- Escobar Exposes America's Existential Battle To Stop Eurasian Integration
Escobar Exposes America’s Existential Battle To Stop Eurasian Integration
Authored by Pepe Escobar via The Saker blog,
Coming decade could see the US take on Russia, China and Iran over the New Silk Road connection
Iranian seamen salute the Russian Navy frigate Yaroslav Mudry while moored at Chabahar on the Gulf of Oman during Iran-Russia-China joint naval drills. The photo was provided by the Iranian Army office on December 27, 2019. Photo: AFP / HO / Iranian Army office
The Raging Twenties started with a bang with the targeted assassination of Iran’s General Qasem Soleimani.
Yet a bigger bang awaits us throughout the decade: the myriad declinations of the New Great Game in Eurasia, which pits the US against Russia, China and Iran, the three major nodes of Eurasia integration.
Every game-changing act in geopolitics and geoeconomics in the coming decade will have to be analyzed in connection to this epic clash.
The Deep State and crucial sectors of the US ruling class are absolutely terrified that China is already outpacing the “indispensable nation” economically and that Russia has outpaced it militarily. The Pentagon officially designates the three Eurasian nodes as “threats.”
Hybrid War techniques – carrying inbuilt 24/7 demonization – will proliferate with the aim of containing China’s “threat,” Russian “aggression” and Iran’s “sponsorship of terrorism.” The myth of the “free market” will continue to drown under the imposition of a barrage of illegal sanctions, euphemistically defined as new trade “rules.”
Yet that will be hardly enough to derail the Russia-China strategic partnership. To unlock the deeper meaning of this partnership, we need to understand that Beijing defines it as rolling towards a “new era.” That implies strategic long-term planning – with the key date being 2049, the centennial of New China.
The horizon for the multiple projects of the Belt and Road Initiative – as in the China-driven New Silk Roads – is indeed the 2040s, when Beijing expects to have fully woven a new, multipolar paradigm of sovereign nations/partners across Eurasia and beyond, all connected by an interlocking maze of belts and roads.
The Russian project – Greater Eurasia – somewhat mirrors Belt & Road and will be integrated with it. Belt & Road, the Eurasia Economic Union, the Shanghai Cooperation Organization and the Asia Infrastructure Investment Bank are all converging towards the same vision.
Realpolitik
So this “new era”, as defined by the Chinese, relies heavily on close Russia-China coordination, in every sector. Made in China 2025 is encompassing a series of techno/scientific breakthroughs. At the same time, Russia has established itself as an unparalleled technological resource for weapons and systems that the Chinese still cannot match.
At the latest BRICS summit in Brasilia, President Xi Jinping told Vladimir Putin that “the current international situation with rising instability and uncertainty urge China and Russia to establish closer strategic coordination.” Putin’s response: “Under the current situation, the two sides should continue to maintain close strategic communication.”
Russia is showing China how the West respects realpolitik power in any form, and Beijing is finally starting to use theirs. The result is that after five centuries of Western domination – which, incidentally, led to the decline of the Ancient Silk Roads – the Heartland is back, with a bang, asserting its preeminence.
On a personal note, my travels these past two years, from West Asia to Central Asia, and my conversations these past two months with analysts in Nur-Sultan, Moscow and Italy, have allowed me to get deeper into the intricacies of what sharp minds define as the Double Helix. We are all aware of the immense challenges ahead – while barely managing to track the stunning re-emergence of the Heartland in real-time.
In soft power terms, the sterling role of Russian diplomacy will become even more paramount – backed up by a Ministry of Defense led by Sergei Shoigu, a Tuvan from Siberia, and an intel arm that is capable of constructive dialogue with everybody: India/Pakistan, North/South Korea, Iran/Saudi Arabia, Afghanistan.
This apparatus does smooth (complex) geopolitical issues over in a manner that still eludes Beijing.
In parallel, virtually the whole Asia-Pacific – from the Eastern Mediterranean to the Indian Ocean – now takes into full consideration Russia-China as a counter-force to US naval and financial overreach.
Stakes in Southwest Asia
The targeted assassination of Soleimani, for all its long-term fallout, is just one move in the Southwest Asia chessboard. What’s ultimately at stake is a macro geoeconomic prize: a land bridge from the Persian Gulf to the Eastern Mediterranean.
Last summer, an Iran-Iraq-Syria trilateral established that “the goal of negotiations is to activate the Iranian-Iraqi-Syria load and transport corridor as part of a wider plan for reviving the Silk Road.”
There could not be a more strategic connectivity corridor, capable of simultaneously interlinking with the International North-South Transportation Corridor; the Iran-Central Asia-China connection all the way to the Pacific; and projecting Latakia towards the Mediterranean and the Atlantic.
What’s on the horizon is, in fact, a sub-sect of Belt & Road in Southwest Asia. Iran is a key node of Belt & Road; China will be heavily involved in the rebuilding of Syria; and Beijing-Baghdad signed multiple deals and set up an Iraqi-Chinese Reconstruction Fund (income from 300,000 barrels of oil a day in exchange for Chinese credit for Chinese companies rebuilding Iraqi infrastructure).
A quick look at the map reveals the “secret” of the US refusing to pack up and leave Iraq, as demanded by the Iraqi Parliament and Prime Minister: to prevent the emergence of this corridor by any means necessary. Especially when we see that all the roads that China is building across Central Asia – I navigated many of them in November and December – ultimately link China with Iran.
The final objective: to unite Shanghai to the Eastern Mediterranean – overland, across the Heartland.
As much as Gwadar port in the Arabian Sea is an essential node of the China-Pakistan Economic Corridor, and part of China’s multi-pronged “escape from Malacca” strategy, India also courted Iran to match Gwadar via the port of Chabahar in the Gulf of Oman.
So as much as Beijing wants to connect the Arabian Sea with Xinjiang, via the economic corridor, India wants to connect with Afghanistan and Central Asia via Iran.
Yet India’s investments in Chabahar may come to nothing, with New Delhi still mulling whether to become an active part of the US “Indo-Pacific” strategy, which would imply dropping Tehran.
The Russia-China-Iran joint naval exercise in late December, starting exactly from Chabahar, was a timely wake-up for New Delhi. India simply cannot afford to ignore Iran and end up losing its key connectivity node, Chabahar.
The immutable fact: everyone needs and wants Iran connectivity. For obvious reasons, since the Persian empire, this is the privileged hub for all Central Asian trade routes.
On top of it, Iran for China is a matter of national security. China is heavily invested in Iran’s energy industry. All bilateral trade will be settled in yuan or in a basket of currencies bypassing the US dollar.
US neocons, meanwhile, still dream of what the Cheney regime was aiming at in the past decade: regime change in Iran leading to the US dominating the Caspian Sea as a springboard to Central Asia, only one step away from Xinjiang and weaponization of anti-China sentiment. It could be seen as a New Silk Road in reverse to disrupt the Chinese vision.
Battle of the Ages
A new book, The Impact of China’s Belt and Road Initiative, by Jeremy Garlick of the University of Economics in Prague, carries the merit of admitting that, “making sense” of Belt & Road “is extremely difficult.”
This is an extremely serious attempt to theorize Belt & Road’s immense complexity – especially considering China’s flexible, syncretic approach to policymaking, quite bewildering for Westerners. To reach his goal, Garlick gets into Tang Shiping’s social evolution paradigm, delves into neo-Gramscian hegemony, and dissects the concept of “offensive mercantilism” – all that as part of an effort in “complex eclecticism.”
The contrast with the pedestrian Belt & Road demonization narrative emanating from US “analysts” is glaring. The book tackles in detail the multifaceted nature of Belt & Road’s trans-regionalism as an evolving, organic process.
Imperial policymakers won’t bother to understand how and why Belt & Road is setting a new global paradigm. The NATO summit in London last month offered a few pointers. NATO uncritically adopted three US priorities: even more aggressive policy towards Russia; containment of China (including military surveillance); and militarization of space – a spin-off from the 2002 Full Spectrum Dominance doctrine.
So NATO will be drawn into the “Indo-Pacific” strategy – which means containment of China. And as NATO is the EU’s weaponized arm, that implies the US interfering on how Europe does business with China – at every level.
Retired US Army Colonel Lawrence Wilkerson, Colin Powell’s chief of staff from 2001 to 2005, cuts to the chase: “America exists today to make war. How else do we interpret 19 straight years of war and no end in sight? It’s part of who we are. It’s part of what the American Empire is. We are going to lie, cheat and steal, as Pompeo is doing right now, as Trump is doing right now, as Esper is doing right now … and a host of other members of my political party, the Republicans, are doing right now. We are going to lie, cheat and steal to do whatever it is we have to do to continue this war complex. That’s the truth of it. And that’s the agony of it.”
Moscow, Beijing and Tehran are fully aware of the stakes. Diplomats and analysts are working on the trend, for the trio, to evolve a concerted effort to protect one another from all forms of hybrid war – sanctions included – launched against each of them.
For the US, this is indeed an existential battle – against the whole Eurasia integration process, the New Silk Roads, the Russia-China strategic partnership, those Russian hypersonic weapons mixed with supple diplomacy, the profound disgust and revolt against US policies all across the Global South, the nearly inevitable collapse of the US dollar. What’s certain is that the Empire won’t go quietly into the night. We should all be ready for the battle of the ages.
Tyler Durden
Fri, 01/17/2020 – 23:45 - All The World's Wealth In One Visualization
All The World’s Wealth In One Visualization
The financial concept of wealth is broad, and it can take many forms.
While your wealth is most likely driven by the dollars in your bank account and the value of your stock portfolio and house, Visual Capitalist’s Jeff Desjardins notes that wealth also includes a number of smaller things as well, such as the old furniture in your garage or a painting on the wall.
From the macro perspective of a country, wealth is even more all-encompassing — it’s not just about the assets held by private households or businesses, but also those owned by the public. What is the value of a new toll bridge, or an aging nuclear power plant?
Today’s visualization comes to us from HowMuch.net, and it shows all of the world’s wealth in one place, sorted by country.
Total Wealth by Region
In 2019, total world wealth grew by $9.1 trillion to $360.6 trillion, which amounts to a 2.6% increase over the previous year.
Here’s how that divvies up between major global regions:
Last year, growth in global wealth exceeded that of the population, incrementally increasing wealth per adult to $70,850, a 1.2% bump and an all-time high.
That said, it’s worth mentioning that Credit Suisse, the authors of the Global Wealth Report 2019 and the source of all this data, notes that the 1.2% increase has not been adjusted for inflation.
Ranking Countries by Total Wealth
Which countries are the richest?
Let’s take a look at the 15 countries that hold the most wealth, according to Credit Suisse:
The 15 wealthiest nations combine for 84.3% of global wealth.
Leading the pack is the United States, which holds $106.0 trillion of the world’s wealth — equal to a 29.4% share of the global total. Interestingly, the United States economy makes up 23.9% of the size of the world economy in comparison.
Behind the U.S. is China, the only other country with a double-digit share of global wealth, equal to 17.7% of wealth or $63.8 trillion. As the country continues to build out its middle class, one estimate sees Chinese private wealth increasing by 119.5% over the next decade.
Impressively, the combined wealth of the U.S. and China is more than the next 13 countries in aggregate — and almost equal to half of the global wealth total.
Tyler Durden
Fri, 01/17/2020 – 23:25 - The Machines Have Us Trained For Obedience, Paul Craig Roberts
The Machines Have Us Trained For Obedience, Paul Craig Roberts
Authored by Paul Craig Roberts,
Many decades ago there was an issue of Mad comics that portrayed a future time when everything was done by robots and humans had no function. One day the system failed. As it had been eons since humans had to do anything, no one knew how to fix the system. It was Mad comics version of Armageddon.
I think that is where the digital revolution is taking us.
I remember when appliances and cars responded to humans, and now humans respond to them. When I grew up cars and home appliances did not go “beep-beep” to remind you of the things you were supposed to do, such as turn off the car lights and take the keys out of the ignition, or turn off the oven and shut the fridge.
Cars, except for British sports cars, didn’t have seat belts. Today a car doesn’t stop beeping until you fasten your seat belts. I hear that soon the cars won’t start until the seat belts are fastened.
When the electric company’s outsourced crew failed to connect the neutral line to my house and blew out all appliances, sprinkler system, and garage openers, the electric company replaced everything on a prorated depreciated basis that cost me thousands of dollars. The worst part of it is that the new appliances boss me around.
The old microwave would gently beep three times and stop. The new one beeps in the most insistent way—open the door you dumb human right this second, immediately—and keeps on insisting until I obey. The fridge refuses to let me leave it open for cleaning. The oven insists that I open it immediately, despite my habit of cutting the on time short and leaving whatever it is to cook awhile longer in the hot oven.
Here is an explanation of how our electric meters spy on us and pass on the information to interested parties.
