Today’s News 13th November 2016

• Martin Armstrong Exposes "The Real Clinton Conspiracy" Which Backfired Dramatically

  Submitted by Martin Armstrong via ArmstrongEconomics.com,

  

  Meanwhile, Hillary lost not merely because she misread the “real” people, she decided to run a very divisive and nasty negative campaign, which has fueled the violence ever since. According to WikiLeaks emails from campaign John Podesta, Clinton colluded with the DNC and the media to raise what they thought would be the extreme right among Republicans to then make her the middle of the road to hide her agenda.

  

  Clinton called this her “pied piper” strategy, that intentionally cultivated extreme right-wing presidential candidates and that would turn the Republicans away from their more moderate candidates. This enlisted mainstream media who then focused to Trump and raise him above all others assuming that would help Hillary for who would vote for Trump. This was a deliberate strategy all designed to propel Hillary to the White House.

  The Clinton campaign and Democratic National Committee along with mainstream media all called for using far-right candidates “as a cudgel to move the more established candidates further to the right.” Clinton’s camp insisted that Trump should be “elevated” to “leaders of the pack” and media outlets should be told to “take them seriously.”

  If we look back on April 23, 2015, just two weeks after Hillary Clinton officially declared her presidential campaign, her staff sent out a message on straregy to manipulate the Republicans into selecting the worse candidate. They included this attachment a “memo for the DNC discussion.”

  

  The memo was addressed to the Democratic National Committee and stated bluntly, “the strategy and goals a potential Hillary Clinton presidential campaign would have regarding the 2016 Republican presidential field.” Here we find that the real conspiracy was Clinton manipulating the Republicans. “Clearly most of what is contained in this memo is work the DNC is already doing. This exercise is intended to put those ideas to paper.”

  “Our hope is that the goal of a potential HRC campaign and the DNC would be one-in-the-same: to make whomever the Republicans nominate unpalatable to a majority of the electorate.”

  The Clinton strategy was all about manipulating the Republicans to nominate the worst candidate Clinton called for forcing “all Republican candidates to lock themselves into extreme conservative positions that will hurt them in a general election.”

  It was not Putin trying to rig the elections, it was Hillary. Clinton saw the Republican field as crowded and she viewed as “positive” for her. “Many of the lesser known can serve as a cudgel to move the more established candidates further to the right.” Clinton then took the strategic position saying “we don’t want to marginalize the more extreme candidates, but make them more ‘Pied Piper’ candidates who actually represent the mainstream of the Republican Party.”

  Her manipulative strategy was to have the press build up Donald Trump, Sen. Ted Cruz and Ben Carson. “We need to be elevating the Pied Piper candidates so that they are leaders of the pack and tell the press to them seriously.”

  This conspiracy has emerged from the Podesta emails. It was Clinton conspiring with mainstream media to elevate Trump and then tear him down. We have to now look at all the media who endorsed Hillary as simply corrupt. Simultaneously, Hillary said that Bernie had to be ground down to the pulp. Further leaked emails showed how the Democratic National Committee sabotaged Sanders’ presidential campaign. It was Hillary manipulating the entire media for her personal gain. She obviously did not want a fair election because she was too corrupt.

  What is very clear putting all the emails together, the rise of Donald Trump was orchestrated by Hillary herself conspiring with mainstream media, and they they sought to burn him to the ground. Their strategy backfired and now this is why she has not come out to to speak against the violence she has manipulated and inspired.

  

  This is by far the WORST campaign in history and it was all orchestrated by Hillary to be intentionally divisive for the nation all to win the presidency at all costs. She has torched the constitution and the country. No wonder Hillary could not go to the stage to thank her supporters. She never counted on them and saw the people as fools. The entire strategy was to take the White House with a manipulation of the entire election process. Just unbelievable. Any Democrat who is not angry at this is clearly just a biased fool. Wake up and smell the roses. You just got what you deserve.

   

  

  

• Is A Real Civil War Possible?

  Submitted by Doug Casey via InternationalMan.com,

  The Trump victory is very good news for the US – relative to a win for Hillary, which would have been an unmitigated disaster. So I’m happy he won.

  Will Trump winning mean a real change in direction for the US? Unlikely. Don’t mistake Trump for a libertarian. He has all kinds of stupid notions—torture as official policy, killing families of accused terrorists, and putting on import duties. He has no grasp of economics. He’s an authoritarian. His cabinet choices, so far, are all neocons and Deep State hangers-on. He’s likely to treat the US as if it were his 100% owned corporation.

  On the bright side, he has real business experience—although of the kind that sees government as a partner. I doubt he’ll try, or be able if he does, to pull up any agencies by the roots. He’ll mainly be able to set the tone, as did Reagan. But, hey, something is better than nothing.

  THE POLITICAL FUTURE

  A brief word on US political parties. I’ve said for years that the Demopublicans and the Republicrats are just two wings of the same party. One says it’s for social freedom (which is a lie), but is actively antagonistic to economic freedom. The other says it’s for economic freedom (which is a lie), but is actively antagonistic to social freedom. Both are controlled by members of the Deep State.

  I still think that’s an accurate description of reality. But, in truth, it’s a little unfair to the Republicans. The creatures who control the Republican Party are one thing – and they were massively repudiated by the victory of Trump. Good riddance. But the people who gravitate towards the GOP are something else. To them, the GOP mostly represents a cultural club they belong to.

  Rank and file Republicans don’t have any cohesive philosophy binding them together. They’re just sympathetic to “traditional” values. They like the picture postcard version of America. The 1950’s style Father Knows Best family. The world of American Graffiti. A house in the suburbs, or a small, neat farm. Thanksgiving dinners with relatives. The exchange of Christmas cards. Going to church on Sunday. The husband having a job that allows him to support the wife and kids. Chevrolets and Fords. A relatively small, non-predatory government. A friendly neighborhood cop. A basically decent and stable society, which doesn’t tolerate crime, or overly outlandish behavior, where social norms are understood and observed.

  You get the picture. It’s a cultural thing, not an ideological or political construct. Unfortunately, it’s no longer a reality. It’s more and more just an ideal, about as dated as a Norman Rockwell painting on the defunct Saturday Evening Post.

  The Democrats are quite different in outlook. They see themselves as hip and sophisticated, and see traditional values as “square”. They’re for globalism, not American nationalism. Forget the clean-cut Mouseketeers; the fat and loathsome Lena Dunham is the new role model. Political correctness rules. White men are automatically despised. Black is beautiful. Women are better than men. The very idea of America is in disrepute, and held in contempt. Multiculturalism overrules home-grown values. Etc. Etc.

  You’ll notice that there was very little discussion about policy in this election. It was almost all ad hominem attacks, mostly pushing emotional hot buttons, not intellectual points. It’s all about a culture clash. It’s a non-violent civil war. These two groups no longer have very much in common. And they don’t just disagree, they hate each other.

  Is a real civil war possible? Unlikely. The electorate is too degraded to actually get off their couches to fight, apart from the fact few know how to use a gun anymore. Besides, 25% of the US is on antidepressants or other psychoactive drugs; they’re too passive to want radical change. Almost half the country is on some form of the dole; they fear having their doggy dishes taken away. More than half the country is obese; fat people tend to avoid street fights. The median age in the US is 38; old people don’t usually get in fights. Anyway, everybody lives on their electronic devices, not the real world.

  You’ll notice that voting for Trump and Hillary broke along cultural lines. The Republicans won the rural areas (which are dropping in population); the Democrats won the cities (which are growing). The Reps are white (and becoming no more than a plurality); the Dems have most of the so-called “people of color”, who used to be called “colored people” (and are becoming a majority). The Reps did better with males; the Dems better with females, who tend to see the world in softer and gentler shades. The Reps are favored by native-born Americans; the Dems are favored by immigrants, who often have very different values. The Reps represent the diminishing middle-class; the Dems represent the growing underclass. The Reps did better with older people, who are on their way out; the Dems did better with younger people, indoctrinated by academia and the media, who are on their way up.

  None of this looks good for the future of traditional American culture. In fact, Hillary won the popular vote. That means, demographics being what they are, the Republicans are in more trouble next time. With current immigration and birth patterns, the constituency of the Democrats should gain about 2% every four-year election cycle in the future. Even more important, as we leave the eye of the storm that started in 2007, and go into the trailing edge of the economic hurricane, the Trump administration will be blamed. There will, therefore, be a radical reaction away from what it’s believed to represent in 2020.

  It used to be the Reps and the Dems differentiated mostly on ideological grounds. Now it’s much more on cultural grounds. Allow me to identify the elephant in the room, and spell out the real nature of the Democratic Party.

  The Democratic party is a cesspool filled with leftist social engineers, academics, busy-body pundits, the “elite”, cultural Marxists, race baiters, racial “minorities” who see race as their main identity, radical feminists and LBGT types, entitled underachievers, statists, the soft-headed, the envy-driven, the stupid, professional losers, haters of free markets, and people who simply hate the idea of America. I can’t imagine anyone of good will, or even common decency, being a member of today's Democratic Party. It needs to be flushed. But it will only get stronger in the near future, for many reasons.

  But it’s an honest party—they generally say what they believe, even if it’s repulsive to anyone who values things like liberty. Interestingly, there are no Dinos—unless they’re Stalinists or Maoists who think the others aren’t going far enough. The party has absolutely no redeeming values.

  A real battle for the soul of the country is shaping up. But I fear it won’t be heroic, so much as sordid. The knaves versus the fools. The Dems are the evil party, but the Reps are just the stupid party.

  Why? Trump and the Trumpers have no ideology except a vision of a vanished world. They’re understandably angry, but don’t know what to do about it. They have no real program, except to say the Dems have gone too far. No coherent philosophy, just a nebulous belief that the Democrats are wrong. They’re justifiably fed up with the Establishment that gave them non-entities like Dole, McCain, and Romney.

  Why did Trump win? Two reasons.

  First, “Cultural Americans” know that their culture is dying, and their standard of living is declining. They sensed—correctly—that this would be their “last hurrah”, their last real kick at the cat. Trump is likely the last white male president. Unless a rabid statist like Tim Kaine is elected in 2020, with promises of a new and more radical New Deal. Or ongoing wars tilt the odds towards a general, most of whom are still white males.

