Oct 10

Today’s News 10th October 2022

  • Why Zelensky's World War III Gambit Will Fail
    Why Zelensky’s World War III Gambit Will Fail

    Authored by Jordan Schachtel via ‘The Dossier’ Substack,

    None of the major parties involved in this conflict want nuclear armageddon via WWIII.

    A continually unhinged Ukrainian President Volodymyr Zelensky has spent the past year trying to draw NATO powers into direct conflict with Russia, and he has yet to achieve success, despite many attempts to do so. While the rhetoric between D.C., Brussels, and Moscow has certainly become more fiery, the kinetic pieces on the geopolitical chessboard have remained steadily in place, because the major parties to the conflict do not want to witness World War III breaking out.

    On Thursday, Zelensky ramped up the rhetoric even further, calling on NATO forces to bomb Russia and try to eliminate their nuclear arsenal.

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    Of course, such a mission, which would launch WWIII, is not even possible, as Moscow retains the nuclear triad and thousands of nuclear weapons at their disposal.

    Zelensky, an actor by trade, doesn’t seem to care about the details. He just wants NATO/US forces on the ground in Ukraine, and he’s willing to accept World War III to make that happen.

    Last week, Zelensky signed an expedited NATO application.

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    The good news, at least for now, is that none of the major parties involved in this conflict want nuclear armageddon via WWIII.

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    NATO powers certainly do not want to get thrown into a direct skirmish with Russia. As the past several months have shown, they are only content to pursue the arming and funding of Ukraine from the sidelines of the war.

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    These powers remain committed to propping up Kiev as the tip of the spear in what they hope is a long, drawn out conflict with Moscow. They do not seek a Ukrainian victory over Russia, but an Afghanistan-like perpetual war that acts both to weaken their foe and facilitate several forms of laundering for the global elite.

    Thankfully, the leaders of Western powers don’t actually believe the hysterical nonsense about Putin being some kind of imperial Hitler-like figure who seeks to conquer the entirety of Europe.

    The Russians don’t want World War III either. Their overt goal, as articulated by the Kremlin, is to eliminate the threats to their territorial integrity. Their more unspoken goal, as proven by Russia’s political and military actions, is to secure territory that is both strategically valuable and populated by citizens who welcome or are indifferent to the idea of switching sovereigns. Russia is a minimally expansionist power, in a limited setting that targets friendly populations.

    Zelensky has miscalculated, badly, because none of the internationalist players involved in propping up Kiev actually care about Ukraine. If they truly did care about Ukraine, they would seek a cessation to hostilities. Instead, the direct opposite is happening, and Ukraine has become the new gold mine for the military industrial cartel.

    Zelensky and his more recent predecessors have completely botched realpolitik. Instead of harnessing Ukraine’s power as a neutral buffer state, his government went all-in on becoming subservient to one coalition while antagonizing its more powerful neighbor. This has had devastating consequences for the Ukrainian people.

    While Ukraine’s political class, headed by Zelensky, is happy to enrich themselves by consuming small drops from the proxy war spigot, the Ukrainian nation is being torn apart by war, and its people remain impoverished.

    While it would certainly be a setback for the NATO coalition if Kiev was lost to Russia’s sphere of influence, their actions showcase that it is not something worth fighting World War III over. This concerns Zelensky, because the game would be up for him and his allies in government. Therefore, hoaxing the world into World War III is the go-to strategy for Kiev. Luckily, for now at least, no major power wants to pursue that route.

    *  *  *

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    Tyler Durden
    Mon, 10/10/2022 – 02:00

  • Michael Hudson: A Roadmap To Escape The West's Stranglehold
    Michael Hudson: A Roadmap To Escape The West’s Stranglehold

    Authored by Pepe Escobar via The Cradle,

    The geoeconomic pathway away from the neoliberal order is fraught with peril, but the rewards in establishing an alternative system are as promising as they are urgent

    It is impossible to track the geoeconomic turbulence inherent to the “birth pangs” of the multipolar world without the insights of Professor Michael Hudson at the University of Missouri, and author of the already seminal The Destiny of Civilization.

    In his latest essay, Professor Hudson digs deeper into Germany’s suicidal economic/financial policies; their effect on the already falling euro – and hints at some possibilities for fast integrating Eurasia and the Global South as a whole to try to break the Hegemon’s stranglehold.

    That led to a series of email exchanges, especially about the future role of the yuan, where Hudson remarked:

    “The Chinese whom I’ve talked to for years and years did not expect the dollar to weaken. They’re not crying about its rise, but they are concerned about flight capital from China as I think after the Party Congress [starting on October 16] there will be a crackdown on the Shanghai free-market advocacy. Pressure for the coming changes has been long building up. The spirit of reform to rein in ‘free markets’ was spreading among students over a decade ago, and they have been rising in the Party hierarchy.”

    On the key issue of Russia accepting payment for energy in rubles, Hudson touched upon a point rarely examined outside of Russia: “They don’t really want to be paid just in rubles. That’s the one thing Russia doesn’t need, because it can just print them. It only needs rubles to balance its international payments to stabilize the exchange rate – not to push it up.”

    Which brings us to settlements in yuan: “Taking payment in yuan is like taking payment in gold – an international asset that every country desires as a non-fiat currency that has a value if one sells it (unlike the dollar now, which may simply be confiscated, or ultimately left abandoned). What Russia really needs are critical industrial inputs like computer chips. It could ask China to import these with the yuan Russia provides.”

    Keynes is back

    Following our email exchanges, Professor Hudson gracefully agreed to answer in detail a few questions about the extremely complex geoeconomic processes in play across Eurasia. Here we go.

    The Cradle: The BRICS are studying the adoption of a common currency – including all of them and, we expect, the expanded BRICS+ as well. How could that be practically implemented? Hard to see the Brazilian Central Bank harmonizing with the Russians and the People’s Bank of China. Would that involve only investment – via the BRICS development bank? Would that be based on commodities + gold? How does the yuan fit in? Is the BRICS approach based on the current Eurasia Economic Union (EAEU) discussions with the Chinese, led by Sergey Glazyev? Did the Samarkand summit advance, practically, the interconnection of BRICS and the SCO?

    Hudson: “Any idea of a common currency has to start with a currency-swap arrangement among existing member countries. Most trade will be in their own currencies. But to settle the inevitable imbalances (balance-of-payments surpluses and deficits), an artificial currency will be created by a new Central Bank.

    This may look superficially like the Special Drawing Rights (SDRs) created by the International Monetary Fund (IMF), largely to fund the US deficit on military account and the rising debt service owed by Global South debtors to US lenders. But the arrangement will be much more like the ‘bancor’ proposed by John Maynard Keynes in 1944. Deficit countries could draw a specified quota of bancors, whose valuation would be set by a common selection of prices and exchange rates. The bancors (and their own currency) would be used to pay countries in surplus.

    But unlike the IMF’s SDR system, the aim of this new alternative Central Bank will not be simply to subsidize economic polarization and indebtedness. Keynes proposed a principle that if a country (he was thinking of the United States at the time) ran chronic surpluses, that would be a sign of its protectionism or refusal to support a mutually resilient economy, and its claims would begin to be extinguished, along with the bancor debts of countries whose economies prevented their ability to balance their international payments and support their currency.

    Today’s proposed arrangements would indeed support lending among the member banks, but not for the purpose of supporting capital flight (the main use of IMF loans, when “left-wing” governments seem likely to be elected), and the IMF and its associated alternative to the World Bank would not impose austerity plans and anti-labor policies on debtors. The economic doctrine would promote self-sufficiency in food and basic essentials, and would promote tangible agricultural and industrial capital formation, not financialization.

    It is likely that gold also would be an element of international monetary reserves by these countries, simply because gold is a commodity that hundreds of years of world practice already have agreed on as acceptable and politically neutral. But gold would be a means of settling payments balances, not defining domestic currency. These balances would of course extend to trade and investment with western countries that are not part of this bank. Gold would be an acceptable means of settling western debt balances to the new Eurasian-centered bank. That would prove a vehicle for payments that western countries could not simply repudiate – as long as the gold was kept in the hands of the new bank members, no longer in New York or London as has been the dangerous practice since 1945.

    In a meeting to create such a bank, China would be in a similar dominant position to that which the United States enjoyed in 1944 at Bretton Woods. But its operating philosophy would be quite different. The aim would be to develop the economies of bank members, with long-term planning or trade patterns that seem most appropriate for their economies to avoid the kind of dependency relationships and privatization takeovers that have characterized IMF and World Bank policy.

    These development objectives would involve land reform, industrial and financial restructuring, and tax reform, as well as domestic banking and credit reforms. Discussions at the SCO meetings seem to have prepared the ground for establishing a general harmony of interests in creating reforms along these lines.”

    Eurasia or bust

    The Cradle: In the medium term, is it feasible to expect German industrialists, contemplating the coming wasteland, and their own demise, to revolt en masse against the NATO-imposed trade/financial sanctions against Russia, and force Berlin to open Nord Stream 2? Gazprom guarantees the pipeline is recoverable. Don’t need to join the SCO to make that happen…

    Hudson: “It is unlikely that German industrialists will act to prevent their country’s de-industrialization, given the US/NATO stranglehold on Eurozone politics and the past 75 years of political meddling by US officials. German company heads are more likely to try and survive with as much personal and corporate wealth intact as they can in the wake of Germany being turned into a Baltic-state-type economic wreckage.

    There already has been talk of shifting production – and management – to the United States, which will block Germany from obtaining energy, metals and other essential materials from any supplier not controlled by US interests and their allies.

    The great question is whether German companies would emigrate to the new Eurasian economies whose industrial growth and prosperity seem likely to far overshadow that of the United States.

    Of course the Nord Stream pipelines are recoverable. That is precisely why US political pressure from Secretary of State Blinken has been so insistent that Germany, Italy and other European countries double down on isolating their economies from trade and investment with Russia, Iran, China and other countries whose growth the US is trying to disrupt.”