We are being told that the Internet of Things is supposed to be our future, everything is connected, everything is a data source. We are told this will make things more convenient somehow, maybe, but your convenience is not what the Internet of Things is being created for. The Internet of Things is being created in a way that things will be associated with your name. So by looking at what the things are doing, people can watch what you are doing. The Internet of Things will be a living, digital organism where you can be found any time of day, watched, identified, and treated like a voluntary member of this new massive database in the sky. Of course, the Internet of Things is a way for government to assure itself that your behavior is not in any way a threat to anyone in government or, if it is, to enable them to quickly pay you a visit in a forceful way.
The Internet of Things will produce more data about you than has ever been collected, and the more data they have on you, the more they can take your stuff from you, the more they can do to you.
Self-driving cars seem to be our future, and robots are taking our jobs away even faster than global corporations offshored them to Asia.
What exactly is it that humans are going to be good for? Nothing it seems.
Why will we need a driving license when cars drive themselves? If there is an accident, who is to blame? The company that made the car? The company responsible for the software? What is the point of car insurance when drivers have no responsibility?
Perhaps it is true that aliens are living among us. Their language is “beep-beep” and they are using our machines and cars to train us, like Pavlov’s dogs, to respond to their command.
I can remember when telephones were a convenience before they became a nuisance. When my land line rings, 95% of the time it is a scam or a telemarketing call, usually robotic. Now, a man will listen to a sexy female voice, for a time, and a woman will listen to a courtly gentleman’s voice, but until sex doll robots catch on, no one wants to listen to a machine’s voice. So why the calls? Why do the telephone companies permit their customers to be scammed and their privacy to be constantly invaded? How do the phone companies benefit from permitting unethical people to destroy the value of phone service?
The same thing, I am told, happens to cell phone users. Recently I finally had to acquire a smart phone, because two people I need to reach only respond to text messages. They refuse to answer any phone, and email is so invaded by scammers, malware, and marketeers that they do not use email. They do not even set up the message system on their cell phones. If you try to call them, you get instead of an answer the message that the person you are attempting to call has not set up their message box.
So there you have it. Except for texting, which can’t (yet) be done with a land line, telephones are a nuisance.
Growing up in Atlanta during the 1940s and into the early 1950s, you could not yourself place a call from your telephone. When you picked up the receiver, an AT&T operator answered and asked: “number please.” You gave her the number, and she rang it and connected you if there was an answer. If you did not know the number, you asked her for information. If you knew the complete name and perhaps the street address, you were provided with the telephone number.
In those halcyon days even in a city such as Atlanta, Georgia, there were party lines. That meant that you shared a telephone line with a neighbor. If you picked up the receiver to make a call through the operator and heard voices speaking, you knew the line was in use and decency required that you hang up immediately. As the talking parties heard the click when you picked up the line, if they didn’t hear the click when you hung up they asked you to get off their call.
In that system, there was no anonymity. Anonymity appeared with dial phones, which allowed you to make your own calls. From a public telephone, the call was not traceable to you. This technology was the beginning of our downfall.
Dial phones, something youths have seen only in antique shops or old movies are still with us in everyday language. We still say “dial the number” when we are punching buttons.
Today thanks to technological “progress,” it is much easier to invade privacy.
Technology is destroying us and the planet. The pollution from technology is phenomenal. 5G itself may do us in. The destruction of privacy, identity, and freedom by the digital revolution is far beyond George Orwell’s imagination. Insouciant humans delight in the gadgets that are turning themselves into unfree people who are under control but who themselves control nothing.
This outcome is easily seen in China where the government uses universal spying to construct for each person a social credit score. If that person is a dissident, has bad habits, etc., that person gets a score too low to qualify for a loan, university admission, employment, etc., and becomes a non-being. Here is Soren Korsgaard’s explanation of our future.
Dystopian classics are back into the spotlight, like Aldous Huxley’s Brave New World and George Orwell’s 1984. They have roared back onto bestseller lists due to whistleblowers’ exposés of government imperialism and totalitarian surveillance of their citizens and foreigners. While the kakistocracy and dystopian surveillance state depicted in 1984 undoubtedly reflected, to some extent, contemporary sociopolitical realities, Orwell extrapolated worst-case scenarios set as warnings for future generations. Nonetheless, his book and implicit warnings seem to have been ignored as an authoritarian surveillance state is now a reality for most people in first and second world countries. In lieu of accountability for criminal mass-surveillance or these revelations deterring or limiting the prying eyes of government-sponsored spy programs, the establishment in conjunction with their media platforms has used it to their full advantage, almost as if they, themselves, masterminded the leaks.
Rather than being dismantled, the establishment has openly added advanced surveillance technology to their arsenal in their cataclysmic War on Truth. The mainstream media now parallels Orwell’s Ministry of Truth that broadcasts official explanations, while it effectively neutralizes those who venture outside the parameters of government-approved thinking, which so often equates to threatening their interests.
While the current Western population control via advanced surveillance technology and social engineering is unparalleled in history, China has nevertheless rolled out a system that sets new standards for government control, the so-called social credit system. In a few decades from now, if the Chinese government succeeds, those who are imprisoned by the social crediting system will have no reference point or conception of freedom; digital tyranny will have become the norm.
To some extent, Western policymakers have been apprehensive of the Chinese program, but as we shall see, it is nevertheless evident that they themselves are working diligently behind the scenes to implement the same technology that makes the Chinese digital prison possible.
Tyler Durden
Fri, 01/17/2020 – 23:05 - OK Boomer: Ex-Citi Banker Wins Ageism Case After Boss Calls Him "Old… Set In His Ways"
OK Boomer: Ex-Citi Banker Wins Ageism Case After Boss Calls Him “Old… Set In His Ways”
Today in “anytime you fire someone it’s always a case of discrimination” news…
A former investment banker for Citigroup has won an age discrimination case against the bank after one of his bosses called him “old” and “set in his ways” when he was laid off at age 55.
A London Tribunal ruled in the ex-banker’s favor this week, finding that Niels Kirk was dismissed unfairly. Kirk had previously been a managing director for energy banking, according to Bloomberg. He had previously been employed at Citigroup for 26 years and wasn’t given any warning about a proposed restructuring.
Citi says it will appeal the decision.
One of his bosses, 54 year old Manolo Falco, denied making the statement but did concede that Kirk “had some very difficult relationships with other senior bankers.” But the judge ruled that Falco’s evidence was “less than convincing”, while Kirk had taken notes in the meeting.
The judge presiding said: “The remark appeared to the tribunal to be the kind of throwaway remark Mr. Falco could make.”
The size of any award will be determined at a later hearing. Once an employee proves they are a victim of discrimination, a tribunal can order damages that are higher than the cap of about $109,000.
Kirk’s performance ranking had fallen from a 1 (best) to 3 (good) between 2014 and 2016. His overall compensation also fell from $1.24 million in 2014 to about $600,000 in 2016.
Citi claims its “position as set out in the litigation is that Mr. Falco did not make that comment.” Citi also says it’s upset with the decision “particularly given the small age gap between Mr. Kirk and the employee who was ultimately appointed to the role.”
Kirk’s hired successor wasn’t much younger, at just 51 years old.
Citi has 51 managing directors in the company’s EMEA Corporate Banking Department and, as of 2016, three were over the age of 55 and fifteen were 50 and older.
“Gray hair is very important in this industry,” Falco told the court last year.
Tyler Durden
Fri, 01/17/2020 – 22:45 - Could ISIS Take Control Over Iraq's Largest Oil Field?
Could ISIS Take Control Over Iraq’s Largest Oil Field?
As always, it’s the fear of sanctions that provides the leverage Trump seeks in this cat-and-mouse game with Iran. And this time, the leverage is over Iraq, which would like to see both American and Iranian forces out of the country, for obvious reasons.
There is nothing ISIS would love more than this.
It would also devastate Iraq because the sanctions threatened would include blocking access to Iraq’s U.S.-based account where all the oil revenues are kept. That threat stands if Iraq moves to kick U.S. forces out of the country.
That would mean victory for Iran (temporarily). Kicking out Iranian forces is not nearly as simple because the line between state and non-state actors is blurred, at best.
A few weeks ago, a U.S. drawdown of military forces in Iraq was already expected, but that now seems unlikely because of the implications.
The very military base that Iran attacked following the assassination of General Soleimani was already preparing for a drawdown.
In addition to the threat of sanctions on oil money, a U.S. withdrawal would likely open the door for an ISIS return.
What Iraqis Want
There is no consensus on this question, other than the fact that no one wants Iraq to be the proxy battleground between the United States and Iran.
It’s a fair point, and Iraqis have had a very difficult time enjoying anything close to sovereignty since the fall of Saddam Hussein.
While the Iraqi parliament has voted for U.S. troops to leave, they do not represent a unified voice. The Sunni elements of parliament did not participate in the vote. Neither did the Iraqi Kurds.
Shia factions in Iraq are, of course, pushing for a U.S. withdrawal, but the Sunnis and Kurds see this as a dangerous opportunity for pro-Iranian Shia factions to take even more control of the central government in Baghdad.
They don’t necessarily want a huge U.S. troop presence, but they are more fearful of a complete withdrawal that would leave them over-exposed to pro-Iranian forces. They also aren’t interested in being very loud about this fear.
In this atmosphere, there is already talk in certain Sunni circles of carving Iraq up to create yet another autonomous region such as that governed by the Kurdistan Regional Government (KRG) in the north of Iraq.
A Sunni-dominated region would include Anbar, Saladin, Nineveh and Diyala provinces, and would leave all of Basra’s oil to pro-Iranian factions.
Already, Sunni leaders are mentioning this as an option, pointing to what they call the “successful” example of the Kurdistan region.
The disintegration of Iraq was already progressing prior to the latest showdown between Iran and the United States. The country has been teetering over the edge of anarchy since 2003, when a single party (the Baath Party) was destroyed and Iraq became “governed” by multiple parties with even more fractious factions and a weak military that pro-Iranian Shia militias found easy to influence.
But this is far from just a sectarian conflict.
The mass protests that were already threatening Iraq’s fragile stability were Shi’ite-versus-Shi’ite. The Sunnis were not involved, nor the Kurds. They were just watching things unfold, warily.
One of the biggest mistakes the casual Western news reader makes is accepting a black-and-white narrative when it comes to Iraq. There is a very distinct group of Shi’ites that has a nationalist bent and is militantly against Iranian influence in an independent Iraq. This was a genuine uprising against highly corrupt and ineffective state institutions.
Then there is a second group of pro-Iranian Shi’ites who have been brutally putting down the popular uprising. This group exists in order to maintain Iran’s influence.
The problem now, for the U.S., is that the confrontation between the U.S. and Iran on Iraqi soil is more likely to bring these two groups together than it is to pull them further apart, which would have been a real threat to Iranian influence in Iraq.
Indeed, both Shia groups are calling for a U.S. withdrawal.
In this territory, you have to pick your evil, and for some time it’s been pro-Iranian forces and pro-U.S. forces against ISIS.
That’s not going to happen anymore, to the great delight of the Islamic State.
In 2011, a U.S. troop withdrawal from Iraq sent an open invitation to ISIS. In 2020, it will do the same.
The Biggest Threat to Iraqi Oil
For oil prices, the only real benefit to the Iran-Iraq conflict at this point is that Iraq is at a bit of a standstill when it comes to developing new projects, though its existing production will not be affected by any evacuation of U.S. oil workers, which has been minimal so far.
Since Iraq is already OPEC’s biggest over-producer, this is a bit of a balm on compliance.
But the biggest threat to Iraqi oil in recent months has been Shia protesters fed up with a corrupt government. No one else is willing to touch the oil.
The biggest immediate threat is not Basra oil–it’s Kirkuk oil.
A U.S. troop withdrawal could easily relaunch a sectarian civil war in Iraq, and Kirkuk would be the first to fall.
Kirkuk is in northern Iraq, but outside the official territory of the Kurdistan Regional Government (KRG).
It’s also one of ISIS’ key stomping grounds, and the only reason they have been kept from taking over this region entirely is the effort of a U.S.-led international anti-ISIS coalition, in which Kurdish Peshmerga forces played an integral role since 2014.
A withdrawal of U.S. troops at this point will ensure a return of ISIS, and a sectarian conflict is exactly what the Islamic State is hoping for.
At an attack on the K-1 base just in northwest Kirkuk in December launched the latest round in the Iran-U.S. proxy war in Iraq.
Prior to that, ISIS had already started escalating attacks on this base, with ISIS seeing a window of opportunity in an American shift to defense against Iran and Hezbollah in Iraq. We’re already seeing the uptick in ISIS attacks–and the focus is definitively Kirkuk.
Coalition forces may have won the Battle of Kirkuk in 2016, but ISIS is still there.
Basra oil is safe, for now. The biggest threat is to Kirkuk’s 9 billion barrels. This is where the next round of this conflict starts, and it will be ISIS that ultimately wins any ‘proxy’ war.
Tyler Durden
Fri, 01/17/2020 – 22:25 - Sig Sauer's Next Generation Machine Gun Receives Safety Certification With Special Forces
Sig Sauer’s Next Generation Machine Gun Receives Safety Certification With Special Forces
Sig Sauer announced Wednesday that the Special Operation Command (USSOCOM) had granted it with a safety certification for the new MG 338 Machine Gun, 338 Norma Mag Ammunition, and Next Generation Suppressors.
