- Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin?
Why Is Western Media Not Questioning The Mysterious Death Of Australian Youth Activist Wilson Gavin?
Authored by Robert Bridge via The Strategic Culture Foundation,
Following a protest against a ‘drag queen story time’ at a library in Australia, Wilson Gavin, 21, the president of the University of Queensland Liberal National Club, was found dead the next morning at a train station.
Local media, while going out its way to portray Gavin and his fellow protesters as hell-raisers, has yet to ask any serious questions with regards to the young man’s alleged suicide – at a time when he was reportedly house-sitting for a Liberal National Party Senator.
If ever there was a story that epitomizes exactly how low Western media has sunk, the story involving the events leading up to the tragic death of Wilson Gavin would have to rank very high.
On Sunday, Gavin and about fifteen members of the University of Queensland’s Liberal National Club (UQLNC) walked into the Brisbane Square Library where a ‘Drag Queen Story Hour’ event for children was in full swing. Gavin went face-to-face with the star of the show, drag queen Johnny Valkyrie, aka Queenie, as the group began to chant “drag queens are not for kids.” No violence, no broken chairs, just a group of university students expressing their displeasure with a controversial event that is sponsored by the local government, i.e. the taxpayers.
What happened next was as predictable as winter in Russia. Social media lit up with thousands of people providing their personal commentary on the incident. An extra big log was tossed on the fire as the popular Australian band, The Veronicas, shared footage of the incident on Instagram, with the smug remark, ‘bigotry is alive in Brisbane today.’
The New Zealand Herald described the social media backlash that ensued against Wilson Gavin by quoting a friend, who wished to remain anonymous (“out of fear of becoming a target” too, the paper explained): “Gavin was relentlessly trolled with vile insults and taunts, and … received some messages with an encouragement that he die.”
“Some members of his family, classmates and friends were tracked down and contacted, while his school, The University of Queensland, was publicly encouraged to kick him out.”
The between-the-line message here seems to be, ‘see what happens to people who protest too much?’
As the media went to great lengths to demonstrate the public wrath Gavin had incurred for daring to speak his mind at a library event (The Herald exhausted the bulk of its article discussing the “dangers of mob rule” on social media and “public shaming”), it failed to show the tremendous outpouring of support that he and his fellow students had received. The comments on social media were divided into two camps, which is normally the case involving any controversial subject. After all, millions of people are vigorously opposed to the idea of drag queens reading stories to children at public libraries, or at any other venue for that matter. Yet the media seriously downplayed that side of the debate, pushing the idea that “public shaming” led to Gavin’s decision to end his life. More on that later.
As current State patron of the UQ LN Club, I’m deeply saddened to hear of the death of Wilson Gavin. Wilson & his friends took a principled stand to protect children from inappropriate sexualisation & gender fluid ideology. For that he was treated terribly. Wilson, RIP!
— Mark Robinson MP (@MarkRobinsonMP) January 13, 2020
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Another particularly inexplicable aspect about the media coverage is that every single publication sympathized with the drag queens and their ‘storytelling’ to very young children, as if nothing could be more natural. What books were the queens reading from? We are never told, but somehow I doubt it was Jack and Jill, unless one or both of them had undergone a sex-change operation along the way. But I digress.
The main message the media strove to deliver was that the young protesters were mean brutes, intimidating the performers and frightening staff and children, as if the sight of well-dressed college students chanting a slogan was the worst possible thing that could happen to them. Meanwhile, there was zero discussion about the possible psychological effects a child may experience when confronted with drag queens, as well as their personal choice of fine literature. No discussion as to why there needs to be a Drag Queen Story Time for children – paid for out of the public purse – in the first place. No comments provided by respectable psychologists about the possible mental side effects these children could face down the road. Instead, the media pushed the ridiculous narrative that the families suffered the very worst ordeal.
ABC Australia, for example, interviewed Jenny Griffin, a mother of two children, ages 6 and 8, who commented, “I was worried, I was concerned for my kids’ safety,” she said. “This was their first introduction to this more violent homophobia.”
Valkyrie, aka Queenie, said, “There were children crying, families distressed and of course, [fellow drag queen] Diamond (whose full stage name is ‘Diamond Good-rim,’ a clear allusion to a sexual act that should be considered inappropriate for children) and I were victim to vilification, harassment and nuisance.”
After several minutes of publicly expressing their criticism, the Queensland students peacefully exited the building, escorted by a single security guard.
End of story? Unfortunately not.
Early the next morning, Wilson Gavin was found dead at a train station as the result of “critical injuries.” Within a matter of hours the media was calling his death a suicide. Before continuing, a few necessary words about Mr. Gavin.
Wilson Gavin, as president of the LNC at his university, courted controversy on numerous occasions in the course of his short life. At the age of 19, Gavin, and despite being homosexual, voiced his opposition to gay marriages by organizing a ‘You Can Say No’ rally and making several appearances on national television.
On another occasion, Gavin brilliantly defended the British monarchy on an episode of “Outsiders,” a political talk show.
“I’m a lover of all things traditional. I’m a lover of all things beautiful,” he said on the show.
“And there’s nothing more traditional in this country than the monarchy.”
.@Austmonarchist’s Wilson Gavin: I’m a lover of all things traditional, all things beautiful, and there’s nothing more traditional in this country than the monarchy. It’s a tremendous asset.
MORE: https://t.co/Qbf8WwZ0WK #outsiders pic.twitter.com/wSmxJJsswB
— Sky News Australia (@SkyNewsAust) May 24, 2018
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Judging by Gavin’s extremely confident demeanor in those past interviews, and at the library protest, he did not come across as a person who could be easily upset by hurtful remarks over social media. Indeed, just the opposite. He seemed to relish the opportunity to prove his detractors wrong. In short, he was a young intelligent man with a successful future ahead of him, and that fact may have unsettled his enemies. Although it is impossible to know what is going on inside of any person’s head, the fact that Gavin’s alleged suicide has shocked so many people is telling.
According to the Star Observer (“Setting Australia’s LGBTI agenda since 1979,” it declares in its masthead), “Gavin was found dead at Chelmer Railway Station this morning at 7:07am. Ambulance officers who attended say he died from critical injuries, but have provided no further details.”
On Thursday, The Guardian provided one short sentence regarding police accounts of the death: “Police did not treat his death as suspicious.”
In place of hard-hitting questions, the article provided the number for a suicide hotline as if the case was already closed. While a nice gesture that is not the sort of information the public needs from the media. Journalists need to be asking how a young man met his early demise at a train station in the wee hours of the morning following a protest that triggered a lot of controversy on social media. The public deserves to know more about the circumstances of the alleged suicide considering the context of events prior to that tragic moment Why is the possibility of foul play not mentioned – not even within the context to deny it, as if this were some sort of impossibility – as a matter of protocol in such a case?