   

  Second, don’t forget that Trump wasn’t the only protest candidate in the primaries. There was Bernie. His supporters know that Hillary and the Dem insiders stole it from him, and they’re still very unhappy. Many abstained from voting for Hillary because of the theft. A few probably voted for Trump out of spite. Or because they wanted to burn the house down. Nobody says this.

  Perversely, they’ll get their wish. The Greater Depression will deepen under Trump, even if he makes the right moves. Which will play into the election of someone from the Democrat cesspool in 2020. So maybe the Trump victory isn’t such a good thing after all.

  But let’s look at the bright side. All things considered, we’re in for some wonderful free (kind of) entertainment.

  

  

• NATO Panics As Putin Urges Trump To Force Alliance Withdrawal From Russian Border

  While many in the media have speculated that the Kremlin had a hand in Wikileaks’ procurement of hacked Podesta emails – something Julian Assange denied last week – and US intelligence services officially accused Russian government-supported hackers of interfering with the US election (providing zero proof for the allegation), the truth is that Vladimir Putin is delighted with the outcome from the US elections: not so much for Hillary’s loss as that the sharp, neo-con wing in the Pentagon has been muted for the next four years.

  And, in the first test of Trump’s willingness to rebuild bridges with Russia, Putin’s spokesman suggested that President-elect Donald Trump should begin rebuilding the U.S.-Kremlin relationship by urging NATO to withdraw forces from the Russian border.  Dmitry Peskov told the Associated Press that such a move  “would lead to a kind of detente in Europe.” Trump repeatedly praised Putin during his campaign and suggested the U.S. abandon its commitment to the NATO alliance.

  The request comes at a time of disturbing, relentless escalations in military tensions between NATO and Russia: this week we reported that NATO has placed as much as 300,000 troops on “high alert” in preparation for confrontation with Russia. 

  Peskov said in the interview that the NATO presence does not make Russia feel “safe.”  “Of course, we have to take measures to counter,” he said.

  Additionally, setting the stage for Trump’s official position on Crimea, in a separate interview with the Associated Press on Thursday, Peskov insisted that Crimea which became part of Russia after the CIA-sponsored Ukraine presidential coup in 2014, will remain such.   “No one in Russia — never — will be ready to start any kind of discussion about Crimea,” he said, refusing to call it “annexation.”

  When asked how Trump could approach the Crimea issue, quoted by The Hill, Peskov said it would take time. “We understand that it will take time for our partners in Europe, for our partners here in the United States to understand that. We are patient enough to wait until this understanding occurs here in Washington, in the States, in Europe,” he said.

  * * *

  But while the Crimea issue is largely moot, with the West resigned to its concession to Moscow, fears that Trump will indeed follow Russia’s advice and pressure the alliance into standing down, or worse, withdraw US support, has resulted in outright panic, and according to German Spiegel, NATO strategists are planning for a scenario in which Trump orders US troops out of Europe.

  Spiegel adds that strategists from NATO Secretary-General Jens Stoltenberg’s staff have drafted a secret report which includes a worst-case scenario in which Trump orders US troops to withdraw from Europe and fulfills his threat to make Washington less involved in European security.

  “For the first time, the US exit from NATO has become a threat” which would mean the end of the bloc, a German NATO officer told the magazine. During his campaign, Trump repeatedly slammed NATO, calling the alliance “obsolete.” He also suggested that under his administration, the US may refuse to come to the aid of NATO allies unless they “pay their bills” and “fulfill their obligations to us.”

  Of course, this is the same Spiegel which after Trump’s victory has predicted the end of the world.

  

  “We are experiencing a moment of the highest and yet unprecedented uncertainty in the transatlantic relationship,” said Wolfgang Ischinger, former German ambassador in Washington and head of the prominent Munich Security Conference. By criticizing the collective defense, Trump has questioned the basic pillar of NATO as a whole, Ischinger added.

  Alternatively, by putting into question a core support pillar behind NATO’s endless provocations and troop buildup at Russia’s border, Trump may prevent World War III.

  NATO, however, demands its way or no other way at all, and it why Ischinger demands that the president-elect reassure his “European allies” that he remains firm on the US commitment under Article 5 of the NATO charter prior to his inauguration.

  This wasn’t the only criticism launched at Trump by the military alliance: earlier this week, Stoltenberg slammed Trump’s agenda, saying: “All allies have made a solemn commitment to defend each other. This is something absolutely unconditioned.” Perhaps the commitment was only contingent on having a resident in the Oval Office who put the interests of the Military Industrial Complex ahead of those of, for example, the American people?

  NATO’s panic has grown so vast that out of fear Trump would not appear in Brussels even after his inauguration, NATO has re-scheduled its summit – expected to take place in early 2017 – to next summer, Spiegel said.

  The NATO report likley also reflects current moods within the EU establishment as well, as Jean-Claude Juncker, President of the European Commission, has called on the member states to establish Europe’s own military. Washington “will not ensure the security of the Europeans in the long term… we have to do this ourselves,” he argued on Thursday. Because Greek troops just can’t wait to give their lives to defend German citizens and vice versa.

  Meanwhile, Spiegel admits that despite NATO’s bluster, Trump has all the leverage, and if Trump is serious about reducing the number of US troops stationed in Europe, large NATO countries like Germany have little to offer, Spiegel said. Even major member states’ militaries lack units able to replace the Americans, which in turn may trigger debate on strengthening NATO’s nuclear arm, a sensitive issue in most European countries for domestic reasons.

  How will Trump respond? It is unclear: while in his pre-election rhetoric, Trump pushed for an anti-interventionist agenda, and certainly made it seem that NATO would be weakned under his presidency, that remains to be seen as his transition team currently hammers out the specifics of his rather vague policies. We would not be surprised at all to find that for all the anti-establishment posturing, the “shadow government” – now in the hands of the Bush clan – which Ron Paul warned against earlier, manages to regain dominance, and far from a detente, Trump’s position emboldens NATO to pressure Putin even further. We would be delighted if our cynicism is proven wrong on this occasion.  
  

  

  

• Chicago Man Beaten By Angry Black Mob For Voting Trump Speaks Out

  A couple of days ago we wrote about the 49-year old Chicago resident, David Wilcox, who was beaten by a group of angry black men as onlookers shouted “you voted Trump? you gonna pay for that sh*t,” “beat his ass,” and “don’t vote Trump.”  Today the battered Wilcox spoke to the Chicago Tribune to give more details on the events surrounding the assault.  In addition to being beaten mercilessly, Wilcox was also drug down the streets of Chicago’s West Side at 70-80 miles per hour as he attempted to prevent the mob from stealing his vehicle.

  “I stopped and parked. And I asked if they had insurance, and the next thing that I knew they were beating the s— out of me,” Wilcox said Thursday.

   

  “They were beating me to have me let go of the car,” Wilcox said. “The guy went to 70 and 80 mph. If I let go, I was dead. He slowed to 45. … He tried to push the door open. …So he stepped on it again.”

   

  “He stepped up back to 70 and 80, swerved again,” Wilcox said. “The wheels on my side left the ground, up to 2 inches. … Then he slowed down. I was looking at oncoming traffic. He probably slowed to about 45. God was watching over for me. I rolled about five or seven times into the oncoming traffic lanes.”

   

  “There was a parole officer with a gun and bulletproof vest,” he added. “He turned left, and he told me just sit down and wait for the police to come.”

   

  Wilcox filled out a police report, but no one was reported in custody Thursday afternoon. Police said they were investigating the beating and who made the “politically divisive” statements in the video.

   

  Wilcox believes the attackers, who were black, were egged on by the bystanders. “They intensified it, aggravated it and made it more than it was.”

   

  Ironically the attackers didn’t even know that Wilcox was a Trump voter at the time of the attack.  That said, he confirmed his support of Trump to the Chicago Tribune which he attributed to his view that Trump would be better for the economy.

  “He’s gonna bring back the economy. I believe he’s gonna be the one to protect the (nation). I know he doesn’t speak politically correct sometimes, but 95 percent of the country doesn’t.”

  Somehow we suspect if this event were reversed and a white Trump mob was video taped beating a black Hillary supporter the mainstream media would pay a little closer attention.  That said, we won’t hold our breath waiting for CNN and MSNBC to cover this one.

  * * *

  Below is what we shared a couple of days ago.

  Authored by Paul Joseph Watson, originally posted at InfoWars.com,

  Shocking video out of Chicago shows a mob of young black men viciously beating an older white man because he voted for Donald Trump, dragging him through the streets as he hangs out of the back of his car.

  The clip shows the thugs repeatedly screaming, “you voted Donald Trump” as they assault the victim from every angle while others steal his belongings.

  “You voted Trump,” the mob screams, “You gonna pay for that sh*t.”

  Another woman shouts “beat his ass,” while another man is heard laughing before remarking, “Don’t vote Trump.”

  A second video of the incident which is dubbed with the “F**k Donald Trump” song, a phrase now being chanted by “protesters” across the country, shows one of the attackers driving away in the man’s vehicle while his hand is still stuck in the window as the car drags him down the street.

  “The scene is frankly reminiscent of a lynching,” remarks Chris Menahan.

  It is not even clear if the victim was a Trump supporter. Presumably, the mob used that as an excuse to beat and rob him.

  YouTube quickly deleted the video, but it has been mirrored on numerous different websites.

  If the roles had been reversed, and Trump supporters had been caught on tape viciously beating a black Hillary voter, this would be a national news story right now.

  As it is, you won’t see this on CNN any time soon.

  

  Finally, here is SHFPlan.com’s Mac Slavo with his typically eloquent perspective on this deplorable behavior…

  Violence and retribution for the election of Trump has proven to be the result of a media-driven attack on his character. For months now, the pundits and columnists have done nothing but tell the population that Trump supporters are racists, etc. and now racially-motivated beatings are taking place in the street without any other pretext or provocation.

   

  Are they proud of themselves yet? And how far will this violence spread?

   

  read more here…

  

  

• Chart Of The Week: The Exodus Begins

  In March, hordes of 'triggered' and 'fearful' liberals began to investigate just what it would take to leave the country if – horror of horrors – Donald Trump should win the US presidential election. As the following chart shows, that 'blip' of search hysteria appears to have been nothing compared to the overwhelming exodus that just occurred…

  trends.embed.renderExploreWidget(“TIMESERIES”, {“comparisonItem”:[{“keyword”:”move to canada”,”geo”:””,”time”:”today 5-y”}],”category”:0,”property”:””}, {“exploreQuery”:”q=move%20to%20canada”});

  Of course, this has not gone unnoticed by the Canadians (who emigration website crashed on Wednesday), as Jim Quinn previously wrote, the flood of Trump-fearing American liberals sneaking across the border into Canada has intensified in the past week. The Republican presidential campaign is prompting an exodus among left-leaning Americans who fear they’ll soon be required to hunt, pray, pay taxes, and live according to the Constitution.

