Today’s News 17th February 2016

• Russia's Trap: Luring Sunnis Into War

  Submitted by Burak Bekdil via The Gatestone Institute,

  • Washington should think more than twice about allowing Turkey and Saudi Arabia, its Sunni allies, militarily to engage their Shiite enemies in Syria. Allowing Sunni supremacists into a deeper sectarian war is not a rational way to block Russian expansion in the eastern Mediterranean. And it certainly will not serve America's interests.

  • Turkey and Saudi Arabia are too weak militarily to damage Russia's interests. It is a Russian trap — and precisely what the Russians are hoping their enemies will fall into.

  After Russia's increasingly bold military engagement in war-torn Syria in favor of President Bashar al-Assad and the Shiite bloc, the regional Sunni powers — Turkey and its ally, Saudi Arabia — have felt nervous and incapable of influencing the civil war in favor of the many Islamist groups fighting Assad's forces.

  Most recently, the Turks and Saudis, after weeks of negotiations, decided to flex their muscles and join forces to engage a higher-intensity war in the Syrian theater. This is dangerous for the West. It risks provoking further Russian and Iranian involvement in Syria, and sparking a NATO-Russia confrontation.

  After Turkey, citing violation of its airspace, shot down a Russian Su-24 military jet on Nov. 24, Russia has used the incident as a pretext to reinforce its military deployments in Syria and bomb the "moderate Islamists." Those are the Islamists who fight Assad's forces and are supported by Turkey, Saudi Arabia and Qatar. The Russian move included installing the advanced S-400 long-range air and anti-missile defense systems.

  Fearing that the new player in the game could vitally damage their plans to install a Sunni regime in Damascus, Turkey and Saudi Arabia now say they are ready to challenge the bloc consisting of Assad's forces, Russia, and Shiite militants from Iran and Lebanon.

  As always, Turkish Prime Minister Ahmet Davutoglu spoke in a way that forcefully reminded Turkey-watchers of the well-known phrase: Turkey's bark is worse than its bite. "No one," he said on Feb. 9, "should forget how the Soviet forces, which were a mighty, super force during the Cold War and entered Afghanistan, then left Afghanistan in a servile situation. Those who entered Syria today will also leave Syria in a servile way." In other words, Davutoglu was telling the Russians: Get out of Syria; we are coming in. The Russians did not even reply. They just kept on bombing.

  Will direct military involvement in Syria by Turkey and Saudi Arabia spark a NATO-Russia confrontation? Pictured: Russian President Vladimir Putin with Turkish President Recep Tayyip Erdogan (then prime minister), meeting in Istanbul on December 3, 2012. (Image source:kremlin.ru)

  Turkey keeps threatening to increase its military role in Syria. Deputy Prime Minister Yalcin Akdogan pledged that Turkey will no longer be in a "defensive position" over maintaining its national security interests amid developments in Syria. "Can any team," he said, "play defensively at all times but still win a match? … You can win nothing by playing defensively and you can lose whatever you have. There is a very dynamic situation in the region and one has to read this situation properly. One should end up withdrawn because of concerns and fears."

  Is NATO member Turkey going to war in order to fulfill its Sunni sectarian objectives? And are its Saudi allies joining in? If the Sunni allies are not bluffing, they are already giving signals of what may eventually turn into a new bloody chapter in the sectarian proxy war in Syria.

  First, Saudi Arabia announced that it was sending fighter jets to the Incirlik air base in southern Turkey, where U.S. and other allied aircraft have been hitting Islamic State strongholds inside Syria. Saudi military officials said that their warplanes would intensify aerial operations in Syria.

  Second, and more worryingly, Turkish Foreign Minister Mevlut Cavusoglu said that Turkey and Saudi Arabia could engage in ground operations inside Syria. He also said that the two countries had long been weighing a cross-border operation into Syria — with the pretext of fighting Islamic State, but in fact hoping to bolster the Sunni groups fighting against the Shiite bloc — but they have not yet made a decision.

  In contrast, Saudi officials look more certain about a military intervention. A Saudi brigadier-general said that a joint Turkish-Saudi ground operation in Syria was being planned. He even said that Turkish and Saudi military experts would meet in the coming days to finalize "the details, the task force and the role to be played by each country."

  In Damascus, the Syrian regime said that any ground operation inside Syria's sovereign borders would "amount to aggression that must be resisted."

  It should be alarming for the West if Turkey and Saudi Arabia, two important U.S. allies, have decided to fight a strange cocktail of enemies on Syrian territory, including Syrian forces, radical jihadists, various Shiite forces and, most critically, Russia — all in order to support "moderate" Islamists. That may be the opening of a worse disaster in Syria, possibly spanning over the next 10 to 15 years.

  The new Sunni adventurism will likely force Iran to augment its military engagement in Syria. It will create new tensions between Turkey-Saudi Arabia and Iraq's Shiite-dominated government. It may also spread and destabilize other Middle Eastern theaters, where the Sunni bloc, consisting of Turkey, Saudi Arabia and Qatar, may have to engage in new proxy wars with the Shiite bloc plus Russia.

  Washington should think more than twice about allowing its Sunni allies militarily to engage their Shiite enemies. This may be a war with no winners but plenty of casualties and collateral damage. Allowing Sunni supremacists into a deeper sectarian war is not a rational way to block Russian expansion in the eastern Mediterranean. And it certainly will not serve America's interests.

  Turkey with Saudi Arabia are too weak militarily to damage Russia's interests. It is a Russian trap — and precisely what the Russians are hoping their enemies will fall into.

  

  

  

  

  

• Visualizing America's Shocking Defense Spending

  Wouldn’t it be a strange world to live in if 50% of military spending was paid for by just 5% of the population? Sometimes truth is stranger than fiction.

   

  

  Courtesy of: Visual Capitalist

   

  Every year, the United States government spends the equivalent of $3,300 for each working citizen on its military budget. In aggregate, this grand total of $610 billion in defense spending amounts to about half of the dollars globally spent on the military.

  With $216 billion spent per year, China has the next largest budget by far. But, to get to a number even close to U.S. spending, the military budgets of China, Russia, Saudi Arabia, India, Japan, United Kingdom, and France would have to be added together.

  From another perspective, the amount of annual defense spending per working person in the U.S. is higher than the income per capita of 70 countries, including places such as Morocco, Nigeria, Nicaragua, India, and Ukraine.

  This means that if somehow the people of Nicaragua were taxed 100% with all money going to defense, it would only amount to a budget 1.8% of the size of America’s.

  Source: Visual Capitalist

  

  

  

  

  

• The Mainstream Media Wants Marco Rubio To Be Your Next President

  Submitted by Neal Gabler via TheAntiMedia.org,

  So here is how you play the media like an accordion.

  First, you deliver a debate performance so notably bad, so mechanical and unthinking, that you have everyone buzzing about it, even those in the media who gush over you. Then you take responsibility for being awful because, after all, you don’t want to give the impression that you might not really be responsible for uttering the words you uttered – four times.

   

  Then you invite a bunch of reporters on your campaign plane to show what a personable fellow Marco Rubio is, how unrehearsed and natural, and they take the bait, basically writing mash notes about how unrehearsed and natural you are. Note Sean Sullivan of The Washington Post: “His hour-long charter flight interview also did not begin with an emphasis on his ‘new American century’ theme, as is often the case. Instead, it started with Twix bars: Rubio wanted to demonstrate how cold and hard they were after explaining at breakfast that he had cracked a molar biting into one.” What a normal, unrobotic guy!

   

  And then the piece de resistance. You don’t repeat yourself mindlessly at the next debate. You give exactly the same kind of debate performance you gave before Gov. Chris Christie called you out, sounding like a polished kid in a high school debate club. And guess what? Surprise of surprises, the media declare you the winner because you didn’t make the same idiotic mistake you made the last time out. Chris Cillizza of the Post found him “thoughtful, nuanced and convincing.” (Whatever else one might say about them, nuanced is about the last thing any of these Republicans is.) The reliable Republican booster, Jennifer Rubin, in the same paper called his performance a “strong comeback.” CNN: “Rubio turned in a notably better performance than he did the last time.” Charles Krauthammer: “I think he was number one, Rubio.” And, best of all, from the Washington Examiner: “The narrative coming out of this debate will be about Rubio redeeming himself.”

  Exactly. The narrative the press comes away with – the narrative they just happen to be writing — is that Rubio is back. But, let’s face it. He isn’t back because he was so brilliant last Saturday night, wielding some sort of rapier wit or intellectual superiority or a plethora of ideas. The New York Times, which hasn’t had much of a Rubio crush, save for a small post-Iowa lapse, found him lackluster. No. He’s back because the media desperately need him to come back to save the Republic from Trump and Cruz. The media, who are usually just content to stir up some trouble so that they can cover it, have got a horse in this race, and they are going to keep whipping him to the finish line, even after he stumbles.

  It’s enough to give you whiplash. Two weeks ago, the media cheered Marco Rubio’s third-place finish in the Iowa caucuses – yes, third place – as a stunning victory. On Tuesday, NBC Nightly News declared “Rubio Rising.” Before the Iowa vote, The New York Times reported, “A Resurgent Marco Rubio Sprints to the Finish in Iowa” and then, after the vote, bannered, “Marco Rubio Sees Bounce in Latest New Hampshire Poll.”

  Two days later it ran an idolatrous piece (that aforementioned lapse) which would turn into a major goof considering what was to come: “Once Cautious in Campaign, Rubio Shows More of His Personal Side.” The AP also gushed: “Rubio Could See Fortunes Rise From Iowa Finish.” “Rubio Soars,” wrote Washington Post columnist Jennifer Rubin. CNN’s Alex Conant explained, “Why Marco Rubio is the Real Winner.” Bill O’Reilly declared “Rubio a big winner.” Did I mention he finished third with 23% of the vote?

