Dec 15

Today’s News 15th December 2020

  • Trump's Last Chance To Snub The Deep State
    Trump’s Last Chance To Snub The Deep State
    Tyler Durden
    Mon, 12/14/2020 – 23:30

    Authored by Ron Ridenour via The Strategic Culture Foundation,

    Any semblance of rationality during the past dozen years in the United States regarding what the Republican and Democratic parties really stand for is hard to find, other than money, of course…

    Political science courses used to teach that Republicans are conservative, oppose labor unionization and decent wages, always ready to war on somebody in the interest of “national security”. While they like to kill foreigners in their wars, especially people of color, they are appalled at the notion that American fetuses should be stopped from growing into human beings.

    Democrats were said to be liberal, maybe even “progressive”, willing to protect workers on the job, allowing unions, using dialogue in diplomacy instead of warring – without good cause, of course. Just ask Bernie Sanders. He voted against the Iraq war, albeit voted for financing it once it began. All the other wars were OK for that so-called “socialist”. In comes the “peace president”. Barack Obama took over Republican Bush’s two wars — Afghanistan and Iraq — and extended them, and even added five more to his cowboy gun belt: bombing Libya, Syria, Yemen, Somalia, Pakistan. Every Tuesday he sat beside his CIA Director John Brennan, and pushed buttons on who should be droned that day. Never mind the fact that none of these wars were actually declared as such. They were “humanitarian actions” to purportedly help someone get human rights. That they were all unconstitutional did not faze Obama, the supposed lawyer specialist in the constitution.

    Now, some political scientists could make the case that, still and all, Democrats are adherents of bourgeois democracy (some might dare say social democracy). Some contend that Trump has shown himself to be a neo-fascist with strong racist attitudes. Such pundits might find it difficult to explain that while Trump has been in office, the Democrats want to make war against Russia while he wants to do capitalist business with them. OK, both Trump and Democrat opponents want to encircle and threaten war with China, so they do have something in common.

    When Assange/Wikileaks was revealing war crimes during the Obama regime, the president’s secretary of state, Hillary Clinton, wanted to drone Assange for revealing her communication to rig the Democratic presidential primary in her favor. So, she sat on Brennan’s lap and they did Russiagate. Trump declared, “I love Wikileaks”.

    The Democratic National Committee, backed up by war addicts in the Pentagon and CIA and their sensationalist-seeking friends in the corporate fake news media world, forced Trump to sound tough for war too. He did some droning, and bombing here and there while he also sought to withdraw the U.S. from several of the Bush-Obama wars.

    Lame-duck presidents usually pardon some prisoners, especially those they feel close to, or who have done them favors. Michael Flynn for instance. Trump’s three-week national security advisor talked with Russians. Democrats consider that to be treason. Maybe Democrats don’t know that the United States is not at war against Russia, not yet anyway. Well, they reply, Flynn must have lied to the FBI. Who wouldn’t lie to cops? Name me a politician, especially when they get to be secretary of state, directors of intelligence service and presidents, who don’t lie. Trump’s lies are simply more apparent than Obama’s Harvard voice reveals.

    Remember Mike Pompeo chuckling with his audience at the Texas A&M University, on April 15, 2019:

    “When I was a cadet [West Point] our motto was: You will not lie, cheat, or steal, or tolerate those who do. [When] I was the CIA director, we lied, we cheated, we stole. It was like we had entire training courses. It reminds you of the glory of the American experiment.”

    The Trump administration calls the International Criminal Court a kangaroo court. He refuses to allow any U.S. soldier to be brought before the court for purported war crimes in Afghanistan. None of the court investigators or judges will receive visas to enter U.S. territory. Any property or bank accounts they have in the U.S. will be confiscated.

    If any court is a disingenuous kangaroo court it is the extradition trial against Julian Assange, in London. The first magistrate who sat in judgment of possible extradition to the U.S. for alleged violations of its Espionage Act, is a subject in Wikileaks’ revelations. Chief Magistrate Emma Arbuthnot, and her husband, James Arbuthnot, who was a defense minister for procurement, have “earned” money from two companies exposed by Wikileaks. During the August-September extradition hearings, Arbuthnot “stepped down” to be supervisor of the new magistrate, Vanessa Baraitser. During three weeks of hearings, Baraitser looked at her laptop to read decisions she had written before defense lawyers had made their arguments, or witnesses had testified.

    I am not the only one hoping that Donald Trump will do the right thing with Julian Assange, and Edward Snowden too. The last president, one Trump hates, first put Assange’s key whistleblower in prison, in isolation, under torture. Chelsea Manning was sentenced to 35 years. Obama leaving office with a gesture of “goodwill”, commuted Chelsea’s sentence once she served seven years. She was later jailed for another year for not snitching on Julian.

    Tulsi Gabbard, the only Democratic presidential candidate in 2020 who wasn’t a war hawk, is asking Trump for goodwill. She tweeted tagging Trump, “Since you’re giving pardons to people, please consider pardoning those who, at great personal sacrifice, exposed the deception and criminality of those in the deep state,” and named Assange and Snowden for him to drop charges.

    The proposal for Trump to pardon Assange was also endorsed at this recent webinar which included speakers Pentagon Papers whistleblower Daniel Ellsberg, Law Professor Marjorie Cohn, Consortium News editor-in-chief Joe Lauria.

    If Trump did the honorable thing of halting the persecution of Julian Assange, it would be a blow for freedom and a middle finger to the Deep State including Obama and Clinton. Wasn’t Trump supposed to be the anti-Deep State candidate? Now’s his chance to prove it.

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  • Autonomous Drone To Launch Satellites Into Orbit For Space Force  
    Autonomous Drone To Launch Satellites Into Orbit For Space Force  
    Tyler Durden
    Mon, 12/14/2020 – 23:10

    Forget air-launching rockets at high altitudes from a conventional aircraft to carry satellites to low Earth orbit because now, a drone can do that. 

    This past week, a startup in Alabama called Aevum unveiled the Ravn X Autonomous Launch Vehicle designed to carry and launch satellites into low-orbit, according to a company press release. 

    As described by Aevum, Ravn X is the “world’s largest Unmanned Aircraft System (UAS), by mass, designed to deliver satellites to space as fast as every 180 minutes.” 

    Aevum’s customer and mission partner, the U.S. Space Force, will launch Space Force’s ASLON-45 satellite into orbit sometime in 2021.

    Ravn X is a beast of an airframe, weighing in at 55,000 pounds when it’s carrying a rocket with a satellite payload. The drone stands about 18 feet tall, has a wingspan of 60 feet.

    Science Magazine reports Jay Skylus, founder and CEO, has already inked about $1 billion in military contracts to launch small satellites quickly into orbit. 

    “Aevum is completely reimagining access to space. The current definition of rocket science doesn’t work for us. With Aevum, everyone will be able to say, ‘It is rocket science and I can do it.’ Aevum is pushing logistics to the next generation with software and automation technologies,” Skylus said. 

    He continued: “U.S. leadership has identified the critical need for extremely fast access to low Earth orbit. We’re faster than anybody. To me, space is merely a vantage point from which the next generation can commit global progress. Through our autonomous technologies, Aevum will shorten the lead time of launches from years to months, and when our customers demand it, minutes. This is necessary to improve lives on Earth. This is necessary to save lives.”

    Video: First Reveal Of Ravn X Autonomous Launch Vehicle

    While this was certainly not mentioned in the press release, Ravn X will likely be used to quickly launch military satellites into space during the next major conflict when space-based war has our adversaries use hypersonic missiles to knock out critical satellites. The ability to deliver satellites into orbit in three hours is game-changing. 

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  • Russia Uses Augmented Reality Technologies To Produce Su-57 Fighter Jet
    Russia Uses Augmented Reality Technologies To Produce Su-57 Fighter Jet
    Tyler Durden
    Mon, 12/14/2020 – 22:50

    By South Front,

    Russia is using augmented reality technologies on the production line for its Su-57 fifth-generation fighter jet, according to videos that recently surfaced online.

    The videos were allegedly filmed in March 2020 at the United Aircraft Corporation’s Komsomolsk-on-Amur Aviation Plant and show a first person look through an augmented reality headset providing workers with interactive features during the Su-57 assembling.

    The system works with QR codes that are being attached to Su-57 parts and allow specialists to work with the combination of real-world and virtual objects.

    The leaked videos with the augmented reality technology show the previously unrevealed level of the sophistication in the production of Russian fighter jets.

    In comparison, Northrop Grumman employs projectors to highlight parts of the F-35 on the production line and help specialists involved in the fighter jet assembling. Nonetheless, this can hardly been compared with the interactive augmented reality.

    It seems that there are some little gaps in the mainstream media concept of painting Russia the third-world power that can nothing besides selling energy resources and meddling in the US election.

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  • What Spending Slowdown: BofA Credit, Debt Cards Show Soaring Retail Sales
    What Spending Slowdown: BofA Credit, Debt Cards Show Soaring Retail Sales
    Tyler Durden
    Mon, 12/14/2020 – 22:30

    Ahead of Wednesday’s retail sales report, and in light of the recent sharp slowdown in the labor market and lack of progress on the stimulus front, most pundits expect a disappointing retail sales performance for the month of November, when retail sales are expected to drop by -0.3%, their first contraction since the April covid chaos when they plunged -15%. But is consensus about to be disappointed, especially when the NY Fed itself report that despite stagnant income and earnings expectations, US households (especially those making under $50,000) expect to go on a furious spending spree over the next 12 months?

    For the answer we looked at the latest aggregated credit and debit card data reported by BofA, one of the largest card issuers in the US, which contrary to gloomy expectations, found that consumer demand normalized with total card spending increasing by 5.4% yoy for the 7-days ending December 5th after a large yoy swing the prior two weeks. Importantly, BofA’s measure of holiday sales, defined as core control retail sales ex-groceries, has moved back in line with last year’s trend and on a cumulative basis is up a whopping 19% yoy, reflecting very strong demand for goods items during the holiday season.

    So is the myth of the weak US consumer just that? Well, as BofA explains, looking at its card data, retail sales ex-autos were unchanged in November on a MOM seasonally adjusted basis as spending at non-store retailers (online) slowed on a sequential basis due to difficult comparison to October when Prime Day and other competing promotions boosted consumer activity.  And although the % mom may indeed be on the cusp of a contraction, BofA’s Michelle Meyer notes that it doesn’t reverse the exceptional growth previously and leaves the November growth rate at a stellar 9.8% Y/Y, hardly the stuff of imminent recessions.

