fuel is excess fuel leftover after refineries have processed gasoline and diesel from the crude. The shipping fuel is dense and heavy, has to be boiled before it can flow into the vessels’ engine(s).
Bunker fuel prices serve as a proxy to the health of the global shipping industry. If prices rise, that usually means the demand to fuel vessels is increasing, which in turn, powers container ships and tankers from the East to West, or West to East.
Over the last month, bunker fuel prices in Houston, Rotterdam, Fujairah, and Singapore, major shipping terminals across the world, have collapsed. Bunker fuel in Houston has fallen -30% in 30 days, -27% in 27 days in Rotterdam, -18% in 26 days in Fujairah, and -29% in 27 days in Singapore.
The start of the rapid decline pre-dated President Trump’s latest escalation of the trade war with China on August 01 by at least 15 days, which he tweeted: “on September 01, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%.”
…during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%…
— Donald J. Trump (@realDonaldTrump) August 1, 2019
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Seems like declining bunker price could be another canary in the coal mine, a warning to investors that the global economy could remain depressed through 2H19. Most global cyclical indicators are showing business activity is flat or negative in the months ahead.
Global manufacturing surveys, industrial output, new orders, business investment, construction activity, motor vehicle production and freight volumes are flat or down YoY, reported Reuters. This means trade volumes are declining as fewer goods or raw materials are being transported by vessel.
Recent purchasing surveys and industrial production data suggest that the global economy worsened in June and July, which was around the time bunker rates started to decline.
With the global economy in the most severe slowdown since 2015, the decline in bunker rates across major ports could be an indication the global economy hasn’t bottomed.
And to make matters worse, Mærsk A/S, also known as Maersk, the world’s largest shipping company, just had its price target slashed Thursday by Morgan Stanely to DKR 7,800 ($1,169) from DKR 9,000 ($1,349), on fears the global shipping industry is about to sink.
So what does this mean for global stocks?
- Paul Craig Roberts Asks "Is The Fed Losing Control Of The Gold Price?"
Authored by Paul Craig Roberts,
After years of being kept in the doldrums by orchestrated short-selling described on this website by Roberts and Kranzler, gold has lately moved up sharply topping $1,500 this week. The gold price has continued to rise despite the continuing practice of dumping large volumes of naked contracts in the futures market. The gold price is driven down but quickly recovers and moves on up. I haven’t an explanation at this time for the new force that is more powerful than the short-selling that has been used to control the price of gold.
Various central banks have been converting their dollar reserves into gold, which reduces the demand for dollars and increases the demand for gold. Existing stocks of gold available to fill orders are being drawn down, and new mining output is not keeping pace with the rise in demand. Perhaps this is the explanation for the rise in the price of gold.
During the many years of Quantitative Easing the exchange value of the dollar was protected by the Japanese, British, and EU central banks also printing money to insure that their currencies did not rise in value relative to the dollar. The Federal Reserve needs to protect the dollar’s exchange value so that it continues in its role as the world’s reserve currency in which international transactions are conducted. If the dollar loses this role, the US will lose the ability to pay its bills by printing dollars. A dollar declining in value relative to other countries would cause flight from the dollar to the rising currencies. Catastrophe quickly occurs from increasing the supply of a currency that central banks are unwilling to hold.
One problem remained. The dollar was depreciating relative to gold. Rigging the currency market was necessary but not sufficient to stabilize the dollar’s value. The gold market also had to be rigged. To stop the dollar’s depreciation, naked short selling has been used to artificially increase the supply of paper gold in order to suppress the price. Unlike equities, gold shorts don’t have to be covered. This turns the price-setting gold futures market into a paper market where contracts are settled primarily in cash and not by taking delivery of gold. Therefore, participants can increase the supply of the paper gold traded in the futures market by printing new contracts. When large numbers of contracts are suddenly dumped in the market, the sudden increase in paper gold supply drives down the price. This has worked until now.
If flight from the dollar is beginning, it will make it difficult for the Federal Reserve to accommodate the growing US budget deficit and continue its policy of lowering interest rates. With central banks moving their reserves from dollars (US Treasury bonds and bills) to gold, the demand for US government debt is not keeping up with supply. The supply will be increasing due to the $1.5 trillion US budget deficit. The Federal Reserve will have to take up the gap between the amount of new debt that has to be issued and the amount that can be sold by purchasing the difference. In other words, the Fed will print more money with which to purchase the unsold portion of the new debt.