One more note. As mentioned earlier, on the weekend of his death, Gavin had been minding the home of a politician, who has been identified as federal Liberal National Party Senator Paul Scarr, the Daily Mail Australia reported. Yet Liberal National politicians have said they have been disaffiliated from the UQLNC that Gavin headed since last month. Now, considering how media rarely shies away from sensational stories, the fact that it is not following up on this bit of information is, at the very least, strange.
Since the death of Wilson Gavin and the protest he organized, two petitions have been started on Brisbane City Council’s website to ban the Drag Queen Story Time events.
Tyler Durden
Sat, 01/18/2020 – 23:30 - False Flag? Fmr CIA Officer Suggests US Hacked Ukrainian Plane Transponder To Provoke Iran Shootdown
False Flag? Fmr CIA Officer Suggests US Hacked Ukrainian Plane Transponder To Provoke Iran Shootdown
Philip Giraldi, a former counter-terrorism specialist and military intelligence officer of the CIA, penned a piece in the American Herald Tribune speculating that the U.S. launched several cyber-attacks, one on an Iranian missile defense system, and another on the transponder of the doomed Ukrainian plane.
Giraldi explains the Iranian missile operator experienced extreme “jamming” and Ukraine International Airlines Flight 752’s transponder was switched off several minutes before the two Russian made Tor missiles were launched.
“The shutdown of the transponder, which would have automatically signaled to the operator and Tor electronics that the plane was civilian, instead automatically indicated that it was hostile. The operator, having been particularly briefed on the possibility of incoming American cruise missiles, then fired,” he said.
Giraldi said the Tor missile system used by Iran is vulnerable to being hacked or “spoofed,” and at the same moment, Flight 752’s transponder was taken offline “to create an aviation accident that would be attributed to the Iranian government.”
The Pentagon has reportedly developed technologies that can trick enemy radars with false and deceptively moving targets, he said.
“The same technology can, of course, be used to alter or even mask the transponder on a civilian airliner in such a fashion as to send false information about identity and location. The United States has the cyber and electronic warfare capability to both jam and alter signals relating to both airliner transponders and to the Iranian air defenses. Israel presumably has the same ability,” Giraldi said.
Iran made the claim Wednesday that “enemy sabotage” cannot be ruled out in the downing of the plane.
Iranian Brigadier General Ali Abdollahi suggested the U.S. hacked missile defense systems to make it appear Flight 752 was an incoming missile.
Iranian President Hassan Rouhani also accused the U.S. of being responsible for the downing of the plane, saying that:
“The root of all sorrows goes back to America… this cannot be a reason for us not to look into all the root causes.”
He added that:
“One cannot believe that a passenger plane is struck near an international airport while flying in a [commercial] flight channel,” after previously saying that IRGC commanders were not the only ones involved in the plane downing, noting that “There were others, too.”
The Iranian parliament also stated that “we are in powerful confrontation with the criminal U.S. and do not allow a mistake… to pave the ground for misusing the issue by the enemies.”
Giraldi concludes by saying electronic warfare by the U.S. to bring down a civilian jet and blame it on Iran “suggests a premeditated and carefully planned event” to create a false flag for the next world war.
Tyler Durden
Sat, 01/18/2020 – 23:00 - How The US Wages War To Prop Up The Dollar
How The US Wages War To Prop Up The Dollar
Authored by Ryan McMaken via The Mises Institute,
At Counterpunch, Michael Hudson has penned an important article that outlines the important connections between US foreign policy, oil, and the US dollar.
In short, US foreign policy is geared very much toward controlling oil resources as part of a larger strategy to prop up the US dollar. Hudson writes:
The assassination was intended to escalate America’s presence in Iraq to keep control of the region’s oil reserves, and to back Saudi Arabia’s Wahabi troops (Isis, Al Quaeda in Iraq, Al Nusra and other divisions of what are actually America’s foreign legion) to support U.S. control of Near Eastern oil as a buttress of the U.S. dollar. That remains the key to understanding this policy, and why it is in the process of escalating, not dying down.
The actual context for the neocon’s action was the balance of payments, and the role of oil and energy as a long-term lever of American diplomacy.
Basically, the US’s propensity for driving up massive budget deficits has created a need for immense amounts of deficit spending. This can be handled through selling lots of government debt, or through monetizing the debt. But what if there isn’t enough global demand for US debt? That would mean the US would have to pay more interest on its debt. Or, the US could monetize the debt through the central bank. But that might cause the value of the dollar to crash. So, the US regime realized that it must find ways to prevent the glut of dollars and debt from actually destroying the value of the dollar. Fortunately for the regime, this can be partly managed, it turns out, through foreign policy. Hudson continues:
The solution [to the problem of maintaining the demand for dollars] turned out to be to replace gold with U.S. Treasury securities (IOUs) as the basis of foreign central bank reserves. After 1971, foreign central banks had little option for what to do with their continuing dollar inflows except to recycle them to the U.S. economy by buying U.S. Treasury securities. The effect of U.S. foreign military spending thus did not undercut the dollar’s exchange rate, and did not even force the Treasury and Federal Reserve to raise interest rates to attract foreign exchange to offset the dollar outflows on military account. In fact, U.S. foreign military spending helped finance the domestic U.S. federal budget deficit.
An important piece of this strategy has been a continued alliance with Saudi Arabia. Saudi Arabia maintains the world’s largest capacity for oil production, and it was the largest single producer of crude for most of the period from the mid-1970s to 2018, when the US surpassed both Saudi Arabia and Russia.
But Saudi Arabia remains under the US thumb:
what Saudi Arabia does not save in dollarized assets with its oil-export earnings is spent on buying hundreds of billion of dollars of U.S. arms exports. This locks them into dependence on U.S. supply [of] replacement parts and repairs, and enables the United States to turn off Saudi military hardware at any point of time, in the event that the Saudis may try to act independently of U.S. foreign policy.
So maintaining the dollar as the world’s reserve currency became a mainstay of U.S. military spending. Foreign countries do not have to pay the Pentagon directly for this spending. They simply finance the U.S. Treasury and U.S. banking system.
However, any move away from this status quo tends to be met with paranoia and intervention from the US:
Fear of this development was a major reason why the United States moved against Libya, whose foreign reserves were held in gold, not dollars, and which was urging other African countries to follow suit in order to free themselves from “Dollar Diplomacy.” Hillary and Obama invaded, grabbed their gold supplies (we still have no idea who ended up with these billions of dollars’ worth of gold) and destroyed Libya’s government, its public education system, its public infrastructure …
But the role of oil-producing states goes beyond merely churning dollars and US debt to keep the dollar afloat. These countries also provide the foot soldiers for many US interventions in terms of terrorists and guerrilla fighters who can be used against US enemies. Hudson declares:
The Vietnam War showed that modern democracies cannot field armies for any major military conflict, because this would require a draft of its citizens. That would lead any government attempting such a draft to be voted out of power. And without troops, it is not possible to invade a country to take it over.
The corollary of this perception is that democracies have only two choices when it comes to military strategy: They can only wage airpower, bombing opponents; or they can create a foreign legion, that is, hire mercenaries or back foreign governments that provide this military service.