    How to escape “There Is No Alternative”

    The Cradle: Are we reaching the point when the key players of the Global South – over 100 nations – finally get their act together and decide to go for broke and stop the US from keeping the artificial neoliberal global economy in a state of perpetual coma? This means the only possible option, as you have outlined, is to set up a parallel global currency bypassing the US dollar – while the usual suspects float the notion of a Bretton Woods III at best. Is the FIRE (finance, insurance, real estate) financial casino omnipotent enough to smash any possible competition? Do you envisage any other practical mechanisms apart from what is being discussed by BRICS/ EAEU/ SCO? 

    Hudson: “A year or two ago it seemed that the task of designing a full-fledged alternative world currency, monetary, credit and trading system was so complex that the details hardly could be thought through. But US sanctions have proved to be the needed catalyst to make such discussions pragmatically urgent.

    The confiscation of Venezuela’s gold reserves in London and its US investments, the confiscation of $300 billion of Russia’s foreign-exchange reserves held in the United States and Europe, and its threat to do the same to China and other countries resisting US foreign policy has made de-dollarization urgent. I have explained the logic in many points, from my Valdai Club article (with Radhika Desai) to my recent book on The Destiny of Civilization, the lecture series that I prepared for Hong Kong and the Global University for Sustainability.

    Holding securities denominated in dollars, and even holding gold or investments in the United States and Europe, is no longer a safe option. It is clear that the world is breaking into two quite different types of economies, and that US diplomats and their European satellites are willing to tear up the existing economic order in hopes that creating a disruptive crisis will enable themselves to come out on top.

    It also is clear that subjugation to the IMF and its austerity plans are economic suicide, and that following World Bank and its neoliberal doctrine of international dependency is self-destructive. The result has been to create an unpayable overhead of debts denominated in US dollars. These debts cannot be paid without borrowing credit from the IMF and accepting terms of economic surrender to US privatizers and speculators.

    The only alternative to imposing economic austerity on themselves is to withdraw from the dollar trap in which US-sponsored “free market” economics (markets free from government protection, and free from government ability to recover the environmental damage from US oil companies, mining companies and the associated industrial and food dependency) is to make a clean break.

    The break will be difficult, and US diplomacy will do everything it can to disrupt the creation of a more resilient economic order. But US policy has created a global state of dependency in which literally There is no alternative but to break away.”

    Germanexit?

    The Cradle: What is your analysis on Gazprom confirming Line B of the Nord Stream 2 was not touched by Pipeline Terror? This means Nord Stream 2 is practically ready to go – with a capacity to pump 27.5 billion cubic meters of gas a year, which happens to be half of the total capacity of – damaged – Nord Stream. So Germany is not doomed. This opens a whole new chapter; a solution will depend on a serious political decision by the German government.   

    Hudson: “Here’s the kicker: Russia certainly won’t bear the cost again, only to have the pipeline blown up. It will be up to Germany. I bet the current regime says “No.” That should make for an interesting rise of the alternative parties.

    The ultimate problem is that the only way Germany can restore trade with Russia is to withdraw from NATO, realizing that it is the major victim of NATO’s war. This could only succeed by spreading to Italy, and also to Greece (for not protecting it against Turkey, ever since Cyprus). That looks like a long fight.

    Maybe it’s easier just for German industry to pack up and move to Russia to help modernize its industrial production, especially BASF for chemistry, Siemens for engineering, etc.. If German companies relocate to the US to get gas, this will be perceived as a US raid on German industry, capturing its lead for the US. Even so, this won’t succeed, given America’s post-industrialized economy.

    So German industry can only move eastward if it creates its own political party as a nationalistic anti-NATO party. The EU constitution would require Germany to withdraw from the EU, which puts NATO interests first at the federal level. The next scenario is to discuss Germany’s entry into the SCO. Let’s take bets as to how long that will take.”

    Tyler Durden
    Sun, 10/09/2022 – 23:30

  • Majority Of GOP Nominees Doubt Legitimacy Of 2020 Election: WaPo
    Majority Of GOP Nominees Doubt Legitimacy Of 2020 Election: WaPo

    A Washington Post analysis has identified 299 GOP candidates for House Senate and key statewide offices that should be called out for wrongthink – namely, questioning the legitimacy of the 2020 US election.

    For example;

    Those who cast doubt over election integrity “are running in every region of the country and in nearly every state.“

    Liberals, prepare thine fainting couches…

    According to the Post – “The implications will be lasting: If Republicans take control of the House, as many political forecasters predict, election deniers would hold enormous sway over the choice of the nation’s next speaker, who in turn could preside over the House in a future contested presidential election.”

    The rest of the report contains multiple instances of the phrases “false claims” , “deniers” , and even includes the most dramatic quote we’ve ever heard regarding the topic;

    “Election denialism is a form of corruption,” according to Ruth Ben-Ghiat, a NY University historian and author of ‘’Strongmen: Mussolini to the Present.”

    “The party has now institutionalized this form of lying, this form of rejection of results. So it’s institutionalized illegal activity. These politicians are essentially conspiring to make party dogma the idea that it’s possible to reject certified results.”

    Really Ruth?

    We get it… it’s ok when they do it.

    Tyler Durden
    Sun, 10/09/2022 – 23:00

  • Our Deluded Leaders Ignore Reality And Ensure Disaster
    Our Deluded Leaders Ignore Reality And Ensure Disaster

    Authored by Phillip Carl Salzman via The Epoch Times,

    Do you think that without electricity you can charge an electric car? The governor of California Gavin Newsom and the dozen states that follow California’s rules do, and so apparently does Prime Minister Justin Trudeau of Canada. They have mandated electric cars by 2035. But the “green energy” that they also mandate is incapable of supporting an electric grid that will charge anything more than your cell phone.

    Have you tried growing crops without fertilizer? The United Nations Environmental Program demands that you do so. Their advice was tragically made government policy in Sri Lanka and led to the collapse of agricultural production, food security, and the national economy. But Trudeau has adopted UNEP advice and is pressing Canadian farmers to dispense with fertilizer. So much for Canada feeding the hungry of the world. Perhaps if the farmers don’t comply quickly and fully enough, it will be necessary to declare the Emergencies Act once again.

    Do you believe that if the temperature increases several degrees all life on Earth with be extinguished? President Joe Biden does, calling climate change, which has been going on throughout the history of the Earth, an “existential crisis.” Apparent Trudeau believes the same, as he has systematically destroyed the Canadian economy in fear of climate change. All of our left-wing elites believe in this “existential crisis,” notwithstanding the fact that all of the predictions based on fictional computer models—a rise in sea levels flooding all coastal areas and inundating islands, the melting of the polar ice caps and glaciers, the disappearance of polar bears, massive deaths from tornados, hurricanes, and other extreme events—were refuted, as these things never happened, a sure indication that climate catastrophism is nonsense.

    Have our climate extremist leaders ever even heard about the global greening resulting from the increase in CO2, the florescence of vegetation all over the world, and its great boon for agriculture? So what can we conclude? Michael Shellenberger, in agreement with the 1,200 scientists and professionals who signed the World Climate Declaration, says “there is no scientific basis for any claim of climate apocalypse.” He continues, “It is hard to come up with any scenario where temperature changes of 4°C could be world-ending.”

    Another reform advocated by our leaders at the national, state or provincial, and municipal levels has been “justice reform.” The justification for this is that there are too many criminals in prison, and that criminals are really victims of “society,” so should be treated sympathetically. Black and Hispanic criminals, who make up a majority of violent offenders, are, it is alleged, victims of “systemic racism,” so their criminality is not really their fault. Thus, “social justice” requires that they not be incarcerated, or, if currently incarcerated, be released immediately.

    Some members of the U.S. Congress have advocated defunding the police and abolishing all jails and prisons. Democrat governors have released tens of thousands of offenders, including violent offenders.  Some states, New York and Illinois, have done away with cash bail, simply releasing those arrested into the public. Many Soros-funded district attorneys refuse to indict individuals for criminal acts. Laws have been passed in California that essentially legalized theft of up to $950. Though repeatedly attacking random civilians, mentally ill violent offenders among the vast populations of homeless in cities are excused for their crimes because they are homeless and mentally ill, so nothing can be done about them.

    The result of all this, precisely recorded in crime statistics, is the massive increase in crime, particularly violent crime, over the last few years. Recidivism, repeat violent offenses, of those released from prison, unindicted, or released on their own bond is common. In cities particularly, the streets and public transport are unsafe. Anyone walking on the sidewalk can be attacked at any time, either for their valuables or because someone mentally ill is angry. Driving is equally unsafe, as car-jackings are a growth industry. You take your life in your hands taking a bus or subway, both favorite places for the mentally ill homeless. Don’t stand too near the edge of the platform in the subway, or someone might find it too tempting to push you under a train.

    Trudeau’s answer to the increased lawlessness, yes, even in Canada, is to forbid law-abiding civilians from owning firearms and from using them in self-defense. This ensures that only criminals could have and use guns. What could go wrong? Biden and members of his party loudly condemn “gun violence,” but never have anything critical to say about the criminals who use the guns, except of course that they are victims who must be coddled. The real victims of violent crime are never given any thought by our leaders, because they are probably “privileged.” The reality, of course, is quite different. The privileged government officials all have teams of armed bodyguards. The many victims of violent crime are primarily black and Hispanic, but also Asian and Jewish minorities.

    Our leaders know that they must capture the youth in order to ensure their control in the future. Trudeau promulgated in 2017 a mandatory program called “Dimensions: Equity, Diversity, Inclusion,” requiring university presidents to sign it formally on behalf of their universities, and restricted the allocation of national government funds to those institutions that fulfilled their objectives to the satisfaction of national bureaucrats. The three “independent” national funding agencies for medical, natural science, and social science research adopted the EDI guidelines in their funding. The new objectives for higher education were “social justice,” anti-racism, and “decolonialization,” while the old universities’ objective of the disinterested search for truth was rejected, along with its criteria of achievement and merit because they are allegedly the tools of racist white male supremacy and colonialism. With reverse racism and reverse sexism now obligatory, Canadian universities have never been the same. Nor has science, now that biology is canceled in favor of radical gender theory, and non-colonial “indigenous science” is a growth industry.