  Canadian border residents say it’s not uncommon to see dozens of sociology professors, liberal arts majors, global-warming activists, and “green” energy proponents crossing their fields at night.

   

  “I went out to milk the cows the other day, and there was a Hollywood producer huddled in the barn,” said southern Manitoba farmer Red Greenfield, whose acreage borders North Dakota. “He was cold, exhausted and hungry, and begged me for a latte and some free-range chicken. When I said I didn’t have any, he left before I even got a chance to show him my screenplay, eh?”

   

  In an effort to stop the illegal aliens, Greenfield erected higher fences, but the liberals scaled them. He then installed loudspeakers that blared Rush Limbaugh across the fields, but they just stuck their fingers in their ears and kept coming. Officials are particularly concerned about smugglers who meet liberals just south of the border, pack them into electric cars, and drive them across the border, where they are simply left to fend for themselves after the battery dies.

   

  “A lot of these people are not prepared for our rugged conditions,” an Alberta border patrolman said. “I found one carload without a single bottle of Perrier water, or any gemelli with shrimp and arugula. All they had was a nice little Napa Valley cabernet and some kale chips. When liberals are caught, they’re sent back across the border, often wailing that they fear persecution from Trump high-hairers.

   

  Rumors are circulating about plans being made to build re-education camps where liberals will be forced to drink domestic beer, study the Constitution, and find jobs that actually contribute to the economy.

   

  In recent days, liberals have turned to ingenious ways of crossing the border. Some have been disguised as senior citizens taking a bus trip to buy cheap Canadian prescription drugs. After catching a half-dozen young vegans in blue-hair wig disguises, Canadian immigration authorities began stopping buses and quizzing the supposed senior citizens about Perry Como and Rosemary Clooney to prove that they were alive in the ’50s.

   

  “If they can’t identify the accordion player on The Lawrence Welk Show, we become very suspicious about their age,” an official said.

   

  Canadian citizens have complained that the illegal immigrants are creating an organic-broccoli shortage, are buying up all the Barbara Streisand CD’s, and are overloading the internet while downloading jazzercise apps to their cell phones.

   

  “I really feel sorry for American liberals, but the Canadian economy just can’t support them,” an Ottawa resident said. “After all, how many art-history majors does one country need?"

  Finally, for those still thinking of leaving, our exclusive “Canadian insider” offered these tips and answers about making the move to Canada and what you can expect when you arrive:

  1. Are Canadians as polite as the jokes say?

  In fact they are. One joke that even Canadians laugh at goes, “How do you get 47 Canadians out of the pool as quickly as possible?” The answer: simply yell, “Get out of the pool!”

  2. Is the weather in Canada as bad as the jokes say?

  No; it is actually worse. The beautiful East Coast becomes an ice cube in the winter—an endurance test equaled only by the weather in the capital, Ottawa, where the main distraction (aside from watching your breath freeze) is skating on the central canal, which freezes solid during winter. The prairies are no better. The outdoor parking spots accompanying most condos and hi-rises each have a built-in electrical outlet. No, not for your orbital buffer; they’re for your block heater. (If you don’t know what a block heater is, perhaps the Dominican Republic should really be your first choice for bugging out…?)

  3. Of course, there is always Vancouver, which experiences the best winters in the country (like Seattle, but with fewer serial killings).

  Keep in mind, however, that Vancouver currently has the largest housing bubble on the planet. (Source: “This is Freaking Nuts — House sells $750K above Asking,” Zerohedge, March 1, 2016.)

  4. Canada has cross-country “value added tax” (VAT), called HST, that can add about 13% to a typical purchase in the mere blink of an eye.

  If you are in business, you may be able to reclaim it. Most Canadians just pay it. Americans will find this unsettling. Of course, the whole idea of a VAT is that it theoretically obviates the need for income tax. Unfortunately Canada has not figured this out yet. They introduced income tax right after WWI, swore it was just temporary, and yet it is still here…? If, however, you are seeking the comfort and nostalgia of politicians who say one thing and then do another, Canada could be a dream come true.

  5. Speaking of politics, the wise voters of Canada just threw out the most conservative leader in decades (that is “conservative” with BOTH a small “c” and a capital “C”).

  This was mainly because they were bored with his conservatism, and (the irony!) they felt he was too close to the U.S.

  6. Social medicine will be a kick if you are making the journey north.

  It has its plusses and minuses. If you are in dire need, it is there. I have a friend who recently received a lung transplant, did not pay a nickel, and now loves Canada so much he moved back to Toronto from the Czech Republic. On the other hand, if you are looking for a simple MRI in a non-urgent situation, be prepared to wait several months or (more irony!) be prepared to cross into a U.S. border town and pony up cold hard cash.

  7. Supermarkets will be a shocker.

  Imagine that 70% of all the products you have come to know and love disappeared in the blink of an eye, like in a sci-fi movie, and, in many cases, they were replaced by brands you have never heard of. Your first time grocery shopping may possibly bring a tear to your eye. Good news? They do stock Kleenex, just like in the U.S.

  8. No, you don’t have to learn French, in spite of the millions of dollars a year Canadians spend translating and labeling everything that moves or squeaks into the official “second language.”

  Learning French is mainly useful only if you plan to live in Quebec or run for federal office. And if you learned history via U.S. textbooks, be prepared for some revisionism. Turns out that France did not lose the war for Canada to the Brits at the Battle of the Plains of Abraham. It was actually a “draw.” (Luckily, nobody bothered to tell the British or every province in Canada would have two tax systems and two levels of government, just like those freethinkers in Quebec.)

  9. The thing you will notice the most?

  Well, the whole money thing will be uncomfortable. First of all, everything in Canada costs more, ceteris paribus, than the equivalent item in the U.S., even before taxes. Why? Mainly because of the higher costs of labeling and moving goods in the sparser geography (hey! those French labels don’t put themselves on the items, do they…). Next, if you factor in the weaker loonie, well, let’s just say that as a Canadian newbie, your first experience with socialized medicine might be for anti-depressants. The good news? The doctor’s visit, and part of the cost of your meds, will be picked up by the very same country that depressed you in the first place!

  

  

• As The Dust Settles: Goldman Q&A On Life In Trumplandia

  Expect the election result to increase policy uncertainty, warns Goldman Sachs, as a result of an increased pace of legislative action in 2017 without clarity, so far, regarding which issues the administration will prioritize. Over the near-term, much will depend on how financial conditions respond to the policy positions of the new administration. Despite today’s favorable market reaction, investors may take a dimmer view on proposals to raise tariffs or otherwise restrict international trade.

  Via Goldman Sachs,

  Q: Where do the final results stand?

  A: Republican sweep. At this point, Mr. Trump is likely to finish with 309 electoral votes but is slightly behind Sec. Clinton in the popular vote (the margin is likely to grow as votes are still being counted). In the Senate, one race has not yet been decided but Republicans look likely to hold 52 seats in the next Congress, two less than the 54 they hold currently. Likewise, in the House, four races have yet to be called, but Republicans look likely to hold 241 seats, down six from the their current level (including one vacant Republican seat).

  Q: What does this mean for policy in general?

  A: Overall, we think the election result implies greater policy uncertainty, for two reasons. First, the likelihood of significant legislative activity has increased as a result of single-party control for the first time since 2010, and Republican single-party control since 2006. In some areas, like fiscal policy, the question is now less if legislation passes, but what legislation passes. Second, uncertainty also looks likely to rise, at least temporarily, because it is much less clear what the priorities—or, on some issues, even the general views—of a Trump Administration are likely to be compared to most incoming administrations. As a first pass in thinking about policy under the new administration and Congress, we would categorize issues along two dimensions: how much political support Mr. Trump would need from Congress, and which issues have been key to his political success, suggesting a need to follow through directionally though not necessarily on the specifics.

  Q: What is likely to be on the Trump Administration’s agenda?

  A: The issues on Mr. Trump’s agenda are fairly apparent but it is less clear how priorities will be ordered. The campaign focused on tax reform, trade and immigration restrictions, easing of regulation, repeal of the Affordable Care Act (ACA, or Obamacare) and increased spending on infrastructure and defense. Some of these issues appear more likely to become priorities for the Trump Administration than others. For example, it is clear that congressional Republicans hold tax reform as a top priority, along with ACA repeal. While both of these issues likely resonated with many of Mr. Trump’s supporters, these are issues that congressional Republicans—and the 2012 Republican presidential candidate—have highlighted in the past, with mixed electoral success.

  By contrast, Mr. Trump focused new attention on trade policy and immigration, taking more restrictive stances in both areas than many Republican members of Congress support. While there were several factors behind Mr. Trump’s surprising victory, many of the states where he significantly outperformed were those with some of the highest shares of manufacturing-related employment (Exhibit 1). Given this, it would be surprising to see a Trump Administration distance itself entirely from commitments made on the campaign trail regarding trade. He also appears focused, as do many of his advisors, on reducing regulation, particularly in the energy and financial sectors. Some of these changes could require legislation, but many would be possible through executive action.

  Exhibit 1: Trump outperformed in manufacturing-intensive swing states

  
  Source: CNN, Department of Labor, Goldman Sachs Global Investment Research

  Q: How much congressional support will President Trump need for his agenda?

  A: It ranges from needing bipartisan support to unilateral executive authority, depending on the particular issue. He would need bipartisan support for regulatory-focused legislation, for example. Under current Senate rules, it usually takes 60 votes to pass major legislation dealing with most policy areas, such as regulatory changes affecting various sectors, legal changes (for instance, dealing with immigration or anti-trust laws) or labor laws like a minimum wage increase. In some cases, bipartisan support in the Senate might be possible in light of the fact that 10 Democratic senators representing states that Mr. Trump won will be up for reelection in 2018 (only one Republican senator representing a state that Sec. Clinton won will face reelection in 2018). Coalitions will differ based on the issue, but a deregulatory push in some areas, like energy, could receive sufficient support from these Democratic lawmakers to cross the 60-vote threshold. On many other issues, like comprehensive immigration reform, we expect that reaching a compromise would remain difficult.