  Then came New Hampshire, where Rubio finished fifth behind even the political zombie Jeb Bush, prompting Nick Baumann of The Huffington Post to crack sarcastically: “Marco Rubio Was the Real Winner of the New Hampshire Primary.” And now? He’s baaaack

  Before we get to the debate debacle in which New Jersey Gov. Chris Christie eviscerated Rubio and derailed his candidacy (at least temporarily), you have to understand why the media seem to love Rubio, and why they were willing to elevate him to frontrunner status when he was barely registering in the polls they so worship, not only because it helps explain Rubio but also because it helps explain the media.

  

  It was back in February 2013 that TIME magazine ran its now-famous cover of Rubio, staring confidently into the camera, with “The Republican Savior” slathered over him in big yellow letters. Here is how Michael Grunwald’s article began:

  “Oriales Garcia Rubio knows how it feels to want more. When she was a girl in central Cuba in the 1930s, her family of nine lived in a one-room house with a dirt floor. Her dolls were Coke bottles dressed in rags. She dreamed of becoming an actress. Instead she married a security guard, moved with him to the U.S. and found work as a hotel maid. Her husband got a job as a bartender while starting a series of failed businesses – a vegetable stand, a dry cleaner, a grocery. They never had much. But their house had a real floor. Their daughters had real dolls. They sent all four of their children to college to chase their own dreams.”

  No, that’s not a Rubio press release. That was actually written by a journalist. But you can see the appeal. It is a stirring if somewhat stale narrative, and the media are narratively driven. It panders to American exceptionalism, and the media are, after all, in the pandering business. And it turns Rubio into a star, and the media are into the star making.

  None of this would matter, of course, if Rubio didn’t also have the aesthetic desiderata the media adore. Despite the saying that politics is show business for ugly people, the media recognize the role of aesthetics. Mitt Romney based his entire political career on them. Rubio was young, which meant he was new – an iPhone 6 in an iPhone 5 business. He had “boyish good looks” according to Grunwald. He knew how to give a good speech – “a compelling speaker,” said Grunwald. He was Hispanic in a party that had pretty much disdained Hispanics even though that demographic was expanding. And he had seemed to strike a balance between idealism and pragmatism – between the aspirational, as pundits like to call it, and the political.

  In short, he was a designer candidate – practically hand-tooled to fill the holes in the Republican demographic, which is why he was allowed to jump the line to get to the presidency.

  And then there was the symmetry. Rubio is often called the GOP’s Barack Obama, given their ages and the fact that both were first-term senators at the time of their candidacies. They each have minority status, they delivered well-received keynote speeches at their party conventions, and they were ambitious enough not to wait their turn. (Of course the dissimilarities are far more striking.)

  The mainstream media love this sort of symmetry – Rubio is Obama, Sanders is Trump, the Clintons are the Bushes — presumably because it allows them to appear balanced and thus defend themselves from the bias flak they invariably take. It is the Newton’s Law of political coverage that for every action in one party, there is an equal and opposite reaction in the other, though these are usually false equivalencies that have served to make the Republican Party seem more rational than it really is. Denial of climate change? Well, Democrats want to stop coal-burning plants. So there!

  For Rubio, symmetry had another advantage besides making him seem less extremist. It made him the youthful idealist of the party, its unifier, and blessed him with a sense of Obama-like inevitability.

  And  that was before the 2016 race began to unfold. No one suspected in the early going that Donald Trump, a kind of novelty candidate, would actually gain traction, much less become a serious contender. And though the media knew that Cruz would have a formidable advantage in his evangelical base, no one took him seriously as the actual nominee for the simple reason that just about everyone in the party except the extremist rank and file hated him.

  Rubio’s only real competitor for what pundits call the “moderate lane” way back in the fall was Jeb Bush, and he was a tired one at that. Once the race began, however, and Trump and Cruz attracted their constituencies, while Jeb foundered, the Florida senator became not only the Chosen One but also the Great Hispanic Hope who, we are told endlessly, is the candidate who can and must stop Trump and Cruz from getting the nomination. Among party stalwarts, Nate Silver’s FiveThirtyEight has him with a commanding lead in the endorsement poll.

  It is certainly no coincidence that the media, who loathed Trump and didn’t like Cruz much either, saw Rubio as their kind of candidate, too. That is precisely the argument New York Times’ columnist Ross Douthat made back in October when he predicted Rubio would be the GOP nominee. The party had no choice, he wrote, since it couldn’t possibly nominate Trump (or Carson back then) and Cruz had that likeability problem. And don’t forget this when you consider why Rubio is such a media favorite: whereas Trump and Cruz don’t need the media, Rubio needs them desperately. With his thin resume, they give him credibility. The media enjoy that power. They like being kingmakers, or even savior-makers.

  The new narrative of the campaign season, then, was that Trump might pull in the “angries” and Cruz the “crazies,” but that one establishment candidate would emerge to stop them and that Rubio was the most likely to do so, which is why he got such an outpouring of media attention after Iowa. Not incidentally, this also plays into one of the few demonstrable media biases. The mainstream press likes moderates, or at least those they perceive to be moderates, much better than it likes extremists or alleged extremists. Presumably it fits the press’s self-image both as objective observers and as national stewards, gently guiding the country away from the fringes. Rubio is not a moderate by any means. In fact, he brags that he is the most conservative candidate in the race, and he might not be far off. But in this field, the media have apparently decided he is one because, again, they may feel they have no other choice.

  So there it was – Trump bloviating toward a New Hampshire victory, Cruz lazing his way through the state on his way to Super Tuesday and the South, and Rubio, the fair-haired boy, needing only a second or third-place finish to set the media hearts aflutter. What happened last Saturday night at the Republican debate, with Chris Christie’s perfectly timed attack on Rubio’s authenticity, suddenly changed all that.

  We know now that Rubio committed a huge gaffe by repeating verbatim four times a little speech about Obama deliberately changing America, just as Christie was accusing him of repeating the same rote speeches again and again and again. (It is worth mentioning, since no one seems to have done so, that the substance of Rubio’s charge of Obama being the first president to change the country, which should have been the object of obloquy, is both idiotic and just plain wrong.) But the problem really wasn’t that Rubio was on autopilot. He had been on autopilot throughout the entire campaign. Indeed, Rubio had often been praised by the media for the very thing Christie called him out on. Rubio had “got his message locked down,” according to one reporter. He was “well-spoken” and “articulate” – a “great debater.” In debate after debate, in which he recited his talking points mechanically without any hesitation or evident ratiocination, the pundits declared him a winner.

  What voters didn’t seem to know, and what they certainly weren’t told by the media, is that whenever Rubio appeared, he was regurgitating what he had memorized. If you do a Lexis-Nexis search of the terms “Rubio” and “robot” in major newspapers from January 1 through February 6, here is what you will find: Not once was the term “robot” or “robotic” applied to him.

  Political reporter Jason Zengerle of GQ explained why. “Want to know a dirty little secret about political journalists?” he wrote on his blog after the debate. “A lot of the time, we don’t pay attention to the speeches of the politicians we cover.”

  Yes, they all heard Rubio saying the same things over and over. The father/bartender story, the mother/K-Mart story, the American Dream stuff, etc. etc., etc. – all canned. And, Zengerle goes on: “Even Rubio’s jokes are canned. And Rubio doesn’t merely confine these lines to his stump speech. They unerringly show up in debates and his answers to voters’ questions, as well. In fact, when The New York Times recently published a story about Rubio’s supposedly ‘intimate—and increasingly improvised—glimpses’ into his life in response to voters’ questions [the story cited earlier], at least two of the examples buttressing this dubious claim were well-worn passages from his stump speech.”

  So, many in the press knew. They knew what Christie knew. They knew Rubio wouldn’t, couldn’t, deviate from the script. Why didn’t they tell us? Because they didn’t much care, even if Rubio continuously crossed the line from repetitive to rehearsed to robotic. What’s more, they didn’t think the voters would care either.

  Again, Zengerle of Christie’s criticisms: “It was hard to imagine them striking a chord with voters.” Even after Rubio’s Teddy Ruxpin performance, Byron York of the Washington Examiner wrote that the press coverage of Rubio’s debate flub “showed again how the concerns of the media commentators are sometimes far from the minds of the actual voters.” And, York didn’t seem to realize, sometimes they aren’t. The press couldn’t imagine that voters might actually want candidates who were thoughtful and authentic and intellectually nimble.

  What the MSM did not think worthy of reporting, however, the blogosphere did report. (In fairness, one local New Hampshire reporter, Erik Eisele of The Conway Daily Sun, wrote on December 23, after spending twenty minutes with Rubio for an editorial interview, that “it was like someone wound him up, pointed him towards the doors, and pushed play.”) Go back into the Twitter-sphere – way back to last year – and you’ll find hundreds if not thousands of tweets talking specifically about Rubio’s repetitions, about his canned speeches, about his avoiding answering press questions, about his obsession with his talking points. The tweeters knew, many of them, because they had seen him doing it during the debates – the very same debate performances the media lauded. And when Christie, who may very well have been following the lead of the Twitter-sphere, lunged, Twitter erupted. (An argument actually ensued over whether Marcobot was a better moniker for Rubio than Rubiobot.) It took Christie to do the work the media should have been doing. But it probably took the blogosphere and social media to poke Christie.

  And then, and only then, the media pounced, not because they observed something they hadn’t previously seen, but because, I guess, they didn’t want to be left behind by the social media. (It is hard to keep a tally of how many YouTube views of the Rubio repetitions there have been; I lost count at about two million.) Thus did Rubio’s standard operating procedure become his Howard Dean Scream or his Rick Perry Brain Freeze.

  But there were differences between his gaffe and theirs, not the least being that Rubio’s was not an aberration; it was his campaign. The media didn’t need any prompting to humiliate and ultimately destroy Dean and Perry because the media didn’t particularly like them. Dean’s media narrative was that he was a lucky, somewhat daffy, beneficiary of a leftish tilt in the Democratic Party after the Iraq War, and Perry’s was that he was a dunce. Their actions only confirmed the pre-existing narratives, and the media were only too happy to amplify their missteps in print and on the air. (When you come right down to it, Dean’s exuberance, which turned out to be a mic problem not a candidate problem, or Perry’s forgetfulness really weren’t much of anything, except for confirming the media narrative.)