    …

    Leaders have based their childish actions on ideological delusions and imaginary virtue signaling, regardless of the disastrous consequences for their citizens and for future generations. We are paying for this now, but the consequences will get worse and worse. Our future is a freight train headed for us at top speed.

    Read more here…

    Tyler Durden
    Sun, 10/09/2022 – 22:30

  • Payrolls Turn Negative Next Quarter And Stay There For All 2023: BofA
    Payrolls Turn Negative Next Quarter And Stay There For All 2023: BofA

    After Friday’s payrolls report once again surprised to the upside, while the unemployment rate unexpectedly slumped near all time lows as the number of unemployed workers dropped sharply in September, sparking a swoon in the S&P on 6 of the past 7 payroll Fridays, Bank of America’s economists summarized the payrolls data noting that there was “little in our BofA Indicator of US Labor Market Conditions and BofA Indicator of US Labor Market Momentum that suggests current and expected Fed tightening have significantly dented the strength of labor markets.” They go on to note that while conditions have moderated somewhat, they remain near all-time highs, and “those that were expecting the Fed to pivot to a slower pace of rate hikes in November may very well be disappointed on the heels of today’s report.”

    But it’s not all good news: momentum – which is the marginal rate of change in labor market conditions – has softened somewhat over the past year, likely reflecting some of the unusual nature of labor market performance during the pandemic. In other words, the BofA framework would normally interpret slower payroll employment and stronger wage growth as late-cycle developments, whereas in the current context they could simply characterize a labor market emerging from the pandemic. The bank’s economists conclude that “notwithstanding this signal extraction problem, we are inclined to take the framework at face value; though recent employment reports would be viewed as robust by any historical standard, they are still less robust than some employment reports received in 2020 and 2021.”

    A far more ominous take on the NFP report was provided courtesy of BofA credit strategist Yuri Seliger who wrote that while the September Payrolls report was strong, “we should start seeing a slowdown in jobs soon.”

    And unlike other banks who still pretend the US can magically avoid a recession with 7% mortgages, record credit card rates and near record low savings rates, the BofA strategist (whose employer recently forecast a recession as a base case) actually put his money where his mouth is and wrote that the bank’s economists are calling for Payrolls to drop to about half the pace in 4Q vs 3Q and then go negative in 1Q-2023, where they will stay until the end of the year.

    This is because financial conditions are tightening fast. Here, BofA economists estimate conditions are already much tighter than at the peak of the prior cycle in 2018.

    Meanwhile, as we discussed earlier, the interest-rate sensitive part of the economy – housing…

    … and autos…

    …  are both showing clear signs of slowing. On the IG credit side the industrial corporate index notional is already shrinking ex. rising stars for the first time since 2005

    In conclusion, Seliger looks ahead and muses that how much growth slows in 2023 will “ultimately determine the impact on credit fundamentals. A stronger than expected US economy now, and the resulting more rapid Fed tightening cycle, create more downside risk to growth in 2023.” The good news for credit investors is that the coming recession matters less for IG spreads, because as long as it is shallow, the impact on IG credit fundamentals is limited. That’s because companies have already been conservative with their balance sheets, with no increases in gross debt in each of the past six quarters. On the other hand GDP growth remaining positive in nominal terms should support earnings, but should growth continue to shrink then after two quarter of dodging the bullet, corporate profits will finally be hit some time in Q4, sparking the long-overdue retail capitulation that Goldman said is finally starting.

    Tyler Durden
    Sun, 10/09/2022 – 22:00

  • Top Medical Center To Pause Transgender Surgeries On Minors After Backlash
    Top Medical Center To Pause Transgender Surgeries On Minors After Backlash

    Authored by Zachary Stieber via The Epoch Times,

    A top medical center in Tennessee is pausing the removal of breasts and other procedures that it says were performed on transgender youth in recent years.

    The Vanderbilt University Medical Center (VUMC) disclosed the pause in a letter to a state representative on Oct. 7.

    VUMC doctors have performed breast removals and other surgeries for youth who think they’re a different gender, according to lectures given by VUMC doctors. Archived versions of the webpage for the VUMC “pediatric transgender clinic” says that puberty blockers and “gender-affirming therapy” are among the services offered.

    The transgender clinic, which also services adults, has performed “gender-affirming surgical procedures” for an average of five minors per year since it started in 2018, Dr. C. Wright Pinson, deputy CEO, told state Republican Rep. Jason Zachary in the new letter.

    All of the minors were 16 or older, none received “genital procedures,” and parental consent was obtained for all patients, according to Pinson.

    Zachary and 61 other Tennessee House Republicans in September asked VUMC to pause what they described as “surgical mutilations of minor children” until they had a chance to craft and pass legislation that prohibits such procedures.

    Pinson’s letter, a response to the request, said that VUMC would pause the surgeries for minors while the center reviews a new version of recommendations by the World Professional Association of Transgender Health (WPATH) and consults with local and national experts on the updated recommendations.

    WPATH’s recommendations say that youth should show “several years of persistent gender diversity [or] incongruence” before being given hormones or surgeries but the group also removed any age restrictions regarding transgender surgeries, which include breast removal and womb removal.

    The review may take several months, Pinson said. He also said that if new laws are passed VUMC will comply with them.

    Zachary said in a statement that he appreciated the response.

    “Glad that VUMC has paused surgeries for children at their transgender clinic. This is a win for the safety of our children, but we’re committed to ensuring this never happens in Tennessee again,” Tennessee House Majority Leader William Lamberth, a Republican, said in a statement.

    Tennessee Gov. Bill Lee, a Republican, has called for lawmakers to pass legislation that would not allow “permanent, life-altering decisions that hurt children,” and a number of legislators said they plan to craft bills to that effect and introduce them in January when lawmakers are due to gather.

    Tyler Durden
    Sun, 10/09/2022 – 21:30

  • Credit Card Rates Just Hit A Record As The Average Car Loan Rises To Fresh All Time High
    Credit Card Rates Just Hit A Record As The Average Car Loan Rises To Fresh All Time High

    With the 30 Year mortgage now (un)comfortably into 7% territory, the US housing market is already suffering the “sharpest turn since the 2008 crash“, according to Redfin…

    … pushing the average mortgage payment almost 50% to $2,500 from around $1,700 at the start of the year.

    But we won’t focus on mortgage in this post (we have done so excessively on various previous occasions), especially since in a world where most Americans have been forced to rent (with the average house increasingly unaffordable), having a mortgage became a luxury for the middle class long ago. Instead, we will bring readers’ attention to what is no longer a luxury, but with the US savings rate at record lows…

    … and with credit card debt soaring every month by record amounts…

    … to record highs…

    … it is that tiny piece of plastic that has become absolutely indispensable in funding the American way of life, and unfortunately as the latest US consumer credit report showed, the interest rate on all credit card accounts (that were assessed any interest as of Q2), just jumped to the highest since Fed record-keeping started in Q4 1994.

    Yes, between soaring prices, exploding rents (after all, with 7% mortgage which nobody can afford, what’s left of America’s middle class is being pushed into renting), the rate on credit cards – that last lifeline to keeping with exploding inflation – just hit the highest on record. We will leave it to readers to decide what this means for the US economy, but first we just wanted to point out something else.

    As we noted last week, used car prices are finally sliding, and not just sequentially…

    … but also annually.

    That’s a problem if the surge in car prices was the result of soaring auto loans. Which as the final chart in this post shows, was precisely the case as the average new car loan just surpassed $38,000 for the first time.

    Translation: the implosion of the US consumer is coming and it will be spectacular.

    Source: Federal Reserve

    Tyler Durden
    Sun, 10/09/2022 – 21:00

  • A List Of Those Who "F**ked With Biden"
    A List Of Those Who “F**ked With Biden”

    Authored by Rajan Laad via American Thinker,

    My late uncle once told me that there are four kinds of people in the world. 

    The gifted who are aware of their gifts, the gifted who are unaware of their gifts, the imbeciles who know of their imbecility, and finally the imbeciles who are unaware of their imbecility.

    “Beware of the fourth kind, always,” he warned me as he concluded.

    Joe Biden is a perfect illustration of this fourth kind. 

    Not only is Biden a dolt who is unaware of his obvious shortcomings, he is also delusional enough to attribute his achievements, which are a consequence of his good fortune, to his nonexistent talent.

    Many of his gaffes, prior to his impaired cognitive abilities, were a product of this erroneous overestimation of his abilities, coupled with his arrogance.

    In his mind, all he had to do was show up and say whatever occurred to him at that moment, no preparations were required.

    This mindset causes his trademark crude swagger and revolting smugness.

    On some occasions, he paid premature tributes to the living.

    On other occasions, he boasted about getting a Ukrainian prosecutor, who would have exposed his son Hunter’s shady dealing in Ukraine and Biden’s abuse of power and corruption, fired. He knew the establishment was on his side and he had nothing to fear. 

    Recently, during a visit to Florida to assess the damage done by Hurricane Ian, Biden bragged to Fort Myers Beach Mayor Ray Murphy that “no one f–ks with Biden.”

    If Trump had made similar claims while visiting a hurricane-ravaged state, the media would have called him every pejorative epithet known to mankind and House Democrats would have conducted another impeachment.

    But since it is Biden, they ignore it and euphemize the profanity with the claim “Oh that’s just Joe, he means well.”

    Time to fact-check Biden’s claim and look at those not only who dared to f—k with Biden but also lived to tell the story

    Barack Obama

    It happened during his April 2022 visit to the White House.

    Obama knows Biden’s cognitive abilities are impaired. Anyone with the slightest sensitivity would have taken Biden along and ensured that Biden was included in all the fun.

    But no, the narcissistic Obama joked at Biden’s expense during his remarks:

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

    Following the speech, Biden was left all alone on stage, looking on listlessly:

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

    After managing to descend from the stage, Biden attempted to include himself in a conversation that Obama was engaged in with others, but was ignored. 