  Fiscal policies could be addressed with only a simple majority in the House and Senate. Under the budget “reconciliation” process, the majority party can pass legislation to cut or raise taxes with only 51 votes in the Senate, rather than the usual 60 votes needed for most legislation. The two issues most likely to be addressed using this process would be tax reform and changes to the ACA. It is possible that certain aspects of federal spending, like Mr. Trump’s infrastructure program, might be addressed through this process as well.

  A third set of issues could be addressed without congressional involvement at all. The president has broad powers related to trade policy, as discussed below. Once in office, President-elect Trump could also reverse the “deferred action” policies for undocumented immigrants that President Obama put in place in 2012. Beyond this, there are a number of regulatory actions that the current administration has taken that could be modified or reversed, related to labor rules, energy exploration and production, carbon emissions and other aspects of environmental regulation, and financial regulation.

  Q: What has President-elect Trump proposed on taxes?

  A: Mr. Trump has proposed personal and business tax reform that would reduce tax revenues by an estimated $4.4 trillion over ten years, or roughly 1.9% of GDP over that period. Roughly half of this cost is estimated to come from his proposed corporate tax reform plan, which would reduce the corporate income tax rate to 15% and would impose a one-time 10% tax on all foreign earnings not yet taxed by the US. Companies would be free to repatriate earnings without additional tax once this tax has been paid. Like the House Republican proposal, this would involve a transition to a new corporate tax system for taxing foreign earnings. The two plans are similar in several other respects as well, including a top individual marginal tax rate of 33%. However, the House Republican plan is estimated to cost around half as much over the next ten years as Mr. Trump’s plan, at least in part because it proposes to go further in limiting or eliminating existing individual and corporate tax preferences (Exhibit 2).

  Exhibit 2: Tax plans compared

  
  Source: Office of Management and Budget, House Ways and Means Committee, Trump Campaign, Goldman Sachs Global Investment Research

  Q: Will his tax proposal pass?

  A: We expect that significant tax legislation has a good chance of passing in 2017, but we would not expect it to reduce revenues by as much as Mr. Trump has proposed. We note three potential obstacles to passing such a proposal:

  First, the cost is likely to be prohibitive for some members of Congress. While the majority party is able to pass tax legislation with only a simple majority in the Senate using the budget reconciliation process described above, it would require near-unanimity among the 52 Republicans in the Senate next year to do so. Our expectation is that some Republican lawmakers would balk at the deficit impact of his proposal.

   

  Second, while the House Republican proposal would increase the deficit less, it has also generally been proposed in the context of the broader Republican budget proposal, which would also reduce spending in several areas. Mr. Trump has not proposed a significant net spending reduction.

   

  Third, tax reform is complicated, and even under a unified Republican government, it may be too complex to resolve in a matter of months.

  Ultimately, the outlook for a tax cut depends on how willing marginal Republican lawmakers are to increase the deficit, and/or how willing they are to find offsetting savings elsewhere. Overall, our expectation is that there is a good chance that some type of tax legislation passes next year, but the obstacles to comprehensive tax reform go beyond partisan disputes, so we would expect tax legislation that is adopted in 2017 to be narrower in scope than the campaign proposal, and significantly smaller in its revenue effect.

  Q: What has Mr. Trump proposed in terms of infrastructure spending?

  A: His infrastructure plan calls for up to $1 trillion in additional spending over ten years, most of it privately financed. A memo released in late October by Mr. Trump’s economic advisors Wilbur Ross and Peter Navarro detailed a plan to finance up to $1 trillion in infrastructure spending over ten years, equal to $100bn per year or about 0.5% of GDP. We previously estimated that a spending boost of this size would reduce the unemployment rate by about 0.3pp and raise inflation a touch, leading the Fed to eventually hike one or two more times by 2019 relative to a baseline without the infrastructure package.

  The plan described by Ross and Navarro would be largely privately financed, but encouraged by tax credits. The plan would seek to incentivize the private sector to increase investment in infrastructure projects that would be supported by future usage fees, such as road tolls. Ross and Navarro suggest that 17% of the initial investments could be financed with equity and the remainder with debt. The government would then provide a tax credit equal to 82% of the equity to reduce the cost of financing. The large role of debt-financed private investment in Mr. Trump’s infrastructure plan implies that a significant increase in interest rates could be a hurdle for the plan’s feasibility.

  Ross and Navarro argue that the plan would be revenue neutral because the tax credit would be offset by revenue raised from taxes on income earned by workers employed by the infrastructure projects and on profits earned by contractors. However, their calculations both assume that the workers employed would not otherwise be earning taxable income and assume a tax rate that looks somewhat optimistic under the tax plan proposed by the Trump campaign. We expect that the Congressional Budget Office and Joint Tax Committee would find that the plan increased the deficit under their methodologies.

  Q: Will it pass?

  A: Mr. Trump appears to be more focused on infrastructure than many Republicans in Congress are. That said, his proposal, which relies on tax credits, might attract more Republican support than a spending plan of the same size. Moreover, there is significant Democratic support for additional infrastructure investment, which raises the possibility that it could be combined with the tax reform legislation discussed earlier to increase support for the overall package.

  Q: What does this signal regarding overall fiscal policy?

  A: We expect fiscal policy to loosen by about 0.75% of GDP, though there would be only a partial effect in 2017. Our very preliminary view is that fiscal policy might loosen by around 0.75% of GDP, with perhaps 0.5% coming through tax reductions and 0.25% through spending. Our expectation is that the effect in 2017 would probably be smaller, for two reasons. First, tax legislation would probably not pass until around mid-year, at earliest. Second, increases in infrastructure spending (or subsidies) and/or defense spending would likely take until 2018 to materially change spending levels.

  Q: What has President-elect Trump proposed regarding trade and tariffs?

  A: Mr. Trump has opposed existing trade agreements and suggested large tariff increases. He has proposed to renegotiate the North American Free Trade Agreement (NAFTA) and raised the possibility of withdrawing from the World Trade Organization (WTO). Mr. Trump also opposes the Trans-Pacific Partnership (TPP). In terms of explicit changes, Mr. Trump has suggested imposing a 35% tariff on imports from Mexico and a 45% tariff on imports from China. If tariffs on imports from Mexico and China only were raised to 35 and 45% respectively, the average effective tariff rate would rise by roughly 11-12 percentage points (pp) from 1.5% to roughly 13%, a level not seen since WWII (Exhibit 3).

  Exhibit 3: Will tariffs stay low?

  
  Source: International Trade Commission, Goldman Sachs Global Investment Research

  Q: What authority does the President have over trade and tariffs?

  A: Trade policy is an area of greater presidential discretion. The Constitution gives Congress the power to regulate commerce with foreign nations but as a practical matter Congress has ceded much of this power to the executive branch over the years. Congress approves trade agreements, but the actual legislation that Congress passes usually simply authorizes the president to enter into an agreement that has already been concluded. The consensus among legal scholars is that presidents generally have the authority to withdraw from bilateral and multilateral trade agreements approved this way.

  Tariff levels are technically under the purview of Congress, though most levels are governed by commitments in bilateral and multilateral agreements. The executive branch lacks the authority to make broad permanent changes to tariffs on a unilateral basis, such as Mr. Trump’s suggestion that imports from China should face a 45% tariff. That said, the president does have authority to raise tariffs broadly on a temporary basis, or to raise tariffs narrowly on a longer term basis. Regarding the former, authority exists under the Trade Act of 1974 that grants the president power to impose quotas and/or an import surcharge of no more than 15%, though neither could be left in place for longer than 150 days. Regarding the latter, the Department of Commerce and the International Trade Commission oversee anti-dumping and countervailing duty complaints from various US industries seeking relief from import competition. The tariffs imposed in these cases are often substantial, but they are limited to certain narrowly defined products from certain countries, rarely affecting more than 1% of annual imports and averaging less than 0.2% of imports since 1980.

  Q: What would be the effects of tariff hikes on the economy?

  A: Tariff increases would likely boost inflation, and have mixed short-run but negative long-run growth effects. We estimate that a hypothetical 10pp hike in US import tariffs would 1) depress imports by about 5% and 2) boost the core PCE price level by roughly 0.6% cumulatively. The decline in exports would depend on the extent to which trading partners retaliate.

  The growth effects of import tariff increases depend on the horizon. The short-term impact on GDP is uncertain and likely mixed. On the one hand, the shift from imports to domestic production contributes positively to short-term growth, and tariff revenues can finance fiscal stimulus. On the other hand, the real income loss from expensive imports lowers consumption and investment. Other important negative short-term effects include the decline in exports under retaliation, tighter monetary policy, and possibly broader FCI tightening. While trade raises important distributional questions, the long-term aggregate growth effects from trade restrictions are negative in our view. The academic trade literature has highlighted several channels through which trade fosters long-run welfare. Trade can boost output as countries specialize; raise the variety of available products; and increase productivity through larger and more competitive markets.

  Q: What are the President-elect’s views on monetary policy and the Federal Reserve?

  A: As a candidate Mr. Trump was sometimes critical of the Fed, but his views on the appropriate direction for policy are unclear. On the one hand, Mr. Trump has expressed support for low interest rates, given the current inflation backdrop: “If inflation starts coming in, and we don’t see any signs of that, inflation starts coming in, that’s a different story. You have to go up and you have to slow things down. But right now I am for low interest rates.” He has also expressed concern about excessive dollar appreciation, saying in the same interview: “If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.” He added: “While there are certain benefits, it sounds better to have a strong dollar than it actually is.” Mr. Trump has also often noted that, as a developer, he prefers low rates. For example, at the Economic Club of New York in September, he said: “As a real estate person, I always like low interest rates, of course.”

  On the other hand, Mr. Trump has said he worries low interest rates are artificially supporting asset prices: “In terms of real estate, if I want to develop … from that standpoint I like low interest rates. From the country’s standpoint, I’m just not sure it’s a very good thing, because I really do believe we’re creating a bubble.” Similarly, he has said Fed policy has created a “false stock market”, that the “only reason the stock market is where it is, is because you get free money”, and that the FOMC “should have raised the rates” at its September 2016 meeting. Many conservative economists favor tighter monetary policy, but Mr. Trump’s views appear more nuanced, and we are therefore unsure whether he would favor a more hawkish Fed stance after taking office.