That is, the US regime can certainly get away with lots of bombing operations and other low-manpower operations. But anything that might require conscription is a political nonstarter. Hudson notes that Saudi Arabia, with its particularly rabid and extreme strain of Islam is quite useful:
Here once again Saudi Arabia plays a critical role, through its control of Wahabi Sunnis turned into terrorist jihadis willing to sabotage, bomb, assassinate, blow up and otherwise fight any target designated as an enemy of “Islam,” the euphemism for Saudi Arabia acting as U.S. client state. (Religion really is not the key; I know of no ISIS or similar Wahabi attack on Israeli targets.) The United States needs the Saudis to supply or finance Wahabi crazies. So in addition to playing a key role in the U.S. balance of payments by recycling its oil-export earnings into U.S. stocks, bonds and other investments, Saudi Arabia provides manpower by supporting the Wahabi members of America’s foreign legion, ISIS and Al-Nusra/Al-Qaeda. Terrorism has become the “democratic” mode of today’s U.S. military policy.
Hudson also notes that the term “democracy,” when used in the context of foreign policy, has very little to do with what a normal person would regard as democracy. Rather,
From the U.S. vantage point, what is a “democracy”? In today’s Orwellian vocabulary, it means any country supporting U.S. foreign policy. … The antonym to “democracy” is “terrorist.” That simply means a nation willing to fight to become independent from U.S. neoliberal democracy.
And this leads us to Iran. Hudson explains:
America’s hatred of Iran starts with its attempt to control its own oil production, exports and earnings. It goes back to 1953, when Mossadegh was overthrown because he wanted domestic sovereignty over Anglo-Persian oil. The CIA-MI6 coup replaced him with the pliant Shah, who imposed a police state to prevent Iranian independence from U.S. policy. The only physical places free from the police were the mosques. That made the Islamic Republic the path of least resistance to overthrowing the Shah and re-asserting Iranian sovereignty.
Thus, we got the Islamic revolution of 1979 which has led to forty years of Iran refusing to play ball in the US dollar maintenance regime that is demanded of other oil-producing nations in the Middle East.
The US is unlikely to let up on this effort so long as Iran continues to refuse to take orders from DC on these matters. It’s true that the US can’t do much about China and Russia. But Iran — unlike North Korea, which wisely secured nuclear arms for itself — remains an easy target because of its lack of nuclear capability.
Being a leftist, Hudson includes some unfortunate stuff about “neoliberalism,” as if low taxes and freedom to trade were somehow driving global war. Hudson also concocts a theory about how this oil-dollar policy is driving global warming. That’s a bit of a stretch, but the connection between foreign policy and the US dollar that he identifies is a key factor that tends to be almost universally ignored by the mainstream media. As China and Russia work ever harder to undermine the dollar and its geopolitical position, small countries like Iran will become even more important in the US’s drive to maintain the dollar’s status quo. But it remains to be seen how long the US can keep it going.
Tyler Durden
Sat, 01/18/2020 – 22:30 - F-18 Fighters To Drop Live Bombs On Florida Swamp This Weekend
F-18 Fighters To Drop Live Bombs On Florida Swamp This Weekend
According to a statement published by the Naval Air Station Jacksonville, the US Navy is preparing to conduct live bombing raids with fighter jets at a training facility in the middle of Florida this weekend.
The Navy will fly McDonnell Douglas F/A-18 Hornets from 11 a.m. to 11 p.m. from Saturday through Sunday, dropping live and inert bombs at Pinecastle Range Complex in the Ocala National Forest.
Residents in surrounding communities will hear explosions and loud noises, especially fighter jets traveling at subsonic speeds.
Here’s a 2012 video of an F-18 jet “5 miles” from the Pinecastle Range completing a tactical turn.
A 2011 video records the moment when bombs were dropped on the range.
Local news station provides more information about Pinecatle Range.
Residents from Volusia, Lake and Marion counties will hear fighter jets and bombs throughout the weekend. Residents as far as Seminole and northern Orange County could also hear explosions.
“During bombing periods, wildlife may be temporarily displaced. Use extra caution when driving through the Ocala National Forest and surrounding areas,” the Navy said. “Secure any items around your residence that could attract wildlife. Always be mindful of larger animals, including black bears, and practice bearwise measures.”
With the threat of war elevated in 2020 – the Navy is actively preparing its pilots for combat by bombing the hell out swamps in the middle of Florida.
Tyler Durden
Sat, 01/18/2020 – 22:05 - Over-Hyped Russian Hypersonics?
Over-Hyped Russian Hypersonics?
Authored by Michael Brenner via ConsortiumNews.com,
Deployment of Russia’s hyper-sonic missiles is causing heartburn in the West. Media headline the news as a dramatic breakthrough on a par with the first Sputnik. “Experts” are rushed into play like those self-styled pundits pronouncing when the initial exit polls appear on Election Day. Pentagon officials assure us that the United States is at the top of the nuclear game and able to respond to (if not exactly match) anything that the Russians can put out there.
Ninety eight percent of all this instant reaction is “fog-horning.” It simply signals that something big and important is out there even though we don’t have a clear picture of its actual shape or dimensions — or its significance. That’s normal. What counts is moving swiftly to the “searchlight” stage of close observation and hard thinking.
Whether analysts, official or otherwise, get there is problematic. We’re out of practice when it comes to serious strategic appraisal. After all, we’ve been flailing about in Afghanistan for almost two decades with no realistic aim or evaluation of the chances of achieving it by whatever means at whatever cost. The disorientation on Syria is even greater. There, we haven’t as much as figured out who are the “bad guys” and who are the “good guys” — except for ISIS.
If you can’t differentiate friend from foe for want of rigorous strategic analysis, your actions are predictably erratic — little more than the expression of mental fibrillations. The same can be said for the rest of the Missile East.
The Washington consensus is sure about one thing: Russia is a mortal enemy. We sanction the Russians, we denounce the Russia, we coerce our European partners into ostracizing them, we conjure frightful images of Vladimir Putin while ignoring just about everything he says (as if they were Hitlerian rants). Still, no one seems able to provide a crisp formulation of what the Russian threat is — other than getting in our way in places where we demand to have full sway: Syria, Libya, Iran, Turkey, Ukraine, Georgia.
Of course, we also accuse them of working relentlessly to undermine American democracy. Yet, that remains debatable as does everything that bears the dubious label of “Washington consensus.” Anyway, whatever minuscule role the Kremlin might have in the accelerated unravelling of the American Republic, it barely registers amidst the hammer blows struck by the craziness of President Donald Trump, his enablers and a largely compromised, abject resistance.
Cold War Dread
Understandably, it is not that easy to overlook nuclear weapons. It wasn’t that long ago that many of us were tormented by the dread of a prospective Armageddon, when the Cold War carried manifest dangers, when the air was thick with hostility and menace.
In October 1962, Americans were terrified over Soviet missiles in Cuba, as this newspaper map showing distances between Cuba and major North American cities demonstrates.