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

    Back in 2020, when Biden was running for president from his basement, Obama apparently told aides: “‘Don’t underestimate Joe’s ability to f-things up.” 

    What happened to Obama after humiliating Biden privately and in public?

    He still remains the de facto leader of the Democrats.

    Kamala Harris 

    Among the others who ignored Biden during Obama’s April visit to the White House was Kamala Harris.

    But that wasn’t the worst blow Kamala delivered to Biden.

    During her failed presidential campaign Harris brutally attacked Biden calling him out for his racism:

    What happened to Harris after that vicious attack on Biden?

    She was made Biden’s vice president, the second most powerful individual in the U.S., and next in line to the presidency.

    Alexandria Ocasio-Cortez

    The self-centered champagne socialist and ‘squad’ leader AOC refused to endorse the idea of Biden seeking re-election in 2024.

    What happened to AOC after snubbing Biden?

    She is on track to be reelected during the midterms and she still continues to attract the attention she craves for.

    Prince Mohammed bin Salman

    Back in July, Biden met the crown prince of Saudi Arabia and shared a cordial fist bump with the leader of a nation he once pledged to make a “pariah” owing to its human rights record.

    After waging war on energy in the U.S. by shutting down the Keystone XL pipeline and restricting drilling on U.S. soil, Biden visited Saudi Arabia to plead with Prince Salman to increase the production of oil to combat the resulting energy crisis.

    Biden’s implorings fell on deaf ears

    The kingdom and its OPEC+ allies announced a massive cut to oil production.

    What’s happened to OPEC+ and Saudi Arabia after.they rejected Biden’s plea?

    They continue to be powerful and dictate the price of petroleum and diesel fuel all over the world.

    The Taliban

    On July 08, 2021, following his hasty withdrawal from Afghanistan, Biden effectively declared ‘mission accomplished’ by saying the following: 

    “The Taliban is not the North Vietnamese army. They’re not remotely comparable in terms of capability. There’s going to be no circumstance where you see people being lifted off the roof of an embassy in the—of the United States from Afghanistan.”

    On 26 August 2021, ISIS carried out a suicide bombing at Kabul Airport that killed 183 people including Afghans and United military personnel.

    Biden pledged to ‘not forgive the attack’ and ordered an airstrike that killed an Afghan aid worker and seven children instead of the perpetrators

    What happened to the Taliban after humiliating Biden?

    They continue to be in power in Afghanistan and continue to provide a safe haven to terror groups such as al-Qaida and ISIS.

    Kim Jong-un

    Back in 2019, North Korea called Biden a “rabid dog” that “must be beaten to death with a stick.”

    President Trump met with North Korea’s leader Kim Jong-un on two occasions, resulting in no major missiles fired in that region.

    Back in May during his trip to South Korea, Biden pledged to do whatever it takes to confront North Korea. Following Biden’s departure, North Korea fired three ballistic missiles.

    What happened to North Korea after personally and symbolically attacking Biden?

    Early in September, North Korea declared itself to be a nuclear weapons state. 

    North Korea recently fired 2 ballistic missiles at Japan and followed that with many other missiles after Kamala Harris visited South Korea.

    Vladimir Putin

    The Democrats concocted their preposterous conspiracy theory that President Trump had colluded with Putin to rig the 2016 elections. They claimed Trump was soft on Russia.

    But the truth is, Putin didn’t conduct any military operations when Trump was in power. He felt that Trump was too unpredictable.

    However, following Biden’s disastrous withdrawal from Afghanistan, things were different: Putin was emboldened to engage in a military intervention in Ukraine.

    Biden has responded by dispatching billions worth of aid and advanced arms to Ukraine.

    What happened to Putin after taking on Biden?

    Putin continues to be the President of Russia, the Russian currency continues to rise and the war continues to ravage the region.

    The New York Times

    Back in July, the Democrat mouthpiece, the New York Times carried a piece that made the case that Biden, at 79, is “testing the boundaries of age and the presidency.” The piece had comments from 50 Democrat officials who urged Biden not to run again in 2024.

    What happened to the NYT after attacking Biden?

    They continue to be the foremost outfit that the Democrats go to in order to spread their message.

    Verdict to Biden’s boastful claim:  

    Four Pinocchios

    Biden’s boast is a blatant falsehood to being gravely insensitive.

    Tyler Durden
    Sun, 10/09/2022 – 20:30

  • The Effects Of Quantitative Tightening: Less Liquidity, More Volatility
    The Effects Of Quantitative Tightening: Less Liquidity, More Volatility

    How are interest rate hikes and quantitative tightening affecting markets?

    The Federal Reserve’s fast-paced rate hikes and initial reductions of its balance sheet have resulted in liquidity drying up across markets, amplifying volatility and uncertainty.

    As Visual Capitalist’s Advisor Channel shows in this ‘Markets in a Minute’ from New York Life Investments explains how quantitative tightening affects markets, and charts the rise in volatility spurred by the severe decline in S&P 500 futures book depth.

    What is Quantitative Tightening (QT)?

    Quantitative tightening (QT) is the infamous twin to quantitative easing (QE). For context, quantitative easing is the injection of liquidity into bond markets by the Federal Reserve buying Treasuries and mortgage-backed securities which are added onto the Fed’s balance sheet.

    As a result, during periods of quantitative easing, Treasuries and certain mortgage-backed securities have a large-scale buyer providing buy-side liquidity, reducing the impact of sellers in the market. This supports bond prices, and prevents bond yields from rising too quickly.

    Quantitative tightening is a reduction of the assets on the Federal Reserve’s balance sheet. This means letting Treasuries mature and not rebuying them, or even selling them on the market. Opposite to quantitative easing, QT removes buy-side liquidity from the market and can result in bond prices falling and yields rising.

    How Rate Hikes and Quantitative Tightening Affect Markets

    Along with quantitative tightening’s reduction of liquidity from markets, interest rate hikes can also result in less market liquidity.

    As interest rates rise, so do borrowing costs for capital. This results in less money being lent out and fewer deals being funded, higher mortgage and other loan rates, and tighter overall purse strings of market participants and everyday consumers. In this way, higher interest rates slow down market and economic activity.

    The Fed’s pace of rate hikes in 2022 has been one of the fastest in history, with the Federal Funds rate starting the year at 0.0-0.25% and projected to end the year somewhere between 4.0-4.5%.

    As rates have continued to rise, the rate of quantitative tightening doubled in September to now let a maximum of $60 billion of Treasuries and $35 billion of mortgage-backed securities roll off its balance sheet without repurchase.

    This acceleration in QT could see market liquidity dry up even more, further amplifying volatility.

    How Low Liquidity and High Volatility Raise Risk

    One of the clearest measures of liquidity is a market’s book depth. Book depth is the amount of available buy and sell orders in a market’s order book.

    More orders stacked up on either side results in thicker book depth, or deeper liquidity for incoming buy and sell orders to tap into, while less orders on either side result in thinner book depth, especially at the top of the book.

    The top of the book is where buy and sell orders are closest to the last traded price:

    • $101 – Closest sell orders
    • $100 – Current/last traded price
    • $99 – Closest buy orders

    In the example above, buy orders at $101 and sell orders at $99 are at the top of the order book since they are closest to the last traded price.

    As liquidity tightens and book depth thins out, orders at the top of the book become smaller, meaning that prices can move around more easily as big trades come into the market to fill orders at the top of the book.

    In this way, tighter liquidity and thinner book depth result in higher volatility, largely raising risk for market participants. This can turn into a self-reinforcing cycle, as investors sit out of the markets to avoid periods of high volatility, resulting in even less liquidity and higher volatility.

    Looking Ahead

    As book depth has thinned out significantly over the past year, volatility began to rise alongside the market’s uncertainty.

    With more rate hikes incoming and the Fed’s QT operations continuing at a faster pace now, market participants may brace for even less liquidity in markets and the possibility for further volatility and heightened risk.

    Tyler Durden
    Sun, 10/09/2022 – 20:00

  • Jagmeet Singh Gaslights Canadians On "Greedflation"
    Jagmeet Singh Gaslights Canadians On “Greedflation”

    Authored by Mark Jeftovic via BombThrower.com,

    He wants Canadians to forget who is propping up Trudeau

    Canada’s NDP leader Jagmeet Singh took Canada’s Thanksgiving weekend as an opportunity to virtue-signal on Twitter, where he blamed corporations and conservatives for causing “greedflation” that is gouging everyday Canadians at the cash register.

    Meanwhile he single-handedly props up the government whose policies brought it about.

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

    It’s not only disingenuous for Singh to be blaming Canadian businesses for inflation, he’s also trying to foist responsibility for it onto the Liberal and Conservative parties – as if the NDP is the blameless voice of reason in the room:

    The reality is that it’s the Conservatives, and their newly elected populist leader  have effectively zero influence on policy in the House of Commons right now.

    Why?

    Because the Liberal government is literally kept in power by a coalition agreement with Jagmeet Singh’s NDPs. That agreement guarantees the Liberals will survive any non-confidence motions brought against them until their present term expires. That means that unless Jagmeet Singh himself, scraps this agreement, he, Jagmeet Singh, and not the Conservatives, much less Pierre Poilievre, is single-handedly keeping the Liberals in power. That means all the prevailing policies and their consequences are on him as much as they are on Trudeau.

    It was the NDP who voted alongside the Liberals to enact the Emergency Powers Act in which the bank accounts of  “hardworking Canadians” were seized without due process. It was Jagmeet Singh’s NDP who then voted against a motion to overturn COVID mandates, and it was the NDP who voted against a motion to scrap the planned carbon tax hikes. That tax hike will triple the existing carbon tax, and that will also be paid for by “hardworking Canadians”.

    (Trudeau, for his part, recently took a victory lap for increasing GST rebates on the heels of tripling the carbon tax. He wants you to thank him for giving you some of your own money back).

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

    What really causes “Greedflation”?