  Similarly, Mr. Trump’s preferences for Fed Chair are still unclear. During the campaign he said clearly that he would want to replace Yellen: “She is not a Republican … When her time is up, I would most likely replace her because of the fact that I think it would be appropriate.” And earlier today, a campaign spokesperson said that Mr. Trump would prefer a Fed Chair “whose thinking is more in keeping with his own”. However, at other times during the last year Mr. Trump said that he has “great respect” for the Fed Chair, and that he is “not a person who thinks Janet Yellen is doing a bad job.” So while unlikely, we would not totally rule out a Yellen reappointment. Several past Fed chairmen have been reappointed after the White House changed parties, including Chairmen Martin, Volcker, Greenspan, and Bernanke (Exhibit 4).

  Exhibit 4: Fed Chairs have been reappointed by presidents of the other party

  
  Source: Federal Reserve Board, Goldman Sachs Global Investment Research

  Q: What changes have you made to your forecasts following the election result?

  A: We nudged down the odds of a Fed rate increase next month, but have made no other changes at this point. After the tightening in financial conditions immediately following the election results, we lowered our subjective probability of a December rate increase to 60% from 75% previously. Markets have now recovered substantially—the S&P 500 in fact closed 1.1% higher on the day. If financial conditions remain benign in the coming weeks, the odds of a December rate hike would rise.

  For now we are sticking with our forecast that real GDP will grow at a 2% pace in 2017. Over the near-term, much will depend on how financial conditions respond to the policy positions of the new administration. Despite today’s favorable market reaction, investors may take a dimmer view on proposals to raise tariffs or otherwise restrict international trade. Beyond the next couple of quarters, increased potential for fiscal stimulus may be a source of upside risk. Given that the US economy is already close to full employment, aggressive fiscal stimulus would also point to upside risks to inflation.

  

  

• Trading For A Living

  Submitted by Erico Matias Tavares via Sinclair & Co.,

  Adam Grimes has two decades of experience in the industry as a trader, analyst and system developer. His trading experience covers all major asset classes–futures, currencies, stocks, options, and other derivatives, and the full range of timeframes from very short term scalping to constructing portfolios for multi-year holding periods. Adam is currently Chief Investment Officer of Waverly Advisors, LLC, a research and advisory firm for which he writes daily market commentary and trade notes. He is also a contributing author for several publications on quantitative finance and related topics, and is much in demand as a speaker and lecturer on the topics of technical trading, risk management, and system development. When not doing finance stuff, Adam is also an accomplished musician and a classically-trained French chef.

  E. Tavares: Adam, you have dedicated most of your professional life to trading, as a private trader and later also including research publisher and coach. You have traded for a living since the 1990s and at this point have looked at all kinds of systems and approaches out there. This is actually a very valuable perspective today. In addition to a tough jobs market central banks have condemned savers – especially retirees – with zero interest rate policies, and so trading might be an alternative to generate income. Have you seen an increasing number of people trying to trade for a living in recent years?

  A. Grimes: I think it comes and goes with market cycles. When markets get difficult the number of people interested in doing this drop off because as we know trading profitably is a very hard skill to develop. I may have missed it but I have not really seen people driven by the low interest rates moving into active trading. However, there is a perennial ongoing interest from people trying to figure out the markets.

  ET: Your background is quite unique in that regard. You went from a trained musician to a full time trader. What prompted you to do that? Are there similarities between the two professions?

  AG: I honestly don’t know if there was any rationale for that. Trading caught my interest. I had some negative early experiences but then I was fortunate to figure some things out—I think the negative experiences were good learning experiences, and probably part of why I eventually did figure it out. It was more of a hobby which eventually grew into something significant.

  People talk a lot about the parallels between the two professions and maybe make too much of that. A lot of the skills and a lot of the intelligence we develop are very domain specific, meaning if you study chess it will make you a better chess player. I don’t know if studying chess makes you better or more intelligent at other tasks.

  Maybe the things that I carried from being a musician centered around focus. It was very natural for me to work six to eight hours a day, day after day, for months at a time in a project. That’s not a normal skill for people to have; and also the emphasis on basics, on the importance of really understanding the basic building blocks and how if you have a strong foundation you can build an impressive structure.

  It seems that many people just want to get to the cool stuff and they ignore the basics. They don’t understand that the soul of any discipline truly is the basics.

  ET: Indeed. Trading is very difficult, extremely difficult in fact, as it requires a range of skills and a level of performance that most people are not even aware of when they begin that journey. Today we would like to briefly explore three core trading fundamentals, or basics as you call them: technicals, risk management and psychology.

  Let’s start with technicals, meaning having the right tools. One concept that is enormously helpful particularly for new traders is a proper understanding of the expectancy formula, roughly speaking the number of times you win times the gain per trade less the number of times you lose times the loss per trade over time. Can you talk about this and the importance of developing a system that has a trading “edge”, meaning a sustainable positive expectancy (expected gains greater than expected losses)?

  AG: The key is that we have a positive expectancy and we hope that it is enduring. All of our system work, if done correctly, should point us towards having something that is robust, meaning that if it works today it should still continue to work tomorrow. Of course, depending on the system the edge may be more or less stable and may require some work here and there. There are plenty of quantitative systems that require a good deal of refitting and rework on a semi-regular basis and that’s fine, it’s part of the game.

  It’s very easy when you start trading to look at patterns, to start thinking about all the money you are going to make and to forget – coming back to those basic concepts – that if you don’t have an edge, a positive expectancy, then nothing else matters.

  One of the reasons why traders struggle is because they are using systems that don’t work and they cannot work because those systems just don’t have an edge. It is essential that you have an edge.

  ET: Yes, in fact there are thousands of trading systems out there being advertised to retail investors using every financial instrument possible, from buying stocks to highly sophisticated option strategies. Some promise very high win rates, meaning the chances of having a loss are small, which intuitively is appealing because nobody likes to lose money. But that is not the whole story, not if you want to make it in this business. How can you use that expectancy formula to evaluate the system you are looking at?

  AG: Well, for one there is a difference in quality in what I consider to be three types of data or system stats.

  First, doing some type of backtest, meaning going back in time and testing different parameters in search of that positive expectancy. You should never trust a backtests done by others, certainly from anyone wanting to sell you things. Even if they are not dishonest people make all kinds of mistakes, not to mention things like aggressive marketing and the like. You want to do your own backtest but even that I would not really trust because there are so many ways it can be wrong. In general, any backtest is highly suspect!

  The next piece is some type of forward test. Perhaps do some paper trading where you can execute the system without real money. Basically what you are looking for here is if the paper trading resembles the results of the backtest. In both of these cases we are looking for that positive expectancy.

  And then the third piece is trading with real money where what we are looking to do is see if each of these kind of link together. We are talking statistical measures with a good deal of variation, it is not always easy to say yes, they do look the same, but we want to have some consistency between all of these different expressions.

  You talk about the high win ration and this to me is pure marketing. There are a lot of people who have made a lot of money winning just 25% of the time. I can tell you from my own experience that you can win 90% of the time and not make money. What matters is that you have a positive expectancy.

  ET: Let’s focus on that trading edge now. Your research indicates that securities behave differently, something that perhaps is not widely understood: stocks trade differently from commodities and foreign exchange, for instance. As such, in order to find that edge your system either needs to be adapted to the asset class you are trading or be so robust that it can be applied across the board. How do you go about doing that?

  AG: You are correct. One of the great lies of technical analysis that is perpetuated in so many places today is that you can apply any tool to any market in any timeframe and you can make money. Somebody doing statistical tests with no more powerful tools than Microsoft Excel and freely available data can show you that there are basic differences between asset classes, for instance in the way they mean revert, and it’s illogical to think that you can apply tools the same way if markets behave differently.

  ET: If you do a backtest when stocks are at all-time highs this means by definition that you could have bought at any time in the past in any imaginable way and you would be in the money. So you can come up with any number of parameters and you will always end up with a system that has a positive expectancy, provided that you stay in the market. Can this stock market condition make people develop systems which are not as reliable going forward? Actually, this may be more relevant at this juncture into a seven year bull market in stocks. Investors seem to forget that in nature – as in markets – trees don’t grow to the sky…

  AG: If we take stocks that are at all-time highs and then look at statistical edges going forward that is different. Otherwise you are correct. If you take stocks now and look at how they have performed over the past you would have made money – in theory.

  There are things that we can do to have more robust results. One of the huge problems we need to account for is survivorship bias. In other words you want to make sure that in your backtesting you are somehow incorporating delisted stocks and stocks that are undergoing some type of market action.

  But in general you need to be very aware of how you are constructing your test and being aware of any leakage from the future, meaning that you have to make sure that your system does not in any way know about what will happen after.

  However, I consider that the stock market has a fundamental element in that stocks over any appreciable period of time always seem to go up. It is quite difficult to imagine anything happening that would move us out of that environment. So I would not have a problem dealing with stocks in the conditions you described. But you can develop systems and edges that are not conditional on this fundamental upward shift in stocks.

  ET: A quick note on market indicators, which seem to fill trading screens these days. Some are very sophisticated and based on exotic proprietary formulas. In your opinion are they worth the complexity and often the cost?

  AG: It’s definitely hard to make a hard generalization. But the efficiency of simple tools for instance ultimately depends on how they are applied. You can have a tool that works very well but if you don’t apply it properly you will not get good results. Complexity is not a bad thing but may not be necessary.

  ET: Can you comment on using purely mechanical systems, where the parameters are predefined (largely as a result of the backtesting we just discussed) and you just follow that plan day in day out, versus more discretionary systems, where you can add your own input to the final decision, some of it more subjective like economic conditions, supply and demand and so forth? It seems you use both in your work, do you favor one in particular?

  AG: There are certainly people who do both effectively, others who are more effective in just one. But particularly for developing traders, if you are going to be a discretionary trader you need to make sure that you are aligned with the market. You can’t just trade any old idea and hope that it works. So there needs to be some type of education there. Other than that I don’t have a particular bias towards any approach.

  ET: Is it fair to say that the quicker you turn over your positions (day trading being the most extreme for retail investors) the more technical systems you should use, and the longer your timeframe the more you should consider factors like longer term trendlines, fundamentals and economic conditions? Is it also fair to say that in trading the real money is made in the bigger moves, meaning trading less and being positioned for the bigger swings over time? The short term, especially day trading, appears to be very noisy, perhaps too noisy to consistently make money.

