- How Globalists Predict Your Behavior
Submitted by Brandon Smith via Alt-Market.com,
The globalists seem to have an overarching obsession with data collection. As we have seen with revelations from multiple government whistle-blowers, the establishment spends most of its time, energy and manpower collecting information not just on known threats to their supremacy, but information on EVERYONE through FISA-based surveillance protocols. This is because the establishment sees every individual as a potential threat.
Thus, the system, without warrant, is programmed to collate data from everywhere, not necessarily to be analyzed on the spot, but to be analyzed later in the event that a specific person rises to a level that poses legitimate harm to the globalist power structure.
There was a time not long ago when this notion was considered “conspiracy theory” by the mainstream, but with multiple exposures from Wikileaks to Edward Snowden it is now common knowledge that the government (and the globalists) spy on us en masse. However, I do not think that many people understand the greater implications or uses for this full spectrum surveillance. This is why you sometimes hear the argument that “if you aren’t doing anything wrong, then you have nothing to worry about…”
The truth is, mass surveillance is not done merely for the sake of surveillance, and it is certainly not undertaken for the sake of public safety. There is a greater purpose, and it is something the elites crave dearly — the purpose of total and PREDICTIVE information awareness.
The establishment is not just hoping to observe our present behavior in detail. No, they hope to use today’s data to predict our behavior tomorrow, and at this very moment, they are extremely close to achieving their goal.
Lets examine some of the methods they use in the pursuit of this goal…
Internet Macro-Analytics
Web analytics are used by almost everyone with a website of their own, and Google is a primary source for this data. Through analytics you can easily measure web traffic for a particular site, but also where in the world the traffic is coming from, how long these people are staying on your site, how many of them are new visitors versus regular visitors, how your traffic has increased or decreased over a span of months or years, etc, etc. That said analytics are not just useful to someone with a web-based business or a blog, they are very useful to the establishment. Why? Because they allow the establishment to view the behavior of most of a population at any given time.
In fact, Eric Schmidt, the former CEO of Google, is notorious for opening his big mouth and letting slip some of the finer intricacies of the establishment’s information war. In 2010 in a videotaped interview with The Atlantic, Schmidt said this:
“With your permission, you give us more information about you, about your friends, and we can improve the quality of our searches. We don’t need you to type at all. We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”
Now, this statement from Schmidt is not entirely true. The use of analytics to know the thought processes of the individual person is nonsensical because, first, individuals can be highly erratic and unpredictable due to emotion, intuition and abrupt changes in psychological dynamic. The elites do not know what you are thinking, yet.
That said, they do have the tools at their disposal to use what I would call “macro-analytics,” a widely encompassing view of internet traffic, to predict GROUP behavior.
The ability to track the web habits of an entire population allows the elites to see shifts in social consciousness in real time. For example, I believe this very method was used to predict the shift of the U.S. population and parts of Europe towards a more conservative or “populist” ideal in 2016. Because of this the elites have acted accordingly.
Instead of attempting to stop the social changes of the group, they have allowed conservative and sovereignty movements to attain a certain level of political power, while also setting those same movements up for epic failure in the next couple of years. I also predicted this move by the elites in advance before the Brexit Referendum (I will go into more detail on this in my next article).
The point is, the elites do not necessarily need to spend the incredible amount of energy required to spy on each individual. When people form into ideological groups their behavior becomes much easier to predict. Through macro-analytics, the establishment can simply watch the traffic numbers of conservative and liberty sites to see how quickly a population is adopting that mindset, or abandoning it. They can read these social movements in advance and move to intercept or co-opt.
Even if everyone in a given population found a way to use the web anonymously, this would do nothing to prevent the establishment from collecting wider analytic data and traffic data.
The best strategy for defusing this weapon at the fingertips of the elites would be a decentralized internet; an internet in which analytics are not collected or cannot be collected. Whether this can be done using existing internet infrastructure or if it would require the freedom minded to start all over from scratch, I do not know. All I know is that while the existing system is indeed useful to liberty advocates as a means to spread information and to counter disinformation, it is also highly useful to the elites as a means to view and predict mass behavior. It is a trade-off, and it is hard to say who is getting the better part of the trade.
For the establishment, though, the internet is quickly becoming, for all intents and purposes, the all seeing eye.
Human Integration With The Internet
Here is where Eric Schmidt’s claim of Google “knowing what you are thinking” could actually come true. Yet another statement from Schmidt in an interview with The Hollywood Reporter breaks down exactly what a human integration with the web might entail:
“There will be so many IP addresses… so many devices, sensors, things that you are wearing, things that you are interacting with that you won’t even sense it. … It will be part of your presence all the time. Imagine you walk into a room, and the room is dynamic. And with your permission and all of that, you are interacting with the things going on in the room.”
Note that Schmidt keeps bringing up the idea that they will have your “permission” to watch your life and actions in such vivid detail. The elites love the idea of consent, but see consent as an unconscious act. Meaning, they take joy in tricking people into consenting to their own slavery through misinformed participation. Surely, if the average person knew the extent to which their information would be used by the establishment against them they would not consent to a thing. But the elites figure that your ignorance and participation is enough for them.
Case in point, the “internet of things” which Schmidt is describing, is already here.
Not only can spy agencies tap into your web activity and your computer microphone and webcam, but also your cell phone activity. This includes the ability to use cell phone GPS to track every move you make in real time. But cell phones can also be activated while turned off (as long as they have battery power), and your conversations can be recorded while you are none-the-wiser.