  On the other hand, the media liked Rubio. They were the ones who had helped propel him. They didn’t want to pile on. But when Christie underlined Rubio’s mindless parroting, he not only struck at one of the struts of Rubio’s alleged strength – that well-spokenness – and made him look foolish, he made the media look foolish, too. Rubio turned out to be a confirmation of exactly what Christie had said he was – a “student council president,” an empty suit, a face-man. As Ross Douthat, who had predicted Rubio’s eventual victory, tweeted that debate night: “I’ve watched Rubio for a long time, always thought that critiques of him as a talking points robot were way overblown. But oh dear.”

  You might have thought Rubio would be finished. And If Marcobot had become a meme, like the Scream or the Brain Freeze, he would indeed have become political toast. Now we know that is not going to happen. The only story the media like better than burying a candidate is resurrecting one, and Rubio had already been anointed the savior. What’s more, the GOP establishment and the media still need their unifier, the hero to oppose the villains Trump and Cruz, and there aren’t too many candidates left from whom to choose, only Rubio, Bush and Kasich. And Rubio, for his part, has a Dracula candidacy. You get the feeling you’ll have to put a stake through its heart to stop it.

  Trying to save himself, Rubio was contrite on election night in New Hampshire. He said he accepted responsibility for what had happened and promised he wouldn’t do it again, though exactly what that meant was hard to parse. Of course, he was responsible. Who else could be? And what wouldn’t he do again? Repeat himself word for word four times while he was being told he kept repeating himself? But no sooner had Rubio issued his mea culpa than Van Jones, one of CNN’s talking heads, pronounced himself impressed, and said it “took a lot of character” for Rubio to do what he had done. Later that week, on the PBS NewsHour, Mark Shields said the same thing. He actually praised Rubio for taking responsibility.

  So the rehabilitation had begun almost as soon as the New Hampshire debate ended, and it was pre-ordained that as soon as the South Carolina debate ended, the media would announce that Rubio is back on the ascent — a self-fulfilling prophecy, if ever there was one. After all, the media were the ones writing the script. It is going to take a lot more than self-inflicted wounds to fell this candidacy. It is going to take an objective media. Good luck with that.

  

  

  

  

  

• 50% Of Canadians Say They Are Within $200/Month Of Being Unable To Pay Their Bills

  It was just last month when we profiled Canada’s “other problem”: record high household debt.

  Canada is struggling to cope with falling crude prices which have put enormous amounts of pressure on some parts of the country, most notably Alberta, where suicide rates are on the rise, as is property crime and foodbank usage.

  Amid the malaise, households are also being pressured by persistent CAD weakness – which is of course a symptom of falling crude. The currency’s decline has driven up prices for things like fresh fruits and vegetables, 75% of which Canada imports. That puts an extra burden on households that are already laboring under record debt.

  

  As we showed three weeks ago, household debt relative to disposable income is sitting at 171% in Canada meaning that for every $100 in disposable income, households have debt obligations of $171. That’s the highest figure for any G7 country.

  

  That’s disconcerting for any number of reasons. As we wrote, “this would be bad enough in a favorable economic environment with a benign outlook for rates, but it’s a veritable nightmare when the economy is sliding headlong into recession and central planners are hell bent on trying to normalize policy some time in the next five or so years.”

  In other words, the outlook for Canada’s economy isn’t good, and that means joblessness is likely to rise going forward…

  

  But interest rates have virtually nowhere to go but up – at least in the medium to long-term. Sure Stephen Poloz may cut rates one or two more times to try and help the oil patch avert certain insolvency, but at 50 bps, there’s only so much lower Canada can go unless the BoC intends to experiment with NIRP. 

  This means that households could face the disastrous prospect of rising rates in an unfavorable economic environment. Think a monetary policy mistake like hiking into a recession can’t happen? Just look at what the Fed did in December. Throw in the fact that many families are overburdened thanks to the astronomical cost of housing in places like Vancouver and Toronto and one is inclined to think that some Canadian households may find themselves in quite a bit of trouble going forward. 

  But don’t take our word for it, just ask Canadians, half of whom said in response to a new Ipsos Reid survey that they are within $200 per month of not being able to pay their bills and make their debt payments.

  “Ipsos Reid conducted the poll about a week after the Parliamentary Budget Office issued a report on Jan. 19 that said Canada has seen the largest increase in household debt relative to income of any G7 country since 2000,” The Calgary Herald writes, adding that “31 per cent of respondents said any increase in interest rates could move them towards bankruptcy“.

  The survey also found that 25% of Canadians are already unable to cover their bills and service their debt.

  So what do you do if you’re the BoC? Cut rates to boost the economy and rescue the oil patch at the risk of driving the cost of imported goods through the roof, thus pressuring consumer spending and thereby creating another headwind for the economy? Or hike to bolster the loonie at the risk of tanking not only the oil patch but also the 31% of the country that say they’ll slip into bankruptcy it rates rise?

  Your guess is as good as ours.

  

  

  

  

  

• "We're Voting With Our Middle Finger": South Carolina Explains Why It Will Pick Trump

  Earlier today, we noted that going into the South Carolina primary, Donald Trump is sitting on a commanding lead not just in the state, where he’s up 17 points, but nationally, where his lead over Ted Cruz is an even larger 20 points.

  Perhaps most disconcerting for Cruz, Trump has a nine point national edge among white evangelicals, a voter base the Texas senator should by all rights dominate. Trump is also only 3 points behind Cruz among voters who identify as “very conservative.”

  

  In short, the Teflon Don is living up to the hype and while everyone was laughing last summer when Trump declared his candidacy, the only one who is laughing now is Trump himself.

  Some were surprised that the latest GOP debate – which appeared at times as though it might devolve into a fist fight – didn’t dent Trump’s numbers. We’re not sure why the shock.

  Quite a bit of what Trump said at the debate was true. America shouldn’t have gone to Iraq. There were no weapons of mass destruction. Jeb Bush’s brother didn’t prevent 9/11. All of those statements – which drew boos from a crowd Trump claimed was stacked with Bush supporters – pale in comparison to virtually everything else the bellicose billionaire has said on the campaign trail. We’re talking about a candidate that called immigrants rapists, says he will demand that Mexico pay for a wall on the border, said John McCain isn’t a war hero, and called for a ban on Muslims. And people are somehow surprised that a few slightly controversial comments about foreign policy didn’t sink him in the polls? The most amusing thing about the debate – well, besides how utterly absurd it was – was that Trump at times appeared to have a better grip on foreign policy than anyone else on the stage.

  In any event, The LA Times is out with a new piece that explores why South Carolina voters are overwhelmingly coming out in support of Trump. Excerpts are presented below, but John Baldwin, a used-car dealer from Greenville summed up the mood quite succinctly: “We’re voting with our middle finger,” he declares. We imagine Bernie Sanders’ supporters would say the exact same thing, if asked. A message to Washington’s entrenched political aristocracy: Americans have just given you the finger. Literally.

  *  *  *

  From The LA Times

  Robert Bowers, a 50-year-old debt collector, conceded that Donald Trump may have gone “overboard just a little bit” when he attacked President George W. Bush, saying he lied about weapons of mass destruction in Iraq and failed to stop the Sept. 11 attacks.

  But that did not stop Bowers, of Fountain Inn, S.C., from putting on a cap with Trump’s “Make America Great Again” slogan and walking through an icy cold parking lot so he could crowd into a raucous Trump rally Monday night.

  “I hope he drops an F-bomb,” one fan said to another on the way into the rally.

  During past controversies, Trump’s supporters have stuck with him, believing his unvarnished criticism of immigrants, Muslims, women and Sen. John McCain’s war record shows he is willing to take on establishment interests and unwilling to bend to what he calls political correctness.

  “We’re voting with our middle finger,” said John Baldwin, a used-car dealer from Greenville.

  Baldwin and his wife were passing out stickers and signs calling Trump’s supporters the “silent majority,” a phrase that dates to President Nixon and is used by Trump to assert that he is giving voice to beliefs that others are afraid to say out loud.

  Betty Carter also didn’t like the way Trump went after former President Bush. But she’s still sticking with him.

  “He needs to know where he is: He’s in Bush country,” she said waiting in a long line to see him Tuesday afternoon at Riverview Park in North Augusta, where she moved more than 15 years ago to care for her grandkids. “I didn’t like it, but I’m still voting for him.”

  Monday night’s rally was typical of Trump’s performances, which feel like arena rock concerts as much as political events. Thousands packed into the TD Convention Center. Many stood along the sides of the cavernous convention hall when the seats ran out. Others were sent to an overflow room or turned away. Giant screens lit up Trump’s face; spotlights vacillated in front of the stage; Van Halen music blared.

  “Didn’t you love this last debate?” Trump said to cheers. “They came at me from every angle.”

  “We shouldn’t have gone into Iraq. That was a big mistake because it destabilized the whole Middle East,” Trump said. “Some people say ‘Oh, don’t say that.’”

  “Everything you see right now is an offshoot of that decision,” he added,

  “Saddam Hussein killed terrorists,” Trump said. “He didn’t do it politically correct. He found a terrorist, they were gone within five seconds, OK. With us, we find a terrorist, it’s going to be 25 years and a trial.”

  *  *  *

  We’re reasonbly sure Trump has no idea that Islamic State’s top ranks are almost entirely comprised of former Baathists.

  But in this case we’ll forgive his ignorance because when he says that everything wrong in the Mid-East today is “an offshoot” of the decision to invade Iraq, he is 100% correct.

