Today’s News 17th December 2020

• Russian Forces Establish Presence On Syrian-Iraqi Border
  Russian Forces Establish Presence On Syrian-Iraqi Border
  Tyler Durden
  Thu, 12/17/2020 – 02:00

  Submitted by SouthFront.org,

  Over the past weeks, the Syrian Army and its allies have intensified their operations against ISIS cells hiding in the Homs-Deir Ezzor desert.

  According to pro-government sources, during the past few days, Syrian government forces and Iranian-backed militias carried out a series of raids to the south of the Palmyra-Deir Ezzor highway and southeast of al-Mayadin. Pro-militant media outlets clam that over 10 Syrian soldiers and 15 ISIS members died in these clashes.

  The Russian Aerospace Forces also resumed their strikes on ISIS targets in the desert region. Pro-opposition sources say that the Russians delivered over 100 airstrikes. Indeed, the intensity of this campaign demonstrates that the regularly resurfacing ISIS cells, which actively exploit the state of chaos on the Syrian-Iraqi border, pose a notable security threat.

  Just a few days ago, the Russian Military Police established a local HQ and several positions in the Syrian town of al-Bukamal, which lies on the border with Iraq. Local sources link the increased Russian presence on the border with the recently resumed anti-ISIS operation there.

  Given the de-facto collapse of security in the area on the Iraqi side of the border, the Syrian, Iraqi and Iranian-backed forces deployed near al-Bukamal and al-Qaim are now the major factor deterring the terrorists operating there. At the same time, Israel and mainstream Western propaganda argue that al-Bukamal is just the base of the Iranian Islamic Revolutionary Guard Corps and thus must be destroyed.

  While the presence of Iranian-backed forces there is an open secret, attacks on them and their allies, which were repeatedly conducted by Israel and even the US-led coalition, have in fact supported the ISIS agenda.

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• Year Zero
  Year Zero
  Tyler Durden
  Wed, 12/16/2020 – 23:50

  Authored (mostly satirically) by CJ Hopkins via The Consent Factory,

  2020 was GloboCap Year Zero. The year when the global capitalist ruling classes did away with the illusion of democracy and reminded everyone who is actually in charge, and exactly what happens when anyone challenges them.

  

  In the relatively short span of the last ten months, societies throughout the world have been transformed beyond recognition. Constitutional rights have been suspended. Protest has been banned. Dissent is being censored. Government officials are issuing edicts restricting the most basic aspects of our lives … where we can go, when we can go there, how long we are allowed to spend there, how many friends we are allowed to meet there, whether and when we can spend time with our families, what we are allowed to say to each other, who we can have sex with, where we have to stand, how we are allowed to eat and drink, etc. The list goes on and on.

  The authorities have assumed control of the most intimate aspects of our daily lives. We are being managed like inmates in a prison, told when to eat, sleep, exercise, granted privileges for good behavior, punished for the slightest infractions of an ever-changing set of arbitrary rules, forced to wear identical, demeaning uniforms (albeit only on our faces), and otherwise relentlessly bullied, abused, and humiliated to keep us compliant.

  None of which is accidental, or has anything to do with any actual virus, or any other type of public health threat.

  Yes, before some of you go ballistic, I do believe there is an actual virus, which a number of people have actually died from, or which at least has contributed to their deaths … but there is absolutely no evidence whatsoever of any authentic public health threat that remotely justifies the totalitarian emergency measures we are being subjected to or the damage that is being done to society. Whatever you believe about the so-called “pandemic,” it really is as simple as that. Even if one accepts the official “science,” you do not transform the entire planet into a pathologized-totalitarian nightmare in response to a health threat of this nature.

  The notion is quite literally insane.

  

  GloboCap is not insane, however. They know exactly what they are doing … which is teaching us a lesson, a lesson about power. A lesson about who has it and who doesn’t. For students of history it’s a familiar lesson, a standard in the repertoire of empires, not to mention the repertoire of penal institutions.

  The name of the lesson is “Look What We Can Do to You Any Time We Fucking Want.” The point of the lesson is self-explanatory. The USA taught the world this lesson when it nuked Hiroshima and Nagasaki. GloboCap (and the US military) taught it again when they invaded Iraq and destabilized the entire Greater Middle East. It is regularly taught in penitentiaries when the prisoners start to get a little too unruly and remember that they outnumber the guards. That’s where the “lockdown” concept originated. It isn’t medical terminology. It is penal institution terminology.

  As we have been experiencing throughout 2020, the global capitalist ruling classes have no qualms about teaching us this lesson. It’s just that they would rather not to have to unless it’s absolutely necessary. They would prefer that we believe we are living in “democracies,” governed by the “rule of law,” where everyone is “free,” and so on. It’s much more efficient and much less dangerous than having to repeatedly remind us that they can take away our “democratic rights” in a heartbeat, unleash armed goon squads to enforce their edicts, and otherwise control us with sheer brute force.

  People who have spent time in prison, or who have lived in openly totalitarian societies, are familiar with being ruled by brute force. Most Westerners are not, so it has come as a shock. The majority of them still can’t process it. They cannot see what is staring them in the face. They cannot see it because they can’t afford to see it. If they did, it would completely short-circuit their brains. They would suffer massive psychotic breakdowns, and become entirely unable to function, so their psyches will not allow them to see it.

  Others, who see it, can’t quite accept the simplicity of it (i.e., the lesson being taught), so they are proposing assorted complicated theories about what it is and who is behind it … the Great Reset, China, the Illuminati, Transhumanism, Satanism, Communism, whatever. Some of these theories are at least partially accurate. Others are utter bull-goose lunacy.

  They all obscure the basic point of the lesson.

  

  The point of the lesson is that GloboCap – the entire global-capitalist system acting as a single global entity – can, virtually any time it wants, suspend the Simulation of Democracy, and crack down on us with despotic force. It can (a) declare a “global pandemic” or some other type of “global emergency,” (b) cancel our so-called “rights,” (c) have the corporate media bombard us with lies and propaganda for months, (d) have the Internet companies censor any and all forms of dissent and evidence challenging said propaganda, (e) implement all kinds of new intrusive “safety” and “security” measures, including but not limited to the physical violation of our bodies … and so on. I think you get the picture. (The violation of our bodies is important, which is why they love “cavity searches” in prison, and why the torture-happy troops at Abu Ghraib were obsessed with sexually violating their victims.)

  And the “pandemic” is only one part of the lesson. The other part is being forced to watch (or permitted to watch, depending on your perspective) as GloboCap makes an example of Trump, as they made examples of Corbyn and Sanders, as they made examples of Saddam and Gaddafi, and other “uncooperative” foreign leaders, as they will make an example of any political figurehead that challenges their power. It does not matter to GloboCap that such political figureheads pose no real threat. The people who rally around them do. Nor does it make the slightest difference whether these figureheads or the folks who support them identify as “left” or “right.” GloboCap could not possibly care less. The figureheads are just the teaching materials in the lesson that they are teaching us.

  And now, here we are, at the end of the lesson … not the end of the War on Populism, just the end of this critical Trumpian part of it. Once the usurper has been driven out of office, the War on Populism will be folded back into the War on Terror, or the War on Extremism, or whatever GloboCap decides to call it … the name hardly matters. It is all the same war.

  Whatever they decide to call it, this is GloboCap Year Zero. It is time for reeducation, my friends. It is time for cultural revolution. No, not communist cultural revolution … global capitalist cultural revolution. It is time to flush the aberration of the last four years down the memory hole, and implement global “New Normal” Gleichschaltung, to make sure that this never happens again.

  Oh, yes, things are about to get “normal.” Extremely “normal.” Suffocatingly “normal.” Unimaginably oppressively “normal.” And I’m not just talking about the “Coronavirus measures.” This has been in the works for the last four years.

  Remember, back in 2016, when everyone was so concerned about “normality,” and how Trump was “not normal,” and must never be “normalized?” Well, here we are. This is it. This is the part where GloboCap restores “normality,” a “new normality,” a pathologized-totalitarian “normality,” a “normality” which tolerates no dissent and demands complete ideological conformity.

  From now on, when the GloboCap Intelligence Community and their mouthpieces in the corporate media tell you something happened, that thing will have happened, exactly as they say it happened, regardless of whether it actually happened, and anyone who says it didn’t will be labeled an “extremist,” a “conspiracy theorist,” a “denier,” or some other meaningless epithet. Such un-persons will be dealt with ruthlessly. They will be censored, deplatformed, demonetized, decertified, rendered unemployable, banned from traveling, socially ostracized, hospitalized, imprisoned, or otherwise erased from “normal” society.

  You will do what you are told. You will not ask questions. You will believe whatever they tell you to believe. You will believe it, not because it makes any sense, but simply because you have been ordered to believe it. They aren’t trying to trick or deceive anybody. They know their lies don’t make any sense. And they know that you know they don’t make any sense. They want you to know it. That is the point. They want you to know they are lying to you, manipulating you, openly mocking you, and that they can say and do anything they want to you, and you will go along with it, no matter how insane.

  If they order you to take a fucking vaccine, you will not ask what is in the vaccine, or start whining about the “potential side effects.” You will shut up and take the fucking vaccine.

  If they tell you to put a mask on your kid, you will put a fucking mask on your fucking kid. You will not go digging up Danish studies proving the pointlessness of putting masks on kids.

  If they tell you the Russians rigged the election, then the Russians rigged the fucking election.

  And, if, four years later, they turn around and tell you that rigging an election is impossible, then rigging an election is fucking impossible.

  It isn’t an invitation to debate. It is a GloboCap-verified fact-checked fact.

  You will stand (or kneel) in your designated, color-coded, social-distancing box and repeat this verified fact-checked fact, over and over, like a fucking parrot, or they will discover some new mutant variant of virus and put you back in fucking “lockdown.” They will do this until you get your mind right, or you can live the rest of your life on Zoom, or tweeting content that no one but the Internet censors will ever see into the digital void in your fucking pajamas. The choice is yours … it’s is all up to you!

  Or … I don’t know, this is just a crazy idea, you could turn off the fucking corporate media, do a little fucking research on your own, grow a backbone and some fucking guts, and join the rest of us “dangerous extremists” who are trying to fight back against the New Normal. Yes, it will cost you, and we probably won’t win, but you won’t have to torture your kids on airplanes, and you don’t even have to “deny” the virus!

  That’s it … my last column of 2020. Happy totalitarian holidays!

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• Anti-Cop Climate Sparks NYPD Exodus 
  Anti-Cop Climate Sparks NYPD Exodus 
  Tyler Durden
  Wed, 12/16/2020 – 23:30

  The NYPost has learned the anti-cop climate, underwhelming pay, and out of control violent crime in New York City have resulted in police officers’ exodus. 

  Approximately 50 NYPD officers left their jobs in Nassau County last Friday. Many of them were on the job for less than five years. 

  

  The departure comes as thousands of city cops have already quit or retired. 

  Police Commissioner Dermot Shea said the NYPD needs 900 new police officers.

  Uniformed NYPD officers fell to 34,184 this year – down from 36,900 last year, a loss of more than 2,700.

  Suppose politicians in the metro area don’t quit bashing the police and their campaign to defund the NYPD. In that case, the exodus is expected to dangerously increase, one where decreased patrols could be seen, which would transform some neighborhoods into violent areas, such as ones seen in Baltimore and Detroit.

  New York City has already experienced gun violence levels ‘unseen in years’ with shootings in November up by more than 112% compared with the same month last year.

  The surge in gun violence in NYC since June coincides with the NYPD’s decision to eliminate its plain-clothes anti-crime unit that focused on retrieving illegal guns. That decision came after the death of George Floyd in Minneapolis. 

  Shea recently said the surge in violent crime across the five boroughs this summer came after NYPD’s budget was reduced by $1 billion. 

  “It certainly had a significant impact,” Shea told FOX Business’, Maria Bartiromo. “You think back, crime follows certain patterns and trends. Certainly, we see upticks of violence in the summer. … To have this crazy time happen this year, certainly, and leading to a defunding, it’s really hurt.”

  NYC Shooting Victims 

  

  NYC Shooting Incidents 2019 vs. 2020

  

  NYC Murders 

  

  While violent crime is surging, the levels of crime is nowhere near what it was in the early 1990s – though the move to defund police is undoubtedly creating an environment that could return the city to a violent mess. 