Those acute fears gradually faded over the 40 years of the nuclearized Cold War. We came to live with the Bomb — if not to love it. Subsequently, concerns shifted to the risks associated with nuclear weapons proliferation among less stable states in more fraught places.
The reasons for this sedating were three-fold.
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Above all was the “balance of terror.’’ Leaders among the major nuclear powers absorbed the fundamental truth that not only was the notion of “winning” a nuclear war an oxymoron — but also that any use of nuclear weapons inexorably would escalate into acts of collective suicide. The survivors would envy the dead — as Nikita Khrushchev one said. That conviction became formalized in the doctrine of Mutually Assured Destruction.
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Second, it was reified by a number of treaties and understandings: START I,II (Strategic Arms Reduction Treaty), the Anti-BallisticMissile Treaty (ABMT), the Comprehensive Nuclear Test Ban Treaty, introduction of the Hot Line between the White House and the Kremlin, and the several arms reduction accords signed when Mikhail Gorbachev came to power in Moscow. Their collective purpose was to ensure that no conceivable advantage might be gained that would jeopardize — however slightly — the balance of nuclear power, i.e. the assurance that any resort to nuclear weapons was tantamount to the death of civilization.
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Finally, a number of technological developments reinforced Mutual Assured Destruction: the deployment of submarine launched ballistic missiles — SLBM (immune to location and possible destruction in a “first strike” — thereby, guaranteeing a retaliatory capability); improved controls that reduced the chances of an “accidental” or miscalculated launch; and the moratorium in placing ballistic missile defenses around major population centers that could have the effect of removing their “hostage” status.
The last has turned out to be a largely redundant measure since the strenuous efforts of the Pentagon/NASA as well as their Soviet/Russian counterparts to devise a workable BMD all have come up well short of producing anything meaningful.
U.S. President Gerald Ford and Soviet Premier Leonid Brezhnev sign joint communiqué to limit strategic offensive arms, 1974. (Wikimedia)
Unfortunately, two policy developments have awakened the nuclear issue from its somnambulant state. One is Washington’s abandonment of arms control treaties that were important parts of the nuclear stability package. George Bush removed us from the Comprehensive Test Ban Treaty(while observing its provisions), and effectively voided restrictions on ballistic missile defense in the vain hope of countering remote threats from prospective nuclear powers (Iran), bolstering the sense of security of some East Europeans (a non-solution to a non-problem)and – frankly – to get under the Russians’ skin. Barack Obama had neither the conviction nor political courage to reverse those retrograde moves.
Under Donald Trump, there has been a comprehensive plan to break free of all manner of restrictive commitments — military, diplomatic or economic. Deployment of regional BMD systems directed at Russian, Chinese and North Korean forces has been expanded despite their demonstrated efficiencies (one version could not even protect Saudi oil complexes or U.S. air bases in Iraq from primitive Iranian missiles).
Modernization of Nuclear Arsenals
The other troubling development concerns the modernization of nuclear arsenals by both the United States and Russia. President Barack Obama committed us to a trillion-dollar program to refine and upgrade American warheads and delivery systems over the next 20 years. The strategic rationale is obscure.
The Russian hypersonic missile development is a parallel development. In a purely technical sense, they obviously are “ahead” of us. And that irritates the hell out of the American security establishment.
Does being “ahead” have any practical meaning, however? Is there a genuine contest for advantage that translates into their gaining an upper hand in some sense or other? The clear answer is “NO!” It is strategically meaningless. Why? Because it in no way alters the logic of Mutual Assured Destruction.
Theoretically, there are only two imaginable ways to do that. The most significant would be development/deployment of a massive, truly effective BMD system that shields population centers and other critical, high value sites from retaliatory attack. That has shown itself to be impossible – even if the initiator of an attack succeeded in reducing the other side’s retaliatory forces by some significant fraction.
A totally disarming first strike in principle could be the second method logically to qualify MAD. It cannot be done, though.Fortunately. The combination of SLBMs, cruise missiles, and increased warhead lethality makes the idea of a disarming first strike a pipe dream of military strategists disengaged from reality. Hypersonic weapons do not change that calculus.
Accuracies of MIRVed warheads were lowered to 100 feet many years ago.(CEP, or Circular Error Probability = 50 percent chance of landing within radius.) Reducing that to 20 feet, therefore, is pointless – the silo is destroyed either way unless its missile has been “launched on warning” (tripwire automaticity as ultimate assurance of retaliatory strike). Similarly for missile defense.
Then, there is the question of an incoming missile’s speed. Current ICBMs that may give 18 minutes warning do not permit any defensive measures to be taken. If they arrive on target within six minutes, there is no additional benefit to the attacker. Today’s missiles that follow a straight trajectory cannot be intercepted — with or without their distracting decoys.
The fact that “swerve” capable hypersonic missiles can mambo their way to the target adds nothing to their effectiveness. Anyone who tells you that the Russians gain a strategic advantage thereby is lying — either in order to extract larger sums for R & D from the Treasury or to accentuate irrational fears of Russia.
President Vladimir Put visiting an exhibit of advanced weapons before meeting with Russia’s Defence Ministry Board, December 2019. (The Kremlin)
Finally, no reasonably sane leader would risk national suicide for a 1 percent chance of getting away with a first strike and surviving retaliation. There is no stake worth even contemplating it. Indeed, that logic holds even were there an impossible 50 percent chance of pulling it off.
Today, the United States and Russia are not engaged in a life-or-death struggle for world domination or for ideological vindication. Ascribing anything like that notion to Vladimir Putin is simply a sign of mental derangement – ours, not his. The same holds for the super-power competition between the United States and China.
So, if this line of reasoning is compelling, why did Russia’s leaders bother with investment of great sums to produce hyper-sonic missiles? The answer is a matter of speculation. Doubtless, technological and bureaucratic momentum has much to do with it. These sorts of long-term programs take on a life of their own — just as they do in Washington. The is no more reason for the United States to squander a trillion dollars in refining our nuclear arsenal as two successive administrations have committed us to doing.
In Russia’s case, there likely is another factor at work. Historically, Moscow leaders have exaggerated American technical capabilities; they have something of an inferiority complex on this score despite their own remarkable accomplishments. It is particularly acute in the nuclear realm — most especially in regard to ballistic missile defense.
This goes back to Nixon’s proposed Safeguard system, followed two decades later by Reagan’s Star War’s plans. Neither of which in actuality had the potential to alter the strategic balance. This free-floating strategic anxiety should be placed in historical perspective. There is a touch of paranoia in the Russian strategic mind — engraved by the events of the 20th century.
Some of this sentiment is conveyed by Putin’s remarks in announcing the deployment of hypersonic missiles: “We’re used to being in the position of catching up. That no longer is the case. Russia is the only country that has hypersonic weapons.”
To some unknowable degree these neuralgic points in the Russian psyche have been stimulated by the aggressive American program to surround Russia with BMD systems. “Might it just be conceivable that the United States could perfect them, make it work, and somehow jeopardize the credibility of our nuclear deterrent? Why are they expending so much money and effort? Why do those BMD sites make Poland and the Baltics feel more secure when they are in fact militarily useless and it makes no sense for us to attack them?”