    For starters, the money supply (the literal definition of inflation) has doubled since the beginning of the Trudeau administration from 1.2T in 2015 to 2.4T today:

    source: tradingeconomics.com

    To be fair, the Canadian M2 money supply has been increasing steadily under all previous administrations, (because we live in a global fiat ponzi), but we can see that pronounced inflection point at the onset of the Covid pandemic. This happened worldwide as nation states blew out their respective money supplies by an aggregated 30 Trillion USD.

    Against this backdrop, the Canadian dollar (alongside all other global currencies) has been in freefall against the USD – we’re witnessing the so-called “Dollar Milkshake Theory”, except it’s no longer a theory. As I covered in the most recent issue of my premium newsletter, it’s now The Dollar Milkshake Reality.

    For many Canadian businesses, much of their input costs are largely denominated in USD. Their Cost of Goods Sold (COGS) is rising, and as they sell their finished products to Canadians, they’re receiving CAD, which is falling.

    This, coming off of two-years of lockdowns in which politicians and bureaucrats picked and chose which businesses were “essential” and which weren’t. Small and medium businesses were squeezed hard and big box and platform megaliths, the kind whose CEOs rub shoulders with the likes of Justin Trudeau and Jagmeet Singh at Davos confabs, made out like bandits.

    So the lockdowns are over, Covid is also over (like it or not), and the world it attempting to get back to normal. There’s only one problem. The rampant monetary and credit expansion in which the world’s central banks (Canada’s included) whose stated policies were to intentionally ignite inflation, finally got it.

    But it wasn’t transitory, it’s now existential. We see glimpses of the stakes in places like Sri Lanka – where the populace overthrew their government, in Turkey – where the inflation rate is officially 90% and in Lebanon, where armed citizens have taken to storming banks to get their own deposits out.

    It hasn’t gotten to that point here in Canada, yet. But it’s certainly entertaining to be lectured to and sermonized on corporate greed by a millionaire socialist who happens to be the one person in Canada who could single-handedly bring down the current government. The same government who went along with, even led the charge, on deranged Covid policies that got us into this mess.

    *  *  *

    Mark E. Jeftovic is the CEO of easyDNS, co-founder of Bombthrower Media, author and investor. Sign up for The Bombthrower mailing list to get updates straight into your inbox and get a free copy of The Crypto Capitalist Manifesto while you’re at it. Follow me on Gettr, Telegram or if you haven’t been kicked off Twitter yet, there

    Tyler Durden
    Sun, 10/09/2022 – 19:30

  • "Massive Errors" By FBI Undercounted Number Of Armed Citizens Thwarting Active Shootings
    “Massive Errors” By FBI Undercounted Number Of Armed Citizens Thwarting Active Shootings

    Surprise, surprise… It turns out that a ‘good guy with a gun’ stopped a ‘bad guy with a gun’ far more than the FBI admits.

    According to a new report from the Crime Prevention Research Center (CPRC), the FBI’s official data contains “massive errors” when it comes to tracking active shooting incidents – and the agency has undercounted how often armed citizens have thwarted active shootings over the past eight years, Fox News reports.

    The FBI defines an active shooter as “one or more individuals actively engaged in killing or attempting to kill people in a populated area,” but does not include crimes related to criminal activities such as robberies or gang shootouts. At the center of the discrepancy are two variables – misclassified shootings and overlooked incidents.

    “Although collecting such data is fraught with challenges, some see a pattern of distortion in the FBI numbers because the errors almost exclusively go one way, minimizing the life-saving actions of armed citizens,” reads the report, which was provided to Fox by author and CPRC founder John Lott.

    Data released by the nonprofit shows that 34.4% of active shootings were thwarted by armed citizens between 2014 and 2021. However, FBI data show only 4.4% of active shootings were thwarted by armed citizens during that time period.

    All in, 360 active shooter incidents were identified by CPRC between 2014 and 2021, with 124 stopped by armed citizens. The FBI identified 252 active shooter incidents during the same time period, with only 11 thwarted by armed citizens. -Fox News

    “Whether deliberately through bias or just incompetence, the FBI database of active shooters cannot be trusted,” said Gary Mauser, an emeritus professor at Simon Fraser University in Canada, in the report.

    According to the research, the FBI misclassified at least five cases where citizens thwarted the incident, but the FBI didn’t list it in the report because the suspects were ultimately apprehended by the police. In two cases, citizens with valid firearms licenses thwarted shootings. In three other misidentified cases, “the FBI simply failed to mention citizen engagement at all.”

    25 likely mass shootings were not included according to the report – which is in addition to another 83 active shooting incidents excluded from the FBI’s figures. There were several instances of armed individuals thwarting potential mass shootings just this year – including a notable case in Indiana, where 22-year-old Elisjsha Dicken took out an active shooter at a mall, undoubtedly preventing more deaths.

    In response to the report, the FBI directed Fox to page 2 of their 2021 active shooting report, which didn’t clear anything up.

    “The FBI works proactively to identify incidents that meet the scope of our study, using internal FBI holdings and repositories, official law enforcement reports (when obtainable), as well as open-source data. There is no mandated database collection or central intake point for reporting active shooter incidents, which exists for other crimes. If additional incidents meeting FBI criteria are identified after the publication of the document, every effort is made to factor those incidents into future reporting,” states the FBI report.

    The CPRC report even differentiated how often armed citizens thwarted potential mass shootings – or mass shootings in areas where guns are allowed, vs. in gun-free zones.

    “When I was at the Department of Justice, they just refused to go and look at this. And that is whether the active shooting event occurred in a place where guns are banned. And the reason why that’s important is that if you have a place where guns are banned, it’s very likely that the law-abiding civilian is going to obey the rules that are there, and you can’t expect them to stop these types of attacks,” Lott told Fox News Digital.

    Read more here…

    Tyler Durden
    Sun, 10/09/2022 – 19:00

  • "The Fed Is Fuct…" Part 4
    “The Fed Is Fuct…” Part 4

    Via AdventuresInCapitalism.com,

    Read Part 1 here…

    Read Part 2 here…

    Read Part 3 here…

    The Fed is trapped in a box of their own creation. As a result, they may want to talk tough, but their ability to maneuver is severely restricted. The Fed claims that they’re targeting a terminal rate of 4.6% for Fed Funds, but if they did that for any period of time, they’d only succeed in blowing up the Treasury.

    Our government has run obscene deficits over the past two decades. This was only made possible by the Fed suppressing interest rates. Despite a succession of Treasury Secretaries, the US debt was never termed out. The majority of the debt is actually quite short term. During 2021, the Federal government paid $392 billion in interest on $21.7 trillion of average debt outstanding—or an average interest rate of 1.8%.

    Now imagine if Fed Funds actually got to the terminal rate and stayed there for any period of time. What would paying an average rate of 4.6% on year-end 2021 debt do to the interest expense? Well, it rises by $636 billion to $1.028 trillion or the more than the cost of our entire military spending of $801 billion in 2021. Ignoring the budget pressure, the interest cost would then be 4.5% of total GDP, up from 1.7% in 2021. That’s like tying a lead weight around the neck of our economy.

    Both political parties have engaged in a drunken spending spree. There is zero political desire to reduce spending and it seems almost inevitable that deficits will continue and even expand into the future. The question is, “who then funds the increased cost of interest expense in addition to the already egregious annual deficits?”

    Over the past few years, our deficits have increasingly been funded by the Federal Reserve purchasing government bonds through their QE, which is quite inflationary as we’re now learning. Except, QE is now going in reverse as the Fed claims that they’ll be selling off bonds as they conduct QT. If they’re selling bonds while the Treasury needs to accelerate their own debt issuances to cover the increased cost of interest, then rates will be forced higher—potentially much higher. As rates go higher, government interest costs will increase, and the cycle will accelerate the cash drain from the Treasury. At some point, the Fed will be forced to step in and monetize this debt as the buyer of last resort—which is effectively what happens in most Emerging Market crises—often making the crisis much worse. This is a cycle that once started, gets ugly quite fast.

    Just look at how fiercely the Japanese are defending the interest rate on their own sovereign debt. The Japanese must know that once rates rise, the whole game is over. The Bank of England belatedly came to a similar conclusion after only testing QT. Over here in the states, I’m not sure if the Fed has actually done any math on the issue.

    Look, Powell may want to be Volcker. He may want to crush inflation. However, he’s trapped. The Fed simply cannot take rates up beyond a certain point without blowing up the Treasury and then being forced back into even more aggressive QE to absorb the bonds from the Treasury—which would only accelerate inflation. Besides, despite Powell desiring a recession to crimp inflation, he must realize that a recession will certainly crimp tax receipts—only making the deficits worse.

    It’s all quite reflexive and low rates are what’s stopping the snowball from rolling down the hill. Raising rates will set an avalanche in motion. When your debt to GDP exceeds 100%, your ability to maneuver is restricted. The US is on the precipice of an Emerging Markets debt crisis and Powell seems determined to be the one who sets it all in motion, but only after he first blows up every other global Central Bank.

    I am always reminded that the Fed is full of useless academics, but in the end, it’s a highly political institution and they’ll craft the white papers to justify whatever idiotic course they choose to take. As the above scenario begins to unfold, the political class will force Powell to back down. They will decide that increased inflation is preferable to detonating the treasury. The Pause is coming and it will send equities parabolic. There will be a few more nasty moments between then and today.

    The trick is to survive and then max it out when the Fed admits that they’re trapped. It’s going to be one of the great wealth transfers of all time. Who’s ready??

    *  *  *

    If you enjoyed this post, subscribe for more at http://www.adventuresincapitalism.com

    We’ve been chatting about inflation quite regularly in the KEDM Discord channel. Join now athttps://link.kedm.com/AIC

    Tyler Durden
    Sun, 10/09/2022 – 18:30

  • "It's Become A Political Arm Of White House": ATF Gun Store Revocations Hit 16-Year High
    “It’s Become A Political Arm Of White House”: ATF Gun Store Revocations Hit 16-Year High

    Under the Biden-Harris administration, there has been a considerable rise in gun stores having their licenses revoked by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

    The Trace reported that 92 Federal Firearm Licenses (FFLs) had been pulled so far this year — this is the highest number since 2008. 