    The big picture shows that while typical “social” activities like transit, restaurants, travel, lodging and entertainment remain depressed, most other categories, and especially spending on electronic products, home improvement, furniture and online sales in general, are soaring:

    Some more charts digging into the November card data:

    It’s not just BofA’s card data that shows continued surprising consumer strength. For the week ending December 4, the NY Fed weekly economic index declined by 0.5ppt to -2.1% yoy, which is a solid print, and follows last week’s new post-crisis high of -1.6% yoy, with the 4- week average falling to -2.41% from -3.42% yoy in the prior four weeks. Based on this aggregate measure the economy continues to recover:

    But while November was a generally good month for spending, in December spending may finally take a major hit, with other indicators suggests there are more soft spots emerging, particularly consumer activity and small business employment. Indeed, as the following high frequency indicators of consumer activity suggest, a double dip may be coming:

    • For the week ending November 28, the week of Thanksgiving, the Dallas Fed’s Mobility Engagement index declined sharply to -50.6, from -39.6 in the prior week. This was the lowest reading since the week ending May 30 and might be due to people spending more time at home because of the Thanksgiving holidays. At a regional level, mobility declined over the week in all four census regions.

    • Seated diners on the OpenTable network dropped by 6.9 ppt over the week to -62.6% yoy for the week ending December 6. The decline was broad-based across census regions as colder weather and tighter restrictions on indoor dining continue to translate into less dining out.

    • Google mobility measures suggest that consumers continue to pull back on activity outside the home, continuing the trend we had seen prior to the Thanksgiving week distortions. For the 7-day period ending December 4, visits to retail and recreation locations, workplaces and transit stations all declined compared to two weeks ago.
    • Demand for motor gasoline over the Thanksgiving week was little changed from the prior week while jet fuel demand remains down significant from a year ago.

    • Movie box office sales did not see the same spike over the Thanksgiving week that they did last year as consumers’ risk aversion and government restrictions on theaters continues to plague the industry.
    • Air travel has unsurprisingly declined sharply following the temporary Thanksgiving boost. The 7-day average through December 7 fell by 22% over the week to 725k, down 66% yoy.

    Meanwhile, similar to the rolling indicators of consumer activity, labor market indicators are pointing to slowdown in the jobs recovery with what may soon be a contraction in jobs:

    • After two consecutive weekly increases, Initial jobless claims fell sharply to 712k for the week ending November 28 from 787k previously. Though the decline may be due in part to fewer days of processing owing to the Thanksgiving holiday, and roughly 50% of the drop is from California, which has had notoriously bad data. Continuing claims, meanwhile, declined by 569k over the week to  ,520k for the week ending November 21. We suspect much of this decline is due to recipients exhausting their 26 weeks of standard state benefits.
    • Small business employment continues to show signs of contracting. Data from Homebase on employment and small businesses open resumed its pre-Thanksgiving declining trend. These data continue to suggest that tighter restrictions on activity and voluntary social distancing are translating into small business job cuts.

    In summary, while this week’s retail sales will likely be a beat to expectations, especially on a Y/Y basis, don’t expect that to continue with a sharp hit to the economy likely as soon as the December print in one month, when the full extent of the second round of economic shutdowns will hammer the US economy.

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  • Convoy Investments: The Bull Market Of Our Lifetime Is Explained By Two Words
    Convoy Investments: The Bull Market Of Our Lifetime Is Explained By Two Words
    Tyler Durden
    Mon, 12/14/2020 – 22:10

    Submitted by Howard Wang of Convoy Investments

    Money is a topic I revisit frequently because it has been so central to our markets in the last decade. As money gets printed, the average price of everything goes up with the tide because there are more dollars in the system chasing assets. We must understand how much of an asset’s performance is explained by traditional factors like appreciation of fundamentals and how much is explained by money printing. Below I offer a simple but telling metric.

    In a vacuum the S&P 500 going up 20% this year seems great, but then you realize that money supply has gone up an incredible 51% this year. So on a monetary inflation adjusted basis, the S&P 500 is sitting at a miserable -30% for the year. Of course, all that printed money is going somewhere else, as assets like crypto-currencies and individual stocks far outperform the money printing benchmark.

    Looking further back, S&P 500 has had an incredible run during the QE era started in 2008, clocking in at over 12% annualized return for over a decade. However, this seems much less impressive when we see that money supply in our system has been growing at 13% a year over the same time. On a monetary inflation adjusted basis, S&P 500 actually lost -1% per year since 2008! In other words, the bull market of our life time is explained by two words, money printing.

    This hasn’t always been the case, of course. Before the markets became hooked on QE, the S&P 500 used to actually outperform money printing rate by 6% a year.

    Stocks and other financial assets have come to be completely dependent on money printing like drug addicts, while the money has largely bypassed the real economy. For some context of the extreme divergence between financial conditions and real economic conditions, below I show the cumulative growth of wages in the US compared to growth of money supply since 1960. Prior to the QE era, money printing would go up and down with the business cycle, but wages grew at the exact same long-term rate as money supply. Since QE started in 2008 and even more so this year, money printing has become completely disassociated from the real economy.

    Fast forward a year, as we recover from COVID (fingers crossed), the central banks will lose the political support to keep up the maniacal pace of money printing. The markets may have to remember how to stand up and function by itself again. Will central banks have the resolve to let the markets go through the nasty withdrawal and rehab ahead?

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  • Signature Match Audit Finally Ordered In Georgia… But Not Where Late-Night 'Ballot Suitcases' Made Headlines
    Signature Match Audit Finally Ordered In Georgia… But Not Where Late-Night ‘Ballot Suitcases’ Made Headlines
    Tyler Durden
    Mon, 12/14/2020 – 21:50

    Exactly 20 days after Georgia Governor Brian Kemp called for (but didn’t order) a statewide signature audit in the wake of CCTV footage of Atlanta poll workers producing suspicious ballots from under a table once election monitors had left, Secretary of State Ben Raffensperger has finally ordered a signature match audit – in the next county over.

    In a Monday announcement, Raffensperger said that investigators will audit voter signatures on absentee ballot envelopes in Cobb County, a suburb of Atlanta that voted 56.3% for Biden vs. neighboring (Atlanta’s) Fulton County at 72.6%.

    Which, to state the obvious, begs the question as to why Raffensperger didn’t order the audit where the suspicious late-night ballots were caught on tape? And why didn’t Raffensperger order a signature match audit sooner?

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

    “Now that the signature matching has been attacked, again and again with no evidence, I feel we need to take steps to restore confidence in our elections,” said Raffensperger during a press conference at the state Capitol. “Starting immediately, we are pulling all of our resources together with GBI to conduct a signature match audit in Cobb County.”

    There it is – to restore confidence, by waiting nearly six weeks after multiple sworn affidavits that fraud occurred were followed by a damning video of election workers wheeling ballots out for a late-night count, putting Biden in the lead. Let’s also not forget that Fulton County election officials lied about a ‘burst pipe‘ in order to evacuate poll watchers for around 90 minutes on Election night.

    The signature audit is scheduled to be completed in two weeks. The Georgia Bureau of Investigation and the secretary of state’s office will review a statistically significant sample of absentee ballot envelopes from both the primary and general election in Cobb County. Signatures on envelopes will be compared to signatures from when voters registered, either at driver’s license offices or on paper forms.

    …

    Cobb Election Director Janine Eveler said her office will assist with the audit, but it’s awaiting a court order before gathering the necessary materials.

    Eveler said the complaint referenced by Raffensperger came from the June primary. –AJC

    “I’m confident any audit would find our office followed procedures and only counted ballots that were processed correctly,” said Eveler, adding “Even though our resources are already stretched thin by advance voting and preparations for the Jan. 5 runoff, we will help this process move as expeditiously as possible.”

    In response to the signature audit, Georgia GOP runoff candidate Sen. Kelly Loeffler finally found her voice after weeks of silence on Trump’s election challenges – saying it doesn’t go far enough.

    “That’s a start. Only 158 counties left to go,” said Loeffler spokesman, Stephen Lawson,” adding “Full audit or it didn’t happen.“

    Gov Kemp, meanwhile, parroted Raffensperger’s statement, saying “People want to have confidence in the election. That’s why I felt like it would be good to do a signature audit just to bring people peace of mind.”

    In short, we expect signatures to match and the establishment to tout the results of this ‘restoration of confidence,’ while Loeffler scores a few brownie points with Trump supporters for having piped up.

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  • What Public Defenders See: "Authorized" For Release, But Still Jailed
    What Public Defenders See: “Authorized” For Release, But Still Jailed
    Tyler Durden
    Mon, 12/14/2020 – 21:30

    Authored by Matt Taibbi via taibbi.substack.com

    In Prince George’s County, Maryland, a procedural quirk puts jails, not judges, in charge of pretrial release decisions

    Keith Lotridge, Chief Public Defender in Prince George’s County, Maryland, explains the problem.

    “You’re arrested for a crime,” he says. “Within 24 hours, you appear for Initial Bail Review. There’s a charging document, maybe a statement by the alleged victim. On the basis of that, the judge makes a determination on bond.”

    Except the judge doesn’t do that. In Prince George’s County, the system allows for more than just a binary decision on remand or release. Judges may elect to walk through door number three.

    “Pretrial option,” Lotridge says. “The defendant is ‘authorized’ for release, but the decision is left up to the pretrial release unit.”

    Pretrial Services is a subdivision of the jail, a corrections office. Among other things, it’s responsible for supervising defendants through electronic monitoring. Mirroring a process that may take place before bail hearings in other states (like the Criminal Justice Agency review arrestees go through in New York City) the defendant’s suitability for release is scored according to a series of criteria. These may include an address in the county, a telephone number, no pending cases in any other county, no active monitoring in Washington, DC, etc. Assuming the defendant meets enough criteria, he or she can be released.

    Pretrial services are often lauded as an alternative to cash bail, but “the system is flawed,” as Lotridge puts it. If you’re not from Prince George’s County but get arrested there, or you don’t have a landline telephone (who does anymore?), or of course if you’re homeless, you might not pass the “risk assessment” test.