The cell phone is also a powerful tool for video surveillance. Cell phone makers are now getting ready to equip products with facial recognition software, allowing organizations like the NSA to not only track you with your own cell phone, but also track you through OTHER people’s cell phones if they happen to capture your face in their own phone camera. Imagine a world in which the elites have eyes everywhere because nearly everywhere you go someone is holding a cell phone with biometric software.
New products are even more invasive. Amazon’s latest “Echo” technology, featuring “Alexa,” an app which allows the Echo to interpret your commands via microphone and talk back to you, is essentially a highly sensitive listening device (with digital speech interpretation) which people are paying good money for and willingly centralizing in their homes. This is so Orwellian it is astonishing.
Though Amazon claims the Echo only records audio for 60 seconds at a time and has refused to give data to the government in two separate instances for use in court prosecutions, the fact is that Amazon does have the data. And, if Amazon has access, then the NSA has access. It is foolish to assume otherwise. The federal pursuit of warrants to gain the data for use in court cases is nothing more than a show designed to normalize the practice of exploiting these devices and make the idea more palatable to the public. If the data can be used to solve a crime, then how can such surveillance be bad, after all?
What Schmidt envisions, and I think what the globalists envision, are millions of households filled with devices like the Echo. Not only this, but they also envision every human being reliant on the “internet of things” every moment of every day. They want a world in which you can’t accomplish any necessary activity without interacting with the network. They want a world in which everything you say and do is recorded and modeled and profiled. We are not quite there yet, but we are not far off, and if such a world comes to pass, then the elites will, in a sense, be able to predict individual thought and behavior.
Countering The Surveillance Grid
In my next article I will be outlining more methods for countering establishment intrusions into your life. Not only that, but I will also be explaining how you can turn the tables and predict the behavior of the elites.
In the meantime, the best solution to the problem is to distance one’s self from the grid wherever possible. This means doing simple things, like leaving your cell phone at home when it is not really necessary. I grew up in an era without cell phones. Trust me, we got by just fine without them.
It also means being more present-minded on the technology in your home and what it does. Do you really need your webcam overlooking your house all day long? Does your computer really need to be operating every second? Do you really need to take pictures of your entire life and post them on Facebook? Can you not limit your desire for every new gadget that happens to come along?
Humanity needs a healthy distance from technology. This doesn’t mean we go back to using a horse and buggy, but it does mean there is wisdom in moderation. Mass surveillance potential by the establishment is not just a threat to people who might be “up to no good”; it is a threat to everyone. For the ability to predict a population’s behavior makes that population highly controllable. NO ONE is morally benevolent enough to be trusted with that kind of power. Anyone deliberately seeking to obtain such power should be treated with the utmost suspicion. Only the worst of men desire the means to intrude on the lives and minds of men.
- Chuck Todd Excoriates Buzzfeed's Editor in Chief: 'YOU PUBLISHED FAKE NEWS'
Democrat shill, Chuck Todd, cannibalized the liberal media tonight by ripping into the Editor in Chief of Buzzfeed, Ben Smith, for publishing a 35 page dossier of laughable content, such as germaphobe Trump having Russian hookers urinate on him, or an irate Donald yelling at Ivanka to respond to her mother, whilst devouring a plate of chicken tenders, saying that if she didn’t her Mother would perish in a horrible accident.
Over the past day, all of the actors involved in leaking the ‘dossier’ to the public have been discredited and humiliated — from John McCain to the CIA and of course to the Buzzfeed reporter, Rick “I’m a spy” Wilson — who published the trite piece of offal — hoping it would derail Trump’s presidency and give solace to the cadre of his fellow Never Trumpsters, who’ve been waiting for the opportunity to discredit and rid themselves of his orangeness.
Unfortunately, for him and his ilk, there are consequences to publishing lies about the President elect of the United States, especially when done in a manner that garnered world wide exposure, galvanizing all of the snowflakes to unite and form into a maniacal Snow Demon set out to devour and crush President elect Donald J. Trump.
Once again, The Donald has proved to be resilient, admonishing his enemies , taking a flame thrower to them — effectively reducing them to a small, sad, pond of liberal misery to be pissed upon whenever he’s in the mood for golden showers.
Todd eats Smith.
Chuck Todd to Ben Smith: “You Published Fake News’ pic.twitter.com/3hQlf4jY66
— The_Real_Fly (@The_Real_Fly) January 12, 2017
More on Chuck Todd ripping into lazy Ben Smith from Buzzzzfeed pic.twitter.com/nVK2VOIP6l
— The_Real_Fly (@The_Real_Fly) January 12, 2017
The Final Chapter: Todd Eats Buzzzzzfeed's Smith pic.twitter.com/8HYX9GZG1l
— The_Real_Fly (@The_Real_Fly) January 12, 2017
Content originally generated at iBankCoin.com
- 2016 Chicago Homicides Even Higher Than Originally Reported
2016 was a record breaking year for the city of Chicago, unfortunately just not in any positive ways. Throughout 2016 we noted several grim milestones that plagued the Windy City: the deadliest month in 23 years, the deadliest day in 13 years, 4,300 people shot…the list goes on and on. And, as we noted a couple of weeks ago, when it was all said and done Chicago was thought to have recorded around 762 murders in 2016 (see “Chicago Violence Worst In 20 Years: ‘Not Seen This Level Of Disrespect For Police Ever’“). To put those numbers into perspective, Chicago recorded over 20% more murders in 2016 than New York and Los Angeles combined, despite having a fraction of the population.