    And comes nearly a year and a half after President Biden declared war on ‘rogue gun dealers.’

    “The numbers provide the first indication that federal investigators have cracked down on lawbreaking gun dealers following guidance from the Biden administration ordering the agency to take a stricter tack during inspections,” Trace said. 

    The revoked 92 FFLs account for 1.3% of all the gun shops inspected. The revocation rate under Biden has skyrocketed to the highest in 16 years. 

    “The pandemic hobbled the ATF’s ability to conduct compliance inspections at gun stores, and the total number of inspections has yet to rebound to pre-pandemic levels,” Trace said. 

    Anti-gun David Chipman, former ATF agent and Biden’s failed ATF head nomination, who now works for the Center for Gun Violence Solutions at Johns Hopkins University, commented on the data, saying, “the trendline is good. We should applaud the agency for holding the industry accountable — for doing its job.” 

    However, one gun shop owner in New Jersey told AmmoLand Shooting Sports News that Biden’s crackdown on FFLs “is no longer about pursuing criminals:” 

    “It has become a political arm of the White House. These ATF agents – they’re no longer worried about what’s right and wrong. They’re worried about their jobs. This is all part of Biden’s zero-tolerance policy for gun dealers.”

    So is the surge in FFL revocations under the Biden administration just another back-door attempt to trample the Second Amendment? 

    Tyler Durden
    Sun, 10/09/2022 – 18:00

  • Are Central Banks Going Bankrupt? Morgan Stanley Makes A Striking Observation
    Are Central Banks Going Bankrupt? Morgan Stanley Makes A Striking Observation

    By Seth Carpenter, Morgan Stanley Chief Global Economist and former Fed economist

    Quantitative easing (QE) changed central bank balance sheets forever. In August 2007, the Fed’s balance sheet was about $900 billion; this year, it peaked at $9 trillion. The global rates sell-off makes investors look at their P&Ls, and I am getting more questions about central bank P&Ls…a topic I have thought about for a while. Central banks will not go bankrupt, but it is worth considering when losses do and do not matter.

    Starting with the Fed, all the income generated on the System Open Market Account portfolio, less interest expense, realized losses, and operating costs is remitted to the US Treasury. Before the Global Financial Crisis, these remittances averaged $20-25 billion per year; they ballooned to more than $100 billion as the balance sheet grew. These remittances reduce the deficit and borrowing needs. Net income depends on the (mostly fixed) average coupon on assets, the share of liabilities that are interest free (physical paper currency), and the level of reserves and reverse repo balances, whose costs float with the policy rate. From essentially zero in 2007, interest-bearing liabilities have mushroomed to almost two-thirds of the balance sheet. As Exhibit 1 shows, the Fed’s net income has turned negative, and losses will deepen as the policy rate rises. Because the Fed – like most central banks – does not mark its assets to market, losses on the portfolio are unrealized and do not flow through the income statement (although for transparency’s sake, the Fed publishes the unrealized gain/loss position on its portfolio quarterly). But if the Fed sells assets, the losses are realized, reducing net income.

    So, what do losses mean? Is there a hit to capital? Bankruptcy? An inability to conduct monetary policy? No. First, remittances to the Treasury end, and the Treasury issues more debt. The Fed then cumulates its losses and, rather than reducing its capital, creates a “deferred asset.”(The details are tedious. On the weekly H.4.1, a negative liability is reported, but in the financial statement, it is an asset.) When earnings turn positive again, remittances stay at zero until the losses are recouped; imagine the Fed facing a 100% tax rate and offsetting current losses with future income. Profitability will eventually return because currency will keep growing, lowering interest expense, and QT will shrink interest-bearing liabilities.

    There are global variations on this theme. The Bank of England has an explicit indemnification agreement with His Majesty’s Treasury for losses on QE. The effect is essentially the same as with the Fed, but the political economy differs. Where HMT and the BoE share responsibility, the Fed is on its own. Passive unwinding for the BoE is hard, given the lumpy maturity structure of gilt holdings, while the Fed has up to $95 billion per month running off passively. For the BoE, a one percentage point increase in Bank Rate lowers remittances by roughly £10 billion per year, a material sum for a country grappling with fiscal issues. The proposal to lower expense by prohibiting interest payments on reserves deserves scrutiny. If no authority remains, the BoE would have to sell assets to regain monetary control, realizing losses. The losses exist; it is the timing that is in question.

    The ECB’s balance sheet is structured quite differently, but the logic is similar. Our European team projects the depo rate at 2.5% by next March, which implies ECB losses of around €40 billion next year. Bank deposits receive the depo rate, which will be much higher than the yield on the portfolio. The BoJ’s balance sheet has similarly swelled, but as of March (the latest available data), the BoJ was in an unrealized gain position. We think that yield curve control (YCC) will be maintained through the end of Governor Kuroda’s term, but when it ends, if the JGB curve sells off sharply, the losses could be large, though unrealized.

    The most interesting variant is the Czech National Bank. The CNB has had a negative equity position for most of the past 20 years. Managing a small, open economy means focusing on the exchange rate, and most assets are foreign currency-denominated. If the central bank is credible and the Czech koruna rises, the value of its assets falls. The same is true for the Swiss National Bank, whose profits and losses have swung by billions in some years, yet it has not lost control of policy.

    Central bank profits and losses matter…but only when they matter. Before the 1900s, the subject of economics was called “political economy.” Central bank losses that affect fiscal outcomes may have political ramifications, but the banks’ ability to conduct policy is not impaired.

    Tyler Durden
    Sun, 10/09/2022 – 17:30

  • Biology Teacher Reinstated After Refusing To Use Trans Student Pronouns
    Biology Teacher Reinstated After Refusing To Use Trans Student Pronouns

    A biology teacher who was suspended last week after refusing to use transgender students’ preferred pronouns was reinstated after over 400 people showed up at the school’s auditorium last Wednesday – most of whom were there to support the educator.

    Darren Cusato

    Biology and anatomy teacher Daren Cusato was suspended by officials at South Side Area School District in rural Beaver County, PA, despite citing religious beliefs for his refusal use the trans students’ pronouns.

    “My uncle Daren is standing up for what is right, even though he is standing by himself. I am thoroughly embarrassed that South Side School District has taken this arbitrary stance in choosing to align with the one percent,” said Cusato’s niece – one of 40 people who spoke at the meeting, most in support of his reinstatement.

    South Side Area School District board

    “I am standing up here tonight to ask you to separate these two things: the very divisive but trendy topic of pronouns and the precedent that you are setting, which is that teachers need to modify their engagement of students based on how that student feels,” said another.

    One speaker slammed the district for acting out of fear of “getting sued,” according to WPXI.

    “We shouldn’t be afraid of being sued. Fine. If you want to sue us, sue us. Let’s take it to the Supreme Court. Let’s take it all the way,” she said.

    Others argued in favor of the school – with one woman insisting that “Transgender students have a right to be identified by their chosen name, their pronouns. School staff must use that name.”

    “If we allow a teacher, particularly one with a highly-regarded reputation, to model that these children don’t deserve acknowledgement of who they are, then the children we are trying to protect are in even greater danger,” said another trans-defender.

    After Cusato’s reinstatement, the district announced plans to rewrite a new policy on the subject at a future meeting.

    Tyler Durden
    Sun, 10/09/2022 – 17:00

  • Inflation, High Inflation, & Hyperinflation
    Inflation, High Inflation, & Hyperinflation

    Authored by Thorstein Polleit via The Mises Institute,

    The word “inflation” is heard and read everywhere these days.

    However, since different people sometimes have very different understandings of inflation, here is a definition:

    Inflation is the sustained rise in the prices of goods across the board.

    This definition conveys that inflation means that the increase in prices of goods is not just a one-off but permanently; and that not just some goods prices go up, but all.

    How does inflation arise? The economists have two explanations ready. The first explanation is the “nonmonetary” explanation of inflation. According to this theory, sharply rising energy prices lead to inflation. This is referred to as cost-push inflation.

    Or inflation is caused by excess demand: the demand for goods exceeds the supply, causing prices to rise.

    The second explanation for inflation is monetary. “Inflation is always and everywhere a monetary phenomenon,” as US economist Milton Friedman put it.

    And that’s right. Because in an economy without money, there is simply no inflation. So, you can see: Inflation has something to do with money.

    It can be demonstrated theoretically that an increase in the money supply leads to an increase in goods prices—the prices of goods will be higher compared to a situation where the money supply has not been expanded.

    There is quite some empirical evidence that increasing the amount of money over time is associated with rising goods prices—be it in the form of consumer goods prices and/or asset prices such as stocks and real estate.

    With a view to current developments in the world, however, both explanations can be meaningfully connected.

    The energy price shock triggered by green policies, which has many other commodity prices skyrocketing, combined with lockdown related shortages in many commodities and goods markets, are hitting a huge monetary overhang that central banks have built up over the past few years.

    And it is precisely this monetary overhang that makes it possible in the first place that the goods price shock can translate into inflation—i.e., further increases in goods prices across the board.

    From this perspective, it is the excessive monetary overhang that is responsible for goods price inflation. Without it, this kind of inflation would not have been possible; without it, there would be no continued increase in all goods prices.

    It should therefore be emphasized at this point that when talking about inflation, it makes sense to distinguish between goods price inflation and money supply inflation. Goods price inflation is the symptom, and money supply inflation is its cause.

    We know that inflation means a loss of purchasing power of money: When there is inflation, you get fewer and fewer goods in exchange for your money. In today’s unbacked paper money system—the fiat money system—inflation is chronic, a daily plague, so to speak.

    The reason: state-sponsored central banks, which have the monopoly of money production, have set themselves the goal of delivering inflation of 2 percent per year. This may seem acceptable at first glance, but not at second glance.

    Because in doing so, central banks do not preserve the purchasing power of money over time; they deliberately reduce it! They are not currency guardians but currency destroyers.

    An inflation of 2 percent may seem “small.” But over time, it leads to a considerable reduction in the purchasing power of money.

    For example, with an inflation rate of 2 percent per year, the loss of purchasing power of money is 9 percent after five years and 18 percent after 10 years.