    The main problem, however, has to do with the chronology of the assessment, which allows both judges and the jail to play volleyball with detention decisions.

    In the parody of the bail process described by Lotridge, judges can punt crucial decisions about release to pretrial services. Although the system seems not to have been designed for this purpose — Lotridge is careful to point fingers at the jail system, not the bench — as it currently stands, judges facing thorny decisions can buy the equivalent of a political options contract as an alternative to judgment.

    Read the rest of the report here.

     

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  • Chinese Consumers' Dining-Out-Doubts Remain Despite 'Crushing' The Virus
    Chinese Consumers’ Dining-Out-Doubts Remain Despite ‘Crushing’ The Virus
    Tyler Durden
    Mon, 12/14/2020 – 21:13

    Having miraculously ‘crushed’ the virus and sparked a record-breaking rebound in PMIs, tonight’s China data dump will confirm if renewed lockdowns elsewhere around the world have upset the massive-credit-impulse-driven recovery in China’s economy.

    Source: Bloomberg

    Despite a soaring yuan and rising defaults, analysts expected the v-shaped recovery to continue across all tonight’s data…

    Source: Bloomberg

    So, tonight we get everything but the big kahuna – GDP… However, most eyes will be on retail sales as while the consumer recovery is gaining momentum, it has been slower than expected given the virus was tamed months ago. As a reminder, sales fell short of expectations in October, but should have received a boost in November from the Singles Day bonanza on Nov. 11

    • China Industrial Production YTD YoY ROSE to +2.3% vs +2.3% exp vs +1.8% prior

    • China Retail Sales YTD YoY ROSE & BEAT -4.8% vs -4.9% exp vs -5.9% prior

    • China Fixed Assets Investment YTD YoY ROSE +2.6% vs +2.6% exp vs +1.8% prior

    • China Property Investment YTD YoY ROSE & BEAT +6.8% vs +6.7% exp vs +6.3% prior

    • China Surveyed Jobless Rate IMPROVED to 5.2% vs 5.2% exp vs 5.3% prior

    Visualized, the “V” continues…

    Source: Bloomberg

    Bloomberg’s Ailing Tan notes that China’s rebound is largely being supported by a seasonal surge in exports ahead of year-end holidays, combined with a pick-up in domestic consumption and investment. The trade surplus widened to a monthly record in November, while exports jumped by the most since February 2018. China’s retail sales rose 5.0% YoY – still below pre-COVID levels…

    Source: Bloomberg

    But, looking through the detail on retail sales, as Bloomberg’s Enda Curran points out, it looks like there was some big gains in demand for communication appliances, cosmetics, beverages and jewelry.

    Still, restaurant and catering actually declined by 0.6% suggesting perhaps that consumers are still nervous about eating out even with the virus under control.

    Given China’s complete crushing of the virus, the residual anxiety over dining-out should be a rather ominous forewarning for American bars and restaurants… masked or not.

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  • New York's Iconic 21 Club To Close "Indefinitely" Due To Covid
    New York’s Iconic 21 Club To Close “Indefinitely” Due To Covid
    Tyler Durden
    Mon, 12/14/2020 – 21:00

    By Peter Romeo of Restaurant Business Online

    The 21 Club, the one-time speakeasy that reigned for 90 years as a choice dining spot for New York City celebrities and powerbrokers, has closed “indefinitely” because of the slowdown in sales during the pandemic, the landmark fine-dining institution alerted New York regulators on Friday.

    The WARN filing was followed two days later by an announcement that San Francisco’s Cliff House, the 157-year-old icon that generated $14.5 million in sales during 2019, will shut its doors for good as of Jan. 1.

    Many celebrated fine-dining establishments have served their last pat of butter during the pandemic, but few boast the storied pasts of 21 and Cliff House.

    The former started as a joint in Greenwich Village in the ‘20s called the Red Head. Its founders, Jack Kreindler and Charlie Berns, hopped from one location to another in the city until they settled on the current W. 52nd Street site in 1930.

    The place was a full-fledged speakeasy, right out of a movie. The location was designed in anticipation of raids, with levers that would tip bar shelves backward to send bottles down a chute and into city sewers as the police charged in. A secret door led to a hidden wine room that was later put into use as a private dining space for the restaurant’s famed celebrity clientele.

    Frank Sinatra was a regular. So was John F. Kennedy, who donated a toy-sized replica of his PT-109 Navy vessel to hang from the rafters of the establishment’s bar. The basement area’s ceiling is covered in toys and memorabilia donated by patrons.

    Upstairs, banquettes and a dark-wood dining room provided a place for the likes of Elizabeth Taylor, Al Jolson, Mae West and Jackie Onassis to dine on classic continental fare in relative privacy, though their visits often figured into gossip-column entries the next day.

    Kreindler and Berns’ descendants would continue to run the place until 1985, making occasional concessions to more modern tastes on the menu and in its décor. Yet it proudly reigned as a piece of old New York; men weren’t allowed to forego neckties until 2009, and the place stocked an array of gaudy sports coats to meet the requirement that males wear jackets. Sneakers were still forbidden at the time of the WARN filing last week.

    The two clans sold the property in 1985 to operators who continued in the same vein. As fine-dining loosened up, the new owners adjusted to changing preferences, but opted to sell the place again in 1995, this time to a company affiliated with the Orient Express, Europe’s famed train line. Orient-Express Hotels Ltd. Morphed into Belmond Ltd., which still owns the restaurant today.

    The original Cliff House, according to its deep lore, might or might not have been built in 1858 with lumber salvaged from a ship that crashed on the rocks below the restaurant’s seaside perch;  the reports have never been verified. Historical records are clear, however, on a restaurant and inn called the Cliff House opening in 1963, or two years before the end of the Civil War. Because the property was located near a race track where the city’s well-to-do enjoyed running their horses, it became a favorite of the local carriage trade in the literal sense of that term.

    It was almost destroyed in 1887 by a dynamite explosion caused by the crash of a ship near the site—only to be completely leveled by a fire seven years later.

    The rebuilt Cliff House would chug along for more than 100 years, adjusting to the times but enjoying its distinctions as one of America’s oldest dining establishments. In 1977, it became part of the Golden Gate National Recreational Area, which remains its landlord.

    The restaurant said in a website posting on Sunday that a failure to hammer out a new lease agreement figured into management’s decision to close, though the prime factor cited was a drop in sales due to the pandemic. 

    The landmark announced its closing on its website Sunday.

    The restaurant is ranked Number 71 on Restaurant Business’ranking of the 100 highest-grossing independent restaurants in the United States.

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  • The Case For Pardoning Edward Snowden By President Trump: Greenwald
    The Case For Pardoning Edward Snowden By President Trump: Greenwald
    Tyler Durden
    Mon, 12/14/2020 – 20:40

    Authored by Glenn Greenwald via greenwald.substack.com,

    A U.S. appellate court in September unanimously ruled that the NSA’s program of mass domestic surveillance was illegal, as well as likely a violation of the Fourth Amendment’s guarantee against “unreasonable searches and seizures.” The court, and the broader public, knew about this illegal mass surveillance program created by the NSA only because Edward Snowden, while working inside that agency, discovered its existence and concluded in 2012 that the American public has the right know about what was being secretly done to them and their privacy by their own government.

    Upon making the decision to blow the whistle on this security state illegality, Snowden delivered the documents relating to that program and other then-unknown systems of mass online surveillance not by dumping them indiscriminately on the internet or selling them or passing them to foreign governments, but by providing them to journalists (including myself) with The Guardian, The Washington Post and other news outlets. The documents Snowden provided were accompanied by requests to report them responsibly. He thus relinquished the power entirely to make decisions about which documents would and would not be published, leaving those decisions exclusively to news outlets.

    That meant that Snowden himself never made a single document publicly available; every document that was reported was the result of decisions by newsrooms around the world that their publication would be in the public interest and would not endanger innocent people. That method of whistleblowing chosen by Snowden — patterned after the one Daniel Ellsberg used in 1971 to make the public aware of years of lying to the American public by the U.S. Government about the Vietnam War, when he gave the top-secret Pentagon Papers to The New York Times and asked them to report it in the public interest — enabled journalists to inform the American citizenry about illegal and unconstitutional spying by the U.S. Government in the most responsible manner possible.

    Indeed, the very first program we reported — on June 6, 2013 — was the mass domestic spying program which the appellate court just ruled was illegal and likely a violation of the constitutional rights of all Americans. That first article we published revealed a top secret court order under which “the National Security Agency is currently collecting the telephone records of millions of US customers,” and required major telecommunications carriers “on an ‘ongoing, daily basis’ to give the NSA information on all telephone calls in its systems, both within the US and between the US and other countries.”

    The months of reporting that followed, all singularly enabled by Snowden’s courageous whistleblowing, triggered so much vital public debate about privacy and mass surveillance, and fostered so many legal and technological privacy reforms around the world, that the reporting earned virtually every award journalism has to give, including the 2014 Pulitzer Prize for Public Service. For those who have not seen it, the 2014 documentary by Laura Poitras about the work Snowden did with journalists, Citizenfour, which received the 2015 Academy Award for Best Documentary, shows much of the Snowden story in real time and can be viewed on YouTube; the feature film “Snowden,” available on Netflix and other platforms, separately explores the trajectory which Snowden traversed from enlisted U.S. Army soldier, CIA contractor and NSA expert to one of this generation’s most consequential whistleblowers.

    The recent appellate court ruling in U.S. v. Moalin, issued on September 2, emphasized the U.S. surveillance state’s sustained law-breaking. “The telephony metadata collection program exceeded the scope of Congress’s authorization” and “therefore violated that section of [the Foreign Intelligence Surveillance Act],” the court concluded, referring to the 1978 law requiring the government to first obtain warrants before spying on the communications of U.S. citizens. Though its ruling of illegality meant it was unnecessary to rule definitively on the program’s unconstitutionality, the court nonetheless noted that “the government may have violated the Fourth Amendment” with this spying program and warned of the dangers of “the collection of millions of [] people’s telephony metadata, and the ability to aggregate and analyze it.”