  Simultaneously, another exodus is underway, one where city dwellers are fleeing to rural communities as they deem the metro area no longer safe to raise a family. 

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• Why People Don't Trust Pfizer's COVID Vaccine
  Why People Don’t Trust Pfizer’s COVID Vaccine
  Tyler Durden
  Wed, 12/16/2020 – 23:10

  Authored by Antony Sammeroff via The Mises Institute,

  Why do people believe in conspiracy theories?

  

  Michael Shermer, a famous skeptic, was forced to admit that one of the reasons is that some of them are true. In his research he found that the fact that some conspiracy theories are real feeds people’s suspicion and makes them susceptible to the belief in others that are far less credible.

  We are increasingly herded into taking a hard line on issues which are nuanced. One example of this is an apparent increase in two camps: some people are entirely against mainstream medicine while others will bend over backwards to mount an extreme defense of the indefensible excesses of Big Pharma.

  Drugs save lives. Drugs are dangerous. These should not be controversial statements, nor do they contradict one another. According to the American Medical Association’s own figures, medical care has become the third leading cause of death in the United States, yet few would advocate a return to a time before we had modern medical care.

  When the government is buying the drug no matter what and those companies are protected from liability for damages that may be caused by those drugs, it ceases to be surprising that people may question whether what is being offered up to them is safe or not.

  One of the reasons why people believe in conspiracy theories about Big Pharma is because some of them are true.

  Some of Pfizer’s History

  A 2004 advert for Zoloft claimed that over 16 million Americans were affected by social anxiety disorder. But here’s the thing: a study conducted by Pfizer (the manufacturer) discovered that participants did a lot better overcoming social anxiety with “exposure therapy,” including counseling with a primary care doctor about their symptoms and homework to learn how to identify and break through social habits and fears, than people who took their drug.

  When the Upjohn Company (now Pfizer) developed Minoxidil, a drug that was originally manufactured to lower blood pressure, they found that it could cause hair regrowth in some balding patients. So they simply switched the marketed effect for the so-called side effect, and they had a drug for balding which just so happened to lower blood pressure.

  The ALLHAT Study (Antihypertensive and Lipid-Lowering Treatment to Prevent Heart Attacks Trial), was intended to compare the effectiveness of four drugs in preventing complications form high blood pressure. It was originally intended to continue for between four and eight years, but part of it was stopped prematurely because those participants assigned to Cardura (manufactured by Pfizer) were developing significantly more cardiovascular complications than those taking a diuretic. At the time the results were published in JAMA (Journal of the American Medical Association), about $800 million worth of Cardura was being sold each year—but the diuretic was proving more effective at preventing high blood pressure complications at a seventh of the cost. Taking advantage of the fact that most doctors weren’t aware of the research, Pfizer hired damage-control consultants. The American College of Cardiology (ACC) issued a press release recommending that doctors “discontinue use” of Cardura but mere hours later downgraded its wording to “reassess.” Could this be something to do with Pfizer contributing more than $500,000 a year to the ACC?

  Whoever funds the study comes out on top. Companies commonly use positive results from head-to-head trials to encourage doctors to prescribe their drug rather than a competitor’s. When the authors of a Journal of Psychiatry survey looked at the trials, they found a curious thing: in five trials that were paid for by Eli Lilly, its drug Zyprexa came out looking superior to Risperdal, a drug made by the company Janssen. But when Janssen sponsored its own trials, Risperdal was the winner three out of four times. When it was Pfizer funding the studies, its drug Geodon was best. In fact, this tendency for the sponsor’s drug to come out on top held true for 90 percent of the more than thirty trials in the survey.

  A 2017 article noted that “prices for U.S. made pharmaceuticals have climbed over the past decade six times as far as the cost of goods and services overall.” In a famous case Mylan was able to increase the price of the EpiPen by more than 450 percent, adjusting for inflation, between 2004 and 2016 – despite the epinephrine in each injection costing only around $1 – because they were the only legal supplier of the product. This example, while extreme, is unfortunately not exceptional. Pfizer, Biogen, Gilead Sciences, Amgem, AbbieVie, Turing Pharmaceutical, Envizo, Valeant Pharmaceuticals, and Jazz Pharmaceuticals (to name a few) all seem to have benefited from price gouging by obtaining legally protected monopoly power over certain healthcare products.

  The covid-19 vaccine manufactured by Pfizer – having bypassed the usual 5–10 years of safety testing – may well be completely harmless, but so long as this kind of tomfoolery continues to be common within the medical field we can expect ever more skeptical people to be labeled by their critics as “antivaxx.”

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• Biden Names As "Climate Czar" Former EPA Chief Blamed For Flint Water Crisis
  Biden Names As “Climate Czar” Former EPA Chief Blamed For Flint Water Crisis
  Tyler Durden
  Wed, 12/16/2020 – 22:50

  Joe Biden will name Gina McCarthy as his White House “climate czar“, making the former head of the Environmental Protection Agency his top domestic climate coordinator. The news sparked outrage among those who pointed out that agency’s failures during the Flint water crisis.

  

  The criticism rained from all both sides of the aisle, as well as from activists. According to the Detroit Free Press, LeeAnne Walters, an environmental activist from Flint who first brought attention to the lead problem, told NBC 25 in Saginaw that the expected appointment was “absolutely appalling” and “a huge injustice to everyone in Flint and everything that we’ve suffered.”

  Former Republican Rep. Jason Chaffetz, criticized Biden as “oblivious about Flint,” given that he is “empowering Gina McCarthy again.”

  “She was a disaster at EPA, and now he is bringing her back for more,” Chaffetz said in a post on Twitter on Tuesday night. “Michigan, your votes mattered, and Biden is bringing Flint water to all of us.”

  Biden is so oblivious about Flint, Michigan water that he is empowering Gina McCarthy again. She was a disaster at EPA, and now he is bringing her back for more. Michigan, your votes mattered, and Biden is bringing Flint water to all of us. #Flint

  — Jason Chaffetz (@jasoninthehouse) December 15, 2020

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

  At the time of the Flint water crisis, where lead from aging pipes leached into the city’s water system after it changed its water source, Chaffetz was the chairman of the House Oversight Committee, which held hearings on the issue.

  Chaffetz wasn’t the only one to object. “The people of Michigan won’t soon forget Gina McCarthy’s mishandling of and failure to adequately respond to the Flint water crisis as EPA administrator,” U.S. Rep. Tim Walberg, a Tipton Republican and a former member of the committee who took part in the Flint hearings,  told the Free Press Wednesday morning. “That ineptness alone is reason enough to disqualify her from a senior role, but her push for higher energy taxes and heavy-handed government regulations is also concerning for consumers.”

  Democrats also chimed in: Rep. Dan Kildee, a Democrat from Flint Township who is a supporter of Biden’s, issued a statement Wednesday afternoon, noting deep doubts about the choice. While thanking Biden for taking climate change so seriously, Kildee – who was a sharp critic of both the state’s and federal government’s roles in causing the Flint water crisis –  said he’d heard from several Flint residents who “expressed their concerns to me about this appointment and I have relayed their concerns to (Biden’s transition team).”

  “While the position of White House climate coordinator does not require confirmation by Congress, we must never forget the failures of the Flint water crisis,” said Kildee, who led efforts to require faster public notifications of high levels of lead in water systems and to approve funding to replace lead water pipes in the wake of the crisis. “All levels of government, including the state of Michigan and the Environmental Protection Agency, failed Flint families.”

  While former Michigan Gov. Rick Snyder, a Republican, shouldered much of the blame in hearings on the crisis for overseeing an administration that did not require corrosion control measures that could have limited the spread of lead, the U.S. Environmental Protection Agency under McCarthy had also clearly known for months that corrosion controls weren’t being used before it finally stepped in to force compliance.

  “I’m sorry, Mr. Chairman, you can only take so much,” the normally placid Snyder said at a hearing on the Flint crisis before the Oversight Committee in March 2016 after McCarthy again insisted sole responsibility for the crisis was the state’s, despite emails showing the EPA was aware corrosion controls weren’t being used and its own experts were warning officials of the danger.

  As Free Press stories at the time showed, emails from at least one expert, EPA Region 5 Regulations Manager Miguel Del Toral, showed him warning officials about high levels of lead at one residence in Flint that could be indicative of larger problems after the city had switched to draw water from the Flint River in February 2015.

  It took months before the EPA forced the state to act and nearly a year before Snyder and the Obama administration declared states of emergency in Flint.

  Once high lead levels began to be found in September 2015, Del Toral wrote an e-mail to other EPA officials saying, “This is no surprise. Lead lines + no treatment = high lead in water = lead poisoned children.” But McCarthy and other EPA officials suggested state officials with the Michigan Department of Environmental Quality refused to move more quickly on recommendations by the agency and that there wasn’t enough evidence of a widespread problem to implement a more urgent approach.

  At the time, an exhaustive look at EPA emails by the Free Press found that agency officials knew of the potential dangers and pressed the state to move but waited months for legal advice before issuing a memo, in November 2015, that made it clear corrosion controls were required. It would take two more months before the EPA formally stepped in to take over the response to the crisis in Flint.

  Her dismal job as former EPA head notwithstanding, the expected nomination of McCarthy was praised by people in the environmental community, however.  An official at the League of Conservation Voters, Tiernan Sittenfeld, praised McCarthy as a “true climate star,” while Lisa Ramsden, senior climate campaigner for Greenpeace, called McCarthy “a seasoned environmental advocate.”

  After leaving the EPA, McCarthy became president and chief executive officer of the National Resources Defense Council, an environmental action organization based in Washington.

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• "The Fraud Happened" – Senator Rand Paul Accuses States Of Using COVID To Steal Election
  “The Fraud Happened” – Senator Rand Paul Accuses States Of Using COVID To Steal Election
  Tyler Durden
  Wed, 12/16/2020 – 22:30

  Authored by Joseph Jankowski via PlanetFreeWill.com,

  Senator Rand Paul accused Georgia and other states of using the COVID-19 pandemic to steal the election in a move he says could have came from the playbook of Obama Chief of Staff, Rahm Emanuel, who famously said, “you never want a serious crisis to go to waste.”

  Appearing on Fox News prior to the Wednesday Senate hearing on election irregularities, Senator Paul was asked how revelations, such as the one out of Georgia showing more than 1,700 voters illegally submitted two ballots during the Nov. 3 contest, would effect the upcoming runoff elections in the Empire State of the South.

  Paul would respond, saying: “You’d think that all of this would be investigated and tried to be fixed before the election.”

  The Senator went on to run off a list of voter fraud examples in Georgia, including the 1,700 double votes, votes from commercial addresses, and dead voters casting ballots.

  He also pointed to potential illegal voting activity in Nevada:

  “We’re going to hear testimony from Nevada where 15 hundred people were deceased and should not have voted, four thousand people were illegal aliens, and 15 thousand people voted from commercial address when you have to vote from a home address.”

  Echoing the case laid out by Texas Attorney General Ken Paxton in his recently dismissed Supreme Court lawsuit, Paul accused states of using the COVID-19 crisis to dodge state and federal election law, comparing the move to a play right out of the Obama, Rahm Emanuel playbook:

  “It’s sort of Obama, Rahm Emanuel’s playbook. They took the crisis of COVID and then they changed election law … not by changing law at the state legislature, they had secretaries of state and or governors simply by fiat change the law to say ‘oh you can keep counting votes’ when the law did say that. So, this election really was stolen in a way and it was stolen because people changed the law …”

  Shortly after his appointment as Obama’s Chief of Staff, former Chicago Mayor Rahm Emanuel famously uttered the words “You never want a serious crisis to go to waste” during a corporate panel sponsored by the Wall Street Journal.

  “What I mean by that is never allow a good crisis to go to waste when it’s an opportunity to do things that you had never considered, or that you didn’t think were possible,” Emanuel would explain at the time.

  Trump Campaign Attorney, Jesse Binnall, would laid out similar accusations of voter fraud to those given by Senator Paul during the Wednesday Senate hearing.