And as bad as all those figures are, according to the Cook County Medical Examiner’s office, the actual number of homicides recorded in Chicago in 2016 were even higher than the official police data would suggest. The discrepancy is largely due to the fact that the Medical Examiner’s office tallies “homicides” while the official police data tracks “murders,” which exclude intentional killings that are deemed “justified” (e.g. police shootings). So while the official police data suggests there were 762 murders in 2016 the county numbers reflect 812 homicides including all of the “justified” killings.
The record-setting violence in Chicago is even worse than announced as new evidence shows the city suffered 50 more homicides last year than the numbers publicly reported in the past week.
The city posted a decades-high homicide count of 812 in 2016, per the Cook County Medical Examiner’s office. That’s 15% greater than the 762 murders reported by the city’s police department.
The discrepancy is largely due to the fact that the county tallies “homicides” while the police number counts “murders.” Murders are defined as violent acts subject to criminal prosecution. Homicides, according to the medical examiner, include instances “when the death of a person comes at the hand of another person. This does not imply that all homicides are murders that would be subject to criminal prosecution.”
The city police count is also lower because it excludes violent, intentional deaths if the act is deemed justified, including police killings of residents.
Meanwhile, the overwhelming majority of Chicago’s homicides came a result of gunshot wounds while ~80% of the victims in Cook County were African American.
Gun violence is the leading cause of death for victims of homicide in Chicago with 725 decedents being felled by at least one gunshot wound.
African Americans also bore the brunt of the violence in Cook County, which includes Chicago. They accounted for 710 of the county-wide total of 915 (88% of which occurred in the city). Men comprised 90% of the homicide victims in the county.
On a positive note, after a violent opening weekend to the year (see “3 Killed, 27 Wounded As Chicago Opens 2017 With A String Of Murders“), shootings and murders over the past week seem to be much lower than the run-rate for most of December. Per HeyJackAss!:
And while we would like to hope the recent data points to a less violent 2017, the collapse in shootings seems to be perfectly correlated with a 5-day period of frigid temperatures that likely kept Chicago’s violent youth indoors for a few days.
- FBI Reportedly Sought FISA Court Warrant To Spy On Trump Campaign Officials
Submitted by Jason Ditz via AntiWar.com,
A new report released today features both the FBI seeking to launch a surveillance operation against an active US presidential campaign, and the ultra-rare case of the FISA courts actually turning down an FBI request to conduct surveillance against somebody.
The report, originating at the Guardian, claims that the FBI had sought broad surveillance powers over four high-ranking members of President-elect Donald Trump’s campaign during the election, claiming them to have had contact with Russian officials.
The FISA court turned the request down, telling investigators they needed to narrow the request.
Though the four are not directly named in the report, it is related to claims in a dossier of Russia having substantial blackmail dirt on Trump, and that dossier centered heavily around accusations against a handful of Trump campaign personnel, including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.
Secondary reports speculated that the FBI may well have sought a more narrow application for surveillance, though details on that are even less clear than the previous reports.
Though a lot of these reports don’t end up substantiated, if true this could well add to the expected acrimony between the incoming administration and the intelligence community.
- American Home Sale Failures Suddenly Double In Q4 2016 – Signed, Sealed, No Deal
A stunning new analysis from Trulia suggests that rising interest rates in 4Q 2016 may actually be having the desired effect of cooling home sales, despite the best efforts of Obama to keep the party rolling at the expense of American taxpayers. Looking at homes that go from “pending” status back to “for sale”, Trulia found that the number of home “sale failures” spiked in Q4 2016, to nearly nearly double the 2015 rate, with “starter homes” being most at risk.
Nationally, sales have been failing at an increasing rate, rising to 4.3% in Q4 2016 from 1.4% of all listed properties during Q4 2014. On an annual basis, the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015.
New homes and very old homes are least likely to see deals fail. As of Q4 2016, homes built in 2016 have among the lowest proportion of failed sales at 2.6%. That proportion increases steadily as age increases to an average of 5.2% in homes built from 1959 through 1969, then falls steadily to an average of 3.5% for homes built from 1900 through 1920.
Of all listings in the largest 100 metros, 7.1% of starter home listings failed in the most recent quarter, compared with 6.7% of trade-up homes and 3.8% of premium homes. For all of 2016, the failure rate was 6.3% for both starter and trade-up homes and 3.6% for premium homes.
During the last two years, the places with the most failed sales are predominantly in the West with Las Vegas leading the pack at 7.6% of all unique listings reverting back to “for sale” at least once.
During the most recent quarter, Tucson, Ariz., saw the highest rate of failed deals with 13.9% of all unique listings retrogressing. For all of 2016, Ventura County, Calif., had the highest fail rate at 11.6%, up from 3.1% in 2015.
Considering both the last two years and just the most recent quarter, Madison, Wis., has had the fewest listings fall back to a “for sale” status at 0.1% of all listings.
Not surprisingly, per Bloomberg, the highest rates of failure occurred in the subprime mecca of the American Southwest.
Meanwhile, starter homes performed the worst…
And while any number of things can cause a home sale to fall through, including lower than expected appraisals and bad home inspections, we suspect that rising mortgage rates are more likely the cause of the sudden surge in “failed sales” rather than a national outbreak of termites. With Americans managing their monthly budgets down to the last penny, because you can “afford it” as long as you can cover the monthly payment, we suspect the 60bps rise in the average 30-year fixed mortgage rate during 4Q was just more than the fragile American budgets could bear.