  

  

  

  

  

• Guest Post: Abolish The Supreme Court

  Submitted by Ryan McMaken via The Mises Institute,

  The current frenzy over the vacancy on the Supreme Court in the wake of Scalia’s death should be enough to make it clear to even the most naïve observer that the Supreme Court is a partisan and political institution, and nothing like the group of disinterested non-political sages that we are supposed to believe the court to be. As I wrote in “The Mythology of the Supreme Court,” the idea of the court as a group of jurisprudential deep thinkers is a tale for little school children:

  This view of the court is of course hopelessly fanciful, and the truly political nature of the court is well documented. Its politics can take many forms. For an example of its role in political patronage, we need look no further than Earl Warren, a one-time candidate for president and governor of California, who was appointed to the court by Dwight Eisenhower. It is widely accepted that Warren’s appointment was payback for Warren’s non-opposition to Eisenhower’s nomination at the 1952 Republican convention. The proposition that Warren somehow transformed from politician to Deep Thinker after his appointment is unconvincing at best. Or we might point to the famous “switch in time that saved nine” in which Justice Owen Roberts completely reversed his legal position on the New Deal in response to political threats from the Franklin Roosevelt administration. Indeed, Supreme Court justices are politicians, who behave in the manner Public Choice theory tells us they should. They seek to preserve and expand their own power.

  In practice, the Supreme Court is just another federal legislature, although this one decides matters of public policy based on the opinions of a mere five people, most of whom spend their time utterly divorced from the economic realities of ordinary people while cavorting with oligarchs and other elites.

  The court’s legislative power is matched by its political power since every vacancy on the court is a gift to the dominant political parties. Every time a justice dies or retires, the event provides political parties with yet another opportunity to issue hysterical fundraising letters to the more monied supporters and demand unqualified support from the rank and file while claiming the SCOTUS-appointment process makes the next election “the most important ever.”

  It seems to bother few, however, that we live in a political system where the most important political and economic matters of the day — or so we are told — are to be decided by a tiny handful of people, whether they be the chairman of the Federal Reserve, five Supreme Court justices, or a president with his “pen and phone.”  

  Just as it is supremely dysfunctional for a major economy to hang on every word of a central bank chairman, so too should it be considered abnormal and unhealthy for a country of 320 million people to wait with bated breath for the latest prognostications of nine friends of presidents in black robes from their palatial offices in Washington, DC.

  The Court Is Just a Group of Nine Politicians in Fancy Robes

  We’re told by pundits and politicians from across the spectrum how indispensable, awe-inspiring, and absolutely essential the Supreme Court is. In truth, we should be looking for ways to undermine, cripple, and to generally force the Court into irrelevance.

  With the expected eulogies for Scalia among his supporters, we’re being berated with the idea that Scalia was an “originalist” who stuck doggedly to the clear text of the Constitution as imagined by its authors. In truth, Scalia was no originalist, since, if he had been one, he would have rejected the whole notion of judicial review, which is itself a total innovation and fabrication dreamed up by Chief Justice John Marshall. Absolutely nowhere does Article III of the Constitution (the part that deals with the court, and is half a page long) give the court the power to decide on what can be legal or not in every state, town, village or business of the United States. Moreover, as Jeff Deist notes today, the Court’s powers we so blithely accept as fait accompli are mostly made up:

  • The concept of judicial review is a fabrication by the Court, with no basis in Article III. 
  • Constitutional jurisprudence is not constitutional law.
  • The Supreme Court is supreme only over lower federal courts: it is not supreme over other branches of government.
  • Congress plainly has constitutional authority to define and restrict the jurisdiction of federal courts.

  A Tool of Centralization of Power

  But don’t look for many in Washington to admit this any time soon. The Supreme Court serves a very important function in centralizing federal power in DC and in the hands of a small number of senior federal personnel. And how convenient it is for members of the ruling classes to influence and access these guardians of the federal government's intellectual respectability: the members of the court, presidents, and senators are all generally all members of the same socio-economic class, send their children to the same elite schools, and work and live together in the same small social circles. At the same time, this closed social and professional circle also helps to diminish the influence of those outside the Washington, DC bubble. 

  The Court in Its Present Form Could be Abolished Overnight

  If it wished to, Congress could overhaul the Court this afternoon. Nothing more than simple legislation would be necessary to radically change or completely abolish the lower federal courts.  Congress could decide what topics fall under the lower courts' jurisdiction, and thereby limit the Supreme Court’s jurisdiction as well. Congress could also decide that the Supreme court is made up of one justice or 100 justices.

  Indeed, since the Supreme Court is nothing more than a legislature, why not make it one? Why not make SCOTUS a body of 50 “judges,” with the understanding that the Senate will not ratify any appointment which does not hold to the rule that each state gets a judge on the Court? Politics and ideology prevent this, but no Constitutional provision does. 

  “But the court would just declare all those reforms to be unconstitutional,” some might say. That is true, although to that, we need only paraphrase the (possibly apocryphal) words of Andrew Jackson: “the Court has made its decision. Now let them enforce it.”

  The Court need not worry, though, since its can nearly always count on the support of the President and the Congress precisely because the Court serves an essential role in augmenting the power of the other branches of the federal government.

  The Solution: Mock the Court and Seek to Undermine It

  Far too often we’re told to revere the Court simply because it is enshrined in the Constitution. Slavery is enshrined in the Constitution too. Need we revere that?

  Even if the Supreme Court’s current form were actually Constitutional (which, again, it is not) it would still be a obsolete relic of a distant age. The idea that the Supreme Court could somehow address all the legal issues arising in a vast confederation was absurd from the outset, but all the more so now.Recognizing this, the authors of the Constitution created the Court as a body designed to address only conflicts between states, or between individuals of different states. In other words, it was supposed to head off conflicts that could lead to crises between state governments; it was designed to prevent wars between states. Whether or not your local confectioner should bake a cake for gay couples wasn’t exactly at the top of the agenda.

  Even in the late 18th century though, the Court's status as a tiny elite club required the creation of the myth that the court was somehow "apolitical" which was buttressed by the creation of lifelong tenure for judges, no matter how senile or out of touch. Otherwise, prevailing ideas of representation in government at the time would have never allowed for a political institution like the Court to gain acceptance. This can be illustrated by the fact that in 1790, Congress was far more "democratic" than it is now, in the sense that there were far more representatives per person than today. Elections in many state governments were annual affairs, and legislative districts very small by today's standards, ensuring that your elected officials lived in close proximity to you and were physically accessible. 

  In contrast to this, in 1790, there was one Supreme Court judge for every 600,000 Americans.  Today, there is one Supreme Court judge for every 35 million Americans. Not even the Soviet politburo managed that level of non-representation. 

  On the other hand, there is no reason why a council of state governments could not be employed to address issues of conflicts between states, and the states (or even small portions thereof) — not nine political appointees — should perform the function of judicial review. This isn't the 18th century.  Having delegates from a variety of diverse and geographically varied states remain in constant contact and regularly meet is by no means a logistical impossibility. 

  Even worse, many of the justices haven't had a real job in decades and have no idea how reality actually works. It's unlikely that the older members of the Court could even use Google to find a phone number on the internet, let alone understand the complexities of  how modern people run their businesses, raise their families, or function in every day life. The Court is largely the domain of geriatrics who are paid generously to make complex judgments about a world they rarely engage and can scarcely understand.

  If Americans want a government that's more likely to leave them in peace, they should ignore the pleas to elect another politician who will just appoint another donor or political ally to the court. Instead, state and local governments should seek at every turn to ignore, nullify, and generally disregard the rulings of the Court when they run counter to local law and local institutions where — quite unlike the Supreme Court — average citizens have some actual influence over the political institutions that affect their lives.

   

  

  

  

  

  

• Yuan Extends Slide As China Weakens Fix By Most In 5 Weeks

  It appears last night’s terrible trade data has reawoken the beats of Chinese devaluation. Amid offshore Yuan’s slide since China came back from vacation, PBOC fixed the Yuan 107 pips weaker against the USD – the biggest ‘devaluation’ since the first week of January. Chinese stocks are opening modestly lower (despite exuberant panic-buying in Japan at the open which spiked Nikkei 200 points).

  The biggest Fix weakening since the first week of January…

  

   

  as Offshore Yuan extends its post-holiday decline…

  

   

  This has pushed CNH “cheap” once again to CNY as outflows rise and shorts rebuild positions.

   

  Charts: Bloomberg

  

  

  

  

  

• "Venezuela’s CDS Is Now At The Same Level As Greece’s Three Months Before Its Default"

  In addition to being a hyperinflating, socialist banana republic with a devastated economy Venezuela has another problem: debt,  of which it has some $70 billion with $9.5 billion due this year. It also has $15.4 billion in foreign reserves, of which two-thirds or around $10 billion, are held in gold bars, which as we said last week, “limits President Nicolas Maduro’s government’s ability to quickly mobilize hard currency for imports or debt service.”

  Furthermore, with Venezuela oil prices in the low $20s, it is unclear if PDVSA can even cover its costs, let alone save up cash for debt repayment.

  And while Venezuela recently enacted another gold swap this time with Deutsche Bank to allow it to monetize its gold, it remains to be seen if the local population which has so far taken all the punishments unleashed by the Maduro reign stoically, will stand idly by as the ruling regime quietly liquidates its last remaining assets.

  But while Venezuela’s upcoming default is not exactly news to anyone, the question remains “when” will it happen. Yes, the time is drawing close, but how close?

  Today we show one attempt at an answer, coming morbidly enough, from the very bank which will be holding Venezuela’s gold as part of the country’s gold swap – Deutsche Bank.

  This is what DB said:

  Keep an eye on EM credit: Venezuela’s CDS spread has risen above 9,500bps, like Greece’s in 2011 and our EM economists worry that a “Venezuela bond default has moved closer”. Venezuela has only about $70bn of external debt, according to the BIS, but a default would increase pressure on other commodity exporters, further adding to the general market stress

  The bottom line: “Venezuela’s CDS spread is now at the same level as Greece’s three months before its default” which is the strongest hint yet on how long the troubled socialist paradise has left.

  Visually:

  

   

  So is the reason why Deutsche Bank rushed to do Venezuela’s gold swap, something which would lead to the German bank almost certainly ending up in possession of its physical gold in case of a sovereign bankruptcy, the result of this prediction for a T-minus 90 days before Venezuela’s default? Find out some time in mid May.