  See Binnall’s opening statement below:

  But, Senator Paul was not done, as Douglas Braff reports via SaraACarter.com, during today’s Senate hearing examining irregularities during 2020 presidential election the Kentucky Republican claimed:

  “The fraud happened. The election in many ways was stolen…And the only way it’ll be fixed is by, in the future, reinforcing the laws.”

  Rand Paul: “The fraud happened. The election in many ways was stolen.” pic.twitter.com/LyUPp1Oebp

  — Jack Posobiec 🇺🇸 (@JackPosobiec) December 16, 2020

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  “But I think [Kreb’s] job was keeping the foreigners out of the election. It was the most secure election based on the security of the internet and technology, but he has never voiced an opinion […] on whether or not dead people voted—I don’t think he examined that,” Paul said toward the end of his speaking time, then questioning if Krebs examined non-citizens’ voting.

  Many Republicans, in alleging that widespread election fraud occurred in the 2020 election, have often cited claims that a lot of dead people and non-citizens voted. The over 50 lawsuits challenging the results of the election in certain swing states alleging election fraud have overwhelmingly failed in the courts.

  “So to say it was the safest election—sure, I agree with your statement if you’re referring to foreign intervention,” Paul continued.

  “But if you’re saying it’s the safest election based on no dead people voted, no non-citizens voted, no people broke the absentee [ballot] rules, I think that’s false and I think that’s what’s upset a lot of people on our side is that they’re taking your statement to mean ‘Oh, there were no problems in the elections.’”

  “I don’t think you examined any of the problems that we’ve heard here,” he added, “so really you’re just referring to something differently, the way I look at it.”

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• Violent Crime Rate Doubles On Chicago Rail System, Even With Stepped-Up Police And Far Fewer Riders
  Violent Crime Rate Doubles On Chicago Rail System, Even With Stepped-Up Police And Far Fewer Riders
  Tyler Durden
  Wed, 12/16/2020 – 22:10

  The rate of violent crime on Chicago Transit Authority (CTA) trains and platforms has more than doubled this year, even though the number of riders has dramatically dropped and Chicago police have stepped up patrols and surveillance, according to a Tribune analysis of police and CTA data, Mass Transit Mag reported.

  Ridership this year on the “L” system has been down 61% through September compared with the same period in 2019, according to the CTA. In some months during the spring and summer, it was down more than 85%. And while the absolute number of crimes has dropped, too, but not nearly as much as ridership. That means those left riding the system saw a jump in their odds of becoming a victim to a crime on the “L” or at CTA platforms and stations.

  

  From Jan. 1 through Sept. 30, there were roughly 6 violent crimes and 9 nonviolent crimes per 1 million rides on the “L.” The nonviolent crime rate saw a slight uptick, but the violent crime rate has more than doubled from last year, when both types of crime on the CTA rail system reached their highest levels of the decade. Brian Steele, CTA’s vice president of communications, said the level of serious crime is in line with transit agencies nationwide. CTA officials meet and communicate with police regularly “to help prevent and respond to crimes,” he added.

  Matthew Cline, the Chicago Police Department’s commander of public transportation, said even though there was a drastic decrease in CTA ridership during the coronavirus pandemic, “the people that are driving the crime never left the system.”

  “People that are engaging in crimes and gang members — they’re not observing the stay-at-home order as much as most other folks,” Cline said. “So whereas a lot of the working people left the system, a lot of the criminals that prey on people did not. So that’s where, honestly, some of our crime didn’t decrease at a rate that we would’ve liked to have seen.”

  The Tribune analyzed CTA ridership numbers and reports of crimes considered serious enough to report to the FBI as “index” crimes, from pick-pocketing to robbery and sexual assault. Of these, cases deemed violent included robberies, homicides and more aggressive assaults and batteries. The analysis focused on crimes reported in the city of Chicago, which covers the vast majority of the CTA system.

  The analysis found that the raw number of crimes on the CTA rail system this year through September was lower than previous years, with police reporting 940 serious crimes, 375 of them violent. That compares with 1,794 serious crimes — 415 of them violent — through September 2019. But with roughly 63 million rides on the “L” this year compared with nearly 165 million during the same period last year, the number of crimes points to a troubling surge in the rate of offenses.

  The increase also comes after Chicago police added about 50 officers to CTA trains and platforms this spring, bringing the total number of officers assigned to patrol the “L” to about 200. Police officials also opened a new strategic decision support center in June to monitor video of CTA properties in real time. Cline said there are seven dedicated detectives analyzing live footage of CTA properties, which has been a “game changer” in gathering better evidence and putting cases together. The CTA has about 32,000 cameras on its network, including in every rail station, bus and train car.

  But deterring those crimes from happening is another issue. Cline said COVID-19 has complicated police efforts since jails aren’t holding as many people, and many of those committing crimes on the rail system are repeat offenders.

  “We’re arresting some people four or five times,” Cline said. “That’s kind of a struggle across the system.”

  While the arrest rate for nonviolent crimes has dropped slightly from about 4.8% to 4.1%, the initiatives may have contributed to a higher arrest rate for violent crimes this year. The arrest rate for violent crimes on the “L” through September was about 21.8%, an increase of about 3.2% from the same period last year.

  Violent crimes reported on the rail system through September included at least 283 robberies, 53 aggravated cases of battery, 33 serious cases of assault, four homicides and two criminal sexual assaults. Homicide cases had the highest percentage of arrests, with three of the four resulting in at least one arrest.

  The rise in the crime rate came as no surprise to Dagan Douglas, 24, a South Side native who rides the Red Line nearly every day to work. On Nov. 27, Douglas was a witness to an argument between two men who didn’t seem to know each other at the Jackson Red Line station in the Loop. The altercation turned violent, and one man tossed the other in front of an oncoming train, seriously injuring him, according to a police report. No arrests have been made, and police have not released any video and photos of the attack or the suspect.

  The fight was the most violent Douglas has seen on the CTA, but he said it wasn’t shocking. He said he sees petty crimes regularly on the CTA that “can easily escalate into violence with the wrong reactions.”

  “This sort of thing is starting to become increasingly common, so when I see an incident, it doesn’t really register with me all that much,” Douglas said.

  Chicago police do not specifically list which crimes occur at or near which stations, and while the department provides addresses and mapping coordinates, they are approximate. Still, the Tribune was able to analyze this data to determine which stations were closest to the reported crimes.

  As of Nov, 23, there were about 14 violent crimes this year at the Jackson Red Line station, making the stop one of the most violent in Chicago. It is behind only the Roosevelt station in the South Loop, which had about 22 violent crimes, and the Blue Line’s Pulaski stop in East Garfield Park, which had about 19.

  The Red Line’s Chicago stop on the Near North Side had the fourth most violent crimes with about 13, followed by the Howard stop in Rogers Park, the Belmont stop in Lakeview and the 79th station on the Red Line in Chatham, which each had about nine.

  Some stations, such as Clark and Lake in the Loop, saw high rates of nonviolent but still serious offenses, such as theft. Though the department places more officers on fixed posts when it notices a spike in crimes, Cline said it’s harder to stop offenses at “massive stations” such as the Jackson Red Line, which has multiple tunnels and platforms spread across one area.

  “There’s just a lot of geography to cover, so it does pose challenges,” Cline said. “I’d like to have more officers in some of these spots, but there’s just a lot of crime.”

  Cline said the department’s focus this year has been on robberies and violent crimes. He added that the department is making better use of technology, but there’s still work to be done, including on homicide cases and in handling issues involving mental illness on the CTA rail system. “We’re early on this,” Cline said. “Obviously, we like the direction we’re going in. We’re not satisfied yet, and I don’t think we’ll ever fully be satisfied, but we do feel like the approach we’re taking now is the right approach.”

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• Woke Crusaders Strip Great Emancipator Lincoln's Name From SF High School Because "Black Lives Never Mattered To Him"
  Woke Crusaders Strip Great Emancipator Lincoln’s Name From SF High School Because “Black Lives Never Mattered To Him”
  Tyler Durden
  Wed, 12/16/2020 – 21:50

  It looks like the leaders of San Francisco’s unified school district are preparing to scratch the name of former American President Abraham Lincoln off of one of their schools.

  The reason?

  Lincoln wasn’t “sufficiently woke”.

  No words better capture the lack of intellectual and historical content of much of the cancel culture sweeping the nation that the following:

  “We did not belabor the point.”

  As Jonathan Turley writes, it was the response of Jeremiah Jeffries, the Chair of the San Francisco School Names Advisory Committee. The Committee has recommended the renaming of Abraham Lincoln High School as well as targeting the George Washington High School, Herbert Hoover Middle School and Paul Revere K-8. 

  

  Even an elementary school named after Dianne Feinstein is being targeted. This is not the first such effort around the country that focused on Lincoln. We recently discussed the effort of University of Wisconsin college students to remove the prominent statue of Lincoln on campus as not sufficiently “pro black”and a single-handed symbol of white supremacy.” 

  Jeffries declared “Lincoln, like the presidents before him and most after, did not show through policy or rhetoric that Black lives ever mattered to them outside of human capital and as casualties of wealth building.”

  

  This is the signer of the Emancipation Proclamation, the vocal advocate for the 13th Amendment, and the man assassinated for his war against the South and slavery.  The reason such culture cancel efforts succeed is that academics and others are intimidated from challenging such ahistorical and unhinged views.

  Jeffries is a first-grade teacher who also co-founded Teachers 4 Change and Teachers 4 Social Justice. He has been a vocal supporter of Bernie Sanders and Congresswomen Alexandria Ocasio-Cortez and Ilhan Omar. However, some liberal politicians like San Francisco Mayor London Breed have opposed the effort.

  The  Committee emphasized Lincoln’s treatment of Native Americans, which we have previously discussed. One issue that was raised is that Lincoln ordered the execution of 38 Dakota men and signed the Homestead Act, which gave settlers land forcibly taken from Native Americans.

  Lincoln’s role in the Dakota executions is legitimately controversial but has been presented without some countervailing facts.  The Sioux or Dakota uprising occurred not long after Minnesota became a state and involved the death of hundreds of settlers.  The Army crushed the Sioux and captured hundreds.  A military tribunal sentenced 303 to death for alleged crimes against civilians and other crimes.  The trial itself was a farce with no real representation or reliable evidence.  Lincoln reviewed the transcripts of the 303 and told the Senate:

  “Anxious to not act with so much clemency as to encourage another outbreak on one hand, nor with so much severity as to be real cruelty on the other, I ordered a careful examination of the records of the trials to be made, in view of first ordering the execution of such as had been proved guilty of violating females.”

  However, only two men were found guilty of rape and Lincoln later expanded the criteria to include those who participated in “massacres” of civilians as opposed to battles with the Army.

  Lincoln however commuted the sentence of 264 of the 303 convicted.

  I have heavily criticized Lincoln for the unconstitutional suspension of habeas corpus and the loss of free speech rights as well as other decisions. However, historical figures often have such conflicted elements that can be discussed and understood in context as we did recently with a pre-revolutionary hero.

  Dianne Feinstein is being targeted because she allegedly flew a Confederate flag at City Hall when she was mayor. It is an ironic moment as those who have supported (or declined to condemn) the cancel culture become targets of it. As discussed earlier, As proven by the French Revolution, today’s revolutionaries are tomorrow’s reactionaries — or victims.  We also saw recently as Democrats called for blacklisting anyone “complicit” in the Trump years, including those connected with the Lincoln Project despite the vicious attacks launched by the Project  against Republicans.  Indeed, these hair-triggered attacks are why most academics have remained conspicuously silent in the face of a wholesale attack on free speech and academic freedom on our campuses.

  In the case of Feinstein, her standing with the left seemed to plummet when she exhibited civility toward a Republican colleague by hugging Senate Judiciary Committee chair Lindsey Graham after the Barrett confirmation hearing. That simply hug sent the left into orbit and soon thereafter stories began to appear calling for her resignations and saying that she was no longer mentally competent.

  What is striking is that Jeffries held out the possibility of a type of political reeducation for Feinstein:

  “On a local level Dianne Feinstein chose to fly a flag that is the iconography of domestic terrorism, racism, white avarice and inhumanity towards Black and Indigenous people at the City Hall.  She is one of the few living examples on our list, so she still has time to dedicate the rest of her life to the upliftment of Black, First Nations and other people of color. She hasn’t thus far.”