    Inflation of 5 percent will already have destroyed the purchasing power of money by 22 percent after five years and by 39 percent after ten years.

    And with 10 percent inflation, 38 percent of purchasing power is obliterated after five years, and 61 percent after ten years.

    What is high inflation? Well, there is no single definition for that. But it makes sense to speak of high inflation when the goods prices increase by 5, 10, or 15 percent a year.

    We speak of hyperinflation when the rate of increase in the price of goods is very, very high and continues to increase over time; we could also say: when it starts galloping.

    Most modern economics textbooks state that hyperinflation occurs when prices increase by 50 percent or more per month. This definition goes back to the influential work of the US economist Phillip Cagan.

    However, be aware that a price increase of 50 percent per month implies an annual inflation rate of almost 12,900 percent. That’s frighteningly high. It would mean, for example, that the price of a cup of coffee would increase from $3 to $390 within a year.

    In view of the devastating effect of hyperinflation on the purchasing power of money in a very short time, it makes economic sense to set the threshold much lower—and to speak of hyperinflation already when there is a permanent price increase of, say, 3 percent per month.

    How does hyperinflation occur?

    The phenomenon of hyperinflation was brought upon the world with unbacked paper money, with fiat money. Hyperinflation was and is inextricably linked to fiat money.

    The reason is that the state central bank can, simply put, increase the amount of fiat money at any time and by any amount.

    And that usually happens, as currency history painfully shows, when the state is at war or when it is so overindebted that it sees no other way of financing its spending than to literally have its central bank print new money.

    Hyperinflation is usually triggered for political reasons. The economist Ludwig von Mises put it succinctly when he wrote in 1923:

    We have seen that if a government is not in a position to negotiate loans and does not dare levy additional taxation for fear that the financial and general economic effects will be revealed too clearly too soon, so that it will lose support for its program, it always considers it necessary to undertake inflationary measures. Thus inflation becomes one of the most important psychological aids to an economic policy which tries to camouflage its effects. In this sense, it may be described as a tool of antidemocratic policy. By deceiving public opinion, it permits a system of government to continue which would have no hope of receiving the approval of the people if conditions were frankly explained to them.

    I will now briefly outline how inflation escalates into high inflation and hyperinflation.

    Let us assume that the state is heavily indebted and gets into financial difficulties—because, for example, the economy is in recession. The state’s revenue is drying up, and there is a big gap in its budget. To close it, the state issues new bonds, which the central bank buys and pays for with newly created money.

    The state spends the money (on employment programs, social transfers, etc.) And the amount of money in the hands of consumers and producers increases. The recipients of the new money then exchange it for goods, causing the prices of the goods to rise as a result.

    However, people were literally taken by surprise by the sudden increase in money supply and the resulting increase in goods price inflation: actual inflation is higher than originally expected—i.e., higher than the inflation promised to them by the central bank.

    The “surprise inflation” has caused the price of goods to rise more than wages and pensions, making the general population poorer. Their real—i.e., inflation-adjusted—wages and incomes are falling.

    People see the scam and realize they have been tricked by surprise inflation. As a result, they adjust their wage, rental, and loan contracts by renegotiating them based on higher inflation expectations.

    If the state does not cut its spending in this situation, but increases it even further, for example, because the payments for social transfers (housing benefits, food subsidies, etc.) Continue to increase due to higher goods price inflation, an ever-greater expansion of the money supply courtesy of the central bank will be the consequence.

    Suppose the central bank increases the money supply (by, say, buying even more government bonds). In that case, people will be hit by surprise inflation again, and the purchasing power of their money will be eroded even more.

    The ongoing central bank fraud will sooner or later eat away confidence in the currency. As a result, people reduce their cash holdings. They increasingly demand other goods in exchange for their money. This, in turn, amplifies the general rise in goods prices, and the rising goods prices and the falling demand for money reinforce each other.

    It won’t be long before the expectations arise that the central bank will expand the money supply at ever faster rates—from, say, 10 percent this year to 15 percent next year, then to 25 percent the following year, then to 40 percent, and so on—and that it never ends. Eventually, the “flight out of money” sets in.

    A “crack-up boom” unfolds, with people eager to exchange their money for all valuables that are still available (stocks, real estate, watches, precious metals). In extreme cases, the purchasing power of fiat money collapses, it ceases to be used as money, and the money holders and savers suffer a total loss.

    Can the hyperinflation process be stopped? The answer is: theoretically, yes. The central bank just has to stop expanding the money supply. But it is precisely this measure that usually encounters fierce political resistance, especially when high inflation has already set in.

    Above all, people dread national bankruptcy, the economic and social crisis and the chaos that would ensue. The state-appointed central bank councils consider it their duty not to let the state go bankrupt in an emergency, even if that destroys the value of money.

    In highly indebted, extensive welfare states, the danger of hyperinflation is particularly great—because here, very many people depend on the financial handouts of the state and prefer—at least initially—that the state remains liquid, even if it means rising inflation.

    At some point, however, the economic costs of hyperinflation will become unbearable. In that sense, hyperinflation cannot go on forever. Either it ends with stopping any further increase in the money supply, rescuing the currency from complete collapse, allowing a crisis to clean the slate—as happened in Austria in early 1923.

    Or it ends with the purchasing power of money being completely destroyed, and the thus destroyed currency being replaced by a new one as part of a currency reform (as in the Weimar Republic, the deutsche mark was replaced by the rentenmark in November 1923).

    Or by literally removing a lot of zeros from the banknotes—as happened in Turkey in 2005, for example, when six zeros were eliminated from the banknotes, and the bank accounts were adjusted accordingly (e.g., one million Turkish lira became one new Turkish lira).

    Now you may be wondering: Is hyperinflation imminent?

    It cannot be overlooked that inflation has already turned into high inflation. In July 2022, US consumer goods prices rose by 8.5 percent compared to the previous year and by a good 9 percent in the euro area in August. German producer prices shot up a good 37 percent in August 2022.

    This has become possible mainly because—as I said earlier—central banks have created a huge monetary overhang. In the US, it is an estimated 15 percent, and in the euro area, it is of a similar magnitude.

    As a rule of thumb, this means that goods prices will continue to increase at around this rate—in the sense that goods prices will increase by 15 percent in total, or by around 7 percent per year over the coming two years.

    The increase in the money supply in the past and the resulting monetary overhang culminate in high inflation (which is bad enough), but not hyperinflation yet.

    There is certainly no reason to give the all clear, however. Because central banks’ policies in recent years have made it unmistakably clear that printing new money is seen as the least evil in times of distress.

    And this is unmistakably the attitude of inflationism, which promotes inflationary policies.

    Inflationism becomes rampant at a time when the major economies of the world are heavily indebted, essentially overleveraged, after decades of reckless fiat money expansion.

    The coming hardships and political temptations can all too easily trigger ever more unchecked fiat money inflation, which, at some point, might become uncontrollable politically and eventually grow into hyperinflation.

    Looking at it this way, one can say that high inflation is here to stay. Hyperinflation may not be at our doorstep just yet, but it is getting closer to our house every day—if the currently prevailing mentality on economic and sociopolitical matters does not change very soon, hyperinflation will come knocking—and eventually kick in the door.

    While it is impossible to say when that might happen, in my opinion, the occurrence of hyperinflation in the fiat money system is very likely; in fact, I fear it is almost inevitable.

    My advice to you is do not trust the official currencies US dollar, euro and co. Adopt the working hypothesis that the purchasing power of the official currencies will be drastically debased, some even becoming a total loss.

    Keep as little money as possible. It is best to reallocate amounts of money you do not need for current payments, such as time and savings deposits. For example, put them in physical gold and silver, in the form of coins and bars. And buy stocks (if you’re not an expert, buy a world diversified stock market exchange-traded fund or certificate).

    And yes, there are other investment options, and greater investment portfolio diversification can also make sense. But investing in productive capital (i.e., stocks) and holding precious metals in physical form (i.e., as coins or bars) is an easy, viable, and inexpensive investment strategy for many people that will help at least partially escape the consequences of the ongoing and even accelerating destruction of the purchasing power of money.

    Tyler Durden
    Sun, 10/09/2022 – 16:30

  • How QT Broke The Market: As Tail Risk Has All But Disappeared, The Dow Jones is Now More Volatile Than Bitcoin
    How QT Broke The Market: As Tail Risk Has All But Disappeared, The Dow Jones is Now More Volatile Than Bitcoin

    Something is breaking in the market, and it is not only making trading via options virtually impossible, it is also flipping legacy, post-QE trading patterns.

    As one of Goldman’s top derivatives traders, Brian Garrett, wrote over the past few days, “for much of my career, if you would mentioned “spot vol correlation” in conversation, you lose would lose 95% of your audience by the third word… this was is until investors started to feel the impact to your convexity book’s performance … depending on the market regime, this dynamic can lead to periods of both large outperformance and large underperformance.“

    What does he mean by this? The two charts below help frame what once was (low vol, high skew, index upside attractive) vs what now is (high vol, low skew, index upside less attractive)

    Regime 1 (then): “spot up vol up” became part of the investing vernacular in 2017-2019. In the first chart below, you can see why – calls went bid as the market rallied, and owners saw both a delta and vol bloom in upside convexity.

    Regime 2 (now):  in the last two years, a higher implied vol regime has manifested and the attractiveness of convexity has quickly diminished. For traders who are bullish, Garrett would recommend against buying outright call options as your carry will be quite difficult, and spot up vol up is (for now) a thing of the past (chart 2)

    Garrett’s conclusion: “keep your index vega exposure in the right tail at a minimum for now, spot up vol down is here.”

    Does this sound all too Greek (no pun intended) to you? Luckily, one of the financial all-time greats, Citigroup’s Matt King is out with a brief note (available to pro subs), putting the above arcane view into far more understandable terms: while the QE era suppressed day-to-day vol risk, it boosted tail risk; now, with QT, both trends have reversed.