The creation of more dollars when the dollar is experiencing pressure puts more downward pressure on the dollar. To protect the dollar, that is, to make it again attractive to investors and central banks, the Federal Reserve would have to raise interest rates substantially. If the US economy is in recession or moving toward recession, the cost of rising interest rates would be high in terms of unemployment.
With a rising price of gold, who would want to hold debt denominated in a rapidly depreciating currency when interest rates are low, zero, or negative?
The Federal Reserve might have no awareness of the pending crisis that it has set up for itself. On the other hand, the Federal Reserve is responsive to the elite who want to rid themselves of Trump. Collapsing the economy on Trump’s head is one way to prevent his reelection.
- Student Debt Crushes Homebuying Dreams For Millennials , Now Delayed 8 Years
The student debt crisis is rapidly expanding, hitting a new record high of $1.6 trillion in 2019 and surpassing auto loans and credit card debt post-GFC.
About 44 million Americans, or 20% of adults, have insurmountable student debts. About 11% of them are in student loan default, and by 2023, as many as 40% could be underwater.
The life-altering impacts of student loan debt on millions of millennials is debilitating towards their financial health.
Many are drowning in student debt, working in the gig-economy with two jobs and can hardly afford rising rents and necessary food items.
At least 60% of millennials have no savings, and their poor financial health has contributed to the reason why so many young adults can’t afford a downpayment on their first home.
A new study published by the Urban Institute says the current homeownership rate of young adults is 37%. That’s 8% lower than the homeownership rate Generation X and baby boomers had at the same age.
“If the homeownership rate for millennials had stayed the same as previous generations,” the study noted, “there would be about 3.4 million more homeowners today.”
The study determined that 36% more graduates who had eliminated their debt (or never had any) owned a home and graduates who paid off their debt were 7x more likely to purchase a home.
About 40% of millennials have student debt, according to the AARP, and Clever Real Estate says the student debt has delayed home buying by eight years for millennials.
The Federal Reserve has said that “a $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public 4-year college-goers during their mid-20s, equivalent to an average delay of 2.5 months in attaining homeownership.” So that means with the average student about $37,0000 in debt, that’s a 7.7-year delay in homebuying.
In 2012, about 71% of all millennials graduating from college had a student loan. The average debt load has quickly increased over time, moving to $37,000 from nearly $9,500 in the early 1990s. Today’s levels are 3x higher than 2006 levels.
And it’s not just home buying that has been delayed, many of these millennials have avoided weddings and starting a family because their debts have limited their economic mobility.
According to Douglas McIntyre with 24/7 Wall Street, who examined student loan data from LendEDU, the Deep South struggles with high amounts of credit card debt; student loan debt is heavily concentrated in the Northeast.
History will show millennials will be known as the “lost generation,” as their ability to participate in the American dream of homebuying was cut short by student debt servicing payments. And with the next recession lurking around the corner, millennials could soon find themselves without a job and back in their parents’ basements.
- Mexicans Are Safer In El Paso Than In Mexico
Authored by Ryan McMaken via The Mises Institute,
The Mexican government, which has contributed heavily to Mexico having one of the world’s worst homicide rates, has announced it may seek legal action against the United States “for failing to protect its citizens after this weekend’s mass shooting in the border city of El Paso.”
In a statement yesterday, Foreign Minister Marcelo Ebrard stated
The president has instructed me to ensure that Mexico’s indignation translates into … efficient, prompt, expeditious and forceful legal actions for Mexico to take a role and demand that conditions are established that protect … Mexicans in the United States.
Yet, it’s hard to believe that Mexican politicians are truly indignant about the deaths of Mexican nationals in the US when Mexico’s homicide rate is nearly five times that of the US, and among the worst in the world. Moreover, Mexico’s homicide rate in 2017 rose to the highest level ever recorded, climbing to 24.8 per 100,000 . Preliminary data suggests 2018 may be even worse .
More than 30,000 homicide investigations were opened in Mexico in 2017. In the US, which has 200 million more residents than Mexico, homicides total around 17,000.
These fact, however, have not stopped the Mexican state from displaying a total lack of self-awareness when it comes to crime and safety.
The foreign minister also implied the US was at fault due to faulty gun laws:
Ebrard said Mexico would request information from the U.S. about how the weapon used in the attack was acquired by the shooter.
“We consider the issue of arms to be crucial,” he added.