  AG: You certainly can make money day trading. More people talk about it than doing it effectively but it is possible. Most developing traders will probably find better success in longer time frames. I don’t think that a generalization is possible, other than using fundamental data for short-term systems makes less sense to me.

  ET: That gets us to risk management, another fundamental of trading, which in very simplified terms deals with how much you should invest in each trade. This is another area where that expectancy formula can be very helpful. If a trader is seeking to change her approach to limit her loss per trade she will very likely find that her win ratio will drop as a result, so that the expected result may not change that much. In other words, in efficient markets there are no free lunches; any improvement comes at the expense of something else. So can risk management really help you?

  AG: What you just outlined is a very good expression of the edge, the expectancy. Yes, you can change your win ratio and the relationship between average win and average loss but at the end of the day the other side will compensate such that your expectancy will be more or less the same within some limits.

  To me risk management is a bigger topic than just position sizing. How much you risk on each trade is certainly a part of that, but the idea is to maximize your equity curve while reducing the chance of something very bad happening. Basically position sizing lets you stay in the game, make the most money you can with the minimal chance of going broke.

  ET: Actually, we often hear that “you will not go broke by taking a profit”. That’s actually not quite true. If your system needs to have profits per trade 5x larger than your losses just to breakeven this means that if you always sell as soon as you reach 2x or even 4x you will eventually go broke. Your thoughts?

  AG: Yes, that saying is one of the great lies told to traders. That is absolutely untrue. In fact one of the biggest psychological barriers of developing traders is managing winning trades. I hear this over and over from people: “it’s very easy for me to get out of my losers but I can’t hold on to winners, I always take profits too early”. This is something that people don’t think about often enough but it is a serious problem.

  ET: That’s a great point. In fact, while it is hard to consistently make money over time there are things that will definitely put you on the losing side over time. Can you briefly talk about those?

  AG: The biggest, I think, is simply doing something that doesn’t work, having some trading system that you don’t understand because you got it off some chat room or bought it from someone else. Even if the system has an edge it’s not your system so you can’t execute it appropriately.

  And then there are things like sabotaging yourself, meaning taking the wrong size in trades, the behavioral issue of ignoring stops, getting lazy and not doing the necessary work, skipping trades, not managing your positions and so forth. There are many things you can do wrong that will effectively sabotage you.

  ET: How would you rate the importance of finding a trading edge versus risk management? You closely liken the two but some traders suggest that the latter is the absolute key and even propose different optimization formulas.

  AG: Yes, they’re equally important but the idea that you could go into a market and make money provided you have good risk management is incorrect. There’s this famous trading book where only one random test in a group of commodity markets is presented confirming this idea, but it was a bad test—the standard obviously should be the baseline drift, not that the tests made money, and it was just one result. Though this test is famous, it was poorly constructed as a statistical argument.

   Risk management is not enough. You can’t make money if you don’t have an edge and risk management does not solve that problem.  

  ET: So let’s look at psychology, the third fundamental which ties together all that we just discussed. Its importance is of course beyond dispute. If you have a winning system but the inevitable losses put you off trading then you can never be a trader. Full stop.

  It can also be more subtle than that, as each trader needs to find and adapt a trading system that truly suits his or her personality. In other words, to be a profitable trader there are no shortcuts, it requires a lot of introspection, research, hard work and confidence. Like every other challenging undertaking in life actually. Your thoughts here?

  AG: Again, trading psychology is not an edge by itself, but you can certainly have an edge and sabotage it with the wrong psychology. It is vital in many level and stages. You have traders who may do well for a while but then they struggle with some aspect and everything comes crashing down. You can also have inherent conflicts with money, the wrong reasons for trading or you are not a coherent human being, all of these can come out and affect your trading over the long run.

  All of this is important but it is critical to understand that you need these three pieces: the edge, the risk management to apply the edge and the psychology to make sure you do what you are actually supposed to do.

  ET: Should trading be boring or exciting, especially if you want to do it for a living? What should motivate you each day as a trader?

  AG: When I talk to a trader who wants to work with me as a coach or mentor, I get very concerned when somebody tells me that they are looking for excitement in trading. If that is your motivation you can have that; simply put on some positions that are too large or ignore your stops and all of the sudden your trading will be very exciting.

  To be a profitable trader this means that you find something that is robust and repeatable and sadly this means it’s boring. Effective professional trading is really doing the same thing over and over. One of my closest mentors said that the best definition of good trading is like being a stonemason or bricklayer. You put a brick down, then put the mortar, smooth it, then put another brick down, then the mortar, smooth it and so on. If you continue doing the same thing over and over at some point you will build a big wall. But the actual act of doing is the same boring, tedious routine. It is almost an insignificant thing.

  And by the way this parallel goes a bit further because most people can’t build a brick wall. It’s not as easy as it looks and they don’t have the skills to do it. Even though the basic elements seem to be simple, it takes real work to develop the skills—the same as in trading.

  Your motivation for trading cannot be excitement. An important stumbling block is once you become a successful trader it can get pretty boring. All of the sudden you realize you lack excitement, that you will not solve any of the world’s problems trading. You’re just doing the same thing over and over, it’s a reality shock that many people having difficulties coping with.

  ET: You have written extensively over the years on all these topics in your blog and even produced a video trading course, all which are available for free. We can’t recommend those enough to anyone wanting to think through and improve their trading skills. Why did you go through all that effort and then charge nothing for it? These are excellent resources that can be further explored in your book, The Art and Science of Technical Trading, which was very well received, and even help to better understand the thinking behind your excellent research product at Waverly Advisors, but aren’t you concerned about giving away your “secret ingredients”?

  AG: First of all thank you for your kind words on my work. Everything I do I try to put out information that I wish I had had when I started trading. I have certainly been immensely touched by the feedback that I have received and I think I’ve shortened the learning curve for some people.

  Regarding the trading course I wanted to put out a product that was equal to or better than courses that cost $10,000+, and I did that. This course has been very well received and has put me in touch with a lot of smart people, but it really did have an altruistic beginning.

  It’s been a great way to get in touch with a lot of intelligent people. It is free, there is no upsell, no hidden fees and it will always remain free. I very much believe that anyone starting from scratch will learn enough to build a profitable trading system, and that’s based on actual feedback.

  ET: That’s excellent. Final question. In light of everything we just discussed, can retail investors prevail in the markets and find consistent ways to supplement their income, if not outright trade for a living, or does it all boil down to a coin flip?

  AG: The answer is yes you can do this, but the way I would think about it is that you have a choice to make.

  If you treat trading as a hobby then you can certainly do that and there’s room in the market for that. But realize that this is entertainment and you probably will not make much money doing that. Your primary motivation is an interest in the financial markets, you want to solve the puzzle but let’s be honest: hobbies cost money.

  If you want to make money in the market then I think you need to make the commitment to trade with a professional mindset. This does not mean that it is your full time job necessarily, that you should take your focus away from your family and anything else that you are doing but it does mean that you approach the market with a full professional mindset, understanding that you operating within the bounds of probability and that you’re looking to apply the same simple system over and over.

  I don’t know how else to put it. You have to make the commitment to become a professional trader because I don’t think the hobbiest has much of a chance to make money. Having said that, virtually anyone in the world with that desire could commit to becoming a professional trader. If you want to do this, you can do it.

  ET: Adam, thank you very much for sharing your thoughts.

  AG: My pleasure, thank you.

  

  

• What "The World's Most Bearish Hedge Fund" Thinks Of The Trump Presidency

  October was not a good month for the “world’s most bearish hedge fund” Horseman Global Management, which suffered another steep drop, losing 5% in the month, and down 5.5% YTD. Absent a rebound in the last two months of the year, Horseman is set to have its worst year since 2009. Alas, with Horseman’s net exposure a whopping -84% (if fractionally more bullish than the -100% recorded in early 2016) as a result of an equity short and a bond long, November does not appear overly promising for the fund’s investors. Unless, of course, the market swoons as both yields and the dollar continue surging (as DB warned), and Horseman does have the final laugh.

  That, however, would be surprising considering that some of the most prominent billionaire mega-bears, such as Carl Icahn and Stanley Druckenmiller, both quikcly flopped to bullish in the aftermath of Trump’s election, on just one catalyst: more debt resulting in more stimulus, and (hope) for more growth.

  Yet Horseman refuses to change its thesis. Why? Instead of guessing, here is the answer straight from the “Horse’s mouth” – the following excerpt from the latest letter to investors by CIO Russell Clark lays out what the gloomy hedge fund believes will be the outcome from a Trump presidency.

  Your fund fell 4.96% last month. Losses came from the bond book, the forex book and the short book. The long book made money.

   

  First Brexit and now the Trump triumph has left many supporters of open liberal economies despairing. They feel that the world is turning in on itself and that perhaps a darker less safe world is emerging. And perhaps they are right.

   

  But in many ways, the great western democracies of the world, the UK and the US are working as they should. It is plainly obvious that large parts of the population in both the UK and the US feel that the system has not worked for them, and they have voted for change. And those voters have had their voices heard and change is on the way.

   

  Undemocratic regimes in the rest of the world look on in either horror or bemusement at the changes in the UK and US and congratulate themselves that their system is so safe and stable. And yet, the reality is that if the political system cannot provide the change that people seek, then eventually and inevitably, revolution becomes the only option for change. And revolution always extracts a very high price on those that have been in power.

   

  When thinking about a possible Trump victory, I perceived that the USD could be very weak, and that this weakness would lead to treasuries also being weak as foreign investors dumped their holdings. What has happened is that domestic US investors have reappraised their views of US domestic growth upwards, and have dumped treasuries to buy equities, and the US dollar has been very strong.

   

  While the stated aims of the Trump administration are very pro-growth, to me the actual effects seem likely to disappoint. Plans to allow more drilling will be dependent on a much higher oil and gas price. Scrapping car emission standards whilst good for SUV makers, will unlikely reverse the falling demand for cars due to high levels of auto debt. Lower taxes and more infrastructure spending may well be bullish for growth, but need to be balanced against the sell-off in the long end of bonds, which will have a negative effect on housing and with DR Horton reporting weak numbers makes, I feel growth will disappoint in the short term.