  As for another important tangent, if Venezuela indeed defaults, the question then becomes: what will happen to its oil production – will the successor (military) regime pump more or less. That is a question the oil bulls (and bears) better answer quick.

  

  

  

  

  

• Foreign Officials Sell A Record $48 Billion In U.S. Treasurys In December

  There has been much speculation whether foreign official institutions (central banks, SWFs, reserve managers and so on) are selling Treasurys or equities, or both as part of the Quantitative Tightening phenomenon.

  Moments ago, courtesy of the latest TIC data we have an answer: based on the monthly flow report breaking down Treasury transactions between foreign official and private entities, in December the far more important, former, group sold $48.1 billion in US Treasurys: the highest single monthly outflow on record.

  

   

  This was partially offset by a $12.2 billion purchase by Private buyers, however as the chart below shows, on an LTM basis, December saw a total of $20.3 billion in selling, and was the third consecutive month of net selling by foreigners. This was the first such occurrence in 15 years.

  

   

  Finally, for all those curious what China is doing with its US Treasury holdings, using the TIC’s stock data, we find that between China and its offshore trading proxy “Belgium”, China dumped another $41 billion in TSYs, a move which continues to track the decline in its official reserve holdings almost TIC for TIC, pardon the pun.

  

  

  

  

  

  

• Presenting The Most Striking Way Chinese Are Evading Capital Controls

  First it was over-invoicing 'exports' to friends in Hong Kong; then it was Bitcoin, most recently it was buying domain names, and now, the ever-industrious (and increasingly desperate) Chinese have found a new way to beat the government's quasi capital controls… by losing.

  China Law Blog's Dan Harris explains how the Chinese are getting money out of China by losing in Arbitrations…

  File this one under “just when I thought I had seen/heard everything.”

  A month ago (exactly) we wrote about how it is getting a lot tougher to get money out of China. See Getting Money Out of China: What The Heck is Happening? Two weeks later, our own Steve Dickinson was interviewed by Bloomberg for a video piece, entitled, The Problem of Getting Money out of China. In the meantime, our China lawyers are getting a whole host of phone calls and emails from mostly foreigners who want to know (1) whether what their China counter-parties are giving as an excuse for not being able to send funds to invest or buy is true and (2) what can be done to get the funds?

  Some of those callers/emailers want to use us to test some idea/scheme/plan to get money out of China. With all due respect/disrespect, 99 times out of 100, their ideas are either severely flawed and/or likely to lead to jail time.

  But my favorite out of all of them came in through from an “advisor” to a Chinese company and the scheme they wanted to run by me was a plan to have the Chinese company quickly lose an arbitration in the United States. This is what I quickly surmised anyway, but it took me a bit of probing to discern this. Here, very roughly and with changes made to improve blog flow and to camouflage any identifiers (including nationality),  is how our conversation went.

  Australian advisor: Can your firm defend a Chinese company in a U.S. arbitration involving a $3.5 million breach of contract.

  Me: Sure. Not a problem, but that is not going to be inexpensive and we are going to require a large amount be paid upfront.

  Australian advisor: This one is going to be different because both sides will want it to move forward as quickly and as cheaply as possible.

  Me: Okay, that may be what they are saying now, but once these things get started that very well might change.

  Australian advisor: It won’t in this case.

  Me: Okay (while thinking, how many times have I heard someone insist that their matter is the one in a hundred that strays from the norm?)

  Australian advisor: The parties would even be willing to agree on the award.

  Me: Then why do they even need to arbitrate? The fastest, cheapest, easiest thing for them to do would be to enter into a settlement agreement that can be enforced in both China and the U.S. I’m just assuming that the other side is a U.S. company and that is why the arbitration is in the U.S.

  Australian advisor: There are extenuating circumstances.

  Me: Like what. And by the way, do you have the contract with the arbitration provision in front of you right now. What exactly does it say about arbitration? Where is it supposed to be and before what arbitral body? Does it provide for the winner to get its attorneys’ fees?

  Australian advisor: Not exactly. We were kind of hoping to have you draft the arbitration agreement.

  Me:  What? What are you talking about? Now I’m really confused. You cannot have an arbitration unless both parties agree to arbitrate. Are you saying that the contract between these two parties does not provide for arbitration but now the parties have agreed to arbitrate? That’s possible.

  Australian advisor: Yes.

  Me: Okay, what is the name of the other party and who is its lawyer?

  Australian advisor: We were going to ask you to form the American company and represent it too.

  Me: What? I don’t get it. My firm can’t represent both your Chinese company and the opposing party. It just can’t.

  Australian advisor: What if they were really the same party?

  Me: But they’re not.

  Australian advisor: Well, they really are.

  Me: How is that?

  Australian advisor: Because the whole point of this arbitration is to get an award that the Chinese company can show to the Chinese government.

  Me: “Not interested. No way are we going to do this and I really don’t appreciate your having wasted my time. Good-bye.”

  Get it?

  The Chinese company wanted us to represent it in a completely fake arbitration that it would lose so that it could then send $3.5 million to its own U.S. company so that — no doubt — in turn that US company could buy a house somewhere in the United States.

  Other lawyers: you have been warned.

  

  

  

  

  

• The Three Branches Of 'New Normal' US Government

  Presented with no comment.. but a big sigh…

   

  

   

  h/t The Burning Platform

  

  

  

  

• Why Aren't Presidential Candidates Discussing Who They Would Pick For Fed Chairman?

  Submitted by California State Assemblyman Mike Gatto

  Electing the next head of the Federal Reserve

  The large and eclectic field of presidential contenders is in full-out campaign-promise mode, as voters demand positions on everything from ISIS to ethanol.  With the economy so fragile, now might be a good time to seek commitments on who our next president will appoint to the Federal Reserve, and statements on what the proper role of the Fed should be.

  Recent history is too important to ignore. After the Fed lowered interest rates to zero during the recession, it found itself lacking options for further “stimulating” the economy. It therefore began what it called Quantitative Easing (QE), which works more or less as follows: A bank buys a treasury bond for $97 million. Assume this bond matures in one year, and will be repaid at $100 million, or (very roughly) a 3 percent annual interest rate.

  Under QE, the Fed creates new money. In our example, it will create $98 million, to buy this bond. By doing so, the interest rate has decreased to approximately 2 percent. And the bank made an easy profit, risk-free, on top of any commissions. But if the bank fails to lend out those funds, it does little for the economy.

  You might ask yourself why the quasi-governmental Federal Reserve doesn't just buy bonds directly from the Treasury. “No,” they say, “that would be too close to just printing money for the government.” As if using a middleman and generating private profits makes the process significantly more palatable.

  After easing for years, now the Fed seeks to raise rates. Of the available methods, it does not wish to force the government to repay loans, so it rolls over the bonds where possible. It also doesn't want to sell the bonds right back to the banks, which might make it appear they were “churning” – generating transactions to earn fees. And the Fed's typical pre-recession move – controlling the supply of money by soaking up bank reserves – would be ineffective now, since it created so much new money during the last decade.

  So, what will the Fed do? It will offer interest to banks on the funds they hold on reserve. In other words, the Fed will pay banks to let their money stay put, instead of lending it to me and you. The percentages might seem small, but remember, this is risk-free profit, generated on vast sums. If you're questioning these actions – bidding up an asset that private parties own, paying them a commission to buy it, and then paying interest on the money you gave them – you're not alone.

  Now that we've established that QE has profited banks, you might ask what it has done for the overall economy. Recently, certain economists have raised the possibility that it might have actually hurt it. Recall that conventional economics is often bad at predicting outcomes, like the extent that government spending (a theoretical stimulus) can “crowd out” private spending (and thus paradoxically hurt the economy) – or how the S&P downgrade of the United States' credit rating in August 2011 counterintuitively caused U.S. borrowing costs to decrease.

  These contrarian economists seek to explain why decades of Japanese efforts to spark inflation have had the opposite effect, and why similar efforts in the U.S. largely failed to reflate anything besides the stock market. They wonder if the reduction of interest rates has had a counterintuitive result.

  Conventionally, the "real" interest rate is the nominal (or common) interest rate, minus inflation. Therefore, if your bank pays you 5 percent on a CD, but inflation eats up 4 percent, your real interest rate is 1 percent. Similarly, if you borrow money at 7 percent, but inflation (and wages, investment returns, etc.) rise by 6 percent, then you're only really paying 1 percent on your loan. The contrarian economists theorize that real interest rates will always seek a certain level, independent of central-bank actions. Therefore, if the Fed depresses interest rates, inflation too will fall, to meet the real interest rate that the economy is pricing by itself. So if the Fed has driven down nominal interest rates to 1 percent, but the economy stubbornly sets a “real” interest rate of 1 percent, inflation will thus be zero.

  I believe the real interest rate is more the result of a subtraction calculation, than an innate level on which one can base a re-arranged equation. But one wonders if the Federal Reserve, by raising their interest-rate target during a time when many questioned the move, perhaps wants to test this theory.

  At any rate (pun intended), Americans are right to question whether the Fed's actions have had the intended results, whether they've benefitted anyone besides banks, and whether the Fed is experimenting with the economy at a time where everything feels pretty fragile. Let's hope the presidential field understands these concepts and lets us know where they stand sometime soon.

  Gatto is the longest serving member of the California State Assembly Committee on Banking and Finance, overseeing the world’s 8th largest economy.  He represents California’s 43rd Assembly District, which includes Los Angeles, Glendale and Burbank. www.asm.ca.gov/gatto

   

  

  

  

  

  

• Calgary's Housing Market Collapses While "Three-Alarm Blaze" Burns Next Door In Vancouver

  In Waterloo, Ontario, the property market is red hot.

  Dubbed “Canada’s Silicon Valley,” the city of just 140,000 people is drawing interest from real estate investors far and wide. Waterloo is around 70 miles west of Toronto and is home to a Google office as well as two universities and “dozens” of startups.

  One-bedroom apartments in a new development being pitched to investors are going for CAD$270,000 while a two-bedroom will run you CAD$340,000. Rents in the building are as high as $2,000/month.