- Russia Deploys S-400 Missile Regiment Near Moscow On Combat Duty
While the stated reason behind its deployment has not been disclosed, Russia has put on duty a surface-to-air missile regiment equipped with the brand-new S-400 air defense system, Russia’s most advanced, in Moscow’s suburbs on combat alert.
“The SAM combat squads of the Moscow Region aerospace forces have put the new S-400 Triumph air defense missile system into service, and have gone on combat duty for the air defense of Moscow and the central industrial region of Russia,” the Defense Ministry’s Department of Information and Mass Communication told Interfax. The new SAM battery arrived at its destination in the Moscow Region from Kapustin Yar in the south Russia last December, the Defense Ministry noted.
“The main task of the anti-aircraft missile troops of the Russian Aerospace Forces is air defense and protecting vital state, military, industry and energy facilities, as well as the Armed Forces troops and transport communications, from aerospace attacks,” said the ministry.
The Triumph system, which was developed by air-defense systems manufacturer Almaz Antei, is designed for high-efficiency protection against airstrikes utilizing strategic, cruise, tactical, and other kinds of ballistic missiles. The new system is capable of hitting moving targets in the air, including planes and cruise missiles, at a distance of 400 kilometers, as well as ballistic targets moving at speeds of up to 4.8 kilometers per second at altitudes ranging from several meters to several dozens of kilometers.
As RT adds, four more Triumph units are to come into service in 2017, citing the Russia’s Defense Ministry said. S-400 Triumph air defense systems have been providing air cover for Russia’s forces in Syria since November, when President Vladimir Putin order their deployment.
It was not clear however, why i) Russia is deploying one near the capital now and ii) why it is doing so publicly.
“With these complexes, we are able to destroy both sea and ground targets” at distances of 350 kilometers for sea targets and nearly 450 kilometers for ground targets, Russian Defense Minister Sergey Shoigu said at the time. In October, President Putin and India’s Prime Minister Narendra Modi signed an agreement for the sale of S-400s to India. Deliveries could begin in 2020.
- The Path To $10,000 Bitcoin
Submitted by Charles Hugh-Smith via OfTwoMinds blog,
So let's imagine a scenario in which tens of trillions of at-risk wealth suddenly seek an alternative–any alternative to staying in an asset class that's circling the drain.
As my colleague Davefairtex observed recently, the paint isn't quite dry on bitcoin and the expanding host of other cryptocurrencies. Initial enthusiasm for the latest cryptocurrency that's going to eat bitcoin's lunch generates outsized returns for early investors, but as glitches in the vision arise, the bubble of initial euphoria pops.
Differing visions of bitcoin's future have divided its community of participants and miners, and hard forks have split other cryptocurrencies into competing camps.
Meanwhile, the spectre of outright bans on bitcoin and cryptocurrencies by nations such as China adds uncertainty to the entire sector. Many observers expect that China's increasingly pervasive attempts to staunch the flow of capital out of China via capital controls will lead inevitably to strict limits on bitcoin or even a total ban on bitcoin transactions and mining in China.
Since the majority of mining and transactions occur in China, severe limits or a ban would have an outsized impact on the bitcoin community. Many observers foresee the potential for a massive decline in the price of bitcoin should such a ban be imposed.
As if all these issues didn't generate enough uncertainty and skepticism, it seems as if every time the general public starts getting interested in cryptocurrencies, another exchange is hacked or another entry in the cryptocurrency sweepstakes blows up, sending the sector back into the "untrustworthy" abyss.
But this minefield shouldn't blind us to the possibility of a path to $10,000 bitcoin. Skepticism is always prudent in any financial matter, especially a speculative one, so put on your skeptical thinkijng cap and follow along.
The problem is everything is now speculative. Do you really think the $100 trillion private-sector bond market (i.e. the bet that debtors will pay back what they borrowed with interest) is "safe," as in guaranteed, bullet-proof, no serious loss of capital is possible, etc.? How about the $60 trillion sovereign (government) bond market?
The problem with sovereign bonds is governments with central banks can create "money" out of thin air to pay interest and redeem maturing bonds, but this devalues the currency. So getting back 100% of your nominal investment doesn't mean you're whole; if the currency the bond is denominated in fell 50%, bondholders suffer a 50% loss in the purchasing power of their initial capital. Ouch. How is that not speculative?
How about the $70 trillion in global stocks? Yes, we all "know" that stocks will never go down ever again because central banks can keep inflating new credit bubbles indefinitely–but let's not kid ourselves: history tells us that stocks remain a speculative gamble.
How about the $62 trillion in unsecuritized debt instruments? How much of this debt is collateralized by fast-dying malls, bubble-priced real estate, or Unicorn-type valuations in other assets?
Take a gander at this chart of financial assets, roughly $300 trillion, and note that this doesn't include real estate, housing, etc. Global real estate is estimated at $217 trillion, roughly two-thirds of financial wealth.
Together, these assets add up to over $500 trillion.
Once again, the larger context here is: all these assets are speculative. Yes, even real estate. Consider this, if you missed it: When Assets (Such as Real Estate) Become Liabilities.
Then there's the currency market. Care to argue that currencies are non-speculative investments? Is that why Chinese wealth is gushing out of the yuan, because it's so guaranteed to never lose purchasing power? Is that why the euro fell from 1.40 to 1.05, because it's a guaranteed safe investment? Venezuelans learned the hard way that fiat currencies when mismanaged by the issuing nation/central bank can destroy wealth on an unimaginable scale.
So now let's turn to bitcoin, with a market cap of about $14 billion, down from a recent high of $18 billion. Now compare that to $500 trillion. If we take 1 measly little trillion, bitcoin's entire market cap is 1/70th of that.