   

  The more apparent of the negative aspects is that higher bond yields are starting to cause some financial pressure in Hong Kong and Chinese interest rates. If a trade war, becomes more likely, then a large Chinese devaluation also becomes more likely. Furthermore, the Trump win makes the break up of the Eurozone far more likely in my mind.

   

  After Brexit, being short equities and long bonds was a fantastic trade for a week or two, but then reversed quickly after, causing severe pain for those that had reacted to the market quickly. I think the Trump win has seen many investors sell defensive positions and buy cyclical positions. I suspect they will come to regret that. Your fund remains long bonds and short equities.

  * * *

  Steepping away from Trump, here is Clark’s asset allocation and sector breakdown, and what appears to be a wager that Trump is about to end the record wave of industry consolidation in a move straight out of Teddy Roosevelt’s playbook:

  This month losses in the short portfolio, in particular from the European and Japanese banks and the automobile sectors, were partially offset by gains in the banks and oil sectors in Brazil and the defence contractors in the long portfolio.

   

  In the US the value of announced mergers and acquisitions (M&A) reached $337 billion in October, making it the biggest deal-making month ever. 2015 was the biggest M&A year ever globally with total deals of about $4.3 trillion dollars (source: Bloomberg). High M&A activity may give the impression that the economy is robust, but in our opinion it merely reflects a sluggish economic environment as companies struggling to grow their revenues and profit margins organically, and turn to mergers and acquisitions instead.

   

  QE monetary policies have supported M&A activity by allowing ample availability of funding, as investors searching for yield are eager to buy corporate debt and drive credit margins lower.

   

  M&A activity causes a decrease in the number of firms and an increase of their respective market shares. This can result in significantly reduced competition between firms. In economic theory, when a few large firms dominate a market there is the potential to engage in collusive behaviours such as deliberately joining together in cartels in order to increase prices. In extreme cases a company that becomes too dominant develops the power to influence market price, run competition out of business or not allow competitors to emerge. Once enough other companies are bankrupt or bought off, the remaining company can stop improving its product, lower the quality and raise prices as much as it wishes, because consumers have no choice.

   

  It has been argued that some companies with large market shares can employ what game theorists call a “trigger strategy,” whereby they signal to their competitors that if they lower their prices, they will start a vicious retail war. If a rogue player refuses to play the game, it becomes the target of an aquisition, not because it makes great products, but because owning it allows an oligopolist to raise prices.

   

  Another detrimental effect of low competition to the consumer was illustrated by an article in The New York Times entitled ‘Arbitration Everywhere, Stacking the Deck of Justice’, about the rise of private arbitration clauses in consumer services contracts, which allow large companies to avoid the court system and prevent consumers from joining together in class-action lawsuits.

   

  The Herfindahl-Hirschman index (“HHI”) measures market concentration by industry and is used by regulators when reviewing mergers, values between 1,500 and 2,500 are defined as “moderately concentrated,” while values above 2,500 are defined as “highly concentrated”.

   

  The US beer market has a high HHI of 2696, it is dominated by one large producer, whose current market share is 46%. The company recently made a large acquisition, but subsequently was forced by the Department of Justice to sell part of the acquired business as the combined market share of 70% would have resulted in almost monopolistic conditions.

   

  At the turn of the 20th century, Teddy Roosevelt became president. He realised that for capitalism to maintain popular support, the monopolists and oligopolists of his time had to be taken on, and his presidency was driven by Trust busting. This set of policies looks set to re-appear.

   

  The fund maintains short positions in airlines, banks, and certain consumer staples, primarily because we think that margins will remain under pressure due to the macro-economic environment and specific sectoral issues (please refer to Russell Clark’s Market views). These are not monopolistic sectors, however they are concentrated, should competition increase at some point, stock prices could de-rate even further.

  Finally, here are Horseman’s Top 10 long positions as of this moment. Alas, the far more useful, top 10 shorts, are not public.

  

  

  

• "The Economic Peace Is Over" – Get Ready, Change Is Upon Us

  Submitted by Chris Martenson via PeakProsperity.com,

  “After four years of warfare that tore the world apart like never before, a peace was finally reached.  But it was a peace which one man in particular vociferously condemned — and that man was John Maynard Keynes.

   

  In just two months, Keynes wrote the book that would make him a household name around the world — The Economic Consequences of the Peace.

   

  In the book, Keynes was highly critical of the deal struck at Versailles, which he felt sure would lead to further conflict in Europe — describing the agreement as a “Carthaginian peace” — and with the passing of a surprisingly short period of time, he would be proven correct.”

   

    ~ Grant Williams in The Economic Consequences of Peace

  After WWI, a particularly noxious set of treaties and economic reparations agreements were put in place that all but guaranteed a future WWII.   Mr. Keynes sniffed that out and, sadly, was proven correct.

  The lesson from this is that, at certain times, it’s really not that hard to predict "what" is going to happen next after disastrously short-sighted and self-interested policies are enacted. Predicting the "when", with precision, is much trickier. But obvious misguided economic policies are destined to have a limited period of apparent (but false) prosperity, after which they end with a nasty Bang!.

  We have entered just such a time. This isn't a Trump vs. Clinton thing; I'd make this claim regardless of who won this week's presidential election — as our plight is much bigger than a single Administration. And my observation is that neither political party had much interest beyond some temporary election year lip-service to the economic plight of the middle class.

  And by “middle class” I mean anybody not in the top 5% economic bracket. For those doing the math at home, that leaves the remaining 95% of us stuck in the meat grinder.

  WTF Happened?

  I know a lot of people who are suffering very raw emotional wounds from the harsh negativity and divisiveness of the seemingly never-ending election we just went through.  There will be a period of healing and adjustment for many, and I can fully empathize with how they feel.

  For the Clinton supporters stunned that she didn't experience the victory so many predicted, here's a “what went wrong” post-mortem given by the brilliant British comedian Jonathan Pie that I think hits close to the mark (caution: it's a pretty heated rant):

  Pie asks some very important questions, chief among them: Have we lost the ability to entertain alternative points of view? Are we ready to begin finally talking to each other again?

  The Left has a lot of soul searching to do. As does the Right.  Because let’s be clear: Trump wasn’t the Republican’s preferred choice either.  They fought him tooth and nail. In terms of the traditional Left vs Right rivalry, both sides lost this time.

  If we're to heal and progress from here, it's critical that we take the time to understand why.

  The conversation has to begin here, I believe, with this excellent article that I ran across in Cracked – yes, the comedy alt-everything online outfit – explaining how it's the rural vs urban divide more than anything else that's pulling our society apart at the moment.

  For those desperately seeking answers to Trump's surprise win, this article, of which I have reproduced only a small part, provides essential context. It's explanation has done wonders for everyone I have shared it with who was struggling:

  How Half Of America Lost Its F**king Mind

  Oct 12, 2016

  [Note: please go to the article to read reasons #6 through #3 as they are very important for understanding the two I have snipped out below]

  (…)

   

  Reason #2:  Everyone Lashes Out When They Don't Have A Voice

   

  [To a rural person] it really does feel like the worst of both worlds: all the ravages of poverty, but none of the sympathy. "Blacks burn police cars, and those liberal elites say it's not their fault because they're poor. My son gets jailed and fired over a baggie of meth, and those same elites make jokes about his missing teeth!" You're everyone's punching bag, one of society's last remaining safe comedy targets.

   

  They take it hard. These are people who come from a long line of folks who took pride in looking after themselves. Where I'm from, you weren't a real man unless you could repair a car, patch a roof, hunt your own meat, and defend your home from an intruder. It was a source of shame to be dependent on anyone — especially the government. You mowed your own lawn and fixed your own pipes when they leaked, you hauled your own firewood in your own pickup truck. (Mine was a 1994 Ford Ranger! The current owner says it still runs!)

   

  Not like those hipsters in their tiny apartments, or "those people" in their public housing projects, waiting for the landlord any time something breaks, knowing if things get too bad they can just pick up and move. When you don't own anything, it's all somebody else's problem. "They probably don't pay taxes, either! Just treating America itself as a subsidized apartment they can trash!"

   

  The rural folk with the Trump signs in their yards say their way of life is dying, and you smirk and say what they really mean is that blacks and gays are finally getting equal rights and they hate it. But I'm telling you, they say their way of life is dying because their way of life is dying. It's not their imagination. No movie about the future portrays it as being full of traditional families, hunters, and coal mines. Well, except for Hunger Games, and that was depicted as an apocalypse.

   

  So yes, they vote for the guy promising to put things back the way they were, the guy who'd be a wake-up call to the blue islands. They voted for the brick through the window.

  It was a vote of desperation.

   

  #1. Assholes Are Heroes

   

  But Trump is objectively a piece of shit!" you say. "He insults people, he objectifies women, and cheats whenever possible! And he's not an everyman; he's a smarmy, arrogant billionaire!"

   

  Wait, are you talking about Donald Trump, or this guy:

   

  

  Marvel Studios

   

  You've never rooted for somebody like that? Someone powerful who gives your enemies the insults they deserve? Somebody with big fun appetites who screws up just enough to make them relatable? Like Dr. House or Walter White? Or any of the several million renegade cop characters who can break all the rules because they get shit done? Who only get shit done because they don't care about the rules?

   

  "But those are fictional characters!" Okay, what about all those millionaire left-leaning talk show hosts? You think they keep their insults classy? Tune into any bit about Chris Christie and start counting down the seconds until the fat joke. Google David Letterman's sex scandals. But it's okay, because they're on our side, and everybody wants an asshole on their team — a spiked bat to smash their enemies with. That's all Trump is. The howls of elite outrage are like the sounds of bombs landing on the enemy's fortress. The louder the better.

   

  Already some of you have gotten angry, feeling this gut-level revulsion at any attempt to excuse or even understand these people. After all, they're hardly people, right? Aren't they just a mass of ignorant, rageful, crude, cursing, spitting subhumans?

   

  Gee, I hope not. I have to hug a bunch of them at Thanksgiving. And when I do, it will be with the knowledge that if I hadn't moved away, I'd be on the other side of the fence, leaving nasty comments on this article.

  The essential context is simply that rural residents are drowning under chronic economic blight. And when they dare to complain about it, they're castigated and humiliated by the dominant city culture that has no awareness of or sympathy for their troubles.