A press release from the Sig Sauer details that upon safety certification, it will deliver multiple MG 338 Machine Guns, thousands of rounds of 338 Norma Mag Ammunition, along with high-tech silencers.
“The safety certification of the complete SIG SAUER MG 338 system and delivery of the system to USSOCOM is historically very significant. For the first time in decades the U.S. Military certified a new machine gun, ammunition, and suppressor at the same time, bringing new innovation, portability, and increased lethality to our ground forces, with all components coming from one company,” said Sig Sauer CEO Ron Cohen.
Cohen added that “this certification was achieved following the outstanding performance of the complete MG 338 system through the rigors of the extensive function, durability, and safety tests set forth by USSOCOM.”
The release notes the new machine gun “bridges the gap” between the current M240 (7.62x51cal) machine gun and the M2 (.50cal). The new weapon is “noticeably lighter, weighing only 20 pounds, and provides significantly more range and lethality.”
The MG 338 is a belt-fed, lightweight medium machine gun weighing about 20 pounds, chambered a 338 Norma Mag. The weapon has a greater range and can breach advanced body armor from extended distances. The weapon can be easily convertible to 7.62x51cal.
“We are incredibly proud of this historical accomplishment and honored to have received this safety certification by USSOCOM for the performance of the complete MG 338 system,” concluded Cohen.
Textron Systems’ AAI Corporation delivered their next-generation machine gun to the Army last year that chambers a telescoped round between 6.5mm and 6.8mm and is expected to be the future replacement for the M16 rifle, M4 carbine, and M249 light machine gun.
The Pentagon, flush with new cash from President Trump’s $2 trillion military spending spree, is expected to outfit soldiers with modern weapons in the next 2-4 years. Sig Sauer’s MG 338 Machine Gun and AAI’s next-generation machine gun could be some of the replacement weapons expected to enter service in the near term. With new weapons comes high-tech ammo, the new rounds are expected to penetrate the most advanced body armor Russia and China have to offer.
Tyler Durden
Fri, 01/17/2020 – 22:05 - Now, Everyone Pays The Piper: The End Of China's Economic Miracle
Now, Everyone Pays The Piper: The End Of China’s Economic Miracle
Authored by Brett Redmayne-Titley via Watching Rome Burn blog,
In emulating the American economic raison d’etre, China has attempted to develop its unique capitalist model while ignoring that it too will soon suffer the same fate for the same reason: Unsustainable debt. When examining the recent realities of Chinese banking and finance over the past year it seems the steam that president Xi Jinping touts as powering the engine of his purported economic miracle of a master-planned economy is only a mirage, now almost completely evaporated before his eyes.
Like the many other similarly foolish western nations, China seeks only one path out of this fiscal death spiral, one that will likely spell doom and/or revolution in many countries soon: More debt.
China is becoming increasingly unable to continue to pay into the base of the world’s largest pyramid scheme of an economy and the cracks in the bubble are showing. This past year, saw three of the 4,279 Chinese lenders almost fail, if not for the massive intervention by the People’s Bank of China (PBoC) of immediate liquidity via more debt. The Chinese economic miracle is built on unsustainable debt-based infrastructure projects over the past two decades that have provided China with a face of prosperity to show the world, but this is only a mask to hide the limited countrywide success of the Chinese miracle into the rural areas. The injection of $Trillions in capital has seen China distribute these sums across the base of its economy creating a GDP that hit a high of 14.2 % in 2007 then averaged nearly 9% for the next decade before dropping yearly to 6.1% in 2018. All this growth had produced a personal affluence to a sub-set of Chinese society that has stoked this appearance of a flourishing economy.
This Chinese economic Keynesian trick of interjection of liquidity into national infrastructure is somewhat similar to the TVA and national works projects funded under Roosevelt’s depression-era New Deal. In this approach employment and therefore a growing tax base accelerated year after year as workers and corporations received the short-lived benefits of this massive windfall of available liquidity.
China’s method of stimulus is of course distinguished from today’s American model that merely shovels the injection of its own manufactured $Trillions by using multiple fiscal tricks to by-pass the citizenry and instead shovel the cash straight into the wallets of the already super-wealthy. Meanwhile, the US peasant once again pines in the “Hope” of yet another election.
The Metrics of a Failing Economy
Many analysts have for nearly a decade opined that China’s belief in national fixed-asset investment, the biggest engine of China’s economy, has long been the fundamental contributor to Chinese GDP growth, which was directly proportional to an ongoing increase in public and private debt. “China has relied on export and debt-financed fixed asset investment for growth for over two decades,” said Ho-Fung Hung, Professor in political economy at the Johns Hopkins University.
But as the world economy slows while the metrics show a recession looming China’s economy is already cooling rapidly. “And as the central government and banking system keeps producing new loans to absorb the debt, it leads to the continuous debt buildup,” Maximilian Kärnfelt, an analyst with the Berlin-based Mercator Institute for China Studies, told news service DW, adding that infrastructure investment still largely drives China’s economic growth since fixed investment contributed to 45 per cent of China’s GDP in 2016.
In a sign of the disaster to come, the first Bank to almost fail was Baoshang Bank Co. in May 2019. In this instance, for the first time in twenty years, the government took over control and seized the bank. This progression next took form when Chinese regulators took a different approach by ordering three state-owned financial institutions to buy significant stakes in Bank of Jinzhou Co. When, Shandong-based Heng Feng Bank, which had failed to disclose its financial statements for two straight years, required a bail-out, the bank sold new shares for about $14 billion to a group of investors including a unit of China’s public sovereign wealth fund and a local government-backed asset management firm.
Although these were some of the smaller rural banks, as shown this past month in Chinese reports, their economy is following the world in a quantified slowdown that has seen GDP slip yearly since 2012. Making the matter worse a similar world slow-down in purchasing is already affecting China’s manufacturing-based economy. The three bank failures were only the tip of a huge iceberg.
China’s $40 Trillion banking system dwarfs the American system at double the size, with over 4,000 small, medium and massive, state-owned banks. The world’s four largest banks, including behemoth ICBC ($4TN), are all Chinese.
The failure of just three banks was important enough that Chinese regulators submitted Chinese banks to a stress test and the results were shocking. China’s central bank admitted that China’s banking sector is “showing signs of strain.” The stress tests had revealed that over 13% of China’s 4,379 lenders were designated “high risk” by the central bank’s report. With this amounting to over 570 banks, and thus multiplied by the three existing examples of bank bail-out funding, with the Chinese economy following the world into recession, the financial numbers and likelihood of any future series of bail-outs are truly biblical. If not, fiscally impossible.
Separately, the PBOC also stress-tested 30 medium- and large-sized banks in the first half of 2019. In the base-case scenario, assuming GDP growth dropped to 5.3% – or well above where China’s real GDP is now – nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth of 4.15%, or just 2% below the latest official Chinese GDP report, seventeen out of the thirty of these major banks failed the test. Separately, a liquidity stress test at 1,171 banks, representing nearly three-quarters of China’s banking sector by total assets, showed that ninety failed in the base-case and 159 in the worst-case scenario. The metrics of any collective bail-out indicates that China has upwards of an insurmountable $20 trillion problem rapidly approaching.
In reaction to these first three bank failures, the stress tests and poorer economic news China did what centrally planned economies do: Chinese policymakers focused on strengthening oversight and regulation by the PBoC and gave it authority to write new rules for much of the financial sector. The China Banking Regulatory Commission and the China Insurance Regulatory Commission will now be merged as part of an overhaul aimed at resolving existing problems such as unclear responsibilities and cross-regulation as well as closing regulatory loopholes and curbing risk in the $40-43 trillion (€34.78 trillion) banking and insurance industries.
With the metrics of China’s banking system already cause for considerable concern to the tune of $20 Trillion, this huge obligation is as much a mirage as the economy since it fails to add to the account the very large and un-tabulated Shadow Banking loans which would add $Trillions in debt to China’s already highly leveraged systemic banking risk. The International Monetary Fund (IMF), which provides- despite its predatory legacy- some excellent yearly analysis of worldwide economic developments has warned China’s problems could lead to “financial distress” in the world’s second-biggest economy. China is seen as one of the economies most vulnerable to a banking crisis, although Beijing has repeatedly assured that the risks are under control. In response to the PBoC reports, Chinese Finance Minister Xiao Jie echoed that the situation “was under control.”
China’s Economic Tricks of Sustainability.
As the world economic body politic runs out of any remaining gas to keep a pilot light under the rapidly cooling metrics that show their long forestalled recession is near and certain, China is also contracting.
The national debt of China, which is the total amount of money owed by the Chinese government and all organizations and branches stands at nearly CNY 38 Trillion ( $5.4 TN) and 54.44% of GDP.
Chinese debt has been accumulating ever more rapidly. The Institute for International Finance (IIF) reported that year-on-year, in Q1 of 2019 China’s corporate, household and government debt increased 6% more from 297% of GDP to an incredible 303%. However, this is also more than a 100% increase since 2008 and amounts to 15% of all global debt.
These figures do not include the off-the-books “Shadow Banking loans that some estimates predict would triple that debt percentage to much closer to $16 Trillion. The problems are most serious in China’s rural banking sector where an ever nervous public has reacted with two late-2019 bank runs at China’s Henan Yichuan Rural Commercial Bank and then at Yingkou Coastal Bank.
At the end of 2018, the budget deficit of the Chinese government was close to five per cent. However, if the off-balance-sheet (“shadow”) financing of local governments is taken into consideration, the budget deficit rises to over 11 per cent. However, at the end of 2014, the official government deficit stood at less than one per cent, but an accounting which includes local “shadow” funding was around five per cent.
China’s shadow banking system is so-called since this myriad of endemic lending trickery is believed to be massive in total and kept off the books. These risky, undisclosed loans entered China’s financial system in 2009 throwing open the doors to debt for a Chinese population hungry for investment in order to pay for all those Chinese and internationally made western goods.
The main kind of shadow deposit is generally offered as a wealth management product (WMPs). Chinese banks offer these via aggressive marketing of high-interest-rate accounts as their alternative to savings accounts which are regulated to a maximum return of 3 %. Since these sanctioned shadow loans advertise a return of as much as 8% or more, normal banking customers have been throwing their miraculously large paychecks into these funds by the billions.
One reason WMPs offer higher rates is that they are based on much riskier bank loans, much like the precursor to the late ’80s, early ’90’s American savings and loan meltdown. Incredibly, banks don’t hold these loans on their balance sheets or set aside capital against their potential defaults. Instead, they typically extend this debt via intermediaries called trust companies—firms that are not allowed to accept deposits or formally loan out money but are allowed to manage it. The trust companies create investment products like WMPs, which banks market for them in return for a commission.
With some smaller Chinese banks having already found themselves either getting bailed out or the subject of a bank run, one reason is that, like America, China’s interbank/repo rates have surged amid growing counterparty concerns of the many banks seeking depleting available liquidity. This has forced many banks to rely almost entirely on new deposits to fund themselves, forcing them to hike their deposit rates to keep their funding levels stable. Like any Ponzi trick in banking, new cash is required to sustain these thousands of lending pyramids. With the economy in decline, this need has lead to some desperate regional banks offering incentives for depositor’s cash that would make the long-ago American “free toaster” seem ordinary.
China has a massive pork famine that has seen disease wipe out 40% per cent of its pig population in 2019. With China being the world leader in pork consumption these bank’s desperations have created some interesting incentives to attract depositors. The SCMP reports that new clients who deposited 10,000 yuan (US$1,430) or more in a three-month time deposit at the Linhai Rural Commercial Bank in Duqiao in Zhejiang province were then eligible to enter a lottery to win a portion of pork ranging from 500 grams (18 ounces) to several kilograms. Other rural commercial banks in northern China’s Hebei province and western China’s Guizhou province have also launched similar pork rewards programs. Dushan Rural Commercial Bank, located in the remote mountainous county in Guizhou, offered a coupon for 10 yuan (US$1.4) worth of pork for every 10,000 yuan of new deposits.
This solution has been touted as uniquely beneficial to these banks since, instead of offering higher rates which only accelerate the bank’s insolvency due to requiring higher payouts on deposits, the bank is instead making a one-time payment, and the unusual incentive is enough to garner substantial new deposits.
PBoC cuts in its key lending rates in August ’19 designed to stimulate a slowing economy have only exacerbated net interest margin pressures on these banks. With less income from returns on their loans and without the many funding options available to China’s much larger banks, these increasingly high-interest rates that China’s smaller banks have to offer in order to attract new cash deposits could further lead to their insolvency.
It’s been over four years since the last official Chinese benchmark rate cut. With America leading the way across the globe with rate cuts aplenty and China still having a base rate of far higher than the US rate of < 1.5%, it was only a matter of time for China to also drop rates.