As with homicides overall, it’s hard to believe that Mexican politicians are sincere when expressing indignation about the manner in which Americans acquire firearms.
Gun control is stringent in Mexico, which means illegal gun ownership is widespread, and law-abiding citizens are lopsidedly outgunned by drug cartel members and ordinary street thugs.
The Mexican government — and gun control advocates in the US — have attempted to distract from these facts by claiming the US is somehow responsible for the presence of illegal guns in Mexico, but the evidence hasn’t backed this up.
Trying to Blame Mexican Violence on US Guns
The often-quoted statistic allegedly showing that as much as 70 percent, or even 90 percent, of guns seized in Mexico come from the US is not true. That statistic is based only on seized guns that are also traced by the ATF . How many of all guns seized in Mexico come from the US? According to Stratfor, ” almost 90 percent of the guns seized in Mexico in 2008 were not traced back to the United States .” Nor does the Mexican government ask the ATF to trace all guns seized in Mexico. This is because many of those arms can be traced back to the Mexican government itself.
After all, it’s not as if Latin America has no locally produced firearms. The 2012 Small Arms Survey notes:
Latin America has a long tradition of gun production, with some manufacturers tracing their history back many decades. Brazil has the largest arms industry in the region, followed by Argentina. Firearms are also produced by private or government-owned industries in Bolivia, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, and Venezuela. While most of the production is intended to equip the military and law enforcement institutions, some of the production is for private use.”
The report also refers to “major exporters” of small arms in Argentina, Chile, Mexico, and Brazil. So we know Mexico contains local arms-producing manufacturers to the point that some are “major exporters” who also produce arms for government institutions. And government stockpiles are a source for black markets as well.
Even worse, the same government institutions that work to keep firearms out of the hands of peaceful private citizens, are often in league with the cartels. As a recent New York Times article noted about local resistance in Michoacan to cartel-sown chaos, “Townspeople formed militias to eject both the cartel … and the local police, who were seen as complicit.”
In other words, there is often no clear line between law enforcement and the cartels themselves.
Often, official law enforcement simply can’t be bothered . Things are even worse when, as one cartel member put it, “soldiers and cops are … really on our side.”
Thus, it shouldn’t exactly be a surprise that many of the guns seized in Mexico are coming from official government sources.
Of course, even if it were true that Mexican criminals were getting their guns from the US, how is it that crime wave only goes one way? If guns are the reason for high crime in Mexico — where guns are hard to legally acquire — shouldn’t crime rates be far higher in the US where guns are far easier to get?
It can’t be that Mexico has implemented a drug war. The US wages a drug war too.
Nor can we even fall back on some theory about Mexican race or culture. Many US border towns, which are heavily Mexican-American in origin are some of the safest places in the US. El Paso, for instance, which is more than 80 percent Hispanic, has long been one of the safest cities of its size in America. Homicide is so rare in El Paso, in fact, with only 20 homicides in 2017, that the El Paso shooter doubled the homicide rate in that city all by himself.
Mexican-Style Reforms: More Gun Control and More Centralization of Power
Thus, when Mexican politicians hint that the US is not sufficiently protecting Mexican nationals, it’s hard to imagine which Mexican officials think would be the proper course of action. Should US governments adopt Mexico-style legislation?
Given the complete failure of Mexico’s gun-control regime, one would hope not.
Moreover, centralization of government power in Mexico has helped ensure local and state governments in Mexico are unable to address problems on their own.
Although the Mexican political system is technically a federal system, the reality is far different, since the central government tightly controls the overwhelming majority of tax revenues.
Indeed, the federal government has maintained the lion’s share of control of government funding. As The Economist noted in 2003, most government revenue, including all levels of government, flows to the federal level alone:
Power may be dispersed, but money is not. About 80% of federal revenues are appropriated by the centre; most of the rest falls to the states, though 5% is spent by the municipalities. In Brazil, by contrast, the federal government controls only around half of total government revenues.
Under Mexico’s law of “fiscal co-ordination”, the states’ powers to raise local revenues are restricted. They consist chiefly of fairly small taxes on payrolls and on cars; municipalities must rely on symbolic property taxes. At one extreme, the Federal District, the quasi-state which includes much of Mexico City, raises about 45% of its $8 billion budget itself. Most states are at the other extreme—lucky if they gather 10% of their spending.
For the other 90%, they must rely on federal transfers, divided up under a notoriously complicated formula dating from 1980.