  Vacancy rates are running at just 1.5%.

  Meanwhile, in Vancouver, housing has gone full-retard. Average home prices for detached residences rose to an astronomical $1.82 million in January. It’s not as insane in Toronto, but at $631,092, there aren’t too many “bargains” to be had.

  

  (Vancouver prices)

  New data out on Tuesday shows average property values on resold homes in the Greater Vancouver area rising by 30.9% in January while average prices in the Greater Toronto Area and in the abovementioned Waterloo rose 14.2% and 9% for the month, respectively.

  But oh what a difference a province makes.

  While the Canadian housing bubble is alive and well in Ontario and British Columbia, in the heart of Canada’s dying oil patch the picture isn’t pretty. We’ve documented the glut of vacant office space in downtown Calgary on a number of occasions. Here’s a visual for those who missed it. 

  

  Calgary is of course in Alberta, where collapsing crude has driven WCS down to just CAD1 above marginal operating costs. That’s led employers to cut jobs. In fact, last year was the worst year for provincial job losses since 1982. This has had a profound effect on Calgary and on Tuesday we learn that it isn’t just office space that’s sitting unoccupied.

  According to data from Altus Group sales of condos in the city fell a whopping 38% from 3,000 units to 4,805 units in 2015, marking the largest y/y drop since 2008. “The drop-off doesn’t bode well for 2016,” Bloomberg notes. “Calgary, the biggest city in the oil-producing province of Alberta, ended 2015 with one of the highest inventories of unsold condos, at 3,356 suites in the fourth quarter, according to Altus.”

  

  If you want to understand all of the above you need only look at the following chart which contrasts home prices in Calgary with those in Vancouver and Toronto:

  

  Clearly, one of those things isn’t like the others. “While we continue to believe that things just can’t any hotter, markets in B.C. and Ontario continue to prove us wrong,” TD economist Diana Petramala said. “[For Toronto and Vancouver], every month of double-digit home price growth raises the risk of a deeper home price correction down the road.” 

  “Hot doesn’t quite describe Vancouver’s three-alarm fire of a housing market,” Bank of Montreal chief economist Doug Porter remarked.

  So while you can’t give condos and office space away in Calgary, you for all intents and purposes have to be a millionaire to afford to live in British Columbia and especially in Vancouver which, judging by the parabolic chart shown above, is one of the most desirable locales on the face of the planet. 

  We close by noting that the Canadian real estate “bargain” we profiled three weeks ago has indeed sold – for $102,000 more than the original asking price…

  

  

  

  

  

  

• Stocks Surge On Biggest Short-Squeeze In 4 Months As Crude, Credit, & Carry Crumble

  Stocks are up – just ignore everything else… "all is well"

   

  One of these things is not like the other… Stocks were panic-bought once Europe closed but Crude, Credit, and Carry crumbled…

  

   

  From the moment a UAE minister opened his mouth last Thursday afternoon, US equities have soared…

  

   

  This is the best 2-day gain for the S&P since August!

  

   

  Small Caps & Trannies were best as the squeeze came on… panic-buy8ing into the close…

  

   

  As "Most Shorted" have soared 7% off Thursday lows with a big squeeze at the open today…

  

   

  The last 2 days are the biggest short-squeeze in over 4 months…

  

   

  US equities decoupled from Oil and USDJPY as Europe closed…

  

   

  US credit markets – having had the day off yesterday – are not buying the euphoria…

  

   

  Financials and Energy stocks both showed gains on the day despite credit weakness (and underlying weakness in crude)…

  

   

  Don't show Jamie Dimon this chart…

  

   

  While many European banks gave up their early equity gains – including CS and DB – US Financial stocks enjoyed another day of exuberance following Jamie Dimon' "Big Buy" – the only trouble is… credit risk for these names actually rose 1bp to 171bps… are you really going to fall for this again?

  

   

  Once again VIX was extremely noisy with spikes (all lower) all morning..

  

   

  Treasury yields traded in a narrow range with the long-end underperforming as they extended their surge off last week's V-shaped bottom, not helped by AAPL and IBM issuance likely weighed on the complex…

  

   

  The dollar rose for the 3rd day in a row (something it has not done for a month) for the best run in 2 months…

  

   

  Between dollar strength, Goldman warnings, and the magic in stocks, commodities all weakened as hope disappeared from Crude..

  

   

  As crude plunged off the hope highs back to a $28 handle…

  

   

  Notably, the front-second month roll spread has narrowed back to pre-Phillips 66 dump levels…

  

   

  Charts: Bloomberg

  

  

  

  

• "You Should Be Very Worried, You Should Be Prepared" Warns Jim Rogers

  "[Central Banks] think they are smarter than the market," exclaims billionaire investor Jim Rogers, "they are not!"

  Warning CNN in this brief but disturbing reality check that "we are all going to get hurt by a global recession," Rogers takes aim at the incompetence of the "academic and bureaucrats who don't know what they are doing," raging that "this is going to be a disaster in the end."

  Rogers concludes:

  "You Should Be Very Worried, You Should Be Prepared"

  200 Seconds of awful truth…

  And if you are not concerned enough, Rogers did an extended radio interview, explaining that the inevitable consequence of disastrous easy-money policy from central planners is war…

  Highlights:

  39:35 – Jim discusses inevitable consequences of disastrous easy-money policy from central planners is war.

  40:00 – Jim discusses heightened xenophobia during difficult economic times and how it can lead to conflict.

  40:57 – Jim discusses how the coexistence of a rising world power and a stagnant or in-decline world power leads to conflict.

  42:26 – Jim discusses precious metals.

  45:30 – Jim discusses a history of poor leadership from US Presidents will continue, money printing and currency debasement will continue, no matter who gets elected this year.
   
  47:49 – Jim discusses coming sovereign debt crises, loss of confidence in government, and how it can lead to war.

  48:35 – Jim says "read your history," politicians will continue to make things worse, capital controls will intensify, economic conditions will continue to deteriorate and war is likely.
   
  52:05 – Jim says that by plot of pure circumstance, the USD will fall from its place as world's reserve currency. Dollar will destroy itself and a replacement will come along.

  54:30 – Jim discusses potential bubble in the USD

  

  

  

  

  

• Keynesianism's Long March To The Dustbin Of History

  Submitted by Gary North via GaryNorth.com,

  We read on Wikipedia:

  The phrase "ash heap of history" (or "dustbin of history") figuratively refers to the place to where persons, events, artifacts, ideologies, etc., are relegated upon losing currency and value as history. A notable usage was that of the Russian revolutionary Leon Trotsky referring to the Mensheviks: "You are pitiful, isolated individuals! You are bankrupts. Your role is played out. Go where you belong from now on — into the dustbin of history!" in response to the Menshevik faction walking out of the All-Russian Congress of Soviets (25 October 1917) in Petrograd, which allowed the Bolshevik faction to dominate the party. In a speech to the British House of Commons (8 June 1982), U.S. President Ronald Reagan said that "freedom and democracy will leave Marxism and Leninism on the ash heap of history."

  It is now the Keynesians' turn to join the losers of history.

  They do not see it. Their critics do not see it. But it is a fact.

  Allow me to shift metaphors away from the ashcan of history.

  One of the most inspiring stories in the Bible is the story of the final night of the rule of the Babylonian Empire.

  The Bible does not tell us what had happened. We know from secular history what happened. The general in command of the Medo-Persian forces had ordered his troops to redirect the Euphrates River to bypass the city. This left the river's entry point into the city undefended. The Army streamed into these undefended points and conquered the city.

  The rulers of the city had not seen it coming. They should have seen it, but they didn't. They undoubtedly had reconnaissance information on the fact that the Medo-Persian army was at work up the river to redirect the river. But they did not respond fast enough. They did not see what was coming.

  We may see this in retrospect as abnormal, but it is normal. Rulers at the end of the dynasty or an empire think it will go on forever. It may not last the night.

  We are told that the King of Babylon invited the prophet Daniel to assess the situation. There follows one of the most famous incidents in the Bible.

  At a banquet, a holy ghostly hand had written words on the wall. This terrified the king and his guests. He called in Daniel to explain. He had previously ignored Daniel.

  25 And this is the writing that was written, Mene, Mene, Tekel, Upharsin.

  26 This is the interpretation of the thing: Mene; God hath numbered thy kingdom, and finished it.

  27 Tekel; Thou art weighed in the balances, and art found wanting.

  28 Peres; Thy kingdom is divided, and given to the Medes and Persians.

  29 Then commanded Belshazzar, and they clothed Daniel with scarlet, and put a chain of gold about his neck, and made a proclamation concerning him, that he should be the third ruler in the kingdom.

  30 In that night was Belshazzar the king of the Chaldeans slain.

  31 And Darius the Median took the kingdom, being about threescore and two years old.

  From this, we get the saying: "The handwriting is on the wall."

  The handwriting is on the wall for Keynesianism.

  THE POWER OF COMPOUNDING

  In his remarkable 2001 article, "The Law of Accelerating Returns," Raymond Kurzweil described the decline in the cost of information, beginning in 1890, and extending to the year 2000. If he had taken it back to 1844, he could've made an even stronger case, but the data are less clear. He began with the census of 1890, which was the first census to use punch cards.

  He said that the cost of information fell by 50% every three years from 1890 to about 1950. Then, with the development of vacuum tube technologies in computers, it fell by 50% every two years. Then, sometime around 1965, with the development of transistor technology, it began to fall by 50% every 18 months. He said in 2001 that he believed that it was falling by 50% every 12 months.

  Nothing like this has ever happened in the history of man. There has been no compounding process that continued for this long a period. This process is now approaching what some people call a tipping point. Others call it an inflection point. Kurzweil called it the upward move of the exponential curve. Whatever we call it, we are now in the middle of it.

  In a follow-up article in 2003, Kurzweil made a fundamental point that has not been recognized by free-market economists, Keynesians, or social theorist in general. The rate of change, meaning the compound decline in the cost of information, was in no way slowed during the Great Depression. The world economy stopped growing for a decade, but the compound decline in the cost of information continued throughout the decade. He said this also applied in both world wars.