Informed analysis suggests that the answer is negative to all these questions. The alternative explanation: U.S. leaders are inclined to do feckless things; they are strategically obtuse.
The broader lesson is that there is truth to the old adage: “Russia never is as strong as it seems; Russia is never as weak as it seems.” We wrote it off as a world power in the 1990s and never since made the proper adjustment. That perception may have contributed to the glaring failure of the United States’ intelligence community in missing Russia’s remarkable break-throughs in weaponry.
It’s intelligence that counts more than Intelligence.
Tyler Durden
Sat, 01/18/2020 – 21:40 -
- The Quiet Crisis: Deaths Caused By Alcoholism Have More Than Doubled
The Quiet Crisis: Deaths Caused By Alcoholism Have More Than Doubled
Opioid overdoses may have leveled off last year after soaring over the last ten, but Americans are still dying in droves from another, far more popular substance: alcohol.
According to a series of studies cited by MarketWatch, the number of Americans drinking themselves to death has more than doubled over the last two decades, according to a sobering new report. That far outpaces the rate of population growth during the same period.
Researchers from the National Institute on Alcohol Abuse and Alcoholism studied the cause of death for Americans aged 16 and up between 1999 and 2017. They determined that while 35,914 deaths were tied to alcohol in 1999, it doubled to 72,558 in 2017. The rate of deaths per 100,000 soared by 50.9% from 16.9 to 25.5.
Over that 20-year period, the study determined that alcohol was involved in more than 1 million deaths. Half of these deaths resulted from liver disease, or a person drinking themselves to death, or a drug overdose that involved alcohol.
For more context: In 2017 alone, 2.6% of roughly 2.8 million deaths in the US were alcohol-related.
One doesn’t need to be a chronic alcoholic to suffer from alcohol: Nine states – Maine, Indiana, Idaho, Montana, New Jersey, New York, North Dakota, Ohio and Virginia – saw a “significant” increase in adults who binge drink, a dangerous activity that can lead to deadly car crashes and other fatal accidents, according to a report released Thursday by the CDC.
And across the country, Americans who binge drink are consuming more drinks per person: That number spiked from 472 in 2011 to 529 in 2017, a 12% increase.
Historically, men have been more predisposed to “deaths of despair” than women: But a study published in “Alcoholism: Clinical and Experimental Research” found that the largest increase in recent years in these types of deaths occurred among non-hispanic white women.
Public health crises tied to substance abuse have been plaguing American for decades. So, what is it about our contemporary society that’s causing deaths to skyrocket?
There’s some food for thought.
Tyler Durden
Sat, 01/18/2020 – 21:15 - It Was Rod: DOJ Court Filing Reveals Rosenstein Behind Strzok-Page Text Dumps
It Was Rod: DOJ Court Filing Reveals Rosenstein Behind Strzok-Page Text Dumps
Former Deputy Attorney General Rod Rosenstein authorized the release to the media of text messages between ‘FBI lovebirds’ Peter Strzok and Lisa Page, many of which revealed deep animus towards then-candidate Donald Trump while they were investigating him during the 2016 presidential campaign, according to Politico.
In a Friday night court filing submitted shortly before midnight, Rosenstein says he made the decision to protect Strzok and Page from the damaging effects of lawmakers and others releasing the texts for use as political ammunition.
In the messages, Strzok and Page regularly disparaged Trump and appeared to seek to reassure each other he could not be elected. Both called Trump an “idiot” and said Democratic nominee Hillary Clinton deserved to win.
The texts also included murky discussions of an “insurance policy” to guard against Trump’s election. Trump backers have interpreted the reference as a plan to use the then-ongoing investigation into ties between Trump advisers and Russia as way to prevent him from taking office or undermine his presidency, but Strzok and Page have denied any such intent. –Politico
Lisa Page – who sued the DOJ and FBI in December over the release, appears to be pissed.
All I can say is this: I very much look forward to Rod’s deposition. https://t.co/so43a38WBh
— Lisa Page (@NatSecLisa) January 18, 2020
Strzok has separately sued the agencies as well – for which Rosenstein’s admission was submitted as part of the government’s defense. The former DAG says that public disclosure of the texts was inevitable in connection with testimony he was set to give the next day in front of the House Judiciary Committee.
“With the express understanding that it would not violate the Privacy Act and that the text messages would become public by the next day in any event, I authorized [Justice’s Office of Public Affairs] to disclose to the news media the text messages that were being disclosed to Congressional committees,” wrote Rosenstein.
In November, the Justice Department asked U.S. District Court Judge Amy Berman Jackson to throw out Strzok’s suit, which challenges both his firing from the FBI and the release of the texts. However, Strzok’s attorneys countered in a court filing last month that one reason to allow the suit to proceed was that Justice Department was being vague about just who made the final call to give the messages.
Arguing that an air of mystery continued to surround the disclosure, Strzok lawyer Aitan Goelman called “revealing” Justice’s decision to seek dismissal of the suit without identifying the responsible official.
“An agency cannot avoid Privacy Act liability for a disclosure actually made for an improper purpose by eliciting a sanitized after-the-fact rationale from an official who does not have all of the facts,” Goelman wrote. –Politico
According to Rosenstein, his aides originally suggested that he should delay sending the texts to Congress until after his testimony in front of the House, however he thought it would be “inappropriate” to do so for that reason. He also said he decided to give them to the media prior to his testimony over concerns that they would be cherrypicked and weaponized.
“The Department’s Office of Public Affairs … recommended providing the text messages to the media because otherwise, some congressional members and staff were expected to release them intermittently before, during and after the hearing, exacerbating the adverse publicity for Mr. Strzok, Ms. Page and the Department,” wrote Rosenstein. “Providing the most egregious messages in one package would avoid the additional harm of prolonged selective disclosures and minimize the appearance of the Department concealing information that was embarrassing to the FBI.”
See the filing below:
Tyler Durden
Sat, 01/18/2020 – 20:50 - "Hard" Of Hearing: PornHub Being Sued By Deaf Man For Lack Of Closed Captioning
“Hard” Of Hearing: PornHub Being Sued By Deaf Man For Lack Of Closed Captioning
Visuals are sometimes difficult to enjoy without context.
At least, that’s the argument being made by Yaroslav Suris, who is suing the popular online porn site claiming that its lack of closed captioning for the deaf and hearing-impaired is discriminatory.
Suris is claiming that the website violates his rights under the Americans With Disabilities Act, according to TMZ, who first broke the story.
He claims that the deaf and hearing impaired can’t understand the audio tracks of videos on the website and claims that some of his favorite titles – with names like “Hot Step Aunt Babysits Disobedient Nephew,” “Sexy Cop Gets Witness to Talk” and “Daddy 4K — Allison comes to Talk About Money to Her Boys’ Naughty Father” – are difficult to follow.