The situation had not changed markedly by 2018 with Robert Velasco-Alvarez noting :
According to Moody’s , the average Mexican state collects only 10 percent of its income. The other 90 percent of the states’ budgets comes in the form of federal government transfers. 3 A former head of our secretary of the Treasury’s Unit for Coordination with the States claims that municipalities account for only 1.1 percent of Mexico’s tax revenues.
By contrast, in the United States, state and local tax collection — while certainly less than that of federal receipts — amounts to over forty percent the size of federal revenues. In numerous states, state revenues alone— not counting local revenues — reach thirty percent the size of federal revenues. When we look at federal aid to states as a percentage of state revenues, we find that rarely does federal spending amount to more than 35 percent of state revenues.
In other words, states in Mexico are considerably more reliant on federal spending than is the case in the US. This means more central planning and more nationwide corruption. It’s perhaps no surprise that after 20 years of top-down “solutions” to the crime problem in Mexico, homicide rates are higher than ever.
So one could imagine the Mexican politician’s version of reform: implement gun control, and centralize political power.
We can see the result of this system at work in Mexico right now.
I don’t say any of this, of course, to try and make governments in the US look blameless or competent. American politicians are certainly not strangers to gun control or corruption, especially in places like Baltimore where homicide is rampant.
Moreover, the US has long made the drug war worse in Mexico by pressuring the Mexican government to abandon efforts to de-criminalize or legalize some recreational drugs. It has long been the policy of the US to use Latin American communities as the battlegrounds in the US’s drug war. With disastrous results for the Latin Americans.
But Mexico’s current posturing and grandstanding over the murders of Mexican nationals in El Paso would be comical if the shooting weren’t so tragic. Listening to Mexican officials berate a foreign government about homicides is like listening to the US government lecture other governments about the need to respect the sovereignty of foreign states. It’s just politicians talking and ought to be ignored.
- HarmonyOS: Huawei Unveils Open-Source Android Alternative
As expected, Huawei has launched its new operating system (OS) as a potential alternative to Google’s Android OS, according to Android Authority.
News of the new operating system also comes in the wake of a U.S. trade ban against the company back in May. President Donald Trump has since claimed that the ban will be partially lifted, but the U.S. Commerce Department is still banning the company.
The U.S. ban complicates Huawei’s ability to offer Android on its phones, so HarmonyOS is seen as a plan B if the trade ban affects Google’s ability to support Huawei in the future. In fact, rumors suggest that the Chinese brand is working on a Harmony OS phone for release later this year. –Android Authority
Speaking on the first day of its annual developer conference on Friday, CEO Richard Yu announced that HarmonyOS is “the first microkernel-based distributed OS for all scenarios” which will eventually support a range of apps – with focus on HTML5, Linux and Android apps, which will ” all be able to run on our OS in the future” according to Yu.
The new platform supports smartphones, smart speakers, computers, smartwatches, wireless earbuds, cars, and tablets. In fact, Yu says the platform supports RAM sizes ranging from kilobytes to gigabytes. Interestingly enough, Huawei says HarmonyOS won’t support root access. –Android Authority
“HarmonyOS 1.0 will be first adopted in its smart screen products, which are due to launch later this year. Over the next three years, HarmonyOS will be optimized and gradually adopted across a broader range of smart devices, including wearables, Huawei Vision, and head units for your car,” the company told Android Authority in an emailed press release.
Huawei unveils HarmonyOS today. I believe it can develop into a good ecosystem based on China’s huge market. HarmonyOS will also eventually go to world market, changing the global market pattern of the operating system. pic.twitter.com/ABcbutyt3K
— Hu Xijin 胡锡进 (@HuXijin_GT) August 9, 2019
https://platform.twitter.com/widgets.js
What about Android?
While Yu said that HarmonyOS can replace Android “at any time,” he reiterated the company’s commitments to Google’s platform.
“If we cannot use Android in the future, then we can immediately switch to HarmonyOS,” said Yu, who added that migrating from Android to Harmony “is not that difficult.”
- Why Is Saudi Arabia Giving Up Land The Size Of Massachusetts For "The World's First Independent International Zone"?
Authored by Michael Snyder via The End of The American Dream blog,
Under the leadership of Saudi Crown Prince Mohammed bin Salman, a $500 billion “mega-city” is being constructed in the northwestern corner of Saudi Arabia. This city has been named “Neom”, and when it is fully completed it will be approximately “the size of Massachusetts”. The Wall Street Journal was able to recently examine 2,300 pages of classified documents related to this project, and what they discovered is absolutely stunning.