  We don't absolutely know what the future will bring, and if you look at the models, they're absolutely linear.

  We don't take into account this law of accelerating returns, which is absolutely a factor.

  If you look at the economy as a whole, either per capita or just the total economy, it is growing exponentially. But the various recessions, even the Great Depression, are relatively minor features that you really see in this chart that is a big exponential. And what's interesting is that when the recession is over, including the Great Depression, it starts back to where it would have been had that never occurred in the first place. It does not represent even a permanent slowing down or delay in the underlying exponential.

  The really pervasive phenomena is the exponential growth. We have exponential growth in productivity. Even that is understated because we're measuring the value in dollars of what can be accomplished. But what can be accomplished for a dollar today is far greater than what could be accomplished for a dollar 10 years ago.

   

  Computation is not the only technology that is growing exponentially. Communications, bandwidth, speed and price performance–both wireless and wired–are also doubling every year. Biological technologies, the price performance of base pair scanning, for example, have doubled every year.

  George Orwell was correct: we find it difficult to see what is under our noses. let me briefly mention what has been under my nose ever since I read this article over a decade ago. It means that, with respect to the most important transformation of modern times, the exponential declining cost of digital technologies, Keynesianism has not been able to deflect the spread of these technologies.

  Keynesianism can affect which special-interest groups benefit and lose as a result of these technologies, because Keynesianism can control the allocation of physical resources. But Keynesianism cannot control the spread of information itself. This means that, at the core of the economic system, Keynesianism is impotent.

  As bad as Keynesianism is, and as bad as regulation is, it can only marginally affect the transformations that are taking place today. These regulations can have major affect when they apply to individuals who are caught in the web of regulation. These regulations can affect the supply and quality of goods that are produced through large-scale physical production systems. The regulators can squeeze large companies. They can put small companies out of business. But what they cannot do is in any way retard the compound growth effects of information technology.

  So, it really does not matter for the long run that the Keynesians are in charge. They can stretch out their control with respect to certain kinds of physical production. They can stretch it out with respect to certain kinds of licensing and regulation. But the steady compounding effects of the decline in the cost of information are going to overwhelm all attempts by all governments to keep social and economic change on government approved pathways. There really is no way for governments to do anything, including fighting a war, to stop the progress of digital technologies.

  Regulatory actions can and do affect the kinds of innovations that take place. It especially can affect the kinds of applications of new digital technologies. These statist interventions are almost always negative. They protect some special-interest group. But, in the long run, meaning over the next 40 years, the whole Keynesian regulatory structure is going to collapse. Why? Because we are reaching an inflection point. We are reaching the point at which the exponential curve turns sharply upward. There is no way for the regulatory agencies to keep up with what is now taking place under their noses.

  I see this as good news. It is good news for liberty, and it is bad news for the arrogant theorists of Keynesian central planning, the arrogant tenured bureaucrats of central banks, and the protected employees of virtually every other government-regulated industry or profession. These people are going to be replaced, and they are going to be replaced within three decades, or four at the most. They are presiding over the final stages of the illusion of central planning.

  It has already happened to the socialists. History tossed them into the dustbin when the Soviet Union went belly-up in 1991. It was all over but the shouting at that point. Almost nobody defends socialism as an ideology these days. Nobody gets a hearing. They want to call themselves liberals. They want to call themselves Progressives.

  The central planners cannot stop the arrival of the exponential curve of liberty and voluntarism. Maybe they can slow it down at the margin, but I doubt it. If the Great Depression did not slow it down, Janet Yellen cannot slow it down. Janet Yellen and her crew of bureaucrats are the only ones in a position to slow it down. The politicians can barely affect the process.

  This should be under your nose. Think through your own profession, your own career prospects, and the legacy you expect to leave behind. Think it through in terms of an increase in the rate of technological change, and a decrease in the products of all digital technologies.

  The days of wine and roses are coming to an end for the Keynesians. The ashcan of history awaits them. I will do what I can to speed up the process, but I don't think I can speed up the process. I can only prepare you and other readers by pointing out what should be obvious.

  UNDER THE NOSES OF INSIDERS

  I want to discuss a couple of examples in history of entire industries that did not see what was coming, even while it was almost upon them. Like a tsunami that pulls the tide out rapidly just before it hits, people playing on the beach do not notice what is happening, and do not run for cover from what will soon follow.

  I teach a course in the history of American literature for the Ron Paul Curriculum. After 1912, I focus entirely on movies. Movies are the way in which storytellers affect tens of millions of people. Movies have displaced novels and short stories as the way to tell stories, which in turn are the foundations of literature.

  Beginning with the 1915 movie, The Birth of a Nation I cover only films. My course has a 15-year gap: 1915-1930.

  The movie industry had a warning. It was the equivalent of the tide that sweeps out rapidly. That was The Jazz Singer (1927). It had sound. It had sound only for Al Jolson's songs. The movie was not really a talkie. It was a "singie."

  From the day that this movie was released, silent movies faced the handwriting on the wall. Yet even in 1928, movie producers still tried to get the public to attend silent films. In 1929, the deluge overwhelmed the entire industry.

  My next piece of literature after Birth of a Nation is All Quiet on the Western Front (1930). The soundtrack is good. The photography is good. The story line, based on the best-selling novel by Remarque, is excellent. It won the Academy Award as the best picture in 1931. The director also won the Academy Award. The movie was highly successful, both artistically and at the box office.

  Consider that transition. It took basically three years: from 1927 to 1930. Basically, 1929 was the year of the transition. This gets little attention in the textbooks, because 1929 was the year of the stock market crash. The stock market crash gets a great deal of attention, crowding out almost everything else.

  I think of the two as related. Herbert Hoover was elected in 1928. That was the last year in which anybody could make money producing silent movies. In 1929, talking pictures overwhelmed silent movies, and the first stage of the depression overwhelmed Hoover's administration. Hoover suffered the equivalence of what silent movies suffered in 1929. But the great smash happened much more rapidly to silent movies than it did to Hoover.

  In Hollywood in 1928, there were still people in the movie industry who were convinced that talking pictures were a fad. For those of you who have seen Aviator, you know the story of Howard Hughes. He had almost completed his nearly bankrupting movie, Hell's Angels. Then he started over. He added sound. The Wikipedia entry is accurate.

  Hell's Angels is a 1930 American war film, directed and produced by Howard Hughes and starring Ben Lyon, James Hall and Jean Harlow. The film, which was written by Harry Behn and Howard Estabrook, centers on the combat pilots of World War I. The picture was released by United Artists and, despite its initial poor performance at the box office, eventually earned its production costs twice over . . .

  Originally shot as a silent film, Hughes retooled the film over a lengthy gestation period. Most of the film is in black and white, but there is one color sequence–the only color footage of Harlow's career. Hell's Angels is now hailed as one of the first sound blockbuster action films.

  As we saw in Aviator, everybody in Hughes' tool company was opposed to his decision to retool the movie so that it would have sound. It should have been obvious to everybody in late 1929 that this was mandatory, but it wasn't obvious.

  Hughes risked everything on the success of the movie. He knew that it had to have sound. He knew that it would be a failure if it did not have sound. He had sunk a fortune into the movie, and yet he dared not release it on time. It had to be delayed. It had to have sound. He was right. His critics were wrong. The entire movie industry was wrong.

  I point this out for a reason. Sometimes, without any warning, a new technology completely changes an industry.

  Consider Google. The Wikipedia entry on the history of Google says:

  By the end of 1998, Google had an index of about 60 million pages. The home page was still marked "BETA", but an article in Salon.com already argued that Google's search results were better than those of competitors like Hotbot or Excite.com, and praised it for being more technologically innovative than the overloaded portal sites (like Yahoo!, Excite.com, Lycos, Netscape's Netcenter, AOL.com, Go.com and MSN.com) which at that time, during the growing dot-com bubble, were seen as "the future of the Web", especially by stock market investors.

  I used Alta Vista from 1996 until about 2002. It may have been 2001. Then I switched to Google. Wikipedia writes:

  AltaVista was an early web search engine established in 1995. It was once one of the most popular search engines, but it lost ground to Google and was purchased by Yahoo! in 2003, which retained the brand but based all AltaVista searches on its own search engine. On July 8, 2013, the service was shut down by Yahoo! and since then, the domain has redirected to Yahoo!'s own search site.

  And then there is Wikipedia. It has put out of business all physically published general encyclopedias. Encyclopaedia Britannica still exists online, but I would never use it, and I can't imagine anybody else using it. Wikipedia has simply destroyed all rival general encyclopedias. It did it without any advertising. It did it without any warning.

  New technologies can transform societies in short periods of time. Not many of them ever do this, but a handful can.

  STEADY GROWTH, RADICAL CHANGE.

  Digital technologies have transformed our lives through steady improvements. The cost of information keeps dropping. This is the Steady Eddie change that, without any fanfare, transforms people's lives so slowly that they do not perceive what is happening to them and their environment.

  If Kurzweil is right, this is going to happen to the cost of solar power. He thinks it is going to happen a lot faster than I do, because he is concentrating on solar panel technology, but solar panel technology constitutes only about 20% of what goes into an electrical power grid, whether local or national. The cost of the other components is not declining at anything like the decline in the cost per watt of solar panels. Nevertheless, there is a steady improvement, and it does not look as though this is going to be reversed. To the extent that panels can become less dependent on physical paraphernalia, the more rapidly this substitution process will take place.

  My assessment is that YouTube will not be replaced by anything anytime soon. There will be steady improvements in YouTube, and these will produce steady transformations of those aspects of society that are dependent on digital viewing. I cannot imagine any rival company to YouTube. It is backed up by the income produced by Google searching, and it has no serious rivals today. There is not that much that we want to get out of videos. They consume a lot of time, and they consume a lot of bandwidth, but the cost of bandwidth keeps declining, unlike the value of our time.