This is a man who obviously appreciates artistic integrity of the actors and actresses…
He also says that he would pay for a Premium subscription to PornHub, but that it is pointless to shell out the money for it without closed captioning. Because we all know there isn’t enough free porn out there – and there definitely isn’t enough free porn with closed captioning.
He is suing PornHub not only to request closed captioning, but also for damages.
PornHub, on the other hand (no pun intended), actually does have some closed captions.
PornHub’s VP, Corey Price responded by saying:
“We understand that Yaroslav Suris is suing Pornhub for claiming we’ve denied the deaf and hearing impaired access to our videos. While we do not generally comment on active lawsuits, we’d like to take this opportunity to point out that we do have a closed captions category.”
We hope Yarslav doesn’t spend too much of his spare time on the site, however. He could wind up deaf and blind.
Tyler Durden
Sat, 01/18/2020 – 20:25 - Why Laws Against Hate Speech Are Dangerous
Why Laws Against Hate Speech Are Dangerous
Authored by Fjordman via The Gatestone Institute,
In November 2019, Germans celebrated the collapse of the Berlin Wall and the reunification of Germany 30 years earlier. That same month, Chancellor Angela Merkel, in a speech to the German federal parliament (Bundestag), advocated more restrictions on free speech for all Germans. She warned that free speech has limits:
“Those limits begin where hatred is spread. They begin where the dignity of other people is violated. This house will and must oppose extreme speech. Otherwise, our society will no longer be the free society that it was.”
Merkel received great applause.
Critics, however, would claim that curtailing freedom in order to protect freedom sounds a bit Orwellian. One of the first acts of any tyrant or repressive regime is usually to abolish freedom of speech. Merkel should know this: she lived under a repressive regime — in the communist dictatorship of East Germany, where she studied at Karl Marx University.
The First Amendment to the United States Constitution protects freedom of speech, specifically speech critical of the government, and prohibits the state from limiting free speech. The First Amendment was placed first in the Bill of Rights because the American Founding Fathers realized that freedom of speech is fundamental to a free society. US President George Washington said:
“For if Men are to be precluded from offering their Sentiments on a matter, which may involve the most serious and alarming consequences… reason is of no use to us; the freedom of Speech may be taken away, and, dumb and silent we may be led, like sheep, to the Slaughter.”
Without freedom of speech, you cannot truly be free. Freedom of speech exists precisely to protect the minority from the tyranny of the majority.
What exactly is “hate speech,” and who gets to define it? Those who love justice usually also hate injustice. But what is justice? Social justice? Economic justice? Ecological justice? Religious fundamentalist justice? Climate justice?
Hate may be a negative emotion, but you cannot ban emotions. Envy and jealousy are also widely considered negative feelings. Yet we do not ban them. Envy of people who are wealthier than you is arguably a component of Socialist and Marxist political parties everywhere.
The concept of a “hate crime” is also flawed. If you rob, assault or murder people, that is equally injurious regardless of the motivation of the assailant or of who the victim is. We should not have different penalties depending upon whether the victim is a gay black man, a straight white man, a Muslim woman or a Christian nun, or we will end up with a kind of a legal caste system.
Although the legal system should not be based on feelings or emotions, we see an increasing tendency toward this subjectivity. There is a tendency to censor certain viewpoints because they might “offend” others. The problem is, it is not the inoffensive things that need protecting; it is only the offensive things that do. When, in the US, the National Socialist Party of America wanted to march though Skokie, Illinois, home to many Holocaust survivors, the Supreme Court decided that the Nazis’ right of free speech overrode suppressing the marchers. According to the Bill of Rights Institute:
“In these cases, National Socialist Party of America v. Village of Skokie (1977), and Brandenburg v. Ohio (1968), the Supreme Court held that the First Amendment protects individuals’ rights to express their views, even if those views are considered extremely offensive by most people…
“American writer Noam Chomsky said ‘If we don’t believe in freedom of expression for people we despise, we don’t believe in it at all.’ Individuals who express unpopular opinions are protected by the First Amendment. The First Amendment prevents majorities from silencing views with which they do not agree—even views that the majority of people find offensive to their very core. “
Possibly many things people say will be considered offensive to somebody, somewhere. In 1600, Giordano Bruno was burned alive at the stake as a heretic for saying that the universe has no center, and stars are suns, surrounded by planets and moons. The findings of Charles Darwin were challenged by the “Scopes Monkey Trial” in 1925, when a high-school teacher in Tennessee, John T. Scopes, was charged with violating state law by teaching the theory of human evolution.
Just a few years ago, it was uncontroversial to state that there are only two biological sexes. After all, this is a fact that would seem pretty straightforward. Yet recently, even this simple statement has become explosive. When the tennis champion Martina Navratilova questioned the fairness of having transgender men compete in sports again women, but was eventually driven to “apologize.”
In the UK, a physician, David Mackereth, recently lost his government job as a medical assessor after more than three decades for refusing to renounce his view that gender is determined at birth.
People who claim to combat “hate” often seem to be quite full of hate themselves. Some Americans claim that US President Donald J. Trump is a racist, yet themselves express open hatred toward Trump, and those who vote for him. They do not object to hating. They just seem to believe that their hate is the only legitimate one.
In 2013, the American scholar Robert Spencer was banned by British authorities from entering the UK. Spencer the author of many books about Islam and runs the website Jihad Watch.
The Koran sura 9:5 has verse stating:
“When the sacred months are over slay the idolaters wherever you find them. Arrest them, besiege them, and lie in ambush everywhere for them. If they repent and take to prayer and render the alms levy, allow them to go their way. God is forgiving and merciful.”
The exact translation of this verse can be debated, but the Arabic verb qatala generally means to kill, slay or murder somebody. How come it is all right to publish the original source, prescribing murder, but that it is “hate speech” to point out that quote?
Robert Spencer and others have observed, for instance, that verse 9:5 and other intolerant verses in the Koran have been quoted repeatedly by militant Muslims to justify jihad attacks and violence (for instance here, here and here). Although other religious books also contain violence, as the scholar Bruce Bawer points out:
“Sometimes, when one points out these rules, people will respond: ‘Well, the Bible says such-and-such.’ The point is not that these things are written in Islamic scripture, but that people still live by them.”
Muslims in Britain and other Western nations are free to spread teachings that are hateful towards non-Muslims. Yet because non-Muslims such as Robert Spencer pointed out that some teachings are hateful and have inspired actual atrocities, UK authorities banned Spencer for spreading “hate.”
One sees, then, that restrictions against “hate speech” often do not really ban hate speech; instead they may actually be protecting certain forms of hate speech against legitimate inquiry.
Laws against “hate speech” and “racism” always lead to political censorship, because the definition of what constitutes “hate” is always influenced by politics and ideology. Laws against hate speech or racism should therefore be removed. No person has the right “not to be offended.” Freedom of speech means saying and hearing things with which you may disagree. What remains important is to be able to say and hear them.