    In ruling the NSA’s mass surveillance program illegal, the court noted the indispensable role Snowden played in enabling the protection of Americans’ rights. It was Snowden, explained the court, who “made public the existence of NSA data collection programs.” And, the court added, “Snowden’s disclosure of the metadata program prompted significant public debate over the appropriate scope of government surveillance” and ultimately led to reform: “Congress passed the USA FREEDOM Act, which effectively ended the NSA’s bulk telephony metadata collection program” and which “prohibited further bulk collection of phone records after November 28, 2015.” Moreover, observed the court, it was “news articles in the wake of the Snowden disclosures [which] revealed that the government had been using evidence derived from foreign intelligence surveillance in criminal prosecutions without notifying the defendants of the surveillance.”

    This recent ruling is by no means the first time a court or other official body has declared illegal the spying programs which Snowden exposed. In 2015, CNN similarly reported that “a federal appeals court ruled on Thursday that the telephone metadata collection program, under which the National Security Agency gathers up millions of phone records on an ongoing daily basis, is illegal under the Patriot Act.” The New York Times reported in 2014 that “an independent federal privacy watchdog has concluded that the National Security Agency’s program to collect bulk phone call records has provided only ‘minimal’ benefits in counterterrorism efforts, is illegal and should be shut down.” In 2018, The Guardian reported about the British equivalent of the NSA: “GCHQ’s methods for bulk interception of online communications violated privacy and failed to provide sufficient surveillance safeguards, the European court of human rights has ruled.”

    Abuses of power by these agencies continue in full force. More recently, the Justice Department’s Inspector General found in 2019 that the FBI deceived the FISA court with false statements to obtain a warrant to spy on former Trump 2016 campaign official Carter Page. A former FBI lawyer pled guilty to doctoring emails to obtain those spying warrants. A DOJ report found more material errors from the FBI in the spying process in 2019. Late last year, the FISA court itself “issued a strong and highly unusual public rebuke to the FBI” and, the prior year, “found that the FBI may have violated the rights of potentially millions of Americans — including its own agents and informants — by improperly searching through information obtained by the National Security Agency’s mass surveillance program.”

    That is precisely the abuse Snowden acted to stop. And that is why the people and institutions across the political spectrum who have devoted themselves to protecting the right to privacy, safeguarding internet freedom and combating the abuses of the security state have advocated a pardon or clemency for Snowden: the ACLU, Sen. Rand Paul, The New York Times, Congressmen Matt Gaetz, Justin Amash, and Thomas Massie, Congresswoman Tulsi Gabbard, internet pioneer Timothy Berners-Lee, Daniel Ellsberg, Apple co-founder Steve Wozniak and Twitter CEO Jack Dorsey, press freedom groups, and international human rights and civil liberties groups. They have all argued that Snowden deserves clemency or a pardon.

    Meanwhile, so many of the arguments against pardoning Snowden’s, and demanding his lifelong imprisonment or exile, have come from the very security state operatives whose crimes he exposed. That includes John Brennan and James Clapper, along with their hawkish and neocon allies such as Susan Rice and Liz Cheney. And to make their case, these Deep State operatives and warmongers rely upon one demonstrable lie after the next. Indeed, it was their blatant lies in the first place that prompted Snowden to knowingly risk his liberty by revealing the existence of these mass surveillance programs.

    The first contact Snowden made with a journalist about the possibility of whistleblowing was a pseudonymous email he sent to me in December, 2012. But what solidified with finality his decision to blow the whistle was watching President Obama’s senior national security official, Director of National Intelligence James Clapper, commit a felony when he blatantly lied to the Senate on March 12, 2013, by falsely denying — when asked by Sen. Ron Wyden (D-OR) — that “the NSA collect[s] any type of data at all on millions or hundreds of millions of Americans.”

    When Clapper told that lie, Snowden was holding the documents in his hand that proved that the NSA was doing exactly that which Clapper, in his public testimony, denied that it was doing. In other words, he knew for a fact that the senior national security official in the U.S. Government lied to the American people and the Senate about the mass spying they were conducting against Americans. A person in Snowden’s position acting with just and noble motives would be impelled to disclose, not conceal, the truth — and that’s exactly what Snowden did. The real criminals were security state officials like James Clapper for criminally lying to the Senate and his colleagues in the secret surveillance state who illegally spied on entire populations.

    But James Clapper was never prosecuted for lying to the Senate. In fact, he did not even lose his job: he served as Director of National Intelligence for another three years, until the end of the Obama administration. And now this proven liar — like so many security state agents — works inside the corporate media, delivering the “news” for CNN. How can anyone justify wanting to see Edward Snowden rot in prison for life while the real powerful criminal whom he exposed, such as James Clapper, go free and thrive? Who besides as craven authoritarian would regard that as a just outcome?

    Speaking of proven liars, those who oppose a pardon of Snowden do so by invariably lying about him and what he did. Why would they do that? It’s because the reality is that he acted honorably and for noble ends. So they have to manufacture falsehoods to justify their demands that a hero be punished.

    Take, for instance, the completely fabricated accusations voiced Sunday night by Congresswoman Liz Cheney (R-WY), daughter of the former Vice President and key ally of pro-war House Democrats in blocking Trump’s plan to withdraw troops from Afghanistan and Germany. To justify her opposition to a Snowden pardon, she just lied outright:

    That Snowden “handed over US secrets to Russian and Chinese intelligence” is every bit as much of a lie as those told by her dad in 2002 about Saddam’s nuclear weapons stockpiles and alliance with Al Qaeda. She just manufactured this accusation out of thin air. Nobody can ever prove a negative — therefore, nobody can proffer dispositive proof that Snowden (or, for that matter, Liz Cheney) did not turn over U.S. secrets to the governments in Beijing and Moscow — but the burden of proof is on those hurling accusations of this sort to produce evidence for it, and she has none. That’s because none exists.

    But that does not stop Endless War advocates like Liz Cheney from saying it anyway — precisely because Liz Cheney is a pathological liar who will say anything to manipulate the public, just like her father taught her to do. The same is true of former CIA Director and proven pathological liar John Brennan. On Monday, he echoed the same false allegation as Liz Cheney did, in order to defend James Clapper and attack Senator Paul for advocating a pardon for Snowden:

    If there is any lesson we ought to have learned over the past two decades, it is that nobody should believe the claims of national security operatives without substantial evidence being presented. For anyone who wants to claim or believe that Snowden handed over secrets to Russia and/or China, you should demand evidence first. Where is it?

    What makes this claim even more dishonest is that it exploits the fact that the U.S. Government forced Snowden, against his will, to stay in Russia. Snowden’s original plan, as has been amply documented, was to fly from Hong Kong after providing us with the archive and reviewing key documents, then transit through Moscow on his way to South America, where he intended to seek asylum in Ecuador or Bolivia.

    But he was trapped in the Moscow International Airport because the U.S. State Department under John Kerry invalidated his passport while he was in transit, and then-Vice President Joe Biden threatened and coerced every other country considering offering him asylum or allowing him safe passage to South America (as he did with Cuba, which withdrew its offer of safe transit). A 2013 NPR headline tells part of that story: “Biden Asks Ecuador To Deny Snowden Asylum.” That was before he obtained asylum in Russia, something he was forced by Obama officials and Biden himself to do.

    So U.S. officials first prevented Snowden from leaving Russia, and then, with such audacity and dishonesty, have for years exploited the fact that he’s in Russia to manipulate public opinion and smear him as a Kremlin agent. And, as is true for all such allegations that a U.S. citizen is working for Moscow, the accusation is tossed out routinely without any evidence, because there is none.

    Then there’s the allegation that Snowden caused harm to national security or to innocent people, a claim that has been made against every whistleblower for decades who exposes corruption and criminality by the security state. Just as is true of the claim that Snowden sold or provided secrets to the governments of Russia and China, one should not even consider accepting the truth of this claim absent evidence to corroborate it.

    Where is this evidence? Who was harmed by this NSA reporting? Not a single example or piece of evidence has ever been furnished in response to those questions, with the defenders of NSA opting to just repeat the accusation over and over in the hope that people will assume that it is true by virtue of is repetition.

    But even if such harm could be established, the argument depends upon a complete distortion of the process used by Snowden to blow the whistle on Deep State criminality. Again, there is not one document from the NSA archive that was published because Snowden chose for it to be published. He used the opposite method for whistleblowing: recognizing that he should not have the power as a single individual to make choices about which documents should and should not be published, he instead gave the archive to journalists and asked that we make those decisions editorially, in as responsible a manner possible, guided by the standard journalistic public interest assessment.

    That means that if there were documents that people believe should not have been disclosed, the choice to publish those documents rested with the top editors at leading media outlets — The Guardian, The Washington Post, The New York Times, NBC News and other outlets around the world — not with Snowden, who was never even consulted on these choices. Once Snowden realized the magnitude of criminality, deceit and corruption inside the security state, he concluded that the. most just course was to turn over to journalists a massive archive regarding these programs, so that it was not up to him to curate in advance which documents should be seen by the public, but instead leave it to experienced journalists to make those determinations.

    Then there’s the claim — based on a substantial set of falsehoods — that Snowden somehow acted improperly by fleeing the U.S. to seek refuge in Russia rather than submitting himself to the U.S. justice system in order to “make his case”, a falsehood-drenched allegation voiced most memorably by Obama national security adviser Susan Rice to Charlie Rose in 2014:

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    The claim that Snowden should have or could have come back to the U.S. to convince a jury that what he did was justified is nothing short of a lie. Under the archaic statute which the Obama administration aggressively used to prosecute more whistleblowers than all previous administrations combined — the Espionage Act of 1917 — someone is automatically guilty if they provide classified information to a person who is unauthorized to receive it (including a journalist), and they are absolutely barred even from raising a “justification” defense in court.

    In other words, as Susan Rice well knows, Snowden would not be able to return to the U.S. and try to convince a jury of his peers that what he did was justified because the law under which they chose to prosecute him does not allow a defendant even to raise that as a defense. Instead, this old statute ensures a rigged process where a guilty verdict is all but inevitable. That’s precisely why Obama officials and security state operatives use this 103-year-old law — originally designed by Woodrow Wilson to criminalize dissent from U.S. participation in World War I — against whistleblowers who expose their crimes not by acting with foreign governments but with journalists.