With the new authority given to the PBoC, this key Loan Prime Rate (LPR) has become the new Benchmark Reference Rate to be used by banks for lending. This, like most recent decisions are designed to interject further liquidity in the form of debt once again into a still failing economy by lowering borrowing costs for small businesses. This rate will be now set monthly (20th of every month) and will be linked to the Medium-term Lending Facility rate. The current 1 year LPR stands at 4.15% after its latest cut on Nov 30 versus the Benchmark Rate of 4.35%. This number is sure to continue to shrink and can be considered a key indicator of Chinese frustration at retaining needed annual GDP growth since the result of this one move lowered the costs of the roughly 152 trillion yuan ($21.7 trillion) in yuan-denominated outstanding loans held by financial institutions (that are actually on the books) in a further hopeful attempt to again boost economic growth.
Just mere days after the 20 bps cut the PBoC further highlighted its desperate need for capital, announcing that it will be lowering the required reserve ratio (RRR) – or the amount of money banks are required to have on hand – by 50bps for commercial lenders. Currently, the required reserve ratio is 13% for large banks and 11% for small banks. The cut, which is the first since September, will bring the blended reserve ratio for Chinese banks to the lowest level since October 2007. In doing so PBoC effectively released about 800 billion yuan ($115 billion) in instant liquidity from out of the already cash-strapped financial system.
All these adjustments by China and the PBoC do little to control or pay-off increasing debt and are designed to maintain the Chinese miracle of TVA style infrastructural improvements that has been the employment engine of its economic growth. China’s new development of the Belt and Road Initiative (BRI), although a masterstroke in Eurasian commerce, also serves to continue the illusion.
As traditional monetary policy becomes ineffective to boost the economy, Chinese President Xi has installed twelve former executives at the state-run financial institutions across the country who will support the communist government’s ability to combat banking and debt difficulties, reported Taipei Times.
These appointments are in response to growth collapsing to a three-decade low in 2019. New manufacturing orders did increase but this was in large- and medium-sized enterprises. Small enterprises continued deeper into contraction and new non-manufacturing orders slowed, pushing employment further into quantified contraction.
An easier to understand recessionary metric, passenger car vehicle sales, fell yet again in December, plunging 3.6% to 2.17 million units, according to the China Passenger Car Association. This marks the 18th drop in the past 19 months for the country. Sales fell 7.5% in 2019 and 6% in 2018. GM said that its sales were down 15% in China and said that pressure into 2020 would likely continue.
Meanwhile, local Chinese manufacturers’ numbers are also down. BYD Co. posted an 11% drop in 2019 sales and SAIC Motor reported a “similar decline”.
Worse, exports to the United States were down 23% from the prior year.
Running from the Piper’s Call
But, it seems that China has no choice but to carry on with the façade of financed infrastructure projects as the only path to survival. Said Victor Shih, an associate professor of political economy at the University of California in San Diego;
“Because it [infrastructure investment] already is a large contributor to growth, the slowing investment will substantially reduce growth rates. This is not what the leadership wants.”
Shih’s assertion seemed confirmed when last year, President Xi said Chinese banks would lend 380 billion yuan ($55.09 billion) to support Belt and Road cooperation, and Beijing would also inject 100 billion yuan into a Silk Road Fund. Some observers view the project as an instrument designed to help the Chinese economy, with state-owned companies in specific sectors expected to profit massively from its implementation.
But they still need funding and Chinese banks on their own volition may be reluctant to get involved when already having troubles of their own. Andrew Collier, managing director at Orient Capital Research, says
“The banks [may] remain leery of these projects because they doubt they will be profitable and they will be stuck with bad loan. In the end, we are going to see increasing defaults among smaller institutions, the collapse of private loans via wealth management products, and growing layoffs in areas of the country with less political power.”
Making matter worse, a study conducted by the Center for Global Development estimates that the initiative could increase debt sustainability-related banking problems in eight countries also involved in the BRI.
“I still think that if growth falls below a certain level, the top leadership will order a stimulus, which involves acceleration in debt growth,” said Victor Shih. “That is the only viable tool in China’s arsenal if the economy slows too much.”
As noted in a recent article by University of Helsinki economics professor Tuomas Malinen, China has stimulated its economy aggressively in Q1 and Q3 2019 but interestingly has not continued its past emphasis on infrastructure investments as in 2015/2016. Q3 of 2019 saw record-breaking stimulus programs, however, China concentrated instead on providing loose credit to enterprises through both conventional and “shadow” banks.
As Malinen forewarns:
“What is notable is that even with this record stimulus, China has kept its economy growing barely above the ‘official rate’. This tells us that the Chinese economy has reached or is very close to reaching the point of debt saturation, where households and corporations simply cannot absorb any more debt, and any new debt-issuance fails to stimulate the economy.”
Though a massive infrastructure-spending program could revive growth, the ability of China to issue fiscal stimulus is starting to be seriously limited. This effectively means that China is fiscally unable to underwrite massive infrastructure projects and so any new world-economy-saving stimulus from China, as in 2015/2016, will be practically impossible. New infrastructure initiatives- if recessionary metrics continue to deteriorate- could only be realized if those costs are directly monetized by the PBoC. This would be the weapon of last resort for China but , when considering a declining economy, may soon be inevitable.
As Goes China…?
China is just one more working example of the failure of the many globalist economies worldwide that are already similarly suffering in the grip of massive unsustainable- if not orchestrated- debt. Which country becomes the first to trigger the almost certainly pending domino effect of global economic collapse, is merely a rhetorical question at this point. As goes China…?
This week in an interview, former Reagan OMB director David Stockman highlighted the global economic link to China, saying,
“The world economy would be not nearly as good as it looks had the Chinese not been borrowing like there’s no tomorrow and building regardless of whether its efficient or profitable.”
Stockman added, in summation,
“The whole global economy is really dependent on China piling even more debt onto the $40 trillion pile they already have.”
China economically continues to play the financial role of Kenneth Lay to its American mentor’s Bernie Madoff. But in the last few months China has shown, like so many other so-called first world economies, that it too is now all-in at the casino and using only borrowed money in a desperate effort to stay at the table…or starve.
Worldwide, many countries already burn in political turmoil of their own debt-ridden making as their own primal forces of nature squeeze their populations with the resultant new mantra of ever increasing austerity while the IMF and World Bank waits in the wings, salivating to gobble-up the carcass.
Alas, when it comes to unsustainable national endemic debt one primal truth is now being heard clearly in China, as in other Central bank boardrooms across the globe, and the empty dinner plates of their public…
When the time comes to pay the piper, that debt will be paid, no matter…but the Piper will take, in lieu of payment, pork, flesh, blood, or… dreams!
Tyler Durden
Fri, 01/17/2020 – 21:45 - Retail Carnage Continues: Bose Lays Off 100s, Shutters All Retail Stores
Retail Carnage Continues: Bose Lays Off 100s, Shutters All Retail Stores
Taking the award for Most Continents Covered While Shrinking Retail Footprint this week is Bose, which will be laying off hundreds of employees to close retail stores across the world.
The company plans on closing its entire retail footprint in North America, Europe, Japan, and Australia, according to The Verge. It adds up to a total of 119 stores, according to a spokesperson. The closures are slated to happen “over the next few months”.
And the company was direct in why it was making the move: it stated this week that its products “are increasingly purchased through e-commerce”.
The company has had a brick and mortar presence since 1993 and has locations across many shopping centers and malls scattered around the U.S. The stores help showcase the company’s headphones, speakers and other hardware. But there are usually similar demo areas in stores like Best Buy, which still sells Bose products.
The company hasn’t said exactly how many people would be laid off, stating:
“Originally, our retail stores gave people a way to experience, test, and talk to us about multi-component, CD and DVD-based home entertainment systems. At the time, it was a radical idea, but we focused on what our customers needed, and where they needed it — and we’re doing the same thing now.”
Colette Burke, vice president of Global Sales, continued:
“It’s still difficult, because the decision impacts some of our amazing store teams who make us proud every day. They take care of every person who walks through our doors – whether that’s helping with a problem, giving expert advice, or just letting someone take a break and listen to great music. Over the years, they’ve set the standard for customer service. And everyone at Bose is grateful.”
The company says it will keep stores open elsewhere:
“In other parts of the world, Bose stores will remain open, including approximately 130 stores located in Greater China and the United Arab Emirates; and additional stores in India, Southeast Asia, and South Korea.”
The company also says it is offering outplacement assistance and severance to employees.
Meanwhile, the move may not surprise Zero Hedge readers, as we noted just two days ago that mall vacancies are hitting two-decade highs.
US retailers announced 9,300 store closings in 2019, according to Coresight, indicating that the retail apocalypse and a massacre of malls are far from over. Mall operators saw a surge of store closures in 2H19 and ahead of Christmas despite a relatively stable consumer that has been leveraging up via the use of credit cards.
Barbara Denham, a senior economist at Reis, said one notable trend during the 2019 holiday season was the shift in spending habits from brick and mortar stores to online. Denham said recent vacancy statistics paint a disastrous picture for shopping malls as vacancy rates have surged to a record high of 9.7%.
Tyler Durden
Fri, 01/17/2020 – 21:25 - Western Media Coverage Of Russia As An Exercise In Propaganda
Western Media Coverage Of Russia As An Exercise In Propaganda
The notion of “fake news” has entered our vocabulary as a pejorative term for dissemination of bogus information, usually by social media, sometimes by traditional print and electronic channels which happen to hold positions contradicting the tenets of our conventional wisdom, i.e., liberal democracy. The term has been applied to Russian state owned media such as RT to justify denying such outlets normal journalistic credentials and privileges.
In this essay, I will employ the more traditional term propaganda, which I take to mean the manipulation of information which may or may not be factually true in order to achieve objectives of denigrating rivals for influence and power in the world, and in particular for denigrating Russia and the “Putin regime.”
The working tools of such propaganda are
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tendentious determination of what constitutes news, which build on the inherent predisposition of journalism to feature the negative and omit the positive from daily reporting while they carry this predisposition to preposterous lengths
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the abandonment of journalism’s traditional “intermediation,” meaning provision of necessary context to make sense of the facts set out in the body of a news report. In this regard, the propagandistic journalist does not deliver the essential element of paid-for journalism which should distinguish it from free “fake news” on social media and on the internet more broadly
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silence, meaning underreporting or zero reporting of inconvenient news which contradicts the conventional wisdom or might prompt the reader-viewer to think for himself or herself. As a colleague and comrade in arms, professor Steve Cohen of Princeton and NYU, has said in his latest book War with Russia?: the century old motto of The New York Times “All the news that’s fit to print” has in our day turned into “All the news that fits.”
Demonstrations of the arguments I present here could easily fill a book if not a library shelf. However, I think for purposes of this essay, it suffices to adduce several examples of the three violations of professional journalism giving us a constant stream of propaganda about Russia and its political leadership by offering a few reports drawn from the very cream of our print and electronic media.
In particular, I have chosen as markers the Financial Times and the BBC. The use of propaganda methods in their coverage of Russia is all the more telling and damaging, given that in a great many domains these channels otherwise represent some of the highest quality standards to be found in reporting anywhere today and consequently enjoy the respect of their subscribers and visitors, who little suspect they could be so prejudicial in their coverage of select domains like Russia.
* * *
As 2019 drew to a close, many of our media outlets drew attention to two Russia-related anniversaries: the just celebrated thirtieth anniversary of the fall of the Berlin Wall with the retreat of Soviet armed forces from Eastern Europe that it touched off; and the soon to be celebrated twentieth year of Vladimir Putin’s hold on power in the Kremlin. Both subjects may be fairly called news worthy and so fully correspond to traditional journalistic values. What has been exceptional and unacceptable has come in the second category of violations listed above – lack of context.
Starting in October 2019, the BBC’s Moscow correspondent Steve Rosenberg did several programs dedicated to the fall of the Berlin Wall. During the Christmas to New Year’s period, the BBC aired one program which consisted of two parts. In the first half, Rosenberg considered the impact of the withdrawal of Russian forces from East Germany on the Russians themselves and interviewed the former chief of those forces, who explained at length how they “came home” to shocking living conditions in the provinces, how they were abandoned to their fate by their own government. The tone of the reporting was sympathetic to Russians’ hardships and it was good that their side of the story from the ground up was given the microphone. What implied criticism there was of the powers that be came from a patriotic source. However, the second half of the program was turned over to a certain Lydia Shevtsova, a very outspoken Putin-hater, formerly with the Carnegie Center Moscow, till she was finally booted out and moved to a more congenial and supportive think tank, Chatham House, in London, where her anti-Russian vitriol is encouraged and disseminated by her co-author, ex-British ambassador to Moscow Sir Andrew Wood. Among the gem quotations which Shevtsova delivered was the claim that Russia under Putin is a declining power which is capable only of disrupting the world order, a spoiler not capable of any creative or productive contribution. Of course, Shevtsova has a right to her opinions, however the BBC had an obligation to its audience to explain exactly who the lady is and, if they wanted to practice fair play, to offer an alternative interpretation of what Vladimir Putin’s Russia stands for on the global stage today. They did not do either. The result was pure propaganda not news and analysis.