Tyler Durden
Sat, 01/18/2020 – 20:00 - Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference
Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference
Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country’s energy producing regions, he’s now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli.
Bloomberg reports Saturday that the Benghazi-based ‘rebel’ general has now “blocked oil exports at ports under his control, slashing output by more than half and posing a potential setback for an international conference on Sunday that aims to broker an end to a civil war in the OPEC nation.”
Image source: AP via Oilandgaspeople.com The major talks Sunday are due to be held in Berlin, and a who’s who of external backers of each side of the conflict will be in attendance, including Putin, Erdogan, France’s Macron, and UK Prime Minister Boris Johnson, as well as the Italian prime minister and US Secretary of State Mike Pompeo.
The Berlin conference comes after a failed deal to establish a ceasefire in Moscow earlier in the week, when Haftar left the city after the head of the UN-backed Government of National Accord (GNA) in Tripoli, Fayez al-Sarraj, actually signed the agreement. Haftar also reportedly secretly scuttled to different Mediterranean capitals, including Athens, in a bid to gain recognition as legitimate leader on the ground.
Haftar’s drastic move to block oil exports is likely aimed at torpedoing the Berlin meeting before it even starts, given he’s proven intransigent in the face of international pressure for him to halt the ongoing Tripoli offensive — even during the talks hosted by one of his key political backers Vladimir Putin.
Libya’s National Oil Corp. (NOC) has now declared Force Majeure, per Bloomberg:
As a result of the blockage of ports in the central and eastern parts of the country, oil output will fall by about 800,000 barrels a day, costing $55 million daily, the National Oil Corp. said in a statement on Saturday. The NOC declared Force Majeure, which can allow Libya, which holds Africa’s largest-proven oil reserves, to legally suspend delivery contracts.
The stoppage also has military implications on the ground, given the GNA’s national army relies on the country’s oil revenue to purchase weapons via Tripoli’s central bank. The NOC has placed sole blame on Haftar for the shutdown, while the LNA has claimed to be listening to the demands of “the people”.
GNA’s Fayez Al-Sarraj (left) and Gen. Khalifa Haftar, via the AFP. Speaking to Bloomberg, European Council on Foreign Relations top official Arturo Varvelli acknowledged the action as bold ploy by Haftar to control Berlin discussions before they commence. “It could be counterproductive as it could make the Europeans, who are the largest consumers of Libyan oil, very upset,” he said.
And S&P Global Platts warns the country’s oil sector could enter a “tailspin”:
Libya’s oil sector could go into a tailspin with two-thirds of its total crude oil production of around 1.20 million b/d at risk after its key oil ports were suspended Saturday by the Libyan National Army…
There’s huge potential for fireworks at the conference itself, given international heavyweights on either side of the conflict will be represented.
Turkey’s Erdogan has recently ordered troops to prop up the Tripoli government, not to mention Turkish drones and military hardware which have for months already been active in defense of the capital against pro-Haftar forces.
Oil exports make up over 90% of Libya’s national revenue and as the below 2019 Stratfor map demonstrates, Haftar has long held the majority of the nation’s oil fields.
Russia, for its part, is believed to have hundreds of mercenaries from the Wagner Group embedded within Haftar’s forces. And complicating matters in the emerging proxy war, Egypt, the Saudis, and UAE (and most recently the Trump White House, apparently) also back Haftar, while Italy, Turkey, and other UN member nations back the GNA’s Sarraj.
Meanwhile, Haftar has vowed repeatedly to not give up until he has control of the Libyan capital, despite fighting for months staying at a relative stalemate. So the Berlin conference outcome is not looking good before it even starts.
Tyler Durden
Sat, 01/18/2020 – 19:35 - 944 Trillion Reasons Why The Fed Is Quietly Bailing Out Hedge Funds
944 Trillion Reasons Why The Fed Is Quietly Bailing Out Hedge Funds
On Friday, Minneapolis Fed president Neel Kashkari, who just two months earlier made a stunning proposal when he said that it was time for the Fed to pick up where the USSR left off and start redistributing wealth (at least Kashkari chose the proper entity: since the Fed has launched central planning across US capital markets, it would also be proper in the banana republic that the US has become, that the same Fed also decides who gets how much and the entire democracy/free enterprise/free market farce be skipped altogether) issued a challenge to “QE conspiracists” which apparently now also includes his FOMC colleague (and former Goldman Sachs co-worker), Robert Kaplan, in which he said “QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it.“
To the delight of Kashkari, who this year gets to vote and decide the future of US monetary policy yet is completely unaware of how the plumbing underneath US capital markets actually works, we did so for his benefit on Friday, although we certainly did not have to: after all, the “central banks’ central bank”, the Bank for International Settlements, did a far better job than we ever could in its December 8 report, “September stress in dollar repo markets: passing or structural?”, which explained not just why the September repo disaster took place on the supply side (i.e., the sudden, JPMorgan-mediated liquidity shortage at the “top 4” commercial banks which prevented them from lending into the repo market)…
… but also on the demand side, which as Claudo Borio, head of the monetary and economic department at the BIS, explained was the result “high demand for secured (repo) funding from non-bank financial institutions, such as hedge funds heavily engaged in leveraging up relative value trades.“
Incidentally, we harbor a slight suspicion that Kashkari, who also admitted to “finding amusement in needling critics calling them conspiracists or goldbugs” (which is a delightfully ironic statement for a person responsible for the biggest asset bubble in history, and one which we are confident in 1-2 years time he would love to retract), was being disingenuous and knows exactly how the Fed is impacting markets, because in what was perhaps the most important news last week which flew under the radar, the WSJ reported that the Fed was considering lending cash directly to – i.e., bailing out – hedge funds, or as we put it, “Fed officials are considering a new tool to ease repo market stress: namely bypassing the existing system entirely, and lending cash directly to smaller banks, securities dealers and hedge funds through the repo market’s clearinghouse, the Fixed Income Clearing Corp., or FICC.“
And so we once again get to the real issue at hand, namely the bailout of those hedge funds which even the BIS said were on the verge of failure had the repo market not been unfrozen – and which the Fed was all too aware of – and had the massive leverage that some hedge funds operate under collapsed, forcing an unprecedented liquidation cascade.
Incidentally, it is the repo-utilizing hedge funds that is the transmission mechanism of the Fed’s monetary policy, and the source of so much Neel Kashkari confusion. Luckily for Neel, and everyone else still confused, the BIS explained that too:
Shifts in repo borrowing and lending by non-bank participants may have also played a role in the repo rate spike. Market commentary suggests that, in preceding quarters, leveraged players (eg hedge funds) were increasing their demand for Treasury repos to fund arbitrage trades between cash bonds and derivatives.
And there you have it: when properly funded, repos issued by commercial banks are critical in preserving and boosting risk prices, by way of levered hedge fund pair trades; indeed as the FT noted in December, “one increasingly popular hedge fund strategy involves buying US Treasuries while selling equivalent derivatives contracts, such as interest rate futures, and pocketing the arb, or difference in price between the two.”