    Then there’s the reality that — as Daniel Ellsberg argued in a Washington Post op-ed about Snowden’s leaving the U.S., headlined “NSA leaker Snowden made the right call” — those who are now accused of endangering national security have essentially no chance of obtaining a fair trial in the U.S. “The country I stayed in was a different America, a long time ago,” Ellsberg wrote, adding:

    I hope Snowden’s revelations will spark a movement to rescue our democracy, but he could not be part of that movement had he stayed here. There is zero chance that he would be allowed out on bail if he returned now and close to no chance that, had he not left the country, he would have been granted bail. Instead, he would be in a prison cell like Chelsea Manning, incommunicado.

    He would almost certainly be confined in total isolation, even longer than the more than eight months Manning suffered during her three years of imprisonment before her trial began recently. . . .

    Snowden believes that he has done nothing wrong. I agree wholeheartedly. More than 40 years after my unauthorized disclosure of the Pentagon Papers, such leaks remain the lifeblood of a free press and our republic. One lesson of the Pentagon Papers and Snowden’s leaks is simple: secrecy corrupts, just as power corrupts….

    But Snowden’s contribution to the noble cause of restoring the First, Fourth and Fifth amendments to the Constitution is in his documents. It depends in no way on his reputation or estimates of his character or motives — still less, on his presence in a courtroom arguing the current charges, or his living the rest of his life in prison. Nothing worthwhile would be served, in my opinion, by Snowden voluntarily surrendering to U.S. authorities given the current state of the law.

    The idea that you must meekly submit to the world’s most aggressive Prison State, where the rules are made by the very high officials whose crimes you exposed, is authoritarian dreck.

    Snowden well knew, when he decided to inform his fellow citizens of these systems of mass surveillance, that there was a very high probability that he would end up in a maximum security U.S prison for decades if not the rest of his life. That’s precisely what made Snowden’s actions so courageous: how many people would be willing to make that sacrifice? But that does not mean Snowden has some moral obligation to help an unjust state keep him in a cage for life out of vindictive vengeance because he exposed their crimes.

    President Trump has, on two occasions, indicated that he was considering the possibility of pardoning Snowden. A pardon is not only just on its own terms but would also be an expression of exactly the reason the U.S. Constitution vests the unilateral pardon power in the U.S. President: to prevent the abuse of the justice system for vindictive ends or to shied abuses of official power by those who operate in the dark (my arguments for why the ongoing attempted extradition and prosecution of Julian Assange is also a massive abuse of power have been set forth in prior articles as well as in a show I produced on the topic).

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    Even if you’re someone who believes that Snowden ought to be punished in some way — and I am not — he has been. Seven years in exile, separated from your friends, family and fellow citizens, in a country in which you never chose to live and to which you have no connections, is a serious deprivation. That is particularly true now that Snowden’s long-time partner, his American wife Lindsay Mills, announced that the couple is expecting their first child in January, a son who will automatically be a U.S. citizen and who should have the right to live with both of his parents in his country of citizenship.

    For decades, it was a staple of left-wing politics that the CIA and the secret security state, long referred to by scholars as the Deep State, pose a grave threat to core democratic values and constitutional rights. Over the last five years, beginning with the 2016 election, the Trump movement and Trump himself has seen up close and personal how easily and casually those powers are abused, and how destructive are the results.

    A pardon of Edward Snowden would be one of the greatest blows against Deep State abuse of secrecy and spying power in decades: probably the most significant act since President Eisenhower’s 1961 warnings in his Farewell Address about the growing anti-democratic dangers of the “military industrial complex” or, at the very least, the mid-1970s reforms of the intelligence community.

    A pardon of Snowden by Trump would prompt bipartisan cheering across the U.S. and would engender support globally across the ideological spectrum. The only ones angered by it would be exactly those people — John Brennan, James Clapper, Jim Comey, Susan Rice — whose ongoing ability to abuse their spying power against the U.S. population depends upon their vindictive use of the justice system to destroy the lives of those who reveal their crimes.

    Subscribe to Glenn Greenwald’s substack here.

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  • Biden Lashes Out At Trump In Post-Electoral College Speech
    Biden Lashes Out At Trump In Post-Electoral College Speech
    Tyler Durden
    Mon, 12/14/2020 – 20:26

    Update (2010ET): Joe Biden lashed out at President Trump Monday night, saying in a 14-minute speech following his win in the electoral college that Trump’s ongoing challenges to the 2020 election are “an unprecedented assault on our democracy,” and that claims of widespread fraud are “baseless” – despite the fact that the Supreme Court elected not to review the merits of various cases.

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    “Every single avenue was made available for President Trump to contest the results. He took full advantage of each and every one of those avenues. President Trump was denied no course of action he wanted to take,” Biden added – also slamming the 17 GOP Attorneys General and 126 GOP Congressmembers who challenged the results of the election as well.

    Biden implied Trump has both abused – and won’t let go of power, saying “In America, politicians don’t take power — the people grant it to them,” adding “The flame of democracy was lit in this nation a long time ago. And we now know that nothing — not even a pandemic or an abuse of power — can extinguish that flame.”

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    Watch the entire speech below:

    *  *  *

    Update (1735ET): Joe Biden officially secured enough electoral votes on Monday to claim victory, despite President Trump’s ongoing refusal to concede in light of wide-ranging claims of election fraud.

    Biden’s win was secured after California’s 55 electors put the former Vice President over the 270 mark needed to win.

    *  *  *

    Update (1717ET): Joe Biden will address the nation at 7:30 p.m. ET following today’s Electoral College voting, in which he captured electors in all six battleground states in which President Trump and his supporters contested the November election.

    As Bloomberg notes, “The 16 electors in Michigan voted for Biden, following the 63 votes cast for him earlier in Arizona, Georgia, Nevada, Pennsylvania and Wisconsin. Biden will have enough electoral votes to be officially declared president-elect when members have cast 270 ballots, which is expected after California votes. Congress will officially count the votes on Jan. 6.”

    The votes come as Trump and his allies continue to contest the results, which Trump attorneys and supporters have suggested are fair game until January 6th.

    On Monday, Georgia Republican Party Chairman David Shafer tweeted that Republican electors in the state also met at the state capitol to cast votes for Trump and Vice President Mike Pence because a Trump campaign lawsuit contesting the state’s results is still pending. Former U.S. Representative Lou Barletta of Pennsylvania said the Trump electors in the commonwealth also held “conditional” votes in case a court were to overturn the results.

    The idea is to send a rival slate of electors for Congress to consider. But there’s only one certified slate of electors that Congress can recognize from a state, and their move is “not going to work as a matter of law,” said Edward Foley, a professor and director of an election-law program at Ohio State University who has studied disputed elections. –Bloomberg

    Biden received 306 electoral votes from the 25 states and the District of Columbia, while Trump captured 232 electoral votes from the 25 states he won.

    *  *  *

    For all the riveting action, watch live below as NBC News takes us throughout the country’s electoral votes.

    *  *  *

    On Monday, members of the Electoral College will gather throughout the day in their respective states to cast their official ballots for president. Most states will offer livestreams to watch the proceedings, which will take place at locations chosen by state legislatures – typically the state’s capitol. Exceptions include Delaware – whose electors will meet in a gym, and Nevada – which will be the only state to hold its meeting virtually this year, according to the New York Times.

    Electors will use paper ballots to cast their votes for president and vice president.

    And while 33 states require their electors to choose whoever won the state’s popular vote, 17 other states don’t “bind” their electors – who can vote for whomever they choose. If they cast a vote for another candidate than the one which won the state, they are considered ‘faithless electors.’ In 2016, two faithless electors didn’t vote for Trump, while five faithless electors didn’t vote for Hillary Clinton. The seven electors were from Hawaii, Texas and Washington State.

    Electors typically have a close relationship with the candidates or politicians in their states. For example, in 2016 Democratic activist Ed Buck – a deep-pocketed political donor since charged with three counts of battery after multiple drugged black men were found dead in his apartment – was selected for the electoral college, likely by Rep. Adam Schiff (D-CA), his district’s congressman who accepted political donations from the accused bundler.

    Rep. Adam Schiff stands next to Ed Buck

    House Speaker Nancy Pelosi’s daughter was also a California elector in 2016.

    What happens after the electors meet?

    The votes are officially counted in Congress during a joint session held in the House chamber on Jan. 6, with Vice President Mike Pence presiding over the affair. Pence will open the certificates, organized in alphabetical order by state, and present them to four “tellers” – two from the Senate and two from the House, who count the votes. Once Joe Biden receives at least 270 votes, as is expected to be the case, Pence will announce the result. The session cannot end until the count is complete and publicly declared, at which point the election is officially decided.

    Can members of Congress block the process?

    Once the result is read on January 6, members of Congress will have one opportunity to lodge complaints, which must be made in writing and signed by at least one Senator and one member of the House. The objection would then be debated by each chamber separately, with each member of Congress allowed five minutes to speak. The debate has a hard stop after two hours, after which each body will vote on whether to reject the state’s results, according to the Times.

    The Times also notes that some Trump allies are “already planning objections,” which should “make for good political theater” but would be unlikely to change the outcome of the election. 

    Does this end Trump and his allies’ fight to challenge the election?

    According to Trump Campaign attorneys Rudy Giuliani and Jenna Ellis, “The only fixed day in the U.S. Constitution is the inauguration of the President on January 20 at noon,” suggesting that they will exhaust every legal option to overturn the results based on accusations of widespread fraud across several key states.

    That said, Ellis had previously called Jan. 6, vote counting day, a date of “ultimate significance.”

    That said, last month Trump told reporters that if Biden is elected by the Electoral College, Trump would leave office.

    “Certainly I will, and you know that,” he said, adding “I will and, you know that,” though he also said “It’s going to be a very hard thing to concede because we know there was massive fraud.”

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  • NJ Gym That Battled Gov Murphy's Closure Edict Faces $1.2MM In Fines
    NJ Gym That Battled Gov Murphy’s Closure Edict Faces $1.2MM In Fines
    Tyler Durden
    Mon, 12/14/2020 – 20:20

    A pair of New Jersey gym owners who have repeatedly defied the “tyrannical” edicts of Garden State Gov. Phil Murphy, who closed gyms as part of the state’s COVID-inspired restrictions, told Fox that they have racked up more than $1.2MM in fines for refusing to adhere to the state’s COVID-19-related restrictions.

    The co-owner of Atilis Gym in Bellmawr, who have appeared in the past on air with Tucker Carlson and others on Fox as libertarians and conservatives opposed to the strict lockdowns rallied to their cause, said that the state and the governor have “thrown everything he possibly could to shut us down.”