  Just for the record, flag allegation occurred decades ago.

  She was first elected to the San Francisco Board of Supervisors in 1969 – over 50 years ago.

  But, of course, “we [do] not belabor the point” of such announcements.

  They are to be simply accepted as manifestly true unless you want to be the next accused of “white avarice and inhumanity.”

  This would seem ample proof of the statement that:

  “America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.”

  Guess who said that.

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• China Is Still Miles Behind Phase 1 Trade Deal Targets
  China Is Still Miles Behind Phase 1 Trade Deal Targets
  Tyler Durden
  Wed, 12/16/2020 – 21:30

  By Michiel van der Veen

  Phase One Monitor: A December Update

  Summary

  • Despite reversing the downward trend in September and October, China is still miles behind the target of USD 230bn set out for imports of US goods and services in 2020
  • China already fell short by USD 78 billion in the first 10 months of 2020 and only has two months to crank up imports by an additional USD 104 billion
  • There is a clear divergence on the progress towards targets for agricultural and energy imports, and manufacturing and services imports.
  • We expect that the future Biden administration will not adopt a softened stance on US trade with China
  • Before the inauguration ceremony in January, Trump might pull the plug from the Phase One deal to cement his legacy as being the ‘only president that stood up against China’
  • China is preparing for further bilateral tensions by adopting an export control law

  China is still miles behind target

  This report provides an update of our Phase One Monitor (POM), which keeps track of China’s progress towards the targets set out in in the Phase One trade deal signed in January 2020. Specifically, China pledged to import an additional USD 200 billion worth of US goods and services by 2021 (compared to 2017 levels).

  

  Despite reversing the downward trend in September and October, China is still miles behind the target of USD 230bn set for imports of US goods and services in 2020 (Figure 1). Between October 2019 and October 2020, China imported USD 125bn of goods and services covered by the Phase One deal.1 This means China already fell short by USD 78bn in the first 10 months of 2020 and only has two months to crank up the import of goods and services by USD 104bn. Given that the year is almost out, it seems all but impossible that China will reach the 2020 target for imports of US goods and services.

  Developments by product group

  When shifting our focus to the individual product groups, we observe diverging trends. Agricultural and energy imports are closing in on the target, while manufacturing imports have been stagnant and services imports are even exhibiting a downtrend.

  Energy and agriculture

  China’s import of US energy products maintained upward momentum (increasing from USD 6.1bn to 7.3bn) but is still far off the USD 24bn target set for 2020 (Figure 2). The increase in US energy exports to China is mainly driven by crude oil (Figure 3). China’s ramping up on oil is closely linked to the recovery from the COVID-19 crisis. But it could also be explained by China’s strategic goal of becoming more self-reliant, which requires stockpiling of commodities that China lacks.

  

  China’s demand for US agricultural goods also increased significantly in September and October to USD 22bn, but this too is well below the target agreed upon in the Phase One deal (of USD 33bn, see Figure 4). A substantial percentage of China’s higher imports of US agricultural goods is driven by soybean import (Figure 5). Demand for US soybeans slipped in 2018 and 2019 when China’s pig herd was struck by African swine fever. Soybean exports reached peak levels seen before 2018 despite the herd rebuilding was in very good progress. China also started to import more other agricultural products, such as grains and cotton. Ultimately, from the perspective of energy and agricultural goods, we clearly see that China is making an effort to follow up on the agreements in the Phase One deal.

  

  Manufacturing and services

  China has made little progress towards the target when it comes to imports of US services and manufacturing goods (Figure 6 and 7). Annual US manufacturing exports (USD 56bn) to China are still below the level seen before the Phase One deal was signed. Import of US aircrafts (both order and deliveries) and vehicles have contracted since the deal was signed at the beginning of the year, although the decline in vehicle trade seems to have bottomed out.

  On the services front, the trend is the diametric opposite of what it should have been (Figure 7). The annual services import currently stands at USD 40bn, whereas the ultimo 2020 target in the Phase One deal stands at USD 70bn. Admittedly, total US services exports have decreased steeply this year during the corona crisis. Yet, US services exports to China fell even more in Q3 (Figure 9). This is at the least remarkable given the fact that China seems to be closest to a pre-pandemic economy.

  

  

  Looking ahead

  The White House will soon welcome a new resident, but we do not expect the US administration under president Biden to adopt a softened stance on trade with China. There is bipartisan opposition against China’s trade practices. In a recent interview, Biden already stated that he will push back on issues such as intellectual property theft, subsidies to state-owned enterprises and forced technology transfers. He also said he will not immediately roll back tariffs on Chinese goods that were imposed by the Trump administration. Neither is he planning to immediately revoke the Phase One deal that was signed at the beginning of 2020 between the US and China. Beijing has signaled that it wants to renegotiate the Phase One deal when Biden is inaugurated as president, as the import targets in the deal are perceived as unrealistic.

  Will Trump pull the plug?

  There is still a chance that Biden will not even have to decide the fate of the Phase One trade deal. China’s inability to live up to its trade promises in the Phase One deal is the perfect opportunity for Trump to launch a final protectionist push towards China in the final weeks of his presidency. True, agricultural commodity prices (especially soybeans) are at multi-year highs, which means the Phase One deal is probably regarded favorably amongst one of Trump’s core constituencies. That being said, pulling the plug on the trade deal would fit the scorched-earth strategy that Trump has already initiated by, e.g. banning investment in 89 Chinese companies and the travel visa restrictions for Chinese Communist Party (CCP) members from 10 years to one month and single entry.

  The motivation for Trump to strike a final blow against China is that it will cement his legacy as being the ‘only president that stood up against China’. The President runs the risk that Biden will keep the Phase One deal alive and showcase its (future) success as a Democratic achievement. In any case, the tough-on-China stance resonates well with US voters. Moreover, it might give one of his children a head start if they run in later election cycles. Note that both Donald Trump Jr. and Ivanka Trump are popular among Republicans as candidates for future presidential elections.

  China is preparing for further escalation of trade tensions

  Meanwhile, China is also preparing for a further escalation of US-China trade tensions. On December 1, a new export control law came into force in China which grants Beijing power to block exports if it feels that national security or national interests are being threatened. A comprehensive list of goods subject to export controls is not yet available. Even if a product does not end up on the list, China’s government would still be able to impose temporary export controls for up to two years. The export control law could be interpreted as a response to a series of US measures aimed at curbing Chinese tech firms.

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• There Are Three Things That Can Kill The "Perfect Reflation Trade": Lessons From Two World Wars
  There Are Three Things That Can Kill The “Perfect Reflation Trade”: Lessons From Two World Wars
  Tyler Durden
  Wed, 12/16/2020 – 21:10

  By Michael Every of Rabobank

  Merry Christmas, War is Over(?) – A strategic/tactical view of the reflation trade

  “So this is Christmas; And what have you done?
  Another year over; And a new one just begun
  And so this is Christmas; I hope you have fun
  The near and the dear one; The old and the young
  A very Merry Christmas; And a happy New Year
  Let’s hope it’s a good one; Without any fear.”

  –  John Lennon ‘Merry Christmas, War is Over

  Summary

  • The markets are crying out that ‘War is Over’ this Christmas, and pricing for a perfect reflation without any tears

  • History after real wars shows that this confidence is likely to be misplaced unless politicians have really learned their fiscal lessons

  • Tactically, however, we suspect there could be misplaced market fears of inflation in H1 2021

  • Indeed, risk assets can arguably outperform in 2021 unless three key, linked risks are triggered: tighter monetary policy, a swing up in the USD, or too-tight fiscal policy

  V for Victory and for Vaccine

  At the start of 2020 we flagged a devastating global economic impact from Covid-19, if Europe and the US weren’t able to avoid the virus already spreading in Asia. Most of what we feared would occur then occurred: rolling on/off lockdowns, huge voluntary and involuntary restrictions on normal life, a collapse in services and travel, and massive supply-chain shocks.

  This was inevitably going to require massive stimulus, and monetary policy alone wouldn’t suffice in the face of such tectonic supply and demand shock. It was clear government support would be required, and would push fiscal deficits to levels last seen during WW2.

  Moreover, our suspicions that this spending would end up being de facto financed by central banks were also confirmed: extraordinary monetary policy was rolled out or expanded across both developed and developing economies. QE, and even open debt monetization, have become ‘normal’ even in economies one would never have expected, such as Poland and Indonesia.

  Yet even as both lockdowns and the virus continue to rage in many countries, victory may be in sight.

  We have not just one but multiple successful vaccines being rolled out that present the very real possibility of things ‘getting back to normal’ ahead. Indeed, the first member of the public, a 90-year old British lady, was injected with the vaccine on 8 December. Billions will hopefully follow.

  Without any fear, for sure

  Good spirits had already emerged after what looks (barring an unexpected “contested” election) to be US President Biden from 20 January; despite President Trump’s pro-business and pro-market policies, there appears a sense of market relief at the prospect of a more conventional personality in the White House, at least in terms of trade/geopolitics.

  This was even more the case coupled with no Democratic majority emerging in the Senate rather than a ‘Blue Wave’: regardless of who wins the two Georgia senatorial run-offs on 5 January, Democratic control could only come via the deciding vote of the Vice-President, assumed to limit the policy room for manoeuvre for Biden and ensuring policy has to be relatively ‘consensus’.

  ‘War is Over’

  Yet since the announcement of Covid-19 vaccines, markets have been trading as if ‘War is Over’ and a global peace-time boom here. As this Moneyweek front cover states “Prepare your portfolio for a return of the Roaring ’20s”, and indeed:

  • Risk is very much ‘on’;
  • US equity markets continue to reach new record highs;
  • 10-year US Treasury yields have risen to test near 1%;
  • US inflation expectations are up;
  • The USD has fallen against most major FX crosses;
  • Most key commodity prices have jumped; and
  • Net inflows to emerging markets have soared.

  Yet is a “reflation” trade really justified? Our Rates Strategy team’s view of global financialisation continues to argue “No”. In fact, there is an argument to be made that under Covid-19 we have seen years of financialisation condensed into 10 months, with the rich/asset-holders getting far richer and the poor/many workers seeing life become more precarious.

  Rather than re-exploring that theme here, we wish to examine how economic recoveries from actual wars have looked. To do so we need to focus on countries with histories of war and key data: we will use the US and UK. And rather than an in-depth analysis of how quickly or completely the US and UK economies will be able to bounce back from Covid-19, we want to look at how well both recovered in the immediate aftermath of both WW1 and WW2.

  This could be the subject for an entire thesis, but what we want to do is focus on GDP, inflation, and bond yields as a proxy for how rapidly things returned ‘to normal’ – because that is what the market is telling us is about to happen again in 2021 now that the Covid-19 ‘War is over’. What does real post-war history show us?

  Population

  The damage wrought by Covid-19 has been extraordinary. In the US, total loss of life has already exceeded all the military deaths recorded in WW1, and may be above those of WW2 before the end in a worst-case scenario. Compared to the total population, Covid-19 deaths are likely to be around the WW1 level of 0.1% and far below the 0.4% seen in WW2.

  True, the majority of these Covid deaths were of the old and sick not the young and healthy, as in WW1 and WW2. Yet this fails to consider ongoing healthcare costs for many survivors, as Covid-19 can result in many permanent debilitating symptoms – not that WW1 and WW2 did not leave a vast number of young injured, of course.

  In the UK, total Covid deaths also represent around 0.1% of the population. However, this is far less than the 895,000 who were killed in WW1, equal to a staggering 2.1% of the 1918 population, and the 450,000 who died in WW2, equal to 1.0%. As can be seen, the UK suffered far more in both wars than the US. Again, there will also be ongoing healthcare costs to bear for many survivors, of course, but less than after the two World Wars.

  In short, Covid-19 was on the relative scale of WW1 in the US, but was far smaller in the UK, and compared to WW2 in both.

  Economy

  Despite often being dubbed ‘a war’, the quandary of battling Covid-19 is that it requires restraint in economic activity, albeit mostly in services rather than the goods sector.