So let's imagine a scenario in which tens of trillions of at-risk wealth suddenly seek an alternative–any alternative to staying in an asset class that's circling the drain. We're accustomed to "rotation," the nice little game where bonds can be sold and the capital invested in real estate or stocks, or vice versa.
We're less accustomed to all the conventional asset classes toppling like dominoes. Where do the fleeing trillions go when stocks, bonds and real estate are all going down in a chaotic sell-off? Gold and silver are time-honored safe havens, but it's not too difficult to foresee the potential for limits or bans on gold, or supply constraints. Some percentage of investors will consider alternatives.
In such an environment of a crowd rushing for increasingly narrowing exits, what thin slice of institutional and individual investors will take a chance that bitcoin might hold or even increase its value as a major currency melts down, or some other global financial crisis unfolds?
Shall we guess 1/10th of 1% of the panicky fleeing wealth will take the chance that bitcoin will be a safer haven than the conventional assets that are cratering?
So 1% of the $300 trillion in financial assets (setting aside the $200 trillion in real estate for the moment) is $3 trillion, and a tenth of that is $300 billion.
So what happens to bitcoin's price if $300 billion rushes through the wormhole? On the face of it, market cap would go up 20-fold from current levels. Since the number of bitcoin is limited to around 18 or 19 million (subtracting those bitcoin lost forever to hard drive crashes, etc., and those yet to be mined), price would also have to rise 20-fold.
OK, so 1/10th of 1% of global financial wealth flowing into bitcoin strains credulity. Let's make it 1/20th of 1%, or $150 billion. That still pushes bitcoin's market cap and price up 10-fold.
That's the pathway to $10,000 bitcoin. Unlikely, you say? Perhaps. But if you're of the mind that $500 trillion in current assets might be revalued considerably lower in a global crisis, then a tiny sliver of that fast-evaporating wealth finding a home in bitcoin (or other cryptocurrencies) doesn't seem all that farfetched.
You want farfetched, how about $3 trillion in panicky fleeing capital flooding into bitcoin? Yes, a whole, gigantic, enormous 1% of speculative financial "wealth" and "money" seeking a home in cryptocurrencies.
(It's worth doing the same exercise with gold, only substitute $6.4 trillion in market cap (i.e. all the non-central owned bank gold) for bitcoin's $14 billion market cap.)
Cryptocurrencies are intrinsically volatile and speculative. Anyone pondering them must keep this firmly in mind at all times. There is no "guaranteed" safety or guaranteed anything. Everything that appears solid can melt into thin air (to borrow Marx's phrase) without advance notice.
All of the World’s Money and Markets in One Visualization
How Much Gold Do Central Banks Actually Have?
Disclosure: the author has a tiny speculative position in bitcoin. This is not a recommendation to anyone to speculate in any financial instrument, including cryptocurrecies. Please read the site's full disclosure here: HUGE GIANT BIG FAT DISCLAIMER.
- China's Xi Open To Meet Trump's Team In Davos, Warns Populism "Can Lead To War"
On the surface, relations between China’s president Xi and Donald Trump have had a rocky start even before the president-elect’s inauguration, with speculation about a trade war, tariffs, the collapse of the “One China” policy, the confiscation of a US naval drone, fly-bys over disputed islands, and non-stop jingoist bluster dominating the airwaves and local press. However, that may be merely bluster as the two leaders gradually warm up to each other, ironically, at a very cold place: Switzerland’s World Economic Form held, as every other year, in Davos. It is here that a senior Chinese official said Beijing is open to a meeting with US president-elect Donald Trump’s team.
“China has good contacts with the present US government, and also has a smooth communication channel with Trump’s team,” deputy foreign minister Li Baodong said on Wednesday. Li was responding to a query on the possibility of a meeting between President Xi Jinping and Trump’s team members when they attend the World Economic Forum in Davos from January 17 to 20, according to SCMP.
This year’s forum is expected to be dominated by discussion of a surge in public hostility toward globalization and the rise of U.S. President-elect Donald Trump, whose tough talk on trade, including promises of tariffs against China and Mexico, helped win him the White House. Earlier, we laid out the top risks envisioned by the WEF in 2017, and which will be topic of much discussion by those present. They are summarized in the chart below.
State Councillor Yang Jiechi met retired general Michael Flynn, the US president-elect’s nominee for national security adviser, and other Trump team members in New York last month.
What makes this year’s Davos meeting unique is that as reported previously, this will be the first time a Chinese head of state will attend the winter gathering of political and business leaders. And while Trump’s inauguration is on January 20, preventing him from participating in Davos, Xi will attend the forum as part of a state visit to Switzerland from January 15 to 18.
World Economic Forum executive chairman Klaus Schwab said “someone from the transition team representing the new [Trump] administration” would attend the forum, according to Reuters. US Vice-President Joe Biden and Secretary of State John Kerry would also be there, Schwab said.
“During the annual meeting in Davos, China is willing to exchange ideas with all parties [at the forum],” Li said, adding that bilateral meetings were still being discussed. “As long as both sides have the time and will, we are willing to arrange for meetings.” Commenting on why Xi had broken with past practice of sending the premier or other top officials to Davos and decided to attend himself, Li said the head of state’s decision came after “years of invitations from WEF executive chairman Klaus Schwab”.
According to Chinese officials, quoted by Reuters, during his visit, Xi Jinping will promote “inclusive globalization” and will warn that populist approaches can lead to “war and poverty.”