As for violations in the categories one and two above, a very good example arose following the recent publication of a study performed by the Levada Center public opinion polling organization in Moscow during October which showed that “53 per cent of 18-to-24 year-olds wanted to leave the country.” This was written about by many of our news peddlers, including FT. The decision to feature this factoid and use it to support claims that the Putin regime’ is a failure fits well with tendentiousness of our news coverage. Meanwhile, nearly all coverage of that study, including in the Financial Times, offered no contextual information whatsoever, when the context was begging to be told.
The article in FT which carried the Levada Center findings was published on 9 January as “Generation Putin: how young Russians view the only leader they’ve ever known.” The remarks on Levada followed directly on another statement begging for context: “Youth unemployment in Russia is more than three times the rate of the total population, according to 2018 data, compared with just twice the rate in 2000.”
First, as regards those 53% would-be “leavers,” one might ask: and so, why don’t they just leave? Russia today is truly a free country: anyone other than convicted felons who wants a passport can get it, and get it rather quickly. And thanks to the efforts of their remarkably hardworking Ministry of Foreign Affairs, most of the world welcomes Russian travelers without a visa requirement. But for that matter, getting a Schengen visa for the EU is not so complicated either.
However, those 53% are, in fact, not going anywhere. They are just sounding off about their youthful disgruntlement with a world created and run by their parents.
At the same time, as the Financial Times editorial board knows full well, young, middle-aged and even old have been leaving the Baltic States, Bulgaria, Romania and other former Soviet Bloc countries in droves, for the past thirty years up to the present day. That was the subject of an article published in the FT on the next day, 10 January 2020 under a title which speaks for itself: “Shrinking Europe.” The states I mentioned here have seen 25 and 30% loss of their population to citizens voting with their feet and departing the shrinking economies and personal prospects which result directly from deindustrialization and economic colonization by Germany and other founding Member States of the EU since 1991. The issue appears in the news now because, as the FT explains, “Andrej Plenkovic, the Croatian prime minister, has decided to elevate population decline to the top of his agenda as Zagreb assumes the EU’s rotating presidency.” Good for him! Now that the skeleton has finally come out of the EU closet, all the stories about Russia’s demographic crisis can be put in context – by those few who wish to do so.
Second, as regards unemployment in Russia today, I believe that similar ratios of youth unemployment to the general population unemployment can be found most everywhere in Western Europe if not in the world at large. The fact that this ratio has worsened comparatively in Russia since 2000 may be explained by the anomalous situation in Russia prevailing throughout the 1990s in step with the economic collapse that accompanied the transition to a market economy. Precisely the older generations, those over 40, were thrown into the street and their children or grandchildren were the first to be hired by the newly emerging industrial conglomerates, not to mention by Western multinationals settling in. What has happened since 2000 is merely a reversion to more normal distribution of employment and unemployment in the population as the Russian economy stabilizes.
Moreover, it would have been helpful had the author named the current level of youth and general unemployment in Russia. In fact, the general unemployment in Russia stands at something like 5%, so youth unemployment would be 15% by his reckoning. I assure you that there are many EU Member States that would be delighted to have similarly low unemployment rates. Here in Brussels the general rate has been over 20% for ten years or more, while youth unemployment has always been considerably higher.
Dear Reader!
For those who find my examples above too subtle to support my argument for egregious propagandistic treatment of Russia in our media, allow me to introduce violation number three, silence, in a way that should sweep away all objections to my thesis.
I draw your attention to an event that occurred in the past week about which you probably know nothing, or perhaps a wee bit from the odd man out reporting in the Wall Street Journal and a few other outlets. I am talking about the visit of Vladimir Putin to Damascus on Tuesday, 7 January. To their credit, the WSJ carried a short article in their 8 January edition, but went no further than to note this was the second visit by Putin since the Russians joined the fight in support of President Bashar Assad back in September 2015, turning the tide in the civil war his way. That is true, but only represents a tiny slice of what all our journalists, including the WSJ’s could have and possibly did learn from watching Russian state television on the 7th. What our media chose not to report was passed over in silence because it shows the complexity of Russia’s policy in the Middle East that includes but goes well outside the domain of pure geopolitics. This is so not least because of the date chosen for the visit, which happens to be Orthodox Christmas.
On the evening of the 6th, that is to say on Christmas eve, by the Russian Orthodox calendar, Russian state television broadcast live coverage of the Christmas service in the Christ the Savior cathedral in Moscow officiated by Patriarch Kirill, with prime minister Medvedev present on behalf of the Government. Then it cut to the service in St. Petersburg, where Vladimir Putin sat in the congregation, as is his custom. The commentator mentioned in passing that the Patriarch’s father, a parish priest, just happened to be the one who baptized Vladimir Putin as a child where they all lived, in the Northern Capital.
The next coverage of Putin on state television was from Damascus on the 7th, where he obviously arrived on a night flight from Petersburg. I did not see video coverage, perhaps because the journalist pool was very limited for security reasons. But still photos and reports on state television informed us that Putin had not merely held talks with President Assad on the Russian military base outside the capital, but had strolled together with him down the streets of Damascus, had visited the main church in the (still existing) Christian quarter of the city, had presented to the Patriarch of Antioch an icon of the Virgin and had also gone on to visit the city’s oldest and largest mosque.
What you have here is precisely the second line of justification for Russian presence in Syria alongside military/geopolitical reasons: resuming Russia’s 19th century role as protector of the Orthodox population in the Holy Land and the broader Middle East. A similar role was exercised back then by France on behalf of the Catholic populations, but that since has been totally negated by rampant secularism and multiculturalism in Western Europe.
It also has to be said that Putin’s visit to Damascus was back-to-back with other very high visibility political statements: his visit to Istanbul on the 8th for the official opening of the TurkSteam gas pipeline and for lengthy talks with President Erdogan that ended in a joint statement calling for a truce in the Libyan civil war for which Russia and Turkey support opposing sides; and his visit on the 9th to Russian naval exercises in the Eastern Mediterranean that included the launch of Russia’s latest hypersonic missiles, the reality of which U.S. and other Western experts have yet to acknowledge.
With this I rest my case on the unfortunate propagandistic behavior of our media which deprive the broad Western public of any chance to make sense of the most dangerous military and political standoff of our age.
* * *
Gilbert Doctorow is a Brussels-based political analyst. His latest book Does Russia Have a Future? was published in August 2017.
Tyler Durden
Fri, 01/17/2020 – 21:05 -
- Middle Age Misery Peaks At 47 For Most Americans, Study Finds
Middle Age Misery Peaks At 47 For Most Americans, Study Finds
Middle age can be a miserable time, particularly for a certain cohort of Gen Xers who are struggling through divorce, a dead-end career, insufficient savings or overwhelming debt.
But David Blanchflower, a professor at Dartmouth College and former BoE policy maker, examined data across 132 countries to measure the relationship between wellbeing and age.
And what he found surprised him, according to Bloomberg.
He concluded that every country has a “happiness curve” that’s U-shaped over a typical lifetime.
“The curve’s trajectory holds true in countries where the median wage is high and where it is not and where people tend to live longer and where they don’t,” Blanchflower wrote in a study that was published Monday by the NBER.
For most of the developed world, the age of peak unhappiness is 47.2 years old.
Most of a person’s middle years are miserable, according to the study. But oddly enough, as we approach the golden years, we start to appreciate life a little bit more.
Perhaps that has something to do with approaching retirement age (something millennials might never reach). Or maybe it’s simply the wisdom of age.
But for most of life, expect the misery to get worse before it gets better. Just one more reason why Americans are seeking mental health advice in droves.
Tyler Durden
Fri, 01/17/2020 – 20:45 - The Population Collapse Behind Rates, Debt, & The Asset Price Explosion
The Population Collapse Behind Rates, Debt, & The Asset Price Explosion
Authored by Chris Hamilton via Econimica blog,
This may not be a surprise to many males, but human females are unlike the rest of the animals on earth. Human females have a unique and totally differentiating factor from nearly all other animal life; their bodies cease being capable of pregnancy approximately half way through their life cycle. This natural change to sterility (menopause) does not happen in the animal kingdom (nor in human males) essentially so long as they live (ok, actually there may be a couple of whales and porpoises that may also go through menopause…but I digress). Animals and male humans are still able to reproduce nearly until the end. But not human females. Even before menopause fully takes over, typically around 50 years of age, fertility rates drop radically after 40 and miscarriages surge among those able to get pregnant. By 45, pregnancies essentially cease.
What the hell does this have to do with economics, you may be asking yourself?
Judging the size and change of humankinds population is quite different than any other species on earth because of this truncated period of fertility among human females. Thus, to gauge the direction of our species, and the future consumption and potential economic activity, we must focus on annual births versus the 20 to 40 year-old female population and understand that the post childbearing, 40+ year-old female population is, from a fertility perspective, simply an inert echo chamber. The 20 to 40 and 40+ year-old populations shown below through 2040 are not estimates or projections but actual persons which already exist and (absent some pandemic, world war, or change in life spans) will slide through the next 20 years. All data (except where noted) comes from the UN World Population Prospects 2019 and they collect / compile all the data from the national and regional bodies. The only real variables in what I’ll show below are immigration, deaths, and births over the next 20 years. I also primarily focus on the world excluding Africa. Africa consumes so little, has relatively very low emigration rates, is highly reliant on the rest of the world for it’s economic growth, but from a population perspective, is growing so rapidly as to skew the picture.
But at the onset of a declining childbearing population (excluding Africa) and ongoing declines in fertility rates, the UN projects that the decline in births (excluding Africa) since 1989 will only continue. But I’ll show why significantly lower annual births are far more realistic than the UN projections. And given nation after nation is reporting “shocking” declines in births in 2018 and again 2019…the estimated numbers of births are only set to be significantly lower as something very momentous is appears to be happening.
Last 70 years…
1950-’89 +32 million annual births, +375 million female 20-40 year-olds, +320 million female 40+year-olds
1989-’20 -17 million annual births, +230 million female 20-40year-olds, +680 million female 40+year-olds
Next 20 years…
2020-’40 -10 million births annually by 2040, -32 million female 20-40year-olds, +435 million female 40+year-olds
Below, looking at the same data as above, but focusing on the year over year change of 20 to 40 year-olds (red columns) versus the same for 40+ year-olds (blue columns), annual births (black line), and federal funds rate (yellow line). From a global population perspective, the 1980’s were the turning point; federal funds rate peaking in 1981 (restricting access to capital as the growth in global demand was at its zenith), annual childbearing female population growth peaking in 1985 (adding nearly 18 million females in that year alone), and annual births subsequently peaking in 1989. Since 1989, the under 40 year old annual growth keeps decelerating, the births keep declining, and the federal funds rate moving lower.
In 2020 or 2021, the global childbearing population of females (excluding Africa) will begin outright declining. The only thing rising was the annual growth of the 40+ year old population. However, the echo of annual growth among the post childbearing female population will peak around 2028…and then rapidly begin the deceleration glide path (still growing, but much slower while the childbearing population will continue to be in outright decline indefinitely).
Looking at the pictures through the global regions.
East Asia (China, Japan, Taiwan, S/N Korea, Mongolia)
For East Asia, 1989 was peak annual births, and the crossover point of post-childbearing outnumbering childbearing was in 2000. Births continue tanking and so is the childbearing female population. Only the fertility-wise inert post childbearing population continues soaring. By 2040, the region is set to reach a 2.8 post-childbearing to childbearing ratio. The higher this ratio moves, the greater the financial and societal pressure of elderly generations on the younger generations…further negatively impacting fertility rates and economic demand/growth.
China
2020 births will be about 50% lower than the 1989 peak, and given the known decline of a minimum of 45 million females of childbearing age by 2040 (and almost 70 million fewer, or -30% fewer, than the 2000 peak) there is really no good reason (other than massive government intervention) that births don’t fall significantly further. My guestimate in blue is likely to be far too “optimistic”. By 2040, there will be more than 2.7 post-childbearing females for every potential mother. And now a trade deal with a nation that has an indefinitely shrinking domestic demand and massive housing over-capacity, factory overcapacity, etc. for a population (let alone middle class population) that will never be coming…hmm, interesting.
Japan
If Japan were a human, now would be about the time to bring in hospice care. From a growth perspective, they are terminal as even the 40+ year-old segment is now making its turn to decline along with births and the childbearing population. By 2040, there will be more than 3.7 post-childbearing females for every potential mother. What saved Japan during the long decline in domestic demand, a long rise in global export demand…is now over. The Japanese / German models of reliance on exports to make up for decelerating/declining domestic demand was premised on fast rising global demand which is simply no longer supported by a growing population of potential consumers.