  In the US, GDP shrank by a record amount in Q2 2020 before rebounding by another record in Q3, but with new lockdowns in Q4 it is likely to end the year with a significant recession; the long-term damage and loss of swathes of small businesses and service-sector jobs is still being tallied. The UK’s Covid-19 recession was still the deepest for 300 years, and the ongoing structural damage to GDP is likely to be similar to that in the US.

  By contrast, WW1 and even more so WW2 saw US production increase massively. The shift to a war economy and vast government military spending was highly stimulatory, and had key spill over effects in many industrial and technological sectors.
  The US also suffered no damage at all to its capital stock given its benign geographic position. It emerged a global superpower, with its post-war debt large but domestically held. (Please see here for a look at the long-run trend in public debt in key economies and how it was dealt with.)

  WW1 and WW2 also saw the UK shift to a war economy, and an initial surge in GDP growth rates as private-sector businesses were co-opted for the war effort. Output was maximized despite domestic consumption being constrained via rationing.

  Notably, the UK still exited both wars in a greatly weakened economic condition, with damaged infrastructure and a loss of both housing and capital stock. It also had enormous public and external debt to service.

  * * *

  US: post-war post-partum

  

  So that’s the backdrop: what about the post-war recovery?

  After WW1, the US did not see a boom but a bust. Over 1919-21 there was a nasty recession as the government rolled back spending and the private sector failed to fill that gap. After WW2 a similar pattern emerged: initially there was a sharp slump as huge public spending into war industries was reversed. Indeed, GDP did not start to pick up strongly until around 1950. There was actually a five year gap before the so-called post-WW2 boom kicked in.

  

  Likewise, US CPI of 20% y/y in WW1 due to a squeeze on key resources was not followed by post-war inflation. Aside from a brief spike in early 1920, the US actually recorded deflation, then low inflation. The ‘Roaring 20s’ did not see CPI roar – and a large part of this was due to the deflationary straitjacket of the gold standard of that time.

  After WW2, inflation was also initially low apart from a one-off jump in 1947 as price and wage controls that had been in place since 1942 were unwound. Once that adjustment had taken place, however, inflation remained constrained until the growth of the 1950s kicked in years later.

  

  In terms of US 10-year Treasury yields, there was no post-WW1 spike either. In an environment of global deflation and then low inflation, this should not be a surprise.

  Indeed, the 1920s was a decade in which unpayable wartime debts (owed to the US by the UK and France, and to the UK and France by Germany, which Germany was unable to pay, but instead borrowed again from the US) were reshuffled rather than resolved. This eventually ended in the 1929 Wall Street Crash and the political extremism of the 1930s, then war. During this entire time US Treasury yields drifted lower.

  During WW2, US Treasury yields were capped by the Fed, with this ‘yield curve control’ used to help finance the war effort. (As we have noted before, this policy is not new.) Even after WW2, US yields still remained capped to help pay off wartime debts via continued financial repression. Would one really want to have been holding a 10-year US Treasury at around 2.4% when inflation was spiking to 19.5%? Markets had no choice, however.

  In short, in the US we have a story of immediate post-war slumps, not booms; of post-war deflation for the most part, except where government controls were removed; and post-war stability in bond yields due to government controls.

  The feel-good growth did not begin in earnest until 1950, a full five years after the iconic picture of a sailor kissing a girl in Times Square. That is *five* full Christmases, something for the markets to ponder as we head into this one so optimistic.

  It was logical, however, given the US saw government spending slump from such high levels: how could the private sector fill that gap?

  * * *

  UK: Post-haste decline

  In the UK, which had seen far more physical damage in WW1 and had fought for far longer, the post-war economic recovery was mixed.

  The private-sector initially enjoyed a boom as investment picked up and the key shipbuilding industry in particular replaced lost merchant shipping stock. However, government spending contracted rapidly, and post-war recessions in other countries dragged down export-dependent UK industry. The economy slipped back into a serious recession over 1921–1922: the gold standard ensured it stayed there for most of the decade.

  

  Following WW2, there was again a recession due to the cut in huge wartime spending and then the sudden withdrawal of US Lend-Lease support in September 1945: a US loan in July 1946 was needed to restore economy stability. From 1946-48 the UK saw bread rationing, which was not necessary during the war. Indeed, it was 1947 before UK GDP growth started again as public investment kicked in. That was two long, cold Christmases.

  

  The post-WW1 environment was also deflationary, not inflationary – and it stayed that way for the next decade. Again, thank the prevailing gold standard from 1925 onwards at the too-high pre-war exchange rate, a peg which was only dropped again in 1931. For obvious reasons the same period was also one of increased unionisation and union militancy in the UK.

  Post-WW2, inflation pressures were notably higher, and in advance of a pick-up in growth, due to shattered supply chains and a much stronger labour movement, but initially stagflationary not reflationary.

  In markets, post-WW1 UK gilt yields saw a moderate decline from a 1920 peak of 5.32% to hold at 4.3-4.5% for most of the decade, with BoE rates high to keep sterling on gold. Given deflation, this meant very high real rates – and so hardly the stuff of end-of-war good spirits.

  Post-WW2, the BoE meanwhile kept base rates at the low of 2% prevailing for the whole of the war, indeed right up until late 1951; gilt yields only picked up from 2.76% to around 3.5%, which given higher inflation overall meant real yields were low or negative.

  

  In short, the UK saw a painful post-WW1 victory due to an inappropriate fiscal, monetary and exchange rate policy and a challenging global environment on top of massive war debts and loss of young men. After a rocky start due to external vulnerabilities, it saw a happier recovery post-WW2 due to looser monetary and fiscal policy, a more appropriate exchange rate, and a benign global backdrop once the US Marshal Plan was introduced.

  The key lessons from the US and the UK should be obvious: post-war ‘victory’ does not always look or feel like victory at all. It depends on: 1) the starting position; 2) monetary policy; 3) fiscal policy; 4) exchange-rate policy; and 5) global demand.

  Markets need to carefully consider these factors if they want to be sure they are right to be so upbeat about the war being over.

  * * *

  Awful Austerity Again?

  1) Starting base

  In which regard, the 2021 starting base is good in that we don’t have excess wartime production, except perhaps of ventilators (or office space). Rather we have suppressed supply and demand that can come back online as the virus situation allows.

  However, permanent economic damage will have been done. There are (very) early estimates that up to 48% of US small businesses may never reopen, and structural unemployment may push much higher. Indeed, office-focused cities and tourism-based locations may never recover fully – and should they even aim to? After all, following the Covid-19 virus ‘war’ there will inevitably be another at some point. War is never really over. Does it make sense to return to an economic model primed for disruption by events that are no longer black swans? Or to one that has been structurally “disrupted”?

  2) Monetary policy

  Meanwhile, monetary policy is arguably close to its useful limit, with nominal rates trapped around zero or just below in most major economies. QE is now a standard policy tool, with significant room for expansion in some major economies: yet it also faces declining returns, and does not provide a solution for real economy problems.

  3) Fiscal policy

  So what of fiscal policy: is it going to help or hurt? Arguably the latter! True, we have arguably crossed the Rubicon to Modern Monetary Theory (MMT), as we had suspected would have to occur in 2020. Look at central bank balance sheets and their QE and government bond issuance. Is any of this massive “asset-swap” really going to be unwound ahead?

  Yet the traditional economic advisors around governments are not embracing this fact. Rather, as after every war, there are already signs that more traditional fiscal and economic thinking is going to try to reassert itself.

  “Belt tightening”, “dealing with the debt”, or “balancing the books” is the message – not that most extraordinary state spending due to the virus has been de facto covered by central bank debt monetisation, just as it is during a real war!

  Almost certainly, fiscal deficits as a % of GDP will be much smaller in 2021 than they were in 2020: and as the government pulls money out of the economy on a net basis, is the private sector ready to put more than that *in*?

  Will they have confidence and output automatically ‘bounce back’ as neoclassical economic theory assumes? Or will a lower net flow of public spending, or even just public spending lower than is required to boost confidence, prevent that bounce from happening?

  Both WW1 and WW2, as well as the 2008 crisis, show the risks of reducing fiscal stimulus too soon. Doing so would mean a post-war hangover, not a post-war party awaits.

  4) Exchange rate policy

  The USD is down markedly against most major crosses, which is seen as pro-growth and risk-on. Yet consider this also means emerging market exporters, especially in Asia, are seeing a rise in deflationary pressures and a hit to export earnings on top of the evaporation of tourism-driven FX inflows. This does nothing to drive growth there given their economies are not primarily consumption-driven.

  Indeed globally, almost nobody wants a stronger currency. Europe doesn’t; China doesn’t; Japan doesn’t; the UK doesn’t; and neither Australia nor Canada nor New Zealand do. Only a few emerging markets would arguably benefit from FX stability or appreciation – but even then only the ones who can look to domestic demand for growth.

  5) Global demand

  Beyond the base-effects bounce of 2021, which economy can truly say that it has brighter prospects post-Covid than it did pre-Covid? And to what extent is that economy able to lift others around it? Who is going to be doing the economic heavy lifting?

  Not the US, apparently, despite the return to a US consumer of last resort vis-à-vis Asia during the Covid crisis. Not Europe. Not Japan. Not the UK. Meanwhile, China is openly talking about ‘dual circulation’, which will ensure that more of what Chinese growth there is stays in China via lower reliance on imports.

  We already saw pre-Covid that a process of deglobalisation and regionalisation had begun: even under a US Biden administration, this can arguably be expected to continue in a stop-start fashion.

  In short, when one looks at the five post-war structural factors, it is hard to see how current fundamentals sit alongside the ‘War is Over’ market exuberance unless fiscal stimulus continues.

  * * *

  The Tactical View

  Let’s now take a tactical cross-asset view. First, a recap:

  The S&P 500 printed a record high of 3,393 on February 19, 2020, but just over a month had fallen over 34% to levels not seen since late 2016 – essentially wiping out more than three years of equity gains. Then the Fed turned the market on a dime: the backstop of an alphabet soup of liquidity programs, unlimited QE, and the promise to buy corporate debt jointly dampened tail risk, reduced volatility, skewed risk-reward ratios, and shifted investor sentiment. Of course, trillions of USD in global fiscal stimulus helped matters as well.

  The high yield and equity markets turned in tandem, and other risk assets in the FX and commodity space eventually followed suit, albeit with a lag and with less gusto. The S&P 500 is once again forging new all-time highs.

  

  We had expected risk assets to take another hit, and for safe-havens to find some relief into year-end 2020. This was based on the expectation that a second wave of Covid-19 infections, triggering regionalised lockdowns, would weigh on market sentiment.

  While the second wave hit, and is still raging in many places, and regionalised lockdowns were seen, news of multiple Covid-19 vaccines proved a game-changer for risk appetite. The market looked through near term winter weakness to the light at the end of the tunnel. ‘War is Over’ is the theme, as noted.

  After all, equities are forward looking, and are always trying to see round corners. Furthermore, the breakdown of equity moves was telling. At first, companies set to benefit from the corporate bond backstop rallied, as did equities sensitive to interest rates. Over the summer, the top five companies in the S&P 500 led the way and eventually ended up with a market concentration of nearly 25% of the entire index.

  Those top-five companies –not all are in the technology sector, but mega-tech became a buzz name for the group- were either less impacted by Covid-19 than many others, or in fact benefited from the socio-economic forces created by the Covid-19 pandemic.

  We know retail played a large role in the equity rally, with the ‘gamification’ of brokerage apps spawning a new breed of small investors happy to buy deep OTM options in tech companies, which created an outsized effect given the gamma impact on dealing desks.

  As volatility fell, risk parity funds and vol-control CTAs bought more equities, momentum jumped on the move, and flows into US equity markets continued. Then came the vaccine news and the rotation into the ‘War is Over’ trade.

  

  Looking ahead, we now seem to be in a market where good news helps drive value and re-opening stocks higher, while bad news pushes interest rates lower and helps drive growth stocks higher.

  Moreover, as has been the case for many, many years now, volatility is key. As long as volatility remains suppressed, risk assets can find support; and historically, there is a strong link between central bank accommodation and the level of market volatility.

  In short, as long as central banks are “rigging the game” the equity game will indeed be played.

  Indeed, with global front-end rates low and likely to remain there for several years at least, there is a strong argument that volatility will continue declining and risk assets remain supported.