    They’ve also been given roughly 60 citations, and both have been arrested. Every single day they open their gym in violation of the state order, the team rack up another 16K in fines.

    “He has arrested my partner and I, given us over 60 citations, some of them criminal. He fines us $15,497.76 per day for every day we’re open,” Smith said during an interview. “Our fines are totaling over $1.2 million, but every single day, Frank and I open our gym.”

    New Jersey allowed gyms to reopen (with the caveat that they  must observe restrictions and capacity limits) on Sept. 1.

    Atilis, however, defied the state’s shutdown orders by opening its doors at the end of May, launching the legal battle between the state and gym that has been the subject of national speculation and coverage.

    During the interview, Smith claimed none of the state’s COVID-19 cases have been linked to his gym, while the gym has told its members they can wear masks when they work out, thought it doesn’t require them to do so, as the state’s rules mandate, he noted.

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  • Treasure Hunter Stays 5 Years In Jail Rather Than Reveal Location Of Gold Coins Worth Millions
    Treasure Hunter Stays 5 Years In Jail Rather Than Reveal Location Of Gold Coins Worth Millions
    Tyler Durden
    Mon, 12/14/2020 – 20:00

    In a bizarre legal saga which sounds like something out of a Hollywood movie script, a former deep-sea treasure hunter has remained in an Ohio jail for a fifth year for contempt of court after refusing to tell the court where a haul of previously sunken and recovered treasure is located that’s said to be worth millions of dollars.

    Scientist and deep-water explorer Tommy Thompson is keeping mum as to the precise whereabouts of 500 gold coins that in 1857 went down with a ship called the “S.S. Central America” off the coast of South Carolina. 

    The coins that the court is inquiring about are believed to be worth at least up to $4 million, part of a much larger haul from what was once dubbed the “world’s richest shipwreck”. Thompson is still at center of a controversy which has raged for decades. Prior reports have estimated that additional gold he could have hidden away in his possession to be worth much more.

    Bob Evans, chief scientist on the Central America Ship of Gold project, posing with some of the gold previously recovered from the ship. Image source: Professional Coin Grading Service/Seattle Times

    Here’s how it all began:

    The steamship’s sinking off the Carolinas in a hurricane with 105 mph winds stands as this country’s worst passenger ship peacetime disaster.  Of the 578 aboard, 425 perished.

    It also has been called the world’s richest shipwreck because it carried 3 tons of gold commercially shipped from the California Gold Rush, and perhaps an equal amount being carried by the passengers. There were rumors of another 15 tons of gold in a secret Army shipment.

    A team of scientists and engineers with specially designed equipment began after the shipwreck site was located in the late 1980s to work on recovering the ship’s treasures, a nearly impossible feat:

    They were the engineers, technicians and owners of high-end sonar equipment who were promised a small share of the wreck’s bounty in return for their work, which found the Central America in 1988, some 160 miles off the South Carolina coast, 7,200 feet down on the ocean floor.

    It took nearly 30 years of litigation and reams of legal documents before a court settlement got them at least a portion of what they were owed.

    In total well over $50 to $60 million worth of gold was brought up, according to previous reporting and statements:

    Over 10,600 gold coins, 577 gold ingots, over 14,000 silver coins, and over 100 pounds of gold dust and nuggets were recovered, according to Bob Evans, chief scientist in both expeditions.

    But Thompson, one of the key team leads on the efforts that recovered the gold has allegedly held on to some of it all these years even though he was already paid by investors for his work in recovering it.

    Tommy Thompson and two of the valuable bars said to be from the wrecked ship, via the Mirror

    Thompson’s legal woes were compounded, and then he flat refused to reveal where the gold that allegedly remained in his possession was located, before going on the run:

    Thompson took the money but never returned the gold, leading the investors to sue him.

    After failing to appear in court in 2012 to disclose the coins’ whereabouts, Thompson lived in Florida in hiding for three years before U.S. marshals tracked him to Boca Raton and arrested him.

    Thompson pleaded guilty for his failure to appear and was sentenced to two years in prison and a $250,000 fine, but he had to answer questions in closed-door sessions about the coins, which the government estimated to be worth $2-4 million.

    Below via AP file: “This 1989 file photo shows gold bars and coins from the S.S. Central America, a mail steamship, which sunk in a hurricane in 1857, about 160 miles off the North Carolina coast. Columbus-America Discovery Group, owned by fugitive treasure hunter Tommy Thompson, argues that it has the exclusive rights to the treasure from the shipwreck.”

    Thompson’s defense has been that he doesn’t actually know where it is. “Your honor, I don’t know if we’ve gone over this road before or not, but I don’t know the whereabouts of the gold,” Thompson said during a 2017 hearing. “I feel like I don’t have the keys to my freedom.”

    But in 2018 he admitted that he “doesn’t know” where precisely they are because “I put them in an offshore trust. The trustee can put them anywhere he wants,” as he told a judge. “The judge ordered him back to prison until his memory improved,” as The Seattle Times later wrote.

    But investors who feel cheated out of the remaining haul from the historic find believe he’s waiting out the legal clock and will try and cash in the moment he gets released from his confinement.

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  • Hotels Consider Requiring All Guests To Have COVID Vaccination
    Hotels Consider Requiring All Guests To Have COVID Vaccination
    Tyler Durden
    Mon, 12/14/2020 – 19:40

    Authored by Paul Joseph Watson via Summit News,

    Hotels have now joined airlines in considering whether or not to mandate that all guests have proof of COVID vaccination before being allowed to stay.

    Several airlines have already announced plans to make the shot a compulsory condition of flying. According to anecdotal evidence, hotels and other forms of accomodation could follow suit.

    A reader of the LockdownSkeptics website reported that a hotel in Scotland which offers wildlife holidays is preparing to adopt the no vaccine, no service policy.

    “Should a vaccination programme be rolled out in the next few months, then it is likely we will require all guests to have been vaccinated before arrival,” states an item in the hotel’s newsletter.

    “2020 has undoubtedly have been a hard year for the hotel and they have already put in place a wide range of COVID-19 related “safety” measures which will have had significant cost and massively reduced their occupancy rates,” states the reader.

    “They will be balancing the requirements of both the Government and their customers, and, in respect of the latter, they clearly envisage that their customers will expect the highest possible levels of “safety” and will, on the whole, regard this vaccination requirement positively!”

    “I fear that, whatever the science and whatever Government might say, we are all going to be forced inexorably into a situation where “Vaccination Certificates”, de facto if not de jure, become necessary to lead even a reasonable life in the months (years?) to come.”

    As we highlighted earlier, according to Bill Gates, coronavirus restrictions will continue into 2022 and bars and restaurants will remain closed for four to six months.

    UK Health Secretary Matt Hancock also told MPs today that a “new variant” of COVID had been discovered, meaning the vaccine currently in production may not even be effective as the virus continues to mutate.

    *  *  *

    New limited edition merch now available! Click here. In the age of mass Silicon Valley censorship It is crucial that we stay in touch. I need you to sign up for my free newsletter here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown. Also, I urgently need your financial support here.

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  • Another Paradox: Consumer Spending Expectations Surge, Despite Dismal Income, Earnings
    Another Paradox: Consumer Spending Expectations Surge, Despite Dismal Income, Earnings
    Tyler Durden
    Mon, 12/14/2020 – 19:20

    Call it the latest economic paradox.

    Despite widespread stories of doom and gloom about the state of US consumer finances once the fiscal stimulus bill expires on Dec 31, the latest NY Fed survey of consumer expectations unexpectedly shows that US consumers have little intention of slowing down their spending. In fact, and very paradoxically, despite depressed and flat income and earnings growth expectations, with median one-year ahead expected earnings growth at 2.0% for fifth consecutive month and expected income growth barely little changed at 2.14% …

    … consumers’ 1-year ahead spending growth expectations jumped to 3.73% over the next 12 months in November – the highest level in more than four years, not only up from the 3.06% in the previous month but a whopping 33% more than the 2.8% reported last November, making this the biggest Y/Y increase in expected spending in series history.

    This bizarre increase took place even as labor market signals were mixed: although the mean perceived probability of losing one’s job in the next twelve months decreased to 14.6% in November from 15.5% in October, expectations that the unemployment rate will be higher one year from now rose to 40.1%, the first increase since July.

    Another paradox: the jump was driven primarily by respondents with annual incomes under $50,000, the New York Fed said, although most income groups indicated a higher expectations to spend in the next year.

    And yet another paradox: survey respondents boosted their plans for spending even as they reported greater pessimism about their personal finances overall in the year ahead, as well as an expectations that taxes will be generally higher in the coming year.

    There’s more: whereas in April, or just after the covid crash, expectations for higher stocks surged to the highest on record boosting overall spending expectations, since then they continued to slide, and in November dropped to just 38.54% from 40.8% in October, the lowest reading since August 2019.

    And as expectations for higher interest rates on savings accounts continue to hibernate…

    …  one wonders: why all this spending optimism. Well, with a little digging, the answer presents itself and it is once again the dirtiest four letter word of all: US consumer expect government debt levels will continue to soar to pay for future fiscal stimulus plans and thus funding all of these incremental purchases that are already factored in, even without income or earnings growth.

    As the NY Fed puts it, the latest survey “shows some moderation in expectations regarding year-ahead changes in welfare and unemployment benefits, with the average likelihood of further expansions falling to 32 percent and 31 percent in August from 39 percent and 53 percent in April, respectively. Despite the decline, expectations of continued program expansion or benefit-level increases remain considerably higher than pre-COVID-19 levels.“

    In other words, US consumers have finally figured out what US corporations figured out long ago: in this world, the only source of purchasing power (and consumer happined) is debt. And with the arrival of a “jubilee” administration that is likely to discharge much of the accumulated debt, one can see why US households – drowning in debt and eager for more – are so optimistic about their spending plans.

    And just to confirm that aside from spending the financial health of US consumers is absolutely dismal, the survey also found that 3-year inflation expectations rose 0.12% to 2.82%, gasoline prices are expected to rise 5.21%; food prices to rise 5.12%; medical costs to rise 7.07%; the price of a college education to rise 5.24%; rent prices to rise 5.48%. Finally, a larger percentage of consumers – 10.93% vs 9.3% in prior month – expect to not be able to make minimum debt payment over the next three months. That’s ok though, because if the debt amount is big enough, the creditor will have no choice but to agree to restructure it.