South Korea
Again and again I am shocked when I look at South Korea. The 70% collapse in annual births will only continue picking up speed to the downside as those capable of childbearing are in freefall…while the 40+ population dwarf’s the under 40 year-olds by more than 2 to 1 now and will be almost 4 to 1 by 2040 (a done deal, not a prediction). Absent state mandated pregnancies (or the like) births will fall in excess of 80% and may even be down 90%+ by 2040? A society collectively choosing not to reproduce or replace themselves…essentially committing a collective suicide at a time of the most relative plenty Korea has ever known, it boggles the mind!?! Again, collapsing domestic demand while global export markets are turning away and inward to meet their needs…it boggles the mind and this is not going to be pretty.
Eastern Europe (Russia, Belarus, Bulgaria, Ukraine, Czechia, Hungary, Poland, Moldova, Romania, Slovakia)
By 2030, the childbearing females of Eastern Europe will be nearly a third fewer than existed as of 2011. I am suggesting that given a third fewer potential females of childbearing age and given continuing flat to falling fertility rates…births will be significantly lower than the UN is projecting. The existing decline of 50% is likely to be down something like 70%+ by 2040. Like Japan, Eastern Europe’s post-childbearing population is set to begin declining around 2030, and accelerating depopulation will be the order of the day. 2030 will also be the peak post-childbearing to childbearing ratio at nearly 3 to 1.
Western Europe
Not as dramatic as East Asia or Eastern Europe thanks to ongoing immigration, but the destination is the same. Growing quantities among the post childbearing population and ever fewer births and potential mothers. Almost a 2.9 post child-bearing to child-bearing ratio by 2040. The weight of the promises made to the old to be paid from the young is a crushing weight only further depressing births.
United States
The charts for the US have a big problem, they assume high rates of immigration (primarily of childbearing age) to maintain a flat childbearing population shown from 2020 through 2040. However, the reality is that in 2019, the US had the lowest population growth in it’s history for three reasons, tanking births, net outflow among illegal Mexicans, and far tighter border controls reducing immigration to a relative trickle. Further, the locations that US immigrants are now coming from (China, India) and the education and income levels of the females coming in is with fertility rates even lower than the general US population. Surging costs of living (rent, healthcare, insurance, daycare, education, etc.) beyond income is forcing females to work to avoid financial wreck. Getting married, having children is simply a luxury more and more simply find beyond their means…and given widely available contraceptives, this is more of a choice than ever. Minimum of 2.2 ratio by 2040…but if the childbearing population falls, as I expect, the ratio (and societal weight it represents) will move northward.
Latin America (Western Hemisphere except US/Canada)
Births are declining, the childbearing population is at it’s zenith and will shortly begin its secular decline, and only the post-childbearing population is growing. By 2040, the childbearing to post childbearing ratio will be about 1.8 to 1.
Southeast Asia (Cambodia, Brunei, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam)
The growth of the childbearing population is over and a decades long period of a flat childbearing population is underway. Births will likely slowly recede with declining fertility rates among a zero growth childbearing population. By 2040, the post childbearing will outnumber the childbearing by a 1.8 to 1 ratio.
South Asia (India, Pakistan, Afghanistan, Bangladesh, Iran, Bhutan/Nepal, Sri Lanka)
Like Southeast Asia, a long period of zero growth among annual births will be coming through the childbearing population beginning in 2030. By 2040, India’s childbearing population will essentially be at it’s peak and the 1.4 post childbearing to 1 childbearing ratio will be ready to rip higher over the next two decades. The engine of population growth among the worlds most populous region has already stalled and begun to reverse although it will take decades before this is apparent in the overall population numbers.
But Africa Will Continue To Populate The Earth!?!
Finally, the chart below shows the year over year change in births among the world (excluding Africa) versus year over year change in Africa, from 1950 through 2040. Note the great gyrations for births among the world (black line) versus the smooth and steady year over year increases in Africa (aqua line)…except that one deceleration around 2018?!? All forward growth among births is anticipated to take place in Africa, essentially just offsetting the declining births among the remainder of the world.
Getting a closer look from 2000 through 2040, the great 2008 through 2018 deceleration (still growing, but much slower) in growth of births among Africa is much more noticeable. Also of import, this UN report came out in early 2019, and the last hard data is through 2018 most everything from 2019 on is projections. So, note the hard data 2008 through 2018 is suggesting the same issues plaguing the worldwide slowdown in births is likely impacting Africa as well. Of course, with a fast rising childbearing population in Africa, the UN demographers immediately project that Africa’s births will return to high year over year increases from 2019 onward…rather than suggesting that the same something that has turned global births upside down world-over will continue to show up in Africa. Definitely something to watch as, again, the only thing keeping global births from really tanking has been Africa, but I’ve a funny feeling this depopulation contagion is likely working it’s way through Africa now.
What is the point of all this?
The global economy is premised on perpetual growth of demand, of supply, of money, of asset prices, etc. But the pre-eminent engine for the growth (at least for the last few centuries) has been a rising population. More people need more of everything. This means more factories, more supply networks, more infrastructure, more homes, more cars, creating more employment, etc. Including more loans and debt being lent into existence, particularly among the younger populations allowing for the purchase of vehicles, homes, etc. in the present to be repaid “later”. But when the collective younger adult population, undertaking the vast majority of leverage, ceases growing and all the growth shifts to older and elderly adults, who undertake relatively low levels of debt or in elderly years move to outright deleverage…the money supply ceases to grow organically and begins to shrink antithetically to a perpetually growing system.
It has been a long run-up since WWII to get here; decades of rate hikes during accelerating demand (constricting supply of money and causing inflation), then decades of rate cuts during decelerating demand (expanding supply of money and causing deflation but simultaneously asset inflation), resultant debt through individuals, corporations, and federal governments, all intertwined with the deceleration of population growth. Since 2009, the Fed is committed to buying bonds so as to avoid a free-market pricing for those bonds and avoid yields on US debt that would soar and consume much/most of the federal taxes collected. The Fed is also now committed to not allow free-market pricing of assets based on decelerating population growth of young and large deleveraging among elderly. I think it is also highly likely the Fed (and/or agents at its direction) are also manipulating precious metals and/or crypto’s so as to hide the severity of the situation.
All of this is inorganic money creation taking place now is to mask the fundamental accelerating weakness that a low population growth can organically support. The Federal government and Federal Reserve have now gone so far that any deceleration in inorganic growth (let alone outright declines in balance sheet, rate hikes, declines in excess reserves, tax hikes, lower federal deficits) have a high potential to take the economy into not a recession but a depression unlike the world has known. The primary ingredients for removing ourselves from previous recessions/depressions no longer exist. Global demand will begin declining indefinitely as this demographic picture plays out and rates back at zero will do little to move the needle (aside from more asset inflation). The fast rising population of elderly will continue to consume less than they did in their prime years and deleverage more…far beyond the capability of the young adults to offset the financial, economic, and currency impacts. The true picture is that a generations reset is likely in the offing before the demographic and depopulation dynamics can be turned around, before the debt can all be extinguished, before the overcapacity can be expunged.
And I guess, the trillion dollar question should be how did we get here? Were the gyrations in the population and subsequent decelerations (and imminent population collapses in many nations/regions) simply the result of birth care becoming widely available, urbanization, female employment rates, etc. etc. that happened of their own accord…or if instead this is by design as central banks had an over-riding mandate since the 1970’s (not unlike China…but by a different means), only now becoming clear?!? Was this simply humankind going beyond itself or was this imminent collapse centrally designed and engineered?
Tyler Durden
Fri, 01/17/2020 – 20:25 - Climate-Kids' "Trump Is Endangering Our Future" Case Crushed By 9th Circuit Court
Climate-Kids’ “Trump Is Endangering Our Future” Case Crushed By 9th Circuit Court
On the same day as 17-year-old Great Thunberg stood in front of thousands of young people in Switzerland, fearmongering their imminent death due to old white men in charge of the world refusing to listen to her; a US federal appeals court dismissed a lawsuit by 21 ‘climate kids’ who claimed the U.S. government’s climate policies and reliance on fossil fuels harms them, jeopardizes their future and violates their constitutional rights.
The Oregon-based youth advocacy group Our Children’s Trust filed the lawsuit in 2015 in Eugene on behalf of the youngsters (aged between 8 and 18). It sought an injunction ordering the government to implement a plan to phase out fossil fuel emissions and draw down atmospheric carbon dioxide emission.
The Ninth Circuit ruled that the children must look to the political branches – Congress and the executive branch – for action, rather than the courts.
“The plaintiffs have made a compelling case that action is needed; it will be increasingly difficult in light of that record for the political branches to deny that climate change is occurring, that the government has had a role in causing it, and that our elected officials have a moral responsibility to seek solutions,”
…
“We reluctantly conclude, however, that the plaintiffs’ case must be made to the political branches or to the electorate at large, the latter of which can change the composition of the political branches through the ballot box. That the other branches may have abdicated their responsibility to remediate the problem does not confer on Article III courts, no matter how well-intentioned, the ability to step into their shoes.”
As KOIN reports, the 2-1 vote for dismissal was a major blow for the climate activists, who have filed numerous similar cases in state and federal courts and currently have nine cases pending in state courts from Alaska to New Mexico.
Of course, it goes without saying that a lawyer for the children said the group intended to appeal the decision to a panel of the full circuit.
“The Juliana case is far from over. The Youth Plaintiffs will be asking the full court of the Ninth Circuit to review this decision and its catastrophic implications for our constitutional democracy,” said Julia Olson, executive director and chief legal counsel for Our Children’s Trust, in a statement.
“The Court recognized that climate change is exponentially increasing and that the federal government has long known that its actions substantially contribute to the climate crisis,” Olson added.
The full ruling can be read below…
Tyler Durden
Fri, 01/17/2020 – 20:05 - Got Gold? – David Rosenberg Warns "We're Going To Have Helicopter Money"
Got Gold? – David Rosenberg Warns “We’re Going To Have Helicopter Money”
Authored by Christoph Gisiger via TheMarket.ch,
David Rosenberg, Chief Economist & Strategist of Rosenberg Research, doesn’t believe in the sustainability of the stock market rally, and warns that investors may be disappointed at the end of the year. He is bullish on energy stocks – and predicts that the gold price will surge to $3000.
Mr. Rosenberg is also the author of Breakfast with Dave, a daily distillation of his economic and financial market insights.
“At this level, many things have to go optimally so that the prices are higher at the end of the year,” comments David Rosenberg on the growing complacency among investors.
The renowned economist and strategist is one of the most profound experts on the U.S. economy and one of the last remaining skeptics to warn of a correction.
His bearish view is based on exorbitantly high equity valuations and over-optimistic earnings expectations. He also thinks that the US consumer sector is in worse shape than the consensus believes.
Rosenberg, who recently launched his own economic consulting firm, explains in this extensive interview with The Market/NZZ why he is pleasantly surprised by the phase one agreement between the United States and China, why the Federal Reserve’s balance sheet is currently the most important determinant for the financial markets, and why he is betting on gold, Treasuries, energy stocks and emerging markets.
Mr. Rosenberg, after a strong start to the year, equity markets seem to be somewhat more hesitant recently. What’s your outlook for the coming months?
This is a liquidity and momentum driven market. It’s been that way for the past four months where the correlation between the S&P 500 and the Fed’s balance sheet has expanded to a 95% relationship. This is a case of a very accommodative Fed policy. The double-digit growth in the money supply is bypassing the real economy and has entered into asset markets broadly, and specifically into equities. So as long as the Fed is in the game priming the monetary pump, shorting stocks is going to be a very dangerous game to play.
How sustainable is this rally?
I’m not bullish. Valuations are at extreme levels and the level of complacency is also a red flag. There are needles in the haystack, but this overall market rally is more a house of straw than a house of brick. You can rent liquidity rallies, and you can rent them for an extended period of time, but they’re very difficult to own. This is not a fundamentally based bull market like in the 1980s and 1990s. Back then, gains in stocks where premised on much better demographics and much more solid productivity growth.
What are your main concerns regarding the U.S. economy?
There’s this view that we’re going to have either a growth stabilization globally or a re-acceleration of economic growth. I don’t see that in any leading indicator. I think there’s going to be a lagged response in the U.S. economy to the sharp slowing that we saw abroad. Remember, twelve years ago it was the rest of the world that ultimately followed the U.S. This time around, the U.S. will follow the rest of the world.
Then again, concerns of a U.S. recession have faded since last summer. Are we definitely out of the woods?
People will claim that there is no recession. Statistically speaking that’s true as far as GDP is concerned. But we know for a fact that we actually had a four-quarter earnings recession. I never quite understood why GDP is so important to an equity investor who is buying an earnings stream. There’s no ticker “GDP” on the New York Stock Exchange. So it’s not about the overall level of GDP, it’s really about earnings and about the fact that if you look at the 30% share of the U.S. economy that is outside of the consumer space, we actually have been in a recession in the past two quarters.
Why would you exclude the other 70% of the economy from an investor’s point of view?