  * * *

  Perfect cocktail?

  This environment looks a perfect cocktail for equities, with hope, dampened volatility, and low real yields creating a positive feedback loop encouraging continued inflows from systematic and discretionary funds through 2021.

  

  Notably, this also fits the historical “post-war” pattern with US equities rallying in the year after both WW1 and WW2 ended, before retracing those gains after the initial euphoria worse off.

  However, let’s think even more tactically and less big picture.

  As we have laid out, low inflation remains the structural risk going forward, but on a tactical basis we must voice caution heading into Q2 2021 very low CPI base effects and a return to (new) normalcy could trigger a short-term rise in inflationary pressures, and/or fears over potential stagflation.

  

  In particular, commodity prices may help push inflation up. We already see this dynamic in commodities, driven by: genuine supply-demand; a weaker USD; central-bank liquidity; and the general ‘War is Over’ risk-on search for peacetime yield.

  Historically, such fluctuations in commodity prices would not be a surprise. After both WW1 and WW2 we saw an initial pop higher in oil prices before a sustained downturn. Our house oil forecast for the next few years sits in line with this pattern.

  Indeed, we see potential upside for oil prices in the coming months, even if only driven by USD weakness. The theoretical link between a lower USD and commodity prices is well known, but there is a mechanical impact as well. For example, if a European pension fund has to allocate 100bn to the Bloomberg commodity index, then a 10% rise in EUR/USD will force them to buy 10bn of commodities to maintain their allocation target.

  We strongly suspect the Fed will look through a temporary rise in inflation, but it could shock markets for a while: after all, the biggest risk facing US stocks is the mere thought of higher rates. For consumers, however, it will mean a drop in real incomes on top of the Covid shock: recall the Arab Spring followed the last global commodity-price surge, which was hardly ‘risk on’.

  

  Admittedly, for stocks the key question is what the market sees as the driver for any near-term higher yields: if it is better growth and inflation prospects, then value stocks may still outperform growth, and cyclicals outperform defensives.

  In the rates space, US breakevens are arguably a better way of playing a temporary rise in inflation than nominals, as the Fed may increase the WAM of its Treasury purchases to lean against any rise in real yields. That said, given the moves observed over recent months (Figure 11) one can argue breakevens are already pricing in a similar story and upside could be limited.

  To reiterate, we remain firmly of the view that from a structural perspective US rates will remain low for the foreseeable future.

  * * *

  Dollars – and sense

  On the USD, the recent sell-off has been brutal, and the inverse relationship between it and equities remains intact.

  

  In the coming months, there is little reason to see this weak USD trend changing. Further out, however, it is useful to question how long USD weakness can be maintained. The huge structural supply/demand imbalance in the Eurodollar market has been temporarily balanced by Fed policies, including swap lines and the FIMA repo facility. Nonetheless, USD liabilities outside the US are still massively higher than the availability of USD there as measured by FX reserves. (See here for more.)

  This will be even more the case if the US is unwilling or unable to provide massive fiscal stimulus. This would imply a smaller fiscal deficit and so a lower net supply of USD to both its economy and to the rest of the world – and far lower growth to boot, meaning less global exports to it. In short, there is likely more of a floor for the USD from here than expected, which means global reflation themes cannot be driven by that trend alone.

  ‘War is Over’ (Reprise)

  However, risk assets can arguably outperform over the course of 2021 even if we see a lower rate of GDP growth than the disappointing average in the decade before Covid-19. To our mind, there are three main risks to this view, however.

  First is central banks tightening monetary policy. This seems extremely unlikely. In the last rates cycle, only the US and Canada among developed markets raised their policy rate by more than 100bp, after many years, and the Fed’s attempt to unwind its bloated balance sheet did not last long before being more than reversed. Central bank escape-velocity will be harder to achieve this time round. Nonetheless, fears of reflation happening earlier than expected may be seen in H1 2021 due to a combination of base effects, commodity prices, and post-Covid joie de vivre on headline inflation. Tactically, this must be noted even if strategically it is a blip in the opposite trend.

  The second is governments implementing tighter fiscal policy. It is important to note that while there is little official rhetoric about a return to austerity – quite the opposite in fact– there are also a range of actions, overt to covert, and large to small, which suggest that this is what may still happen anyway. For example, payment of deferred tax payments or the reversal of VAT cuts, to say nothing of pay freezes or new tax hikes. After all, the alternative is fundamentally too challenging for the conservative central bank/Treasury economics teams to embrace. History also suggests we will probably get this wrong.

  The third is the USD. Any new global dollar liquidity squeeze, driven by either a US recession, the need for even looser fiscal and monetary policy in other economies, or geopolitical tensions/instability, for example, would push USD higher and risk firmly off again. In a post-Covid environment, are global ‘wars’ over or just getting started?

  In short, when one looks at the three risk factors above, current fundamentals arguably *do* sit alongside the ‘War is Over’ market exuberance – if one thinks politicians will act correctly ahead.

  Yet who is it starts the wars, may we ask?

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• Australia To Challenge China At WTO Over Devastating Barley Tariffs
  Australia To Challenge China At WTO Over Devastating Barley Tariffs
  Tyler Durden
  Wed, 12/16/2020 – 20:50

  Australia has pulled the trigger on its prior threats to take China to the World Trade Organization where its steep tariffs on Australian barely exports will be challenged.

  “We will make this formal request to the WTO tonight,” Trade Minister Simon Birmingham announced to reporters Wednesday. “WTO dispute resolution processes are not perfect, and they take longer than would be ideal, but ultimately, it is the right avenue for Australia to take.”

  Birmingham confirmed that Beijing has now been directly advised of Australia’s intention “to request formal consultations with China,” saying that the major decision came after “extensive consultation” with the country’s industry. Formal TWO disputed typically take up to at least many months or often years to resolve.

  

  “We are highly confident that based on the evidence, data, and analysis that we have put together already, Australia has an incredibly strong case to mount,” the trade minister added.

  Tariffs on Australian barley were first announced last May at a whopping over 80%, bringing the trade to its knees. Days after this Beijing blacklisted multiple major beef plants and has only increased the pressure as Australia’s number one commodities export destination, including most recently the 200% tariffs on Aussie wines.

  China has shown no signs of backing down since vowing to hit back over what it dubbed as Australia “teaming up” with Washington to unfairly spotlight China as responsible for the global coronavirus pandemic. 

  China’s trade barriers came specifically in retaliation to Prime Minister Scott Morrison’s demand in May for an independent probe into the origins of COVID-19, and as the Wuhan Institute of Virology came under suspicion of irresponsible, high-risk research.

  China-Australia trade deal does not oblige either country to continue buying goods, lawyers say #China #china #Australia https://t.co/mPqOlDiFr2 pic.twitter.com/NgwBYKT0zI

  — SCMP Economy (@scmpeconomy) December 15, 2020

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

  Meanwhile on Wednesday though China in the immediate hours following Birmbingham’s WTO announcement urged for Canberra to act to improve relations, with its foreign ministry further alleging, “The Australian side has taken some discriminatory actions against Chinese companies in violation of international practices” – it didn’t specifically respond to the declared intent to initiate WTO mediation.

  Spokesperson Wang Wenbin added: “We hope the Australian side will take China’s concerns seriously and take concrete actions to correct such discriminatory actions.”

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• Serial Rapists In Pakistan To Be Chemically Castrated Under Strict New Laws
  Serial Rapists In Pakistan To Be Chemically Castrated Under Strict New Laws
  Tyler Durden
  Wed, 12/16/2020 – 20:30

  Authored by Elias Marat via TheMindUnleashed.com,

  Pakistan has adopted new measures against sexual assault that will ensure brisk trials and the chemical castration of offenders convicted in cases of rape.

  

  The Anti-Rape Ordinance was signed into law Tuesday by Pakistani President Arif Alvi, and will ensure special courts meant to combat the crime will hear all rape cases, and wrap them up within four months, according to a statement from the president’s office.

  Crisis cells will also be established that will conduct full-scale medical and legal examinations of rape victims within six hours of reported incidents, reports Anadolu Agency.

  The new law will also establish a nationwide registry of repeat sex offenders.

  Rape victims’ identities will also be protected, and those who reveal the identity of victims will face legal repercussions under the law.

  Most controversially, repeat offenders will face chemical castration – a procedure that entails the use of drugs to lower testosterone levels and as a result, lower the sex drive of recidivist offenders.

  The Cabinet approved the strict new measures last month following a spate of serious rape cases that drew national attention and caused an upswell of public outrage. The country has also seen unrest and riots in recent years in response to high-profile sex-abuse cases, including some involving minors.

  In September, a mother was driving with her children along a major highway when  she ran out of fuel and she was raped by two men while waiting for police to get her car started.

  In Novemer, a mother and her daughter were also abducted in the southern Sindh province and forced to endure several days of rape at the hands of their kidnappers.

  The ongoing crisis of rampant sexual assault has infuriated Prime Minister Imran Khan, who vowed to adopt draconian measures – including chemical castration – to halt the crisis of sexual assaults in the South Asian nation.

  “I think he (the rapist) should be hanged publicly. Rapists and child molesters should have public hanging,” he told Hard Talk Pakistan in a September interview. 

  “You do not know the real statistics as well, because it’s under-reported. People do not report it due to being scared or ashamed, women are ashamed, no one wants to tell.”

  However, Khan conceded that public hangings go against international human rights law and that the adoption of capital punishment would have an adverse effect on already-fraught relations with the west, and especially the country’s trade relationship with the European Union. Instead, he remarked that rapists and child molesters should “undergo chemical castration, or surgery be performed so they cannot do anything in future.”

  Earlier this year, the lower house of Pakistan’s parliament passed a non-binding resolution calling for the public hanging of convicted child killers and rapists.

  The resolution was swiftly condemned by government officials and human rights NGOs. Federal Minister for Science and Technology Fawad Chaudhry also condemned the passage of the resolution in a tweet that stated: “Strongly condemn this resolution. This is just another grave act in line with brutal civilisation practices [sic]. Societies [should] act in a balanced way, [barbarity] is not an answer to crimes. This is another expression of extremism.”

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• Saudi Arabia Hires Army Of New Lobbyists In Preparation For Biden
  Saudi Arabia Hires Army Of New Lobbyists In Preparation For Biden
  Tyler Durden
  Wed, 12/16/2020 – 20:10

  The Saudis are alarmed at President-elect Joe Biden’s prior signaling that he’ll take a much tougher stance on the kingdom after Trump’s previously close relationship with the Saudis and Crown Prince Mohammed bin Salman (MbS) in particular – the brief icy tensions following the state-ordered Jamal Khashoggi murder notwithstanding. While on the campaign trail Biden had specifically decried that Trump had written the Saudis a “dangerous blank check”.

  “The Kingdom of Saudi Arabia is on a hiring spree for lobbyists” according to a new detailed report, in attempts to ensure things don’t drastically change after Biden takes office on January 20. 

  

  The Saudis are reportedly focusing their efforts on GOP leaders in Congress in hopes they could block or stall any aggressive or negative measures directed at the kingdom, such as related to the Yemen war for example. 

  Previously Biden vowed: “I would end U.S. support for the disastrous Saudi-led war in Yemen and order a reassessment of our relationship with Saudi Arabia,” at a Council on Foreign Relations (CFR) event. “It is past time to restore a sense of balance, perspective, and fidelity to our values in our relationships in the Middle East. President Trump has issued Saudi Arabia a dangerous blank check,” he added.

  Among the multiple new lobbying firm contracts detailed in a CNBC report includes the following:

  One of the recent hires came through the Larson Shannahan Slifka Group, an Iowa-based public affairs shop that signed a lucrative contract with the Saudi Embassy last year. Also known as the LS2group, the embassy agreed in 2019 to pay it $1.5 million for one year.

  New records show LS2 recently brought on Arena Strategy Group, for actions that will “include informing the public, government officials, and the media about the importance of fostering and promoting strong relations between the United States and the Kingdom of Saudi Arabia,” a foreign lobbying report says.

  Figures analyzed by the nonpartisan Center for Responsive Politics show the kingdom spent over $30 million on lobbying activities in 2018.