  There may be 3-D videos at some point. There may be high definition 3-D videos that can be projected on a wall. But my guess is this: they will be YouTube videos. It is very difficult to compete against "free."

  We can see that YouTube is not going to be reversed or replaced. We see no swift movement of the video tide. Now the trick is to figure out how YouTube is going to transform the way we do things. It is certainly transforming education. This is not going to stop. This is going to accelerate. Yet there are teachers who do not see the handwriting on the wall. They are like people in the movie industry in 1928. They ought to be able to see what is going to happen, but they don't. They are going to be overwhelmed.

  They are like IBM executives in 1982. They could see that Moore's law was going to enable the IBM PC's to overwhelm the minicomputer market. The idiots at Armonk forbade the innovators in Boca Raton to adopt Intel's 386 chip. They thought a 386-based computer would wipe out the market for the entry-level minicomputers sold by IBM's main branch. So, Compaq adopted the 386 computer, and destroyed the minicomputer market. IBM never caught up.

  We do not want to admit what is going to happen to us, even when we can see what is going to happen to us. We think that something is going to save us. Nothing is going to save us, other than the government. The government can protect an industry or a profession, but the free market does not. Then, when the government tanks and finally collapses, the industry of the profession is overwhelmed in just a few years.

  When I watch a movie produced in 1930, I can still enjoy it if there is a good script. We all enjoy King Kong (1933). It is a better movie than the recent versions. Gable and Colbert still make us laugh in It Happened One Night (1934). Snow White (1938) still works. (Grumpy is my guy.)

  The great breakthrough in movies came in one year, 1939. There has never been a year in the history of the movies like that 1939. One man directed two movies: Gone with the Wind and The Wizard of Oz. Can you name him? Probably not. But those two movies changed entertainment forever.

  In that year, John Ford directed Stagecoach, which was the breakthrough role for John Wayne, Young Mr. Lincoln, which was the breakthrough role for Henry Fonda, and Drums Along the Mohawk, a confirming role for Henry Fonda. The next year, he produced Grapes of Wrath, starring Henry Fonda. Yet there was more change in 1939 than there had been through the entire 1930's. From 1939 on, movies are pretty much the same as they are today, except they were better in 1939.

  We cannot connect emotionally with the silent film era. We laugh at Charlie Chaplin's sight gags, but other than Chaplin's movies, we don't watch silent movies. Yet we can easily connect with the earliest talking movies. That single technological change made possible what we know as the movies. And yet from 1903 until 1929, people were transformed by the movies. Somehow, silent movies were able to get inside the minds of masses of people. Hollywood did not see the potential for talking pictures.

  Color pictures were a marginal improvement on black and white pictures. But would you really want to watch Casablanca if it were colorized? I don't think I would. What about Stagecoach? Maybe.

  As it turned out, 3-D pictures were a setback. Only with modern cartoons and science fiction movies have 3-D movies reappeared. We still don't pay extra to see a 3-D movie unless there is a lot of action involved. A 2-D movie is fine for most storylines.

  Sound was the big transformation. The coming of modern loudspeakers in the 1930's pulled us into the movies in a new way. Yet Hollywood did not see it coming. It was literally under their noses, or blaring in their ears, in 1927, but they still neither saw nor heard it.

  I don't think this is abnormal. I think this is normal. George Orwell was right. It takes a great deal of effort to see what is under our noses.

  CONCLUSION

  Keynesians today are like the dinner guests on Babylon's last night. They are the silent film producers in 1928. They are Alta Vista's owners in 2001. They are headed for the ashcan of history.

  The steady decline in the cost of information, especially communications, has undermined every establishment on the face of the earth — North Korea excepted.

  Here is how I view the future of Keynesianism. It is in the northern half of the map.

  

  

  

  

  

  

• Carl Icahn, David Einhorn Dump "No Brainer" Apple Shares

  Having opened his position in AAPL in Q3 2013, Carl Icahn's projections, prognostications, and positioning have all lent credence (for CNBC watchers) to buying into the "no brainer" stock. However, it appears the plunge in the stock of the last few months has taken the shine of Icahn's glee as, according to his fund's latest 13F, he dumped 7 million shares (or aound 14% of his position) in Q4 2015. In addition, Greenlight's David Einhorn dumped 44% of his holding in Tim Cook's releveraging firm.

  It began here in August 2013…

  

   

  And here is where it appers to be ending…

  • *ICAHN CUT APPLE STAKE BY 7M SHRS TO 45.8M SHRS

  His first adjustment since Q1 2014…

  

   

  AAPL stock is limping lower after-hours on the news…

  

   

  But, according to Bloomberg, his cost basis for the entire position is $68.05 and so his exit here is still significantly positive.

  In addition, Greenlight Capital, the hedge fund led by David Einhorn, also slashed its stake in Apple by 44% during the fourth quarter. According to Bloomberrg, Einhorn's averasge cost basis was $74.53…

  

   

  The firm sold 4.9 million shares of Apple, leaving it with 6.3 million shares worth $661.5 million as of Dec. 31, according to a regulatory filing Tuesday.

  *  *  *

  

  

  

  

  

• "Truck-ocalypse" Hits Main Street As Daimler Fires 1,250 Amid Collapsing Demand

  If you were looking for signs that US trade may be collapsing on itself, a good place to start would be Class 8 truck orders which, as we first documented in early December, have posted sharp y/y declines of late.

  In November for instance, orders collapsed 59% y/y. In December, the drop was 37%, and in January, Class 8 orders dove 48% from the year ago period.

  

  This is all consistent with the trend towards broadly lower global growth and trade, something which at this point looks to be structural and endemic rather than transient and cyclical.

  To be sure, the writing has been on the wall for quite a while. Have a look, for instance, at Morgan Stanley’s Dry Van TLFI:

  

  As you can see, things haven’t been this bad since the crisis. And expectations aren’t looking so hot either:

  

  Speaking of trucking and expectations, Daimler pretty clearly shares the rather dour outlook expressed by Morgan Stanley’s survey respondents because on Monday, the company laid off 1,250 people in North Carolina.

  “We see a fall in demand of about 10 percent for heavy trucks in North America this year,” a spokeswoman said. “This is a response to lower demand,” she added, flatly. 

  “Workers at Daimler’s truck manufacturing plants in Mount Holly and Cleveland, North Carolina, said they were told Monday morning that the company is cutting hundreds of jobs at each plant at the end of the week,” the local WSOCTV wrote yesterday, adding that “Daimler has taken over the plants that were run by Freightliner in Rowan and Gaston counties, and workers at the plant in Cleveland told Eyewitness News the announcement of job cuts came as a shock to many.”

  “I know that I’m one of the ones that’s going to be laid off, so it’s going to affect me,” said Andre Tucker, who has worked at the plant since May 2014. “Right now probably the biggest thing is to figure out the next step as far as trying to find a new job,” he laments. Tucker has a wife and two children.

  Daimler also laid off 900 employees in Rowan County last month. “Everybody around here’s been hurting, and it’s going to hurt even more,” a convenience store clerk told WSOCTV.

  Yes, it most assuredly is “going to hurt even more,” because as we’ve said time and again as it relates the collapsing Baltic Dry, central banks can’t print trade. The US economy is bumping along at a barely positive 0.69% growth rate, and that’s according to the BEA who, as we saw last summer, is prone to doing all sorts of things to make the data look better than it actually is.

  Quick, someone tell the executives at Diamler that the industry forecasters who see a double-digit decline in Class 6-8 demand this year are merely “peddling fiction.”

  Full statement from Daimler

  Pursuant to the notification requirements of the Worker Adjustment and Retraining Notification Act of 1988 (“WARN”), Daimler Trucks North America (DTNA) has announced that it will implement a reduction in force of approximately 700 employees at its Mt. Holly Truck Manufacturing Plant and approximately 550 employees at its Cleveland Truck Manufacturing Plant, effective April 16, 2016. Employees at the Mt. Holly and Cleveland plants were notified in Town Hall meetings yesterday and today.

  The last day of work for employees affected by this announcement will be Friday, February 19, 2016 in both facilities. Impacted employees will receive payment in lieu of the notice period at each employee’s regular rate of pay, and employees are free to seek and accept other employment during the notice period without jeopardizing their entitlement to the WARN period payment or benefits.

  As of February 22, the workforce at the Mt. Holly Truck Manufacturing Plant will be reduced from approximately 2,150 to approximately 1,450 employees, with plant operations scaled back to two full shifts per day. The workforce at the Cleveland Truck Manufacturing Plant will be reduced from approximately 2,150 to approximately 1,600, with plant production scheduled at one full shift per day. The Cleveland reduction in force is in addition to a previous workforce adjustment announced in January affecting approximately 936 employees at the Cleveland Truck Manufacturing Plant, effective March 5, 2016.

  These workforce adjustments are in response to a sustained reduction in orders and a diminished build rate, and are expected to be temporary, based on future market developments. 2015 was an extraordinarily strong market for trucks in NAFTA. DTNA anticipates the North American truck market Class 6 to 8 to be down around minus 10 percent in 2016. This is still expected to be above the 2014 Class 6 to 8 market.

  The Mt. Holly Truck Manufacturing Plant is located in Mt. Holly, North Carolina and manufactures medium-duty Freightliner trucks. The Cleveland Truck Manufacturing Plant is located in Cleveland, North Carolina and manufactures heavy-duty Freightliner and Western Star trucks.

  The company has no further comment pertaining to the announcement. 

  

  

  

  

  

• President Obama Explains Why He Must Appoint A New Justice (Or Else) – Live Feed

  Due up at 1635ET, President Obama holds his first post-Scalia press conference. We assume the propaganda du jour will be the imminent need to appoint a new SCOTUS justice… and why anyone who blocks that plan is "peddling fiction." While he is up there, we assume some comments regarding the escalations in Syria will be discussed… and why Russia (and Putin most clearly) are to blame.

   

  Live Feed…

  One wonders if the next justice will break the records…

  Recent Supreme Court Nominations | Graphiq

  

  

  

  

  

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