As an equity strategist, you look at the stock market from a breadth perspective to gauge the overall health of the marketplace. You should do the same thing to examine the breadth of GDP. On a median basis, the U.S. economy has stopped growing three quarters ago. Also, the U.S. consumer is not as nearly in good shape as people think. We see signs that the labor market is starting to show some fatigue. Moreover, there is a big split between spending growth on discretionary and non-discretionary items where things don’t look as robust. We surely saw that not just in the latest retail sales report but also in the CPI numbers this week. If consumer demand was really that strong the underlying inflation rate would be accelerating not decelerating. The Fed would not be cutting interest rates three times and then re-extending its balance sheet at a rate that even exceeds what they were doing with QE3.
How stimulative is monetary policy right now?
The most important correlation to the stock market today is the Fed’s balance sheet. The power of the Fed has become so acute that it has replaced the economy as a principle influence over the stock market to the point where there is only a 7% correlation between GDP and the S&P 500. Historically, in any given cycle that relationship was anywhere between 30% and 70%. The amount of easing that the Fed has done since the beginning of October by expanding the balance sheet is just about as strong in terms of basis points as the three rate cuts they engineered last year. They have cut rates almost a 150 basis points when you look at it on an equivalent basis.
How are the financial markets going to react when the Fed tries to wind down its “Not-QE”-program?
A lot will depend on what the macroeconomic background looks like, especially what’s happening with earnings estimates. But we have a template of what happened when the Fed provided a lot of liquidity juice to the marketplace with the Y2K special lending facilities in late 1999. At that time, the market strongly surged, and kept on rallying into the early part of 2000. Then, the Fed started to withdraw that liquidity and it wasn’t a pretty picture.
Keep in mind that the recession didn’t start until March of 2001, even though the problems in the stock market and particularly in technology started about a year ahead of the economic downturn.
What do you think will happen this time?
It’s tough to time when the Fed is finally going to sit back and say: “Ok, you know what: I’m not handing any more candy to the kindergarten class”. My sense is that the response to the Fed no longer priming the pump could be significant. We could end up unwinding almost anything we saw since last October. That wouldn’t surprise me at all. It doesn’t necessarily bring you a 20% stock market correction, but it certainly could bring you a 10% pull back.
At what level will the S&P 500 trade at the end of the year?
I would be surprised if the market is higher than today. The question will be how much lower, because earnings are going to be very challenged to meet the double-digit growth forecast based on the consensus view. Earnings will disappoint this year and I don’t think we’re going to get another 4-point multiple expansion. The question also will be the extent to which companies continue on this path of share buybacks. The principal source of demand in the stock market have been the corporations themselves. There is a big disconnect between the dollar level of earnings and earnings per share. The share count has been driven down to the lowest level in two decades, and that’s providing the support on a per share basis.
On a positive note, the U.S. and China have finally signed the long-awaited trade agreement. What do you make out of this deal?
The deal preserves the U.S. bargaining “stick” in the form of tariffs remaining on $360 billion of goods imported from China. But investors do seem impressed with this ‘Phase One’ trade deal, which did end up addressing IP protection issues, forced technology transfer, and termination clauses/dispute resolutions if either party reneges. Even skeptics like me have to be open minded to the possibility that there is more to this agreement than met the eye initially. At a minimum, the hostilities appear to be behind us for now and President Trump does have something tangible to campaign on. But the trade war is not over despite rising hopes that this trade deal with China is going to open up a prolonged period of appeasement. In fact, this is a much broader economic war between two clashing ideologies.
It’s not much more than two weeks until the start of the Democratic primaries. To what degree are the U.S. elections going to impact the financial markets?
Most market participants think that Donald Trump has a lock on the November elections. He may well, but I don’t think the odds are as close to a 100% as people think. There is going to be political risk in polling, and that’s going to inject more volatility into the marketplace.
What should investors do in this kind of environment?
I believe in Bob Farrell’s 10 Rules for investing. He was a legend at Merrill Lynch & Co. for several decades, and his first rule is that markets tend to return to the mean over time. Whether you’re looking at price/earnings, price/book or price/Ebitda, we’re pressing against the valuation levels we saw at the peaks back in 2000. So at this stage, a lot of things have to go right for the market to continue to appreciate until the end of the year. It can happen, but there is going to be bumps along the road. So to me, it’s less about buying the index. It’s more about identifying the sectors and subsectors that will hold up well in that sort of environment.
What’s your advice for a Swiss investor coping with deeply negative interest rates?
You want to be investing in things that are reversely correlated to negative interest rates. Firstly, as a Swiss investor or a European investor, I truly would want to be invested in bonds that have a positive yield and liquidity. That means you want to be in other countries’ fixed income markets where Central Banks have the capacity to ease monetary policy. The United States fits that bill. That’s why I’m still a big fan of Treasuries. I think the U.S. Treasury market will be a very good refuge.
Where else do you spot opportunities?
Gold is inversely correlated with either near zero rates, zero rates, or negative rates which makes it an ideal investment. Mark Twain coined the phrase “Lies, damned lies, and statistics”. But the thing about charts is that they don’t lie. Gold went through a long-term, multi-year basing period. Now, it has broken out and the chart looks fantastic. Also, gold is no country’s liability. For example, in the United States M2 growth is running at double digits. So when you compare the new supply of gold against the supply of money coming into the system from Central Banks, to me it’s a very clear cut case that you want to have very high exposure to bullion.
You’re predicting that the gold price will surge to $3000 an ounce. What are the fundamentals your forecast is based on?
It’s just a matter of when, not if. Gold demand is predicated on the final act which is going to be right-out debt monetization. When we get to the lows of the next recession, we’re going to find that these Central Banks that already have been extremely aggressive are going to engage in what is otherwise known as the “debt jubilee” or a right-out debt monetization which was actually the final chapter of the Bernanke playbook. Remember, Ben Bernanke got his nickname “Helicopter Ben” because in a speech in 2002 he suggested that helicopter money could always be used to prevent deflation. So we’re going to have helicopter money.
That doesn’t sound very encouraging.
Would you ever have thought that, at or near the peak of this cycle interest rates would be at the lowest level since the 1500s? Just imagine what happens to monetary policy in the next downturn.
What do you think?
This debt morass has been the principal reason why – notwithstanding how wonderful the stock market has done – this has been the weakest global expansion on record. What happens in the next recession is that the cash flows to service that debt are going to become significantly impaired and we’re going to get a destabilizing default and delinquency cycle. I know, that sounds absolutely horrible, but we’ve hit the end of the road on negative interest rates, and we’ve really hit the end of the road on quantitative easing. So the Central Banks are going to go into a new, non-conventional toolkit called debt monetization. They will lose control of the monetary base and then we will go into a situation where, even with technology and with aging demographics in the industrialized world, we will be talking about inflation again. That might come in the next 18 to 24 months, and gold is going to skyrocket.
Do you also see attractive investments in the stock market?
There is not a lot of visibility in terms of earnings. But defense and aerospace is an area where the earnings surprises will be on the upside for the foreseeable future. So you want to participate in that. Every single country is raising its defense budget, and Donald Trump has successfully pressured his NATO allies to ramp up their military spending. For the first time in the post World War II area, we see Japan doing the same thing. We’re not talking about classic warfare. We’re really talking about defense technology and cybersecurity. It’s just like the chart of gold: Even though multiples in this sector have been re-rated because of the earnings visibility, this is a chart you want to buy.
What about opportunities from a value perspective?
The energy sector’s market capitalization relative to the overall stock market valuation is the lowest it’s ever been. We’re down to almost a 4% energy share of the S&P 500. That’s lower than it was when the oil price was $11 a barrel back in 1998. We will not all be sitting in driverless electric cars three years from now. Fossil fuels are not going to go away that quickly. At this stage, there is a very firm floor. The energy sector is nowhere close to being priced for where oil prices are right now and there is justification for why the oil price will remain close to where it is for an extended period of time. So in a world where practically every asset class from real estate to corporate credit to equities is extremely expensive, energy offers very deep value. At peaks of the cycle this is where you want to be buying.
Are there also promising investments globally?
Sticking to the concept of mean reversion, I want to be taking my profits out of growth and moving into value. Part and parcel of that is taking profits in the US and moving them into other markets that are a lot cheaper and that have lagged well behind. Emerging markets are inherently riskier, but the valuations are very compelling. Moreover, I expect the U.S. dollar to go down rather than go up which is an additional benefit for the emerging market space.
What countries should investors look at?
You can’t get much cheaper than Hong Kong. But there are other markets that look pretty attractive. I would say Korea is another market that you would be focusing on as well.
And how about countries in the developed world?
The most positive story is Japan. I continue to believe that Prime Minister Shinzō Abe has emerged as a transformational leader. There has been a positive re-rating of Japan’s secular growth rate as a result of his policies. The back of deflation has been broken by the Bank of Japan. So Japan is a market that’s under owned and relatively inexpensive. There is going to be a positive re-rating, not just in terms of Japan’s GDP growth rate. There are also nascent signs of an equity culture being developed that reminds me a lot of what happened in the U.S. in the early 1980s.
Tyler Durden
Fri, 01/17/2020 – 19:45 - Human Rights Watch: China Is "Existential Threat" To Global Freedom
Human Rights Watch: China Is “Existential Threat” To Global Freedom
Authored by Steve Watson via Summit News,
Non-governmental organization Human Rights Watch warned Wednesday that if China continues to go unchecked, it threatens to enslave the entire global population and eviscerate freedom for good.
In its annual report, the think tank cautioned that the Communist Chinese government is using technology, censorship and violent repression to such an effective extent that it threatens to fundamentally undermine international human rights forever.
“Beijing has long suppressed domestic critics. Now the Chinese government is trying to extend that censorship to the rest of the world,” the 652-page report concluded.
HRW declared that China is now engaged in the “most intense attack” ever on freedom, and that President Xi Jinping’s government is executing “the most brutal and pervasive oppression that China has seen for decades,” including the implementation of a “nightmarish surveillance system” in Xinjiang province.
The report outlines how China is using its might to systematically silence political dissidents, religious groups, and ethnic minorities.
The report is so damning that Beijing banned HRW executive director, Kenneth Roth, from traveling to Hong Kong to attend an event to release it. Instead, the report was launched at the United Nations headquarters in New York.
The report also criticized the UN, other countries, and global corporations for not doing enough to stand up to China, accusing them of being “willing accomplices,” of “enabling” the crackdown and turning a blind eye to “a dystopian future in which no one is beyond the reach of Chinese censors.”
“Far from being spurned as a global pariah, the Chinese government is courted the world over, its unelected president receiving red-carpet treatment wherever he goes, and the country hosting prestigious events, such as the 2022 Winter Olympics.” Roth noted.
“The aim is to portray China as open, welcoming, and powerful, even as it descends into ever more ruthless autocratic rule.” he added.
“While other governments commit serious human rights violations, no other government flexes its political muscles with such vigor and determination to undermine the international human rights standards and institutions that could hold it to account.” Roth further asserted.
The report also criticized the US, but conceded that “the Trump administration is one government that has been willing to stand up to China, best evidenced by its October 2019 imposition of sanctions on the Xinjiang Public Security Bureau and eight Chinese technology companies for their complicity in human rights violations.”
The warnings come as Trump continues to push for restrictions on Chinese technology, including the exclusion of Huawei Technologies from the trade deal, and the grounding of more than 1,000 civil drones, owing to fears of espionage because they use Chinese technology.
Details also continue to emerge regarding claims by an anonymous former Microsoft contractor that the Chinese government is able to access and listen to Skype conversations and audio from Cortana, Microsoft’s voice assistant equivalent of Apple’s Siri.
“Their foreign bank accounts should be frozen. They should fear prosecution for their crimes.” the HRW report demands.
“Chinese companies that build and help run detention camps in Xinjiang, and any company that exploits the labor of prisoners or provides the surveillance infrastructure and big data processing, should be exposed and pressured to stop.” the report concludes.
Tyler Durden
Fri, 01/17/2020 – 19:05 - "Make Iran Great Again" – Trump Says "Noble Iranian People" Should "Abandon Terror"
“Make Iran Great Again” – Trump Says “Noble Iranian People” Should “Abandon Terror”
If you didn’t expect Trump to kick off the long holiday weekend with some feisty tweets about Iran, then you clearly haven’t been paying attention.
Bolstered by this week’s twin trade victories and Iran’s embarrassing acknowledgment of culpability in the crash of UIA Flight 752, Present Trump clearly felt the need to respond in kind after news of a rare Friday sermon by the Ayatollah reached the American press.
During the sermon, the Ayatollah called Trump a “clown,” and warned the Iranian people that Trump’s messages of sympathy were insincere.
In response, Trump mocked the “Supreme Leader” – whom Trump joked hasn’t “been so Supreme lately” – and gloated about the crumbling Iranian economy, which has sagged under the weight of US sanctions (and now the possibility that UN sanctions might be reinstated, thanks in part to Trump’s threats).
The so-called “Supreme Leader” of Iran, who has not been so Supreme lately, had some nasty things to say about the United States and Europe. Their economy is crashing, and their people are suffering. He should be very careful with his words!