  CNBC documents further that one D.C. firm is being paid $75,000 each month to help improve the kingdom’s image on Capitol Hill. This is also no doubt focused on reversing the reputational damage wrought in the wake of the October 2, 2018 killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul.

  Reports by the United Nations as well as the CIA reportedly pointed the finger at the highest levels of the Saudi monarchy as behind the gruesome killing, including MbS himself.

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• Flow Of US Imports Continues To Surge, Now At Twice The Rate Of Exports
  Flow Of US Imports Continues To Surge, Now At Twice The Rate Of Exports
  Tyler Durden
  Wed, 12/16/2020 – 19:50

  By Mike Wackett of TheLoadStar,

  With no let-up in consumer demand, container imports into the 10 largest US ports soared by 25% last month, compared with the previous year. And with the forward booking visibility of transpacific carriers indicating that the US import boom is set to continue to at least the Chinese New Year in February, import throughput is likely to stay high.

  However, the intense focus on repositioning empty equipment back to Asia, to meet export demand and benefit from the exceptional high market rates, has skewed the trade imbalance further.

  

  Blue Alpha Capital’s analysis of the top ten US ports recorded a 24.5% jump in imports through the west coast in November to 1,042,331 teu, and 26.6% more containers for east and Gulf coast ports to 965,485 teu.

  This combined total of 2,007,816 teu takes throughput for September, October and November to over 6.1m teu – 18.8% higher than the year before. And with December import volumes equally strong – port of Los Angeles Signal data for this week and next forecasts increases of 49% and 46% – the year is set to record ‘modest growth’.

  But this seemed inconceivable at the start of the pandemic, said Blue Alpha Capital founder John McCown, adding: “With the likely gain for December, 2020 will close out with an annual gain in the 1.5% range. That would have been unthinkable at the outset of Covid in March and would be a reversal of the modest 0.9% decrease in 2019.”

  The consultant noted that several import sectors saw big spikes in volume during November, the furniture, sporting goods and toy categories recording a 55% gain, up on the 52% and 41% gains seen in October and September.

  “The stay-at-home lifestyle has generated volume in an array of consumer products,” said Mr McCown, and he added that some of the demand surge was due to consumers reallocating what they would normally spend on vacations, dining out and entertainment.

  Despite the positive import numbers, November US exports fell 4.2%, the ninth consecutive monthly drop, further worsening the trade imbalance to a near-historical record ratio of 2.32 import loads for every one export, according to Blue Alpha Capital.

  “The latest data seems to confirm that the trade war is hurting our container exports more than our container imports,” reported Mr McCown, who said the latest data indicated that “much, if not all, of the initial impact of tariffs reducing container imports from China had dissipated”.

  This he suggested left the American consumer “with a large hidden tax”, and that “instead of reducing imports more than exports, the net effect looks to be exactly the opposite”.

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• A Record 61% Of Restaurants, 35% Of Small Businesses Can't Pay December Rent
  A Record 61% Of Restaurants, 35% Of Small Businesses Can’t Pay December Rent
  Tyler Durden
  Wed, 12/16/2020 – 19:30

  Another day, another restaurant doomsday story.

  According to the latest Alignable Rent Poll, it’s becoming increasingly difficult for small businesses everywhere to pay their rent in full and on time, given the latest COVID resurgences. The need for more federal funding is also becoming more pronounced for many of these businesses, according to the poll. 

  These findings are based on the most recent Alignable Rent Poll conducted among 9,204 small business owners from 11/21-11/23/2020.  Here are the highlights:

  • Several B2C industries are devastated – 61% of restaurants can’t pay their rent this month. That’s up 19% from 42% in November.
  • 35% of U.S. small businesses couldn’t pay their rent this month, up 3% from 32% in November. 
  • Beauty salons (46%) and travel/hospitality businesses (43%) round out the Top 3 most-affected businesses, but many others are in trouble. 
  • Looking at demographics, minority-owned businesses are suffering the most, as 49% of them reported that they could not afford their rent in December. That figure is 5% higher than it was in November.
  • Women-owned businesses are also struggling (38% of those have not paid their rent, up 3% from 35% last month). 

  Overall, 35% of small business owners reported that they couldn’t make rent this month (up 3% from 32% in November). For minority-owned businesses, the struggle is even more pronounced: nearly half (49%) report being unable to cover their rent in December. That figure jumped 5% from 44% in November.  For women-owned businesses, 35% couldn’t make rent in November and now that percentage is up to 38% in December.

  Looking at different sectors, it’s clear that money is growing even tighter in many B2C industries, and paying rent is becoming increasingly more challenging.

  

  Restaurants/bars top the list in December with 61% unable to cover their rent. (And that’s up 19% since November).

  Nearly half of beauty salons (46%) had trouble paying the rent, as did 43% of travel/hospitality businesses. 

  High percentages of small business owners in other industries also couldn’t pay their rent in full, on time:

  • 41% of gyms
  • 40% of retailers
  • 40% of massage therapists
  • 36% of entertainers
  • 32% of construction/home services firms.

  Most noted that increasing restrictions based on COVID resurgences are causing more problems for them — and limiting the kind of revenue they can make for the rest of the year, and perhaps, beyond.

  Rent Woes Across The U.S. & Canada
  While 35% of U.S.-based small businesses are unable to pay December rent, small businesses in a variety of states are even more cash-strapped.

  In Canada, the rate is even higher – 37% of Canadian small business owners said they couldn’t make December rent, 1% higher than in November. Here’s the breakdown by state for those matching or exceeding the overall, national U.S. average:

  • NY — 43%
  • AZ — 43%
  • IL — 42%
  • OR — 42%
  • WA — 40%
  • MD — 40%
  • NJ — 39%
  • PA — 39%
  • CA — 37%
  • VA — 36%
  • GA — 36%
  • MN — 36%
  • FL — 35%
  • SC — 35%

  The following states are still struggling, but not as much as those listed above:

  • TX — 34%
  • MI — 34%
  • OH — 32%
  • MA — 31%
  • CO — 29%
  • NC — 27%
  • MO — 20%

  Shifting from the U.S. to Canada, the survey witnessed a range of rent payment rates across the provinces. On one extreme, small businesses in British Columbia appear to be weathering the COVID storm a bit better, with only 30% of them reporting that they couldn’t afford to pay rent in full and on time. However, the situation is more severe in other parts of Canada: 43% of small businesses in Alberta, and 42% in Ontario reported not making December rent. 

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• PBOC Has Explaining To Do With Mysterious Yuan Data
  PBOC Has Explaining To Do With Mysterious Yuan Data
  Tyler Durden
  Wed, 12/16/2020 – 19:10

  By Ye Xie, Bloomberg macro commentator and analyst

  Beijing has avoided being named a currency manipulator by the Trump administration. But the conclusion comes with a big yellow flag that may come back to haunt China.

  The U.S. Treasury Department on Wednesday kept China on the watch list in the last currency report of the Trump administration, while slapping the manipulator tag on Vietnam and Switzerland. It urged Beijing to “improve transparency” in its currency management – in particular the role state-owned banks play in the foreign exchange market. It noted state-owned banks have sold the yuan, even as the PBOC appears to have refrained from intervening.

  The Treasury pointed out that China’s balance-of-payments number doesn’t seem to add up. China’s goods and service surplus surged to a record $132 billion in the second quarter, and the country also attracted stock and bond inflows. But its foreign reserves added only $18 billion during the period.

  “While intervention proxies do not provide definitive evidence that the PBOC intervened in foreign exchange markets over the review period, this issue warrants further investigation,” said the report. “In particular, the small scale of foreign reserve accumulation relative to China’s substantial trade and portfolio inflows in the second quarter of 2020, coupled with the RMB’s relative stability over the same time period, raises concerns.”

  

  It’s not just the Trump administration. The apparent mismatch also caught the eye of Brad Setser, a senior fellow at the Council on Foreign Relations, who was tapped to work on Joe Biden’s transition team last month.

  In a report on the CFR website in September, Setser noted that the pace of foreign asset accumulation of China’s state banking system increased “dramatically” in the second quarter.

  

  “The signs of possible hidden intervention are still mostly whispers that speak most loudly only to those who have spent a long time with the data,” Setser wrote. “But if current trends continue, I would expect that they will start to shout when the data for the full year becomes available – as the both the rising Chinese surplus and ongoing bond inflows will raise the size of the offsetting outflow to a level that is going to be hard to hide.”

  To be sure, there may be some other explanation for the balance-of-payment puzzle. For instance, Chinese exporters may have parked their dollar revenue overseas, so not all of the trade surplus translates into foreign-currency inflows. The so-called “errors and omissions” also point to capital flight from illegal channels, offsetting the trade surplus.

  But the bottom line is that “China’s balance of payments data raise more questions than answers at the moment,” as Mark Williams of Capital Economics puts it. There needs to be a bit more transparency on state banks’ activities in the currency market. On that point, the Trump administration may have a valid argument.

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• Report Alleges China's 'Mass Surveillance' Of Americans Using Caribbean Cell Networks
  Report Alleges China’s ‘Mass Surveillance’ Of Americans Using Caribbean Cell Networks
  Tyler Durden
  Wed, 12/16/2020 – 18:50

  New technical analysis compiled by a veteran cybersecurity expert previously at Mobileum, a mobile security company whose job it is to track threats to mobile operators, has detailed likely efforts of Chinese intelligence to surveil US mobile phone subscribers using phone networks out of the Caribbean. 

  Gary Miller, who has since started the cybersecurity company Exigent Media, has alleged and detailed to The Guardian that China is engaged in “active” surveillance attacks through foreign telecoms operators.

  The Guardian report offers little to nothing in the way of forensic or technical evidence to back the claims, but is reliant merely on Miller’s track record of expertise as an industry insider. There have been similar allegation in the past, particularly a prior similar 2018-2019 report titled Far From Home.

  

  Some of the details of the alleged China snooping are as follows: 

  “At the heart of the allegations are claims that China, using a state-controlled mobile phone operator, is directing signaling messages to US subscribers, usually while they are travelling abroad.

  Signaling messages are commands that are sent by a telecoms operators across the global network, unbeknownst to a mobile phone user. They allow operators to locate mobile phones, connect mobile phone users to one another, and assess roaming charges. But some signaling messages can be used for illegitimate purposes, such as tracking, monitoring, or intercepting communications.“

  Miller claims that among US telecoms providers it’s a bit of an “open secret” but that “No one in the industry wants the public to know the severity of ongoing surveillance attacks.” 

  The findings appear to center on Signaling System 7 (SS7), a communications protocol which routes calls and data around the world. Analysts have long decried its inherent weaknesses and security vulnerabilities. 

  China’s Communist Party (CCP) seems to be implementing a multidimensional strategy in the Caribbean, reaping economic, political and potentially military gains a few miles offshore the United States. https://t.co/cb692ZoyGl

  — Joaquín Ortega (@ortegabrothers) December 10, 2020

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  “I want the public to know about it,” Miller said. “Once you get into the tens of thousands, the attacks qualify as mass surveillance, which is primarily for intelligence collection and not necessarily targeting high-profile targets,” Miller told The Guardian further.

  “It might be that there are locations of interest, and these occur primarily while people are abroad,” Miller described.

  “China reduced attack volumes in 2019, favoring more targeted espionage and likely using proxy networks in the Caribbean to conduct its attacks, having close ties in both trade and technology investment,” he alleged further.

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• California Sheriff Refuses To Release 1,800 Inmates After Judge's Order
  California Sheriff Refuses To Release 1,800 Inmates After Judge’s Order
  Tyler Durden
  Wed, 12/16/2020 – 18:29

  Authored by Isabel van Brugen via The Epoch Times,

  A California sheriff is refusing to comply with a judge’s order to release 1,800 inmates from Orange County jails, including individuals who have been imprisoned for murder, due to the CCP (Chinese Communist Party) virus pandemic.

  

  County Superior Court Judge Peter Wilson on Friday ordered the release of 50 percent – or 1,858 inmates out of 3,716 – to curb the transmission of COVID-19, the disease caused by the CCP virus.