    Source: NY Fed

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  • Doug Casey On What Happens When The Suspension On Evictions Ends
    Doug Casey On What Happens When The Suspension On Evictions Ends
    Tyler Durden
    Mon, 12/14/2020 – 19:00

    Via InternationalMan.com,

    International Man: Earlier this year, CDC was able to extend its powers unprecedentedly by issuing a nationwide suspension on evictions.

    What’s your take on how a public health agency grew to be in the position of telling property owners what they can do on their properties?

    Doug Casey: Health paranoia is an excellent method of control. People put their health above almost everything. I’m only surprised it hasn’t been used as a lever up until now. It’s part of a trend toward mass control that has started in earnest early in the 20th century and has been increasing exponentially over time.

    First was the income tax. If you didn’t comply, it was not only seen as a legal crime but also promoted as a moral sin. The prohibition of liquor from 1919 to 1933 got under way as a moral failing and then was turned into a crime. It’s the same with the prohibition of some drugs; Nixon started that hysteria in 1971, and it was put on steroids, so to speak, by Nancy Reagan. Next came the war on terror, especially since 2001. These were all promoted with both legal and moral taboos. Everybody is supposed to line up with them shoulder to shoulder, like in one of those old socialist realism propaganda posters the Soviets and the Nazis specialized in. The public is supposed to self-police under the supervision of the authorities, like they did in Salem in 1692.

    Public health is the current impetus for mass hysteria and paranoia. All of these things impinge upon your right to ownership of private property, including your own body, which is the primary form of property. The public health angle is potentially the most dangerous and invasive one from the viewpoint of freedom. Busybodies—the type of people who work for and actively support the State—always need an excuse to control others en masse. This pandemic provides an excellent template for the future.

    Wearing a mask—whether or not you want to or think it helps—isn’t just about virtue signaling. It also shows whether you’re willing to do as you’re told—whether you’re “politically reliable”, as the communists like to say. It’s like wearing the Party’s armband.

    In fact, wearing a mask and social distancing in stores, bars, restaurants, and gymnasiums shouldn’t be up to the government. It should be strictly up to the property owner. Decisions that the individual makes regarding his own health are his own; it’s between the individual and his doctor.

    I have no problem if the owner of a bar or restaurant wants to keep me out if I’m not wearing a mask. It’s his property. He makes the rules. I can go elsewhere, where it suits me better. It’s an affront and an imposition on restaurateurs and storekeepers to be told what they and their guests can and cannot do.

    This isn’t, incidentally, about a technical or medical problem. The value of wearing masks, social distancing, and obeying quarantines and lockdowns is questionable at best, as Sweden has shown. The real problem is ethical and that there’s no moral pushback from either the public or the property owners. People are arguing on strictly technical grounds: “Yes, you have a right to tell me what to do, and even close my business. But you shouldn’t because it’s not ‘fair’, or your solutions aren’t optimal”. They accept the busybody’s premises. The argument is over before it even begins. Americans are truly acting like whipped dogs.

    Whether the masks, distancing, and the rest of it work or not, isn’t the point. My own belief is they’re at best of marginal value and may well be counterproductive. But that’s beside the point. The point is that it’s immoral and destructive for the State to tell people how to relate to each other.

    As for the CDC, it’s just another government bureaucracy concerned with putting itself in the limelight, gaining more power, enhancing its budget, and the number of its employees—and making Fauci, a lifelong but previously insignificant swamp creature, into an international celebrity.

    International Man: Currently, over 18 million Americans are currently behind on their mortgage or rent payments.

    That temporary suspension on evictions ends December 31st. What do you think will happen next?

    Doug Casey: Just as with the financial markets, the government has no alternative but to “do something.” They will—they have to—print more money to keep the rotten house of cards from collapsing on itself.

    The Democrats have already said that they want to increase the next stimulus to over $3 trillion. The fact that most of the last round of stimulus was either overtly wasted, went to cronies, or can’t be accounted for, is completely lost on them. They recognize that unless they give a lot of money directly or indirectly to the hoi polloi, there are going to be millions of them on the streets.

    Approximately 11 million renters and 4 or 5 million mortgagees are now in forbearance. They’ll be kicked out of their houses and apartments come January 1, barring a huge bailout. Where are those people going to go?

    If Obama had made good on his ridiculous promise about shovel-ready projects, there’d be a lot more bridges that they could camp out under. But he didn’t. They have a real problem on their hands. Millions of people have been living above their means and have no savings. At this point, if they let landlords and banks kick all those people out, a number of things will happen. Residential property prices will collapse. Millions of people will be scrambling for somewhere to live. Lots of banks and landlords would go bust.

    The longer the government kicks the can down the road, the bigger the inevitable bust will be. The stimulus money will have to continue because Biden doesn’t want it all to come unglued on his watch. The State is not only going to have to pay individuals and business owners that their idiotic policies have busted. They’ll be subsidizing banks, landlords, and utility companies—because you can’t live in a house or an apartment without water and electricity.

    It’s worse than that because even if you cover the bare essentials, there’s no money leftover for maintenance. There will be millions of buildings across the country suffering from deferred maintenance. The South Bronx, East St. Louis, and Baltimore will be replicated across the country.

    And no one’s talking about how to cover the real estate taxes due on these properties. Many local governments are already bankrupt. Their expenses are going way up even while their tax income collapses. The whole country has painted itself into a corner at this point. That’s what happens when you adopt a collectivist economic policy, as the Soviets, the Chinese, and scores of other countries have discovered.

    I’m not sure how they’re going to get out of it because the economy itself has just started to collapse. Of course, they’ll print up more money because they see that as a solution when it’s actually a cause. It’s going to worsen the collapse.

    International Man: For the tens of millions behind on their mortgage and rent payments, will their back rent and overdue payments ever be repaid?

    Doug Casey: The government will not only have to pay the rent for the future, but it’s going to have to cover landlords’ previously unpaid rent—if they don’t want lots of bankrupt landlords and banks.

    It will lead to a guaranteed annual income, which they’ve been thinking about for some time. In some cases, the government will take over properties. It’s nothing new. Most major US cities already have significant public housing. None of it’s good, but most isn’t as bad as Cabrini-Greene or Pruitt-Igoe.

    Who knows where this daisy chain will lead? With all the unemployed people who can’t pay their rent, perhaps the government will develop something like national service. Then there will be millions more people working for the government, doing god knows what. It will lead to the socialization of society. Remember, this COVID hysteria is just the pin that broke the bubble. The Greater Depression was already in the cards. Americans will beg the government to cure it, which is guaranteed to make it vastly worse and longer-lasting and invite some charismatic authoritarian to be their savior and take charge.

    International Man: Assuming the COVID hysteria and lockdowns are behind us in 2021, what lasting effects could we see taking place?

    Doug Casey: It’s going to destroy the restaurant, retail, and travel industries all at once.

    Stores, restaurants, and small businesses are always failing—maybe 15% of them annually— and new ones are starting up in normal times. It’s the circle of life. The problem is that about half of these businesses are failing all at once. That makes it much harder to recover.

    The economy is a lot like a body. If you burn your finger, it hurts, but you’ll recover. But if you suffer burns on over 50% of your body all at once, it might kill you. That’s what we’re looking at right now.

    Commercial real estate is another area that is going to be devastated because a lot of people will continue working at home and prefer it over working in an office.

    Who knows what’s going to happen to all that commercial real estate and how it’s going to be repurposed. It’s certainly going to consume a huge amount of capital.

    Another area that will change is schools. I would have been happy to have a year off from school because classes bored me. I would have read many more things on my own. But today, most kids don’t read books. Public school kids are lucky to absorb a few things by osmosis.

    Now they’re mostly playing video games or are on social media—mostly doing nonproductive things on their computers at home. I don’t know the effect of not being able to associate with other kids.

    For most kids, it may be damaging. On the bright side, many parents have decided that school is a waste of time and have started homeschooling their kids. That’s generally a positive thing.

    Here’s the important thing, we don’t know how long this hysteria is going to last. People are so scared that they’ll be easy to control for fear of the next real or imagined virus that comes down the road. When people are scared and don’t know what to do, they will want somebody to kiss it and make it better.

    So, I expect we’re heading towards a genuine strong man for president in the US, whether that’s Kamala Harris or somebody else. If the 2020 election was bad, the 2024 election would be worse.

    *  *  *

    Unfortunately most people have no idea what really happens when a government goes out of control, let alone how to prepare… The coming economic and political crisis is going to be much worse, much longer, and very different than what we’ve seen in the past. That’s exactly why New York Times bestselling author Doug Casey and his team just released an urgent new report titled Doug Casey’s Top 7 Predictions for the Raging 2020s. Click here to download the free PDF now.

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  • Kremlin Blasts New US Agency Hack Accusations As "Blame Russians For Everything" Mania
    Kremlin Blasts New US Agency Hack Accusations As “Blame Russians For Everything” Mania
    Tyler Durden
    Mon, 12/14/2020 – 18:40

    Days ago Russian Foreign Minister Sergey Lavrov’s skewered what he dubbed the West’s “gunboat diplomacy” during an address before Russia’s annual Assembly of the Council on Foreign and Defense Policy conference in Moscow. “We seek stability, fair opportunities for all states, including, of course, Russia,” he said at the time. “Gunboat diplomacy or democratic or any other sort of messianism is hardly an option if we want to accomplish this.”

    The Kremlin has long accused Washington of seeking to gain leverage internationally by routinely ginning up fake threats which paint Russia as the perpetual boogeyman. This is precisely what it’s now saying of the current widespread hacking allegations being leveled at Russia related to the Sunday night ’emergency directive’ issued by the Department of Homeland Security’s cybersecurity arm.

    Specifically it’s being widely reported Monday that the Treasury Department and the Commerce Department’s National Telecommunications and Information Administration had their networks breached by foreign hackers via government contractor Austin, Texas-based IT provider SolarWinds as part of a sophisticated months-long campaign by foreign actors.

    “The compromise of SolarWinds’ Orion Network Management Products poses unacceptable risks to the security of federal networks,” an official statement from the Cybersecurity and Infrastructure Security Agency (CISA) indicated. Federal agencies were ordered to scour and immediately disconnect possibly compromised servers in light of the breach and this “unacceptable risk”. Federal cybersecurity officials believe an active major espionage campaign targeting federal agencies through the third-party software provider is still underway.