This “city of the future” will feature an artificial moon, flying taxis and robot maids, but there will also be gene-editing in order to make humans stronger and smarter, and everyone living there will be subjected to 24 hour surveillance. In addition, we are being told that this will be “the world’s first independent international zone”, and many are concerned about what exactly that is going to mean.
“Neom” certainly has a futuristic ring to it, and according to Digital Trends it was derived by combining a Greek word and an Arabic word…
Called Neom (a mix of the Greek word for “new” and Arabic word for “future”), the project aims to construct a $500 billion city, covering 10,000 squares miles of coastline and desert in northwest Saudi Arabia. With its mixture of high-tech amenities and luxury services like restaurants and shops, the goal is to build what the Wall Street Journal describes as a superior to “Silicon Valley in technology, Hollywood in entertainment and the French Riviera as a place to vacation.”
It has been reported that Saudi Crown Prince Mohammed bin Salman originally came up with the idea for the city when he “pulled up a map of his country on Google Earth and saw its northwest quadrant was a blank slate.” He ultimately decided that it would be an ideal location for “the city of the future”, and he enlisted an army of U.S. consultants to help him fulfill his dream.
But will his dream ultimately become a nightmare? There are some extremely alarming things that I want to tell you about, but first let’s talk about some of the cool stuff that is planned for the city…
The in-development Saudi Arabian city-state will have robot maids, flying taxis, and glow-in-the-dark sand, according to confidential planning documents reviewed by The Wall Street Journal. An artificial moon will light up the sky every night, and a Jurassic Park-style island will let visitors mingle with robot dinosaurs.
Sounds like a fun place to live, right?
And even though the climate of the region is extremely, extremely dry, Saudi Crown Prince Mohammed bin Salman plans to use “cloud seeding” to produce rain whenever it is needed.
In other words, the fact that they will be using geoengineering to control the weather in this city is not even being hidden.
There will also be gene-editing facilities that will be used to make humans stronger and smarter than ever before, and according to the Wall Street Journal, Neom’s board plans to make it a fully automated city “where we can watch everything”…
“This should be an automated city where we can watch everything,” Neom’s founding board is quoted as saying in the documents, according to the WSJ. “[A city] where a computer can notify crimes without having to report them or where all citizens can be tracked.”
That means while you’re chilling on the glowing beach, daydreaming about your next prix fixe meal, a drone equipped with facial-recognition technology will likely be transmitting your location to Neom’s “1984”-esque law enforcement officials.
Hmmm – that actually doesn’t sound like such a fun place to live after all.
In fact, it basically sounds like the sort of dystopian nightmare that I have always been warning about.
But even more alarming is the fact that this city is being billed as “the world’s first independent international zone”…
The city itself will be “the world’s first independent international zone,” presents its marketing literature. How independent it will actually be remains to be seen. The Kingdom of Saudi Arabia set up a “special authority,” chaired by the Crown Prince himself, to supervise the development of the project. Once its built, the zone will be managed via a “regulatory framework that will adopt world-class investment laws to support residents and targeted economic sectors,” declares its presentation, which also purports the city-state will have an “autonomous judicial system.” Its laws, enforced by city-wide automation and tracking of its citizens, would be independent of Saudi Arabia’s, created by a slate of both local and foreign investors “in accordance with international best practice.”
So this city will not technically be part of Saudi Arabia.
It will actually be a “city-state” with its own laws, rules, regulations and judicial system.
Could it be possible that this giant “independent international zone” will one day be the home base for an “international leader”?
I don’t know. I am just throwing that out there.
Obviously there is an agenda here. Why else would Saudi Arabia be willing to give up a giant tract of land the size of Massachusetts for a futuristic mega-city that won’t even be under their jurisdiction?
As is the case with so many other things, this isn’t being hidden from us at all. It is being done right out in the open, and Saudi Crown Prince Mohammed bin Salman is being quite clear that his intention is to make Neom the most important city on the entire planet.
But to me it sounds like a prison, and the truth is that this is the direction the entire globe is heading.
Already, virtually everything that we do is being watched, monitored or tracked somehow. With each passing year, the global Big Brother surveillance grid becomes even more extensive, and we have very little privacy left.
So perhaps we should stop talking so much about the dystopian nightmare that is coming, because to a very large degree it is already here.
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