Jiang Jianguo, head of the State Council Information Office, told a symposium hosted by the World Trade Organization in Geneva that President Xi would go to Davos to push for development, cooperation and economic globalization in order to build “a human community with shared destiny.”
“With the rise of populism, protectionism, and nativism, the world has come to a historic crossroad where one road leads to war, poverty, confrontation and domination while the other road leads to peace, development, cooperation and win-win solutions,” Jiang said.
Here China was speaking tongue in cheek, and referring not so much to events in the UK or the US, but more about possible events in China, where it is very much terrified that if the local population is ever inspired by the anti-establishment wave observed in the developed world, then it’s game over for the Chinese landed oligarchy, which in many ways is far more corrupt and crony, not to mention rich, than any western government.
To that point, at a briefing in Beijing on the Davos visit, Vice Foreign Minister Li Baodong said China would respond to the international community’s concern over globalization by putting forward Beijing’s opinions on how to “steer economic globalization toward greater inclusiveness.”.
Needless to say, this is precisely the opposite direction in which Trump would like to steer the world economy.
Li added that criticism of trade protectionism leveled at China, by Trump and others, was unjust. “Trade protectionism will lead to isolation and is in the interest of no one,” he said. “Channels of communication are open” between China and Trump’s transition team at the forum, Li said, but warned that scheduling a meeting might be difficult. Well, not if the two manage to connect in Davos, even though that would hardly resolve the inherent conflicts between a mercanilist nation and one that is (allegedly) trying to try out isolationism.
Days after Trump’s victory, Xi vowed to fight protectionism and to push forward with multilateral trade deals. Foreign businesses in China have long complained about a lack of market access and protectionist Chinese policies.
- Chanos Fears Trump's "Unmet Expectations", Warns Investors To "Rethink Almost Everything In Your Life"
Submitted by Lynn Paramore via The Institute for New Economic Thinking,
Milwaukee-born short-seller Jim Chanos, founder and managing partner of New York-based Kynikos Associates, teaches University of Wisconsin and Yale business students about corporate fraud. During his life and career, he has witnessed seismic shifts in economic thinking and the relationship between labor and capital.
Chanos shares his thoughts on the world emerging from the election of Donald Trump and the tumultuous political events of 2016.
Lynn Parramore: Leading up to the election of Trump, we had eight years of Obama, and before that, eight years of Bush. Before we get to the president-elect, how do you assess the records of those past presidents in terms of basic policing of markets and corporate fraud?
Jim Chanos: Bush was the MBA president who was going to be pro-business, cut taxes, and deregulate. Meanwhile, he had two recessions on his watch, less employment than when he started, and two bear markets in the stock market — probably the worst president for business since Herbert Hoover. The business guy!
Yet, he did tighten up the Justice Department and go after corporate crime. The Ashcroft Justice Department, as bad as it was in lots of other things, went after corporate fraud and accounting fraud, criminally. In 2002, we got Sarbanes-Oxley to curb fraud.
I don’t know that all this was Bush’s predilection — remember, his biggest supporter was Enron. But because of Enron and the other dot-com era scandals, he got backed into a corner to go hard on them. I’ve joked that the only person who put more corporate executives in jail than George W. Bush was his father during the Savings and Loan Crisis.
On these issues, I’d rather have Bush any day of the week than Obama. Both Eric Holder and Lanny Breuer of Obama’s Justice Department said in TV interviews and testimony that they factored in non-judicial aspects as to whether to mount prosecutions. I think that this had political costs to the Democrats. The crony capitalism still bothers people — the idea that Wall Street got off scot-free and they are still struggling. That lack of justice applied equally under the law was corrosive, not necessarily for Obama personally, but certainly for the party following him.
LP: How do you see a Trump presidency in this light?
JC: You and I have talked about how it has become a cost calculus for lots of corporations and financial institutions to cheat. “If I get caught,” they say, “I’m just going to pay a fine.” How does this change with new faces in Washington? You still have this very pro-corporate group on Capitol Hill whose main bailiwick, in my opinion, is to protect the corporate class and the very wealthy. You’ve got what ostensibly is a proto-populist in the White House with a cabinet that is a mélange of different types, so who knows?
In my overall view, stuff happens to change people. If we go back to Bill Clinton, his “Putting People First” manifesto in ’92 was quite left-of-center, but he didn’t govern that way. If you look at things like NAFTA, Welfare reform, and cutting capital gains taxes — well, in many ways, Ronald Reagan would have been proud of him.
Events conspire to derail our perceptions of presidents. When we look at their platforms, we think we know where things are headed. But in modern times, the only two presidents that I can think of who really got their ideas and platforms enacted wholesale were FDR and Reagan. Everybody else has gotten compromised, or has had events overwhelm them.
LP: What do you make of the expectations of the economy under Trump?
JC: I worry about the heightened expectations from the people who voted for him thinking that he’s their savior. That’s what scares me — unmet expectations.
For the swing voter in the Midwest who voted for this guy because he thinks coal-mines are coming back or the plants are going to reopen — it’s not going to happen.
LP: What about the rise in bank stocks since the election? Are banks anticipating deregulation?
JC: Almost all stocks are going up, mostly because of the belief of lower taxation. But after Obama’s election, most stocks went down and kept going down until the following March — and then they tripled! So I wouldn’t read a lot into the first month or two.
It could be that banks are anticipating deregulation, but so what? Deregulated to what end? They’re still going to have the capital requirements, which are international. Putting capital standards on them is the biggest way in which they were regulated.