— Donald J. Trump (@realDonaldTrump) January 17, 2020
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The president followed that up by tweeting the same message in English and Farsi, with a screenshot of a tweet sent from an account commonly associated with the Iranian regime.
The noble people of Iran—who love America—deserve a government that’s more interested in helping them achieve their dreams than killing them for demanding respect. Instead of leading Iran toward ruin, its leaders should abandon terror and Make Iran Great Again! https://t.co/RLjGsC5WLc
— Donald J. Trump (@realDonaldTrump) January 17, 2020
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مردم نجیب ایران، که آمریکا را دوست می دارند، سزاوار دولتی هستند که بیش از تمرکز بر کشتن آنها به جرم احترام خواهی، به آنها کمک کند تا به رؤیاهایشان دست یابند. رهبران ایران به جای آن که ایران را به سمت ویرانی بکشانند، باید هراس افکنی را کنار بنهند و ایران را دوباره باعظمت کنند! https://t.co/RLjGsC5WLc
— Donald J. Trump (@realDonaldTrump) January 17, 2020
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Tomorrow, other senior Iranian officials will step in to lob insults at Trump in defense of the Islamic Revolution. And we imagine President Trump will continue to respond in kind.
Tyler Durden
Fri, 01/17/2020 – 18:45 - Ivanka's Sister-In-Law Says She Won't Vote For Trump In 2020
Ivanka’s Sister-In-Law Says She Won’t Vote For Trump In 2020
Ivanka Trump’s sister-in-law disclosed on Thursday that she doesn’t plan on voting for President Trump in 2020, and will instead be supporting whomever wins the Democratic nomination at this summer’s convention in Milwaukee.
The “Project Runway” host told Bravo’s Andy Cohen during a taping of “Watch What Happens Live” that she doesn’t feel the need to agree with her family on politics, and that she’s certainly not the only one who has political differences with her family.
“I’m sure I’m not the only person in this country who does not necessarily agree with their family on politics,” Kloss said.
During an episode of “Project Runway” earlier this season, one contestant made a snarky remark about Kloss’s ties to the first family. While judges were reviewing a poorly designed dress by one of the show’s contestants, one of Kloss’s fellow judges said he “cannot see Karlie wearing [the dress] anywhere.”
“Not even to dinner with the Kushners?” the contestant replied snarkily.
He was immediately chastised for the remark by the judges and told to keep his comments on topic. He was later eliminated.
“I cannot see Karlie wearing it anywhere, honestly.”
“Not even to dinner with the Kushners?”#ProjectRunway pic.twitter.com/O9qJbrC2ZN
— Ξvan Ross Katz (@evanrosskatz) January 3, 2020
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When Cohen asked her what she thought of the contestant’s snide remark, Kloss replied: “I was honored to be one of the first memes of the decade” (the clip went viral).
She also denied that the contestant’s dismissal was in any way related to the remark.
“Honestly, the real tragedy of this whole thing is that no one is talking about how terrible that dress was,” she added. “That’s why he went home. I would not wear that dress to any dinner.”
The contestant, meanwhile, told People that he felt like his remark was “misunderstood.”
Neasloney said he felt “misunderstood” over the episode, People reported. “I felt like we had built a really cool rapport. I was laughing, they were laughing, we were going tit-for-tat. There was shade, there were jokes, and it was really fun.”
Of course, we could hardly blame Kloss for publicly denying voting for Trump: Despite her immense fame, her career would almost certainly take a hit if she was exposed as a supporter of the “evil” orange man.
Tyler Durden
Fri, 01/17/2020 – 18:45 - Falling Through The Cracks – America's Poverty Crisis Hits Home
Falling Through The Cracks – America’s Poverty Crisis Hits Home
Authored by Adam Taggart via PeakProsperity.com,
In the trailer for our recent (and excellent) webinar WTF: What The Fed?!?, I ask:
What’s it going to take for the pitchforks to come out? How much more does the common man need to be abused before he wakes up and says ‘I’m not going to take anymore!’?
As discussed in detail in the webinar, our economic and political systems have been captured by monied interests. Industry, government, markets and the judicial system all work for their benefit, not ours.
The result? An acceleration of wealth and opportunity away from the masses and into the pockets of the top 1% (really, the top 0.1%)
The public is literally being sacrificed so that a tiny number of powerful elites can enjoy “more”.
Today, I’m not going to make my point with my usual onslaught of charts and data. Instead, I’m going to make it visually.
We’ve all read the articles about the dying middle class and the explosion of homelessness in recent years.
Well, I live in northern California, in Sonoma County, about an hour north of San Francisco. It’s quite pleasant up here, with lots of small farms, orchards and vineyards.
Yes, there are some rich folks here. But nothing like the rest of the Bay Area. Most families are working class.
The local economy is nothing like the Tech frenzy of Silicon Valley. But it’s better than most places in the country.
At least, it has been.
Recently, it’s become impossible not to see the signs that more and more people are falling into poverty. They just can’t afford the rising cost of living, even if they have a job.
Here where I live, nowhere is this more apparent than the Joe Rodota trail connecting my small town of Sebastopol with the nearby city of Santa Rosa. Over the past year, this previously quiet, clean, bike & pedestrian route has exploded into a sprawling homeless encampment for hundreds of dispossessed people.
Here’s a 2-minute video I took of the encampment this afternoon (h/t to my daughter Charlotte for manning the camera as I drove):
YouTube is full of similar shocking video of much larger encampments across the West Coast, from Los Angeles to Seattle. Here in the Bay Area, even our “jewel” cities of San Francisco and Berkeley are becoming overrun by an exploding homeless problem and the mental health, sanitation, addiction, safety and crime issues associated with it.
It’s a major issue with no clear fix in sight. And folks, it’s only going to get worse. Far worse.
Remember, we’re in the 11th year of the longest economic expansion in US history. The markets are at record highs. The official reported unemployment rate is at a record low.
When the next recession hits it will be like pouring jet fuel on this fire.
Homelessness in California has doubled in just the past few years and our social support systems are already overwhelmed. What’s it going to be like if mass layoffs cause the homeless population to quadruple in a single year?
I remain amazed at how difficult life is for the millions of working poor in America. What harsh conditions they suffer just to hold a job, sleep under (any) shelter, find food, and wake up the next day to do it all over again. Day after day, always worried that sickness, injury, misfortune or theft is going to jeopardize the little you have.
Once you’ve dropped into poverty, especially if you have family dependents, it is damn hard to extricate yourself from it. Regardless of how hard you apply yourself.
If you have the time, I recommend watching this 45-minute documentary on US poverty produced by a German public broadcast service. Currently more than 40 million Americans live beneath the poverty line — that’s twice as many as in 1970.
Viewing our country through their outsider’s eye is a stark warning that we ignore this metastasizing social epidemic at our peril:
Back to my question at the start of this post: What’s it going to take?
How many more millions will fall into poverty? How much more abuse will continue until of those of us paying attention, with growing fear at the social implications and perhaps at our own financial vulnerability, actively revolt against the elite-centric status quo?
For thousands of years, history has warned us that such social imbalance will not stand:
Are we going to listen in time?
Tyler Durden
Fri, 01/17/2020 – 18:25 - US Begins Airport Screenings After Second Patient With SARS-Like Pneumonia Dies In China
US Begins Airport Screenings After Second Patient With SARS-Like Pneumonia Dies In China
The US will begin screening airline passengers beginning Friday after a SARS-like pneumonia outbreak in central China has claimed a second life after a 69-year-old man died on Wednesday, according to the Straits Times.
“To further protect the health of the American public during the emergence of this novel coronavirus, CDC is beginning entry screening at three ports of entry,” said CDC official Martin Cetron, adding “We’re expecting that the screening over the next couple of weeks could include as many as 5000 people” starting Friday night.
The three airports are; San Francisco International, New York’s JFK, and Los Angeles International.
The second death from the new coronavirus occurred at the Wuhan Jinyintan Hospital in the Hubei province. He had been ill approximately two weeks before experiencing multi-organ system failure, according to Bloomberg, citing a Thursday statement by the Wuhan Municipal Health Commission.
As of Friday, the city has reported 45 cases of the coronavirus, known as 2019-nCoV. According to the report, five patients are in critical condition, twelve have been cured and discharged, and two have died.
Authorities in Japan reported a case Thursday in a resident of Kanagawa prefecture aged in his 30s, who had spent time with an infected person in Wuhan. That’s the second time someone outside China was found to be infected with the novel coronavirus, which has captured international attention because of similarities with the one that sparked Severe Acute Respiratory Syndrome, or SARS, 17 years ago.
Unlike SARS, which killed almost 800 people, the new virus doesn’t appear to spread easily between people. Much remains to be understood about the new coronavirus, which was first identified in China earlier this month, the World Health Organization said in a statement Thursday in response to the case in Japan. –Bloomberg
It is unknown how the virus is spread, however it is believed to be concentrated among a Wuhan fish market which carries other meat as well.
Tyler Durden
Fri, 01/17/2020 – 18:05 - Woman Arrested In India For Hiding 3lbs Of Gold In Her Rectum… & Other Absurdities
Woman Arrested In India For Hiding 3lbs Of Gold In Her Rectum… & Other Absurdities
Authored by Simon Black via SovereignMan.com,
Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity.
Feds steal $80,000 life savings from a confused elderly man
79 year old Terry Rolin kept his entire life savings in cash at his home in Pittsburgh. Inside a tupperware food container, he had saved $82,373 over his life working as a railroad engineer.
When he started to become confused at times, he realized his mental health was in decline. So he gave the cash to his daughter Rebecca and asked her to open a joint bank account with him, to keep his money safe.
Rebecca had an early morning flight to catch with no time to visit a bank, so she took the cash with her after checking online and confirming that it is perfectly legal to carry large amounts of cash on an airplane.
But the TSA became suspicious after seeing the cash at a security checkpoint. They alerted the Drug Enforcement Agency (DEA).
The DEA agent intimidated Rebecca into calling her father to confirm the story. Awakened from sleep, he sounded confused–the whole reason for the joint account in the first place.
So the DEA agent told Rebecca their stories didn’t match, and he seized every penny of the old man’s life savings.
Terry and Rebecca were never charged with a crime– they were victims of Civil Asset Forfeiture.
And unfortunately, horror stories like these are not isolated incidents. Now Terry and Rebecca are part of a class action lawsuit for innocent airline passengers who have never been convicted or even charged with a crime to have their stolen cash returned.
Click here to read the full story.
* * *
Woman arrested in India for concealing 1.2kg of gold in her rectum
People don’t trust their government in India, a country legendary for graft and corruption. This is especially true when it comes to money.
A few years ago, for example, India’s government announced that certain cash notes would be cancelled and no longer considered valid currency with IMMEDIATE effect.
This was debilitating for tens of millions of people across India’s poverty-stricken villages who have no access to bank accounts and rely on cash transactions.
It’s one of the many reasons why GOLD is so popular in India. But the government has plenty of restrictions for precious metals as well… prompting a surge in illegal gold smuggling into the country (according to India’s Director of Revenue Intelligence).
Just last week a woman was arrested in New Delhi’s Indira Gandhi Airport for smuggling an unbelievable 1.2 kilograms (2.65 pounds) of gold in her rectum, worth about USD $60,000.
It’s a pretty sad state of affairs when people are forced to do something so drastic just to make sure they have an honest currency that can’t be manipulated by bureaucrats.
India’s government is finally starting to wake up to this reality and is reportedly ‘considering’ loosening some of the restrictions.
Click here to read the full story.
* * *
City officials shut down restaurant because it got shot at
Rita Johnson owns a restaurant in Saginaw, Michigan.
One night when the eatery was rented out to a private party, it became the victim of a random shooting. Suspects shot at the building and ran away.
Luckily, no one was hurt.
The owner and the guests had no idea why they were targeted, nor by whom.
But rather than find the criminals, the city revoked Rita’s permit and shut down the restaurant.
Wait a minute– wasn’t Rita the victim?
Yes. But the city’s excuse was that the restaurant was the site of criminal activity. The town also cited “Failure to maintain adequate security. . .”
This is pretty ironic coming from a city government that charges taxpayers a bunch of money for basic services, like, oh I don’t know, police??? Seems like it would have been the Saginaw Police Department’s job to maintain adequate security for taxpaying business owners.
Click here to read the full story.
* * *
US Supreme Court declines to hear “Free the Nipple Case”
A New Hampshire woman was arrested after performing yoga topless on the shores of Lake Winnipesaukee.
This occurred in the city of Laconia in May of 2016 (presumably on one of the handful of days each year that it’s warm enough to go topless in New Hampshire).
Two other women were subsequently arrested for a bare-chested “Free the Nipple” protest after the first arrest.
The town’s ordinance bans women from going topless, but allows men the freedom. Yet the New Hampshire Supreme Court ruled that the ordinance was not a violation of the 14th amendment’s requirement that laws be applied evenly.
Now the US Supreme Court has refused to hear the case, leaving the ban in place.
Click here to read the full story.
* * *
And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.
Tyler Durden
Fri, 01/17/2020 – 17:45
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