    Cybersecurity firm FireEye, which was also breached, put out a press release which many analysts are using to cast focus on Russia: “The campaign is the work of a highly skilled actor and the operation was conducted with significant operational security,” FireEye stated in a blog post.

    No evidence has been forthcoming as to who is ultimately behind the “ongoing” campaign, but of course it took a mere hours for Russia to be linked to it in the headlines. For example, the latest Associated Press reporting merely vaguely cited “many experts believe…” to suggest Russia is behind it: 

    The hacked cybersecurity company, FireEye, would not say who it suspected – many experts believe the operation is Russian given the careful tradecraft – and noted that foreign governments and major corporations were also compromised.

    News of the hacks, first reported by Reuters, came less than a week after FireEye disclosed that nation-state hackers had broken into its network and stolen the company’s own hacking tools.

    The Washington Post has subsequently confirmed that the FBI is specifically investigating groups believed connected to the Russian Foreign Intelligence Service, SVR.

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

    The Kremlin responded on Monday by suggesting it’s yet another example Russophobic fear-mongering and groundless threat inflation which conveniently scapegoats Russia for everything that goes wrong in the West. It’s also conveniently timed just before a new US administration takes office.

    Kremlin spokesman Dmitry Peskov vehemently denied Russia was behind the alleged attacks on US federal agencies. “Once again, I can reject these accusations,” Peskov said at a press briefing. “If for many months the Americans couldn’t do anything about it, then, probably, one shouldn’t unfoundedly blame the Russians for everything.”

    Indeed the illegal intrusions are believed to have gone on for months but new details as to the extent of the breach are only now coming to light in dramatic fashion, with the mainstream media only too willing to name the usual ‘bad guy’ (Putin did it!… case closed) without too much in the way of investigation first.

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  • What If Central Bankers' Prayers Are Answered And Inflation Surges
    What If Central Bankers’ Prayers Are Answered And Inflation Surges
    Tyler Durden
    Mon, 12/14/2020 – 18:20

    By John Buttler, submitted by Macro Hive; John Butler has 25 years experience in international finance. He has served as a Managing Director for bulge-bracket investment banks on both sides of the Atlantic in research, strategy, asset allocation and product development roles, including at Deutsche Bank and Lehman Brothers.

    ‘Take care for what you pray; for the Gods may one day grant it to you,’ is an old proverb with similar variations across many cultures and religious traditions. Thus it seems reasonable to pose as a possible Grey Swan for 2021 that central bankers around the world finally get that for which they have long been praying: inflation.

    As 2020 draws to a close, most of the developed world remains mired in various stages of lockdown, attempting to pre-empt what many experts believe is a seasonal surge in Covid-19 infections. But with much positive news on the vaccine front, it is highly likely that, as fears recede, pent-up demand for all manner of economic activity will be released.

    While impossible to model, the amount of pent-up demand could be unusually large for a variety of reasons. Many people, feeling a sense of existential relief, are likely to spend more than they normally would following a typical downturn. And given the amount of stimulus still circulating through the system, the necessary credit and liquidity is likely to be on hand for those who may have developed a ‘live for today’ mentality during 2020.

    But consider the widespread evidence of lingering supply backlogs and bottlenecks, signs energy prices have hit bottom, rapidly rising food prices and huge excess liquidity. If pent-up demand is released in 2021 amid this backdrop, prices may be driven much higher and faster than would be the case under more normal economic recovery circumstances.

    Food prices deserve a special mention here. This is because, while food represents only a small part of the developed world’s official inflation baskets, it takes a large share of those in the developing world, where much of the world’s manufacturing infrastructure and workers are now located. Should food prices rise enough, those workers are going to demand higher wages. In turn, those higher costs will be at least partially pushed through the production chain into exports.

    This is a recipe for a surge in inflation. The possible ‘Grey Swan’ for 2021, however, is that not only does inflation rise, but it rises to above target in multiple large economies. What then? How will central bankers react and, more important, what will be the impact on financial markets?

    The Fed has already made clear that they would allow for a temporary overshooting in order to raise the multi-year inflation average to around 2%. However, were inflation to rise above 2%, no doubt Fed rhetoric would begin to prepare markets for higher rates. But on what timescale? Market memories may be short, but certainly they are long enough to remember the repo crisis of late 2019, when the anticipation of only slightly higher rates led to a near seize-up of the US repo (i.e., money) market. The Fed acted swiftly to flood the system with fresh liquidity and rates then fell, although under the cover of the Covid scare. Thus even if rhetoric begins to change during 2021, the Fed may well not raise rates at all.

    In the euro area, the policy response is likely to be more complex. There is already dissent at the ECB regarding the scale and structure of the existing QE programme, and at the EU level with respect to joint financing initiatives, which Hungary, Slovenia and Poland had been particularly vocal on. Such disputes are likely to escalate if inflation picks up in the inflation-phobic northern bloc of countries, including Germany.

    Amid such developments, peripheral bond spreads are likely to widen again and the Target2 imbalances grow further. This will only increase the political tension within the European institutions as the ECB leadership pushes for ever-more disproportionate peripheral bond buying and the EU Commission threatens Poland, Hungary, Slovenia and any other dissenting members with some form of rebuke.

    Although for somewhat different reasons, both the Fed and ECB will therefore have reason to be cautious in tightening policy, as will other major central banks. But consider now how financial market psychology might begin to change: it is one thing for the Fed (or any other central bank) to blink on the road to rate normalization when inflation is still below target; quite another when it has already risen through it. It is one thing for the ECB to justify aggressive, disproportionate (and so legally questionable) QE with inflation near zero. But at 2%? Higher? What then?

    Inflation is, Always and Everywhere, A Psychological Phenomenon

    While inflation is ultimately a monetary phenomenon, it is also one with a highly complex, unstable and consequently unpredictable transmission mechanism. Economists have attempted to model velocity (i.e., transmission) through the decades, with no success. Even in the 1980s under the Volcker monetary-targeting regime, money velocity was highly unstable. But it is worth revisiting why that regime succeeded in bringing inflation down sharply: Inflation is not merely a monetary phenomenon but also a psychological one.

    Consider the behavioural dynamics of the classic ‘smoke in the movie theatre’ example. As one patron after another smells smoke and rises to leave the cinema, others remain seated in what is a ‘linear’ change. But when those who remain seated begin to rise to leave the cinema even without having smelled smoke themselves, the change becomes non-linear. Such ‘tipping points’ are impossible to predict in their specifics or timing, but we know they exist.

    Applied to inflation, non-linear shifts in expectations can become a self-fulfilling prophecy as economic actors begin to change their behaviour, for example, by reducing holdings of cash balances and front-loading consumption – or ‘hoarding’ if you prefer – instead. Removing goods from circulation (a reversal of the ‘just-in-time’ production+consumption associated with advanced economies) represents a negative supply-shock in of itself, aside from whatever might have caused prices to begin rising in the first place. Returning to the analogy above, it is akin to people leaving the theatre without themselves smelling the smoke.

    Confronted with such developments on assuming the Fed chairmanship in 1979, Paul Volcker immediately set about addressing inflation psychology. First, he needed to get his colleagues on side, which he famously did at the first opportunity, the FOMC meeting of August that year. What follow are a few Volcker excerpts from the transcript:

    This is a meeting that is perhaps of more than usual symbolic importance if nothing else.

    When I look at the past year or two I am impressed myself with an intangible: the degree to which inflationary psychology has really changed.

    Nobody knows what is going to happen to the dollar but I do think it’s fair to say that the psychology is extremely tender.

    [E]conomic policy in general has a kind of crisis of credibility… If we can achieve a little credibility both in the exchange markets and with respect to the [monetary] aggregates now, we can buy the flexibility later.

    Psychology and credibility are not quantifiable economic aggregates. But they are absolutely essential when it comes to inflation expectations, which are ultimately a psychological phenomenon.

    Unlike in Volcker’s time, today central banks are aiming for higher inflation. So if they do indeed succeed in ‘lighting the fire’, as it were, what are the likely market implications?

    1. First, breakevens are likely to rise, and not only merely to keep pace with the rise in actual inflation but to reflect the change in inflation psychology.
    2. Second, nominal yields are likely to follow along, as real yields are already near historic lows and so have limited room to decline.
    3. Third, curves are likely to steepen as central banks have made clear that they intend to accommodate higher inflation for a sustained period of time.

    Turning to equities, in general they are likely to hold up better than bonds, as corporate profits tend to rise with inflation. However, the sectors performing best will be those in defensive industries with strong pricing power. Value will outperform growth. Strong balance sheets will once again be in vogue, as will dividends.

    If the 1970s are any guide, commodity prices are likely to rise and, in many cases, commodities and basic industrials will outperform both bonds and stocks generally. Metals are likely to do best of all, especially precious. Whether cryptocurrencies would join this particular party is unclear, but they certainly have the potential to do so given current market sentiment.

    Beyond a certain point, central banks might decide they have created too much of a good thing. Reversing such expectations is indeed possible, but remember: Once inflation psychology shifts, this will only be possible by raising rates in excess of whatever is already priced in, perhaps significantly so.

    This worked for the Volcker Fed after all. But the market consequences of such action could well be severe, as indeed they were in the early 1980s. That particular Grey Swan, however, is unlikely to take flight already in 2021; rather a year or two further out.

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  • The Major Corporate Solvency Crisis
    The Major Corporate Solvency Crisis

    6216245149001

    Tyler Durden
    Mon, 12/14/2020 – 18:03

    Real Vision managing editor Ed Harrison is joined by editor Jack Farley to break down the growing corporate debt crisis. Ed and Jack discuss the latest report from the Group of Thirty, which finds that balance sheet impairment will complicate economic recovery and persist long after this pandemic ends. Ed crystallizes the risks into three separate categories—pandemic-related, economic, and financial—and incorporates these risks into Raoul’s framework on the “insolvency phase.” Ed and Jack also discuss fiscal aid, sector rotation, and lockdowns in the U.S. and Europe. In the intro, Real Vision’s Peter Cooper discusses the joyous news of the beginnings of vaccine distribution in the U.S., AstraZeneca’s announcement to acquire Alexion Pharmaceuticals, and the sterling’s rally on renewed Brexit trade negotiations.
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