In the bigger picture, if you think this is an uncertain presidency and we’re not quite sure where he’s going and how events will conspire, it’s not that important to get too worked up because things will happen and you’ll have to react. If, however, this is a once-in-a-fifty-year change in global thoughts about capitalism, then you have to pay attention.
LP: If this is a once-in-fifty-year change, what’s at stake?
JC: Part of my view is that in the 1930s, we rejected the individuality of the ’20s and before. After the crash and the Depression, we finally put the corporate class and bankers to the sidelines. Whether it was Keynesianism or the New Deal in the West, or state fascism or the advent of Stalinism, you saw more government control over the economy. This was good for workers and large governments. It was more nationalistic and led, obviously, to the next conflict. But the rise of government planning and government involvement was good for nominal GDPs. It was not good for the asset-holding classes — stocks and bonds did terribly over that period, right? You wanted to be a worker, you wanted to be labor, not capital.
The period from the late 1970s to 1980 changed all that. You had Thatcher and the U.K. and Reagan in the U.S. Mao died in 1976, the Solidarity movement in Poland began in 1978, and the Soviet Union peaked in power in 1979. You saw that the pendulum had gone too far and now we’re going to cut taxes on capital, we’re going to be more globalistic, and trade was going to improve. Since then, capital has risen and assets have done better than labor. Taxes have been light on financial assets and heavy on labor. Everything was reversed on its head.
If we look at the events of 2016 — Brexit, the Italian referendum, Trump, and the rise of nationalist China — are these the harbingers of something bigger? Or are they just a coincidence? The ground seems to be fertile for things to change globally. If so, does this give rise to a more nationalistic, protectionist, statist scenario? Are labor prices going to go up again? Are we going to tax capital and emphasize wages?
We’ll see….
LP: Going back to Trump’s promise to bring jobs back to the U.S. — can the government even do that?
JC: In the case of the ’30s, you had massive public works spending and government spending, so you created construction workers. But on that front, we’re not going to compete anymore, as the Carrier guy said. Mexican labor is $3 an hour. No amount of retraining for a lower-skilled assembly job is going to change that. The only thing that will replace that Mexican worker himself is a robot. And a robot is infinitely cheaper than even the cheapest labor.
Surveys show that there are jobs open in the economy, but there’s just not a skill level to fill all of them. Our problem is the displacement in things like mining, assembly, low-end manufacturing – that’s where the job losses have occurred. It is just very hard under almost any scenario no matter what your politics are to see where those jobs are going to come back.
To the extent that you have wholesale, large, construction-like projects, then you will put people to work at relatively high rates, but the jobs are episodic and not necessarily career paths. When I was making $14 an hour working steel in Milwaukee in the summers in college, a steel worker could basically say, “all right, as long as I understand that I’m going to work in this factory, I can have a nice living for my family.” Those jobs are gone. The plants closed. So the whole idea that someone can now say, “I can work in the Carrier plant for $20 an hour and be assured of a job for life and security and put my kids through college” — that doesn’t exist anymore.
That’s where the problem and discontent will come — when you’ve sold that dream and it doesn’t happen. In that scenario, Trump begins to have a pretty short honeymoon.
LP: You’ve long been linked with China. What do you make of the positions of China and the U.S. in the international economy, and how do you think they’re changing?
JC: To me, the rise of Xi Jinping is a big event still underestimated in the global political economy. He is more of a personality than either Deng Xiaoping or Mao Zedong, certainly higher in stature internally than his predecessors. He is not first among equals in the Politburo Standing Committee — he’s first. This goes along with the theory about the rise of nationalists such at Putin in Russia. Xi Jinping is also a nationalist. He talks about the China Dream, China getting back to past glories, and not exporting communism. What you would have heard Mao say.
He’s a member the Chinese Communist Party, but the Party exists now as a political apparatus, not an ideology. China would not have the type of capitalism it has today if this were not the case. So these are not Marxist-Leninists, but rather just a fantastic single party in control. We have to understand it in that light.
China is increasingly a geostrategic rival. In the past, China looked toward protecting what it had — making claims on Taiwan and Tibet and ancillary areas, but the Chinese were really content not to compete in the global Cold War between the Soviet Union and the United States. Now we have this multi-polar world, and China sees itself clearly as the prime actor in the Pacific willing to fill any vacuum that the United States begins to pull away from.
Xi Jinping comes in and immediately he rewrites the passport maps. He sets the air traffic and extends the air defense zones. More ominously, he begins to militarize the South China Sea, and puts military bases on the islands, which alarms pretty much everybody. (And yet if you look at a map of the Pacific, the only country that really needs to traverse the South China Sea is China itself —oil going from the Middle East to Japan goes around it. The South China Sea is symbolic more than it is geostrategic).
I think, however, that Trump has decided that China makes a convenient media punching bag. You can claim that China took your jobs and China is a bogeyman. It seems to me that president-elect Trump does best when he has someone to fight against. However, the broader issue will be that foreign policy and national security events have a whole different dynamic than beating up on a defense contractor for an air conditioning plant.
What will be the ramifications? How will China react? What do you do about countries like the Philippines that are in the middle — a country that has elected its own interesting president, someone who seems to want to embrace China after decades of being staunchly a U.S. ally? What does this do for Japan? Japan itself has a nationalist, Shinzo Abe, who wants to increase military spending and take off the yoke of the Japanese constitution block on an expanded military.
There are many questions, but whatever you might think, China and Japan, while big trading partners, are not the best of friends in that neighborhood. Finally you’ve got the wacky guy in North Korea. What’s he going to do?