  “I have no intention of releasing any of these individuals from my custody,” said Sheriff Don Barnes, pushing back against the order. “We are going to file an appeal and we’re going to fight it and if the judge has any intent of releasing any one of these individuals, he will have to go through line by line, name by name, and tell me which ones he is ordering released.”

  Please see my statement below following an order from the court mandating the release of more than 1,800 inmates from the Orange County Jail. pic.twitter.com/Y6PuIKVlPr

  — OC Sheriff Don Barnes (@OCSheriffBarnes) December 12, 2020

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

  Barnes told “Fox & Friends” that he has no intention of releasing the inmates back into the community, saying he believes they pose a “serious threat.”

  Wilson’s order arose from a lawsuit filed in April by the American Civil Liberties Union (ACLU) filed on behalf on inmates that sought to protect the Orange County Jail’s most vulnerable.

  “Public safety does not just mean crime,” ACLU’s Jacob Reisburg said, defending Wilson’s ruling.

  “Public safety also means, is there a hospital bed open if you get sick? And if there’s a massive outbreak in the jail, which this depopulation order is trying to avoid, there will not be hospital capacity in Orange County for people on the outside who get COVID.”

  Barnes explained that to date, some 1,400 low-level offenders have already been released since March. The remaining inmates are “serious offenders,” he said.

  “Of the medically vulnerable, 90 of them are in custody for murder or attempted murder, 94 for child molestation,” Barnes added.

  Wilson’s order followed reports of a recent surge in cases in the county jail. The sheriff on Friday announced an outbreak with 138 cases, which jumped to 416 by Monday. Barnes, however, noted that the facility had recently begun to test all individuals, including asymptomatic patients.

  “We have inmates who are participating in different practices. Either going to medical appointments or going to court or meeting with their attorneys. These people are all from the general public and we know there’s a surge within the general public,” Barnes said.

  “Many of these inmates are in pre-trial status for, or have been convicted of, violent crimes and will be released back into the community,” he added in a separate statement.

  “This order puts our community at substantial risk and does not take into account the impact on the victims of these crimes.”

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• Giant "Bitcoin Whale" Emerges With Transformational $1 Billion Stake, Backing From Legendary Traders
  Giant “Bitcoin Whale” Emerges With Transformational $1 Billion Stake, Backing From Legendary Traders
  Tyler Durden
  Wed, 12/16/2020 – 18:12

  It’s oddly fitting that on the day bitcoin finally breaks out above $20,000 – a critical psychological level first established during the Dec 2017 meltup – we learn that a new and formerly unknown massive bitcoin whale, who just happens to be one of the most respected hedge funds currently operating, has backing from legendary traders and is a frequent guest on these pages – has been quietly accumulating a lot of bitcoin… some $1 billion worth.

  

  According to Bloomberg’s Erik Shatzker, a hedge fund specializing in volatility bets – one which regular Zero Hedge readers are very familiar with – has emerged as one of the largest investors in Bitcoin after quietly buying more than $600 million in cryptocurrencies in recent months and joining forces with legendary trader Alan Howard, co-founder of Brevan Howard Asset Management.

  Echoing what we have said repeatedly in recent months, namely that the next leg higher in bitcoin will come on the back not of continued retail chasing but due to institutional rotation into the cryptocurrency (for another example of this, see “169-Year-Old Mass Mutual Buys $100 Million In Bitcoin“), Eric Peters, CEO of One River Asset Management, told Bloomberg he set up a new company to seize on the growing interest in cryptocurrencies among institutional investors. In addition to its initial purchases, One River Digital Asset Management has commitments that will bring its holdings of Bitcoin and Ether to about $1 billion as of early 2021.

  “There is going to be a generational allocation to this new asset class,” he said. “The flows have only just begun.”

  He’s right, and as we said last week: “One by one, the big institutions are piling into bitcoin.”

  Just after Bitcoin’s first modest correction since the start of its March rally which prompted an amusing twitter meltdown by Nouriel Roubini, we reported that one of the world’s biggest fixed income asset managers, Guggenheim Partners, jumped on the bitcoin bandwagon when it announced that it was reserving the right for its $5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust whose shares are solely invested in Bitcoin, and track the digital asset’s price less fees and expenses.

  Guggenheim’s (partial) embrace of Bitcoin following PayPal’s announcement a few weeks later that it had enabled crypto transactions for all its clients, sparking the latest leg higher in bitcoin. It also came following glowing endorsement from legendary investors such as Paul Tudor Jones and Stan Druckenmiller, and in the aftermath of Jack Dorsey’s “other” company, Square, which said in October that it bought 4,709 bitcoins, worth approximately $50 million, about 1% of Square’s total assets.

  But the biggest “first mover” in the space was business-intel firm MicroStrategy, which on August 11 sent a shockwave around the globe when it announced it had poured all $250 million of its planned inflation-hedging funds into the digital currency. Then last week, not content with the 100% return its stock has generated since then, on Friday MicroStrategy announced that it has bought even more Bitcoin, first in the form of $50 million in outright purchases and then, on Wednesday the company upsized a $400 million debt offering to $550 million, whose proceeds would be used to purchase even more bitcoin.

  More are following: overnight, the venerable Massachusetts Mutual Life Insurance company, better known as MassMutual, said it purchased $100 million in Bitcoin for its general investment fund, according to Bloomberg. The mutual insurer, which has been around since 1851, also acquired a $5 million minority equity stake in NYDIG, a subsidiary of Stone Ridge that provides cryptocurrency services to institutions, according to a statement. NYDIG, which already keeps more than $2.3 billion in crypto assets for clients, will provide custody services for MassMutual’s Bitcoins.

  As we concluded “Bitcoin has more than doubled in price this year, and hit an all-time high earlier this month; as more institutions shift into cryptos, the price will only go higher.” We had to wait just 3 days to be proven right.

  Peters said he was wary of triggering a spike in the prices of Bitcoin or Ether as he was quietly building up his initial position. He described executing his trades as inconspicuously as possible and finishing all the buying in November before Bitcoin hit $16,000.

  The investment in bitcoin is a departure for the vol-specialist: the company, which was founded by Peters in 2013, One River employs volatility and trend-following strategies in an effort to make money whether asset prices are rising or falling. As reported earlier this year, its Long Volatility Fund and Dynamic Convexity Fund surged during the coronavirus selloff in March and are up 33% and 40% this year, respectively. The firm’s total AUM is about $1.6 billion; we assume that its bitcoin holdings are not included in this number.

  Peters, 54, whose market insights appear weekly on its website, said that he was drawn to digital assets for the same reasons he anticipates more volatility in financial markets: now that interest rates in the developed world are at or below zero, fiscal spending by governments combined with debt monetization by central banks has emerged as the primary way to spur growth. The consequence of that increase in the money supply will be currency debasement and, potentially, inflation. Ultimately, all those trillions in newly created liquidity are making their way into alternative currencies such as cryptos.

  “Covid-19 provided the ultimate catalyst for that transition,” Peters said. “This is the most interesting macro trade I’ve seen in my career.”

  While most legacy investors have traditionally been skeptical to invest in bitcoin, Peters is certainly not the first investor to predict a flood of money into cryptocurrencies. In addition to this website, former Fortress founder Mike Novogratz, who started the crypto-focused Galaxy Digital Holdings, has been saying “the cavalry is coming” for years, only to watch as Bitcoin slumped to a recent low of $3,157 in December 2018 before recovering. Several other heavyweight crypto managers have emerged, including Pantera Capital, Polychain Capital and Galaxy.

  Meanwhile, in the clearest indication of rising interest in fiat alternatives, assets in the Grayscale Bitcoin Trust, the largest player, have swelled to more than $10 billion. As we discussed last month, the exponential ascent of the Grayscale Bitcoin Trust in recent weeks suggested that other institutional investors who look at bitcoin as a long-term investment have been playing a bigger role in recent weeks than quantitative funds or retail investors. It now turns out that One River was one of the biggest accumulators.

  

  As we also explained previously, the ascent of Grayscale Bitcoin Trust suggests that bitcoin demand is not only driven by the younger cohorts of retail investors, i.e. millennials, but also institutional investors such as family offices and asset managers (something which in retrospect was proven to be correct). These institutional investors appear to be the biggest investors in the Grayscale Bitcoin Trust, perhaps reflecting their preference to invest in bitcoin in fund format. What makes the past five weeks flow trajectory for the Grayscale Bitcoin Trust even more impressive is its contrast with the equivalent flow trajectory for gold ETFs, which overall saw modest outflows since mid-October, as shown in the chart below.

  

  This contrast lent support to the idea that some investors that previously invested in gold ETFs, such as family offices, were looking at bitcoin as an alternative to gold. As JPMorgan previously highlighted, the potential longterm upside for bitcoin is considerable if it competes more intensely with gold as an “alternative” currency, given that the market cap of bitcoin (at $383bn) would have to rise about 7 times from here to match the total private sector investment in gold via ETFs or bars and coins which stands at $2.6tr.

  

  As a reminder, it is this anticipated inflow into bitcoin from institutional investors that prompted JPMorgan to admit last month that it was wrong about the Bitcoin bull run and renewed its $140,000 bitcoin price forecast:

  “the potential long-term upside for bitcoin is considerable we think as it competes more intensely with gold as an “alternative” currency given that Millennials would become over time a more important component of investors’ universe.”

  But back to Peters, who said his ultimate goal is to build a “blue-chip fiduciary” for institutional clients seeking digital assets, and won’t be trading aggressively or making venture-capital investments. The funds will charge 1% fees and allow investors to sell in a day. While gold also stands to appreciate in a world of debased currencies and inflationary fears, Peters thinks Bitcoin and Ether prices can far outpace that rise. Recent fund flows confirmed this observation: as we noted at the end of November, there was been a notable divergence in the prices of gold and crypto starting in early October…

  

  … which culminated with record inflows to bitcoin offset by record outflows from gold.

  But if the thesis is ultimately one of fiat debasement and a shift away from fiat, why not just buy gold? “There definitely are more risks to this than gold, which has been around for thousands of years, but there’s also way more convexity,” Peters said. “There are very few convex bets that’ll help your portfolio when these macro forces start playing out.” He’s right, but convexity cuts both ways, and once the selling returns in bitcoin – and it will – it will take a lot of willpower to sleep through those 80% drawdowns.

  What is interesting is that Peters’ transformational investment seems to be a U-turn from some of his recent thoughts on the cryptocurrency, when as recently as 2017 he warned that governments would eventually muscle out investors in the volatile asset class:

  … the future of cryptocurrency is not as it seems. Once private markets perfect cryptocurrency technology, governments will commandeer it, killing today’s pioneers. Then with every cryptodollar, yen, euro and renminbi registered on their servers, they’ll have complete dominion over money, laundering, taxation. They’ll track every transaction. Imposing negative interest rates in an instant. There will be no hiding, no mattresses. And in a deflationary panic, they’ll instantaneously add an extra zero to every account, their own especially.

  Ironically, it is Peters that has now emerged as one of the top pioneers in the emerging field.

  Lending legitimacy to the new venture is its direct support from one of the most iconic macro traders: Alan Howard, who co-founded Brevan Howard, is playing a number of supporting roles. In addition to investing in One River Digital’s funds, Brevan Howard also bought a 25% stake in the business as reported in October. A company he controls, Elwood Asset Management, is providing One River Digital with trading services, market analysis and technical support. Howard intention to allocate $1 billion ti cryptocurrencies was first reported by the FT back in August 2019. This is what Elwood CEO Bin Ren said then

  “Losing traditional assets in the real world is hard. In the digital world, it’s very easy to lose assets — put in the wrong address for a bitcoin transfer and it’s gone forever,” said Mr Ren, the former chief investment officer of Brevan Howard’s Systematic Investment Group. He says Elwood has been screening crypto hedge funds and has identified up to 50 that “probably satisfy our due diligence”.

  We now know that the winner of this diligence process was Peters’ One River.

  Another iconic investor with One River Digital is the fund formerly known as “50 cent” for its recurring purchases of deep out of the money VIX calls – Ruffer LLP. Ruffer is best known for having made a whopping $2.6 billion in March as markets crashed. On Tuesday, Ruffer disclosed a 2.5% position in Bitcoin in one of its funds, describing it as “a small but potent insurance policy against the continuing devaluation of the world’s major currencies.”

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