    As King puts it, “sharp spikes higher in vol, especially in rates, have been accompanied by widespread concern about illiquidity.” But in many ways King thinks of this “as part of a return to a more healthy, less unbalanced, market. QE saw day-to-day vol suppressed unnaturally, at the expense of increased tail risk and OTM skew.” i.e., this is what Garrett defined as “Regime 1.” Not surprisingly, to King, “QT means the opposite”, i.e. “Regime 2“

    Obviously, the removal of the large, off-market, price-insensitive bid for risk courtesy of the Fed that resulted from QE has left a giant void beneath market prices, and to King, who has for much of the past 13 years been a tacit critic of how central banks have broken market, “it may take forced issuance or outflows to precipitate true price discovery.” However, until this point is reached, King,  like Hartnett and Wilson, finds it “hard to be bullish on risk. Indeed, just as QE almost forced investors to be short vol and long risk, so under QT there is a case your default position should be short risk and long vol.”

    Going back to Garrett, the Goldman trader also had some ideas how to monetize this growing market discrepancy, starting with index trades…

    • Index ideas:  spreads, KO calls, and call flies are the trades to put in the book for now … or a slightly nuanced version, one could go long puts on a heavy delta (ie, buy 30 delta put and run on 50delta – i believe skew should go bid if the market rally continues)

    … and then looking at single stock derivatives, where an especially interesting trade opportunity has opened up:

    • singles ideas … at this moment in time, the cost of a single stock call (3m25d) is at one of the lowest levels in the last decade  (chart 3) relative to the index. Said another way, the cost of “idiosyncratic” upside has rarely been cheaper.

    There is one more chart that the Goldman trader posted earlier last week that was quite stunning that: given the rally in yields (fwds higher) and the level of implied volatility, this is one of the first times in 20y that the 12 month 10% OTM put is funded by a call that is greater than 10% OTM (i.e, uneven risk reversals line up for costless and the vol market is daring you to sell the index call)

    Fast forward a few days until after last week’s payrolls report, when we saw Garrett’s trade recos pan out very much as expected. As mentioned above, the hurdle for spx realized to pay is extremely high, and Friday’s “underperformance of convexity is one of the most severe we have seen since March of 2020”, or as Garrett puts it, “following up from earlier this week, just as you can’t own calls for a rally, it appears you also can’t own puts for a sell off.“

    This broken derivatives market may explain why on Friday, Garrett noted that “the floor is extremely quiet despite an almost 4% (not a typo) sell off in NDX … cash 1 delta volumes are down 3% vs the 20d avg (our desk is almost 400bps better for sale, very much driven by asset managers) … option volumes are up small // mostly has been monetization and vol for sale (hence, the underperformance).”

    Then again, as King explained above while tail risk has collapsed in the QT era, day-to-day vol risk has exploded, and as Garrett notes, “if it feels like rates are completely driving the equity bus, it’s because they are… SPX and 10y yield rolling correlation (50 day) has not been this negative in 20 years … truly does not feel like this is going to change, we have had seen spx down rates up trades printing.”

    But the clearest visualization of just how broken (or is that unbroken) the market is now that QT is the dominant market force, look no further than what Garrett said is the “chart for the weekend” – “the dow jones (30 largest industrial stocks on planet earth) if officially more volatile than bitcoin.”

    More in the full note available to pro subs in the usual place.

    Tyler Durden
    Sun, 10/09/2022 – 16:11

  • Biden's Options To Counter OPEC+ Are Limited
    Biden’s Options To Counter OPEC+ Are Limited

    Authored by Irina Slav via OilPrice.com,

    • Despite repeated requests from the Biden Administration not to cut oil production, OPEC+ went ahead and did just that.

    • The geopolitical rationale behind OPEC+’s move might be more worrying than the output cut itself.

    • Besides suspending deliveries of weapons to Saudi Arabia, there’s little that the U.S. can do to raise the pressure on the Kingdom.

    This week, OPEC+ made a decision unprecedented in its history and the history of OPEC. The extended cartel approved production cuts of 2 million bpd at a time of steady demand, tight supply, and runway inflation in the world’s biggest economies.  More significantly, perhaps, OPEC+ made this decision despite Washington’s numerous attempts to change the mind of the cartel leaders, notably Saudi Arabia and the UAE.

    Just a day before the OPEC+ meeting, CNN reported that all available human resources in the administration had been mobilized, with the White House “having a spasm and panicking,” per one unnamed official.

    Top officials such as Amos Hochstein and Janet Yellen had been tasked with talking the Saudis and the Emiratis out of a production cut. Talking points included a not too thinly veiled threat of reputational and foreign relations damage: “There is great political risk to your reputation and relations with the United States and the west if you move forward.” Yet the Saudis and the Emiratis did just that. They went forward.

    Commentators were quick to note the move was a slap in the face of the United States and the collective West. It is the West that needs cheaper oil the most right now as the European Union embargoed Russian crude and fuels and the U.S. Democratic administration needs cheap gasoline ahead of the midterms to have a chance of retaining its party majority in Congress, however slim.

    In a symbolic affirmation of a major geopolitical alignment change, the Saudi energy minister, Prince Abdulaziz bin Salman, accused Reuters of bad reporting and refused to answer questions from the agency at a news conference after the OPEC+ meeting and pretty much waved off suggestions by CNBC’s Hadley Gamble that OPEC+ was siding with Russia and weaponizing oil at a time when the global economy needed it.

    In short, OPEC+ bluntly demonstrated it can do whatever it feels it needs to do to protect its own interest, even if this means going against the interests of its traditional allies, including its biggest one.

    As Bloomberg’s Javier Blas put it in a commentary piece after the meeting,

    “The US and its Western allies need to pay attention. For the first time in recent energy history, Washington, London, Paris and Berlin don’t have a single ally inside the OPEC+ group.”

    One might argue that this tectonic change in geopolitics is more important for the future of the world than the war in Ukraine, although these are certainly not isolated from each other.

    Saudi Arabia has already stated its desire to join the BRICS alliance in what can hardly be interpreted as anything less than a declaration of support for the Russia/China bloc. Its closest ally at home, the UAE, tends to follow Riyadh’s foreign policy, so it is on board with this distancing from the West and forging closing relations with a symbolic East and a very literal group that represents a substantial portion of global GDP.

    So, the world’s largest oil producers after the U.S. are turning their backs on their once geopolitical friends and siding with the enemy, to put things bluntly and simply. That talking point for the Biden top team cited above may sound like a threat, but what specific form would that threat take?

    So far, the response has been quite general. In an official statement, President Biden said on Wednesday that he was “disappointed by the shortsighted decision by OPEC+ to cut production quotas” and threatened to consider moves to “reduce OPEC’s control over energy prices.”

    The only way to reduce OPEC’s control over energy prices would be to boost domestic production, but this is something Biden has vowed he will not do and even pledged to prevent. This, however, would leave even fewer options on the response table, such as the end of arms deliveries to Riyadh.

    Indeed, some congressional Democrats have already called for a sharp reduction of arms deliveries to the Kingdom in response to the OPEC+ output reduction decision. Yet such a move would make the military-industrial complex quite unhappy with the White House, which would make such a decision difficult to sell.

    Besides suspending deliveries of weapons to Saudi Arabia, there is the political pressure campaign approach, with some on social networks already joking that it’s only a matter of time before Washington begins noticing human rights abuse and the absence of democracy in the desert Kingdom.

    Other than this, there is little Washington can do to “punish” Riyadh—OPEC’s leader and co-leader of OPEC+ along with Moscow—for the slap in the face. Sanctions would hardly be a smart decision given Saudi Arabia’s weight as an oil producer at a time when oil supply is short in the West. Coaxing didn’t work and seems unlikely to work going forward, at least for the time being.

    It is beginning to look increasingly wise to sit this one out to avoid risking an even greater alienation with former allies that can do a lot of damage to the U.S. economy—and it won’t be reputational damage. After all, Saudi Arabia is the United States’ third-largest foreign supplier of crude.

    Tyler Durden
    Sun, 10/09/2022 – 15:30

  • Hong Kong Giving Out 500,000 Free Airline Tickets To Re-Start Tourism Industry Post-COVID
    Hong Kong Giving Out 500,000 Free Airline Tickets To Re-Start Tourism Industry Post-COVID

    Hong Kong seems to be serious about getting its airline industry “off the ground” – literally – now that the pandemic (or its restrictions, should we say) is officially in the rearview mirror.

    The country was bringing in close to 56 million visitors per year before the pandemic and now, it attempting to boost its tourism industry back to towards those pre-pandemic numbers by giving away 500,000 airline tickets. 

    The move comes only days after the country did away with its mandatory hotel quarantine requirement, CNN Travel wrote this week. 

    The country’s Airport Authority Hong Kong (AAHK) told CNN that the half million tickets would be earmarked for global visitors and residents. The tickets are worth about $254,8 million when combined. 

    A spokesperson for the AAHK said: “Back in 2020, Airport Authority Hong Kong purchased around 500,000 air tickets in advance from the territory’s home-based airlines as part of a relief package to support the aviation industry.”

    “The purchase serves the purpose of injecting liquidity into the airlines upfront, while the tickets will be given away to global visitors and Hong Kong residents in the market recovery campaign,” they continued. 

    As the report notes, Hong Kong has cut off from the rest of the world due to its stringent Covid-19 quarantine rules, which made it nearly impossible to travel to the country. Hong Kong’s rules “at one stage required incoming travelers to spend 21 days in a hotel room at their own expense, with only Hong Kong residents permitted entry,” CNN wrote.

    The hotel quarantine had been reduced from seven to three days and was eventually done away with entirely on September 26. When the regulations were scrapped “droves of residents” logged on to airline websites in unison to book flights. 

    “Expedia saw a nine-fold surge in search for flights from Hong Kong to Tokyo and 11-fold for flights from Hong Kong to Osaka,” the report says. 

    Hong Kong’s Chief Executive John Lee concluded Friday: “We hope to give the maximum room to reconnect Hong Kong, and to revitalize our economy.”

    Tyler Durden
    Sun, 10/09/2022 – 15:00

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