This whole area just keeps quietly but relentlessly getting to be more dangerous. I think that at some point in the first four years of the Trump administration, the Pacific is going to heat up again.
People are talking about starting a trade war with China but they haven’t really thought it through, because if you talk to corporate execs in the United States, they’re sort of quietly terrified. Often the supply chain, even in U.S. manufacturing, relies on parts from Mexico and China coming in. We are pretty interconnected. Lots of businesses, and workers, too, will get disrupted in ways we can’t even think of in a trade war. There’s a reason why people studied the 1930s with the tariff walls that went up and the disruptions that happened. It’s negative for growth.
So stay tuned, it’s going to be interesting.
LP: To turn to Europe, you’re a Greek-American, and you have been critical of the Eurozone’s attitude toward Greece. What do you make of the situation there now?
JC: The key issues for Greece now revolve around two entities that are not Greek. First you have the EU as a whole. We continue to have these bombshells, like the Italian referendum and Brexit — and you’ve also got elections coming up elsewhere in 2017.
I think Greece was sort of the Spanish Civil War to what’s about to be the EU’s WWII in that it was the opening preview of all of the problems that are going to come to the fore if Catalonia wants to become independent, if Italy wants to leave, if France wants to leave. The EU is being held together by chewing gum and string right now.
With this rise of nationalism — if that’s what it is and it continues — the EU is going to find itself increasingly a victim of people wanting self-determination in northern Europe. That’s the first thing. Second is something I’m much more concerned about which nobody’s paying attention to, and that’s the continued rise of Erdo?an in Turkey. He has not only consolidated his power through a series of purges —thousands and thousands of journalists and academics have been thrown in prison since the aborted coup — but increasingly he is becoming more militant and Turkey is becoming a pro-Islamic state that is part of NATO. He’s throwing wild monkey wrenches into the whole Middle Eastern situation by making claims on land that was owned by the Ottomans, pre-WWI, like modern-day Iraq, modern-day Syria, and modern-day Greece and Bulgaria. He’s warned the EU that he will open Turkey’s borders to undocumented immigrants if EU membership talks are frozen. Like Xi Jinping, he’s putting out these old maps and saying: this is our real land. Erdo?an is yet another nationalist.
Poor Greece is at the crossroads of all these seismic events and Ottoman Empire II. You’ve got the possible weakening or dissolution of the EU, and Greek debt problems are about tenth on the list of issues in that region. They’re going to struggle, no doubt about it. Every time the Greek economy starts to show some green shoots, it seems to stall and fall right back down again.
LP: What do you hope might happen in this emerging world?
JC: This is the tough thing about being in the financial markets. You can have opinions on all this stuff and either get it wrong or have it not matter.
First, I hope our system of free trade holds up. That’s one thing I believe in fervently. The evidence seems to be that a rise of tariffs and trade walls and barriers will be bad for global growth. Given the debt overhang that’s out there, which is relentless, the ability of economies to service debts in a global trade war will be greatly curtailed, so I’m clearly watching that.
I also continue to be concerned, on a stand-alone basis, with the giant debt bubble occurring in China. It has done nothing but just gotten bigger since you and I last sat down. Despite all the talk of reform, there really hasn’t been any. The Chinese are more reliant on the state than ever — on state lending and state banks. The debt continues to grow at twice the rate of growth, and now the currency is depreciating.
We’re getting a situation where the Chinese economy is still a very important driver of global growth, but increasingly it is using the old methods that the Chinese themselves said only a few years ago that they would have to change. But they can’t, because every time they try, the economy slows too fast.
China continues to be half of the demand for global commodities. It basically supports Africa and countries like Australia and Brazil. Almost 40 percent of global GDP is either China or commodity-exporting countries whose prime market is China. That’s considerable. So we have to look not only at China’s role with us, but China’s role on its own because it is such a driver for global growth, Chinese growth represents 1 point of the 3 percent GDP growth, so if China were not growing at all, we’d be at 2 percent. Doesn’t sound like a lot but it is. We have to keep our eye on what’s going on there. A global trade war would probably send China into a really steep recession.
How would an average worker navigate a rising trade barrier globally? It’s scary. If we look back at the ’30s template, one major outlet was, of course, a giant arms race. By the late ’30s, you had the whole world realizing the threats of fascism and rearming rapidly. Keynesian government spending was what pulled up the economies; it just had some really bad repercussions from 1939-45. But if we get into any kind of global arms race with China, either conventionally or otherwise, that would be Reagan-like. I don’t know what the numbers would mean in terms of employment, but you would take a lot of manufacturing people and turn them to making other things.
LP: How do you rate the current moment with big periods of change you’ve seen in your lifetime?
JC: I had this odd personal journey from being a union pipefitter and boilermaker as a college student — I made more money in two-and-a-half months making steel than I did my first year on Wall Street. I went from being a product of the industrial Midwest and putting myself through college by working in a steel mill, to being the beneficiary of the Reagan-Thatcher era. I saw the world change, but I didn’t really understand until years later what an important period the late ’70s/early ’80s was (and a great period for music, by the way!).
If we’re in one of those periods now, if 2016 is like 1932 or 1979 — then you not only have to change your portfolio, you have to change your lifestyle. That’s one of the things we’ve been telling clients. If this is a major shift to populism, nationalism, greater state involvement, and less globalism, then you really have to rethink almost everything in your life.
Certainly, if you were a capitalist in 1932, you might be best served to change your outlook. And if you were a union leader in 1979, it would have been good to change your outlook. The question will be, in 2016, would it be best for the Davos man and woman, the globalists, to change their outlook?
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