  We've NAFTA'd away millions of manufacturing jobs (and those that served manufacturing communities) without providing the displaced labor a path to reskill and apply itself. Instead, we've left a patchwork of bomb crater communities across the heartland, where there are no employers and no prospects. To these rural folks, being cast as racist, misogynist, ignorant, or uneducated buffoons for being angry about their plight just adds kerosene to the fire that's been smoldering within theem. A fire which just conflagrated during this week's election.

  So to reiterate: the cultural divide that's really in play here is not between the 'enlightened/progressive' people and their supposed opposites. Rather, it's Urban vs Rural.  

  And as the rural dwellers have increasingly felt marginalized, demonized and otherwise unfairly treated, they are now angry enough at the perceived injustice to lash out against the status quo and roll the dice with an outsider who promises to shake things up. It's not surprising, really — as I've written about before, we humans are wired to reject unfairness. This next short video is a favorite of mine, because it perfectly demonstrates how it's in our genes to become enraged when we perceive we're being unjustly treated:

  To put in in monkey terms: since surbanites set the rules because they happen to outvote the rural people, and those same urbanites don't have to live with the consequences of their decisions, then it's cucumbers for rural people and grapes for the urban folks.

  Adding to this understanding is today's article by our good friend Charles Hughes Smith, who validates the rage the downtrodden are feeling these days:

  The Source of our Rage: The Ruling Elite Is Protected from the Consequences of its Dominance

   

  There are many sources of rage: injustice, the destruction of truth, powerlessness.

   

  But if we had to identify the one key source of non-elite rage that cuts across all age, ethnicity, gender and regional boundaries, it is this: The Ruling Elite is protected from the destructive consequences of its predatory dominance.

   

  We see this reality across the entire political, social and economic landscape. If I had to pick one chart that illustrates the widening divide between the Ruling Elite and the non-elites, it is this chart of wages as a share of the nation's output (GDP): 46 years of relentless decline, interrupted by gushing fountains of credit and asset bubbles that enriched the few while leaving the economic landscape of the many in ruins.

   

  

   

  The Ruling Elite once had an obligation to uphold the social contract as a responsibility that came with their vast privilege, power and wealth (i.e. noblesse oblige).

   

  America's Ruling Elite has transmogrified into an incestuous self-serving few unapologetically plundering the many. In their hubris-soaked arrogance, their right to rule is unquestioningly based on their moral and intellectual superiority to "the little people" they loot with abandon.

   

  Rather than feel a responsibility to the nation, America's Elite views the status quo as a free pass to self-aggrandizement. Much has changed in America in the past 46 years. Not only have wages and salaries declined as a share of "economic growth," but the wealth that has been generated has flowed to the top of the wealth/power pyramid (see chart below).

   

  

   

  Social mobility has also declined drastically: Restoring America’s Economic Mobility, as has trust in government and key institutions.

   

  As Frank Buckley, the author of The Way Back: Restoring the Promise of America observed: "In a corrupt country, trust is a rare commodity. That’s America today. Only 19 percent of Americans say they trust the government most of the time, down from 73 percent in 1958 according to the Pew Research Center."

   

  The top .01% has seen its share of the household wealth triple from 7% to 22% in the past four decades, while the share of the nation's wealth owned by the bottom 90% has plummeted from 36% to 23%.

  Look at that.  The share of the national wealth has been steadily, if not increasingly, siphoned away from the 95% and towards the 5%.  In reality, it's almost entirely gone towards the 0.1%.

  The economic “peace” we’ve seemingly enjoyed over the past number of decades turned out to be no peace at all. It was the same sort of peace that existed between the Treaty of Versailles and the outbreak of WWII — a crippling arrangement that overwhelmingly favored one side over the other. Germany eventually had no choice but to rebel.

  Similarly, by failing to protect anyone but their cloistered and wealthy friends, the elites of both current US political parties has laid the fuel for the fire that now burns.

  Bernie Sanders’ post-election statement had this to say about the economics that drove the result:

  "Donald Trump tapped into the anger of a declining middle class that is sick and tired of establishment economics, establishment politics and the establishment media. People are tired of working longer hours for lower wages, of seeing decent paying jobs go to China and other low-wage countries, of billionaires not paying any federal income taxes and of not being able to afford a college education for their kids — all while the very rich become much richer.”

  Bernie would have easily bested Trump in my opinion. It was a huge twin set of mistakes by the DNC to first hamper his primary efforts, and then fail to at least make him Clinton's running mate. 

  Redistribution of money and power seem to happen peacefully only rarely among humans and virtually never in America.  Labor rights?  Fought and died over.  Women’s right to vote?  Fought and died over.  Environmental rights?  Brought kicking and screaming across the moats.  Racial rights?  Only partially achieved after the greatest amount of violence and bloodshed of all these causes.

  Can we do better? Absolutely, in theory.  But so far we don’t a lot of better examples to point to inside the US.

  So this battle is just getting started and will far outlive Trump and everybody reading this. Decades of ill-advised growth and financial squandering cannot be wished away — we, and our children (and likely our grandchildren, too), will be cleaning up the messes of our profligacy for a long time.

  And just as one can easily peer at Charles Hughes Smith's charts and conclude that eventually a rebellion of sorts is inevitable, there’s an even more startling chart you need to see. If you can truly internalize it, you'll understand why the new era of status quo rejection is just getting underway.

  Promises That Can’t Be Kept

  There's a lot of data I can provide here, but I’ll go with a single — but critically important — chart from Ray Dalio’s Bridgewater Associates, one of the largest money management firms out there.

  I’m sorry that you have to squint a little to see this, but here’s all you need to know: when you add up both the debts and the liabilities of the US, those are more than 1,000% of current GDP:

  

  (Source)

  One thousand one hundred percent?!?!?  As in eleven times GDP??  You might as well say eleventy gajillion because there’s no sense in any of these numbers.

  Yep.  No country has ever dug out from under such a load. None have even come close.  The “prediction,” which is so simple it’s not really a prediction at all, that flows from the above chart is this: Somebody is going to have to eat the losses.

  Massive, fabulously enormous losses. 

  Trillions and trillions of losses in current dollars. Even if the economic elites don’t try to force all of those losses on the ‘little people’, the pain is still going to be so extraordinary that serious political and social crises will erupt.

  You can count on it.

  You can already see that larger future predicament playing out painfully around us. One example is how pensions are cutting back benefits, lowering expectations, demanding higher funding payments by taxpayers, and otherwise displaying signs of distress.

  And this is with equity markets perched at all-time highs (at the moment of this writing, the Dow is at a new record).

  So our recent decades of economic peace must end, given the thousand percent indebtedness predicament revealed by the chart above.

  We got into that thousand percent predicament the exact same way the DNC lost to Trump: by failing to address things that plainly needed to be dealt with.  We proved to ourselves, yet again, that pretending something uncomfortable doesn’t exist doesn’t make it go away.

  “Well, we might just grow out from under those debts and obligations” some might be tempted to say. My response is to ask you to go back and look at that chart again and note that it has grown from 700% to 1,100% since 2001.  If GDP had been growing at the same pace, the ratio value wouldn't have budged. It would have remained at 700%.

  But it grew to 1,100%, which means the debts and obligations were growing much faster than GDP.

  So for the past 15 years the “grow out of it” mantra — which has been echoed ad nauseum — has been a complete train wreck of a failure.  How many more years before we can all just admit the obvious?

  Just as both the RNC and DNC opted to ignore the extreme damage their policies had been inflicting on the upper, middle and lower classes, sparing only the very tippy-top elites (but hand-feeding those elites peeled grapes it should be noted, because their lot improved wildly over the past decades), everybody in power has been steadfastly ignoring our massive debt and liability problems, too.

  Those are going to shape the future, and that future is going to be plenty painful. The longer we wait, the more painful it will be. This has been our steady message at Peak Prosperity for a very long time, and we are actually hopeful that now, finally, we can speak about the unspeakable to those who had no willing ear for it just a short week ago.

  Conclusion

  The political upheaval of Donald Trump is best understood through the lens of economic erosion suffered by the vast majority of people.  If a democracy is measured in how well it serves the interests of the majority, the United States is not a democracy at all.

  Of course, nearly everyone already knows this. But it's been all but unspeakable in polite circles to say so.

  Now, it is finally becoming okay to voice.

  Which is, admittedly, a breath of fresh air for us at Peak Prosperity.  Because not only are massive, obvious economic issues going to unavoidably visit the US in the not-too-distant future, but they'll be doing so at a time when many critical resources will be in decline.

  Chief among those? Oil, of course.

  To skirt the impact of a future oil supply crunch, we'll need an incredible effort of joined forces and strict prioritization to assure that whatever transition we can effect will be a smooth as possible.  Even then, we’ll be lucky to evade painful disruption.

  But if we don't begin to view our future with clear eyes and a united sense of what the predicaments are, if we instead turn to another version of four more years of preservation of the status quo, then we will face a future of disruption so painful it will make the worst of post-election Wednesday for the most ardent liberal seem like a minor inconvenience (by comparison, I mean, of course). 

  It will take an enormous amount of effort simply to stem the tide of economic erosion that now besets the land.  And that’s just as true for the US as it is for Japan, Europe and the UK.  The same forces are at play in all of these centers.

  It will take another massive bowlful of effort to begin to address the debts and liabilities issues.  And yet another cauldron of effort to revamp our energy infrastructure in parallel with all the other challenges.  Put it all together and you can begin to understand why, if we're going to deplore something from the recent election, it should be the running of an intentionally divisive set of campaigns that have driven as large a wedge between people in the US as has existed in a very long time.

  We need to be working together on the common predicaments that care not if we are liberal or conservative, religious or not, male or female, or which race or sexual persuasion best applies to us. Declining global net energy per capita. Our massive fiscal over-indebtedness. The collapse of too many ecosystems we depend on for food and drinkable water. The list is sadly long…

  It’s not just time to heal; it’s imperative that we do. So that we stand united to deal with these predicaments as they arrive in full force.

  There’s really not a moment to spare.

  And for those looking to get a jump on what's coming, we need to better understand the implications of what just happened this week. The Trump upset has changed all of the probabilities that we track.

  I've been keeping a running update of the developing situation in OK, Here's What We Think Is In Store After Trump's Win (free executive summary, enrollment required for full access). We'll be continuing to update this important assessment as new information filters in over the next few days.

  

  

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