While on its own this trade is not very profitable, given the close relationship in price between the two sides of the trade. But as LTCM knows too well, that’s what leverage is for. Lots and lots and lots of leverage. And when the repo market seized in September, the risk was that all this leverage would be pulled, forcing an unprecedented liquidation wave among the massively levered hedge fund world.
Hence the need for an emergency liquidity intervention by the Fed.
But as the WSJ noted, it’s not just about preserving a handful of hedge funds – fundamentally, the very foundation of the US financial system was suddenly at risk, and with the Fed suddenly targeting liquidity injections into claringhouses, it immediately became apparent what the weakest link was: Clearinghouses themselves.
This is hardly the first time we have discussed clearinghouses as the weakest link in the US financial system. As a reminder, the “hail mary” thesis of the uber bearish CIO of Horseman Global, Russel Clark (who in 2019 was down a record 35%) is that clearinghouses will collapse as liquidity is drained from the market:
LCH claim to have done a quadrillion of compression trades or netting in the last year, this is more than twice the notional of all outstanding interest rate derivatives.
If initial margins rise significantly, the only assets that will see a bid will be cash, US treasuries, JGBs, Bunds, Yen and Swiss Franc. Everything else will likely face selling pressure. If a major clearinghouse should fail due to two counterparties failing, then many centrally cleared hedges will also fail. If this happens, you will not receive the cash from your bearish hedge, as the counterparty has gone bust, and the clearinghouse needs to pay from its own capital or even get be recapitalised itself.
For those confused, here is another quick primer on clearinghouses from Horseman’s November letter to clients:
Clearinghouses have become the center of the financial system, but they do not bear the cost of any mistakes they make in pricing risks. This is borne by other clearinghouse members. But what the BIS note and the note issued by the banks and other users of clearinghouses makes clear is that the market has become very directional, with banks supplying liquidity to the repo market, while leveraged funds are taking liquidity (until 2017 banks were taking liquidity from the system). As the near bankruptcy of a clearinghouse highlighted last year, it is other members that bear the risk when things go wrong, and hence big US banks have acted rationally in looking to reduce liquidity to the repo market, which of course forced the Federal Reserve to act.
And since things are getting a bit fuzzy, let’s summarize here is what we know:
- The repo crisis was the result of a liquidity shortfall at the “Top 4” banks, precipitated by JPMorgan’s drain of over $100BN in repo market liquidity (a wise move, which eventually forced the Fed to launch QE4, and helped JPM report its most profitable year on record)
- The Fed addressed the “supply side” of the Sept repo crisis by injecting over $400BN in liquidity to replenish bank reserve levels, first via repo and then via T-Bill POMO, i.e., QE4.
- The Fed has yet to address the “demand side” of the Sept repo crisis, namely the market transmission mechanism which is intermediated by hedge funds. And it is here that, as the WSJ reported, the Fed is currently contemplating providing liquidity directly to hedge funds to prevent a systemic collapse during the next repo crisis, whenever it may strike.
But going back to the clearinghouse issue, how are these linked to the potential failure of a handful of (massive) hedge funds? Well, we have an explanation for that too, and it once again comes from Horseman’s Russell Clark, who in his latest letter to the few clients he has left (which is a damn shame, because despite his dismal performance in 2019, one can argue that Clark is one of the best investors of his generation, yet one who will soon be out of a job due to endless central bank intervention), writes that “since 2016, its has become much harder to short. There are two reasons. One is negative interest rates have made almost any amount of investment risk justifiable, as owning a safe asset will cost you in real terms. The second is that the malinvestment has moved from bad investment in real assets, into bad investment in financial structures that actually push up markets before crashing them.”
How is that relevant to clearinghouses… thus hedge funds… thus repo… thus liquidity… thus the Fed…. thus QE4? Clark explains:
In 2019 there were many signs that the Japanese were perhaps beginning to step away from US debt markets, which made me very bearish. Yet US corporate debt continued to trade very well, which ultimately was the main support for US markets. As I looked more and more closely at clearinghouses, I realised the way they priced risk, and the provided leverage through compression, meant they were the grease that kept the US debt markets operating, and in fact kept spreads much tighter than they should be.
This brings us to the punchline, namely the reason why clearinghouses have emerged as the weakest link in the Frankenstein monster of a market that the Fed has created over the past decade, and why the Fed is, quietly, preparing to backstop hedge funds and clearinghouses themselves during the next crisis. Or rather 944 trillion reasons. Here is Clark’s conclusion:
Regulators, clearinghouses and central banks have published notes saying that clearinghouses are safe and the problems in the Swedish exchange in 2018 were due to one rogue trader. But when the biggest clients of the clearinghouses, banks, say there is a problem, then I suspect they are right. I spent the Christmas period trying to prove that compression is dangerous, and the best nugget I could come from was from the biggest interest rate clearinghouse in the world, LCH.
In a pamphlet on their website, pushing the benefits of “Compression with Swap Clear”, in the 12 months to October 2019, LCH did a record 944 trillion USD (11x world GDP) of compression. LCH also provide an estimate of the amount of capital this saved members (i.e. banks) under Basel III, a princely 37 million USD. To restate, USD 944 trillion of compression, yielded the banks USD 37 million of regulatory capital saving.
Which leads to the 944 trillion dollar question asked by the Horseman CIO: “If the banks are not benefitting, who is?”
His answer:
“Leverage funds with huge interest rate derivative positions. And who is on the hook if they blow up? The big banks who are on the other side of the trade, as they would be forced to recapitalise the clearinghouses.“
In other words, if enough liquidity is drained, mutual assured destruction between funds and banks will almost instantly follow. And since banks are now aware of the risk and are trying to reduce their exposure, it is very hard if not impossible to see how this can be unwound “without triggering all the other bad financial structures and malinvestment that QE has produced.”
It also explains why the Fed had to get involved, if under the guise of saving the repo market, when in reality the Fed was once again bailing out the banks and levered funds that are facing trillions of dollars in losses should one clearinghouse go under, as the cascade of resulting events would lead to a domino effect where one counterparty after another failed, and one clearinghouse after another has to be bailed out, initially by banks, and ultimately by the Fed.
And there you have it: while the September repo crisis was fundamentally represented by the Fed as one of insufficient reserves, and the resultant QE4 was painted by Powell merely as an exercise in “reserve management” the real reason why the Fed stepped in so decisively was to prevent a cascading sequence of hedge fund failures that would have not only sent the market crashing as funds were forced to liquidate all positions once leverage as high as 10x (see chart above) was yanked, but would culminate in the failure of one or more clearinghouses. Which is also why now that the Fed has stepped in, and backstopped this weakest link, stocks keep hitting new all time highs.
As for Mr Kashkari’s childish “needling of critics”, if after reading the above he still doesn’t understand what is going on, we have a suggestion: announce on Monday the Fed will no longer inject $100 billion in liquidity each month via repo and POMO, and see what happens to the stock market. After all, the Fed’s actions – or in this case the lack thereof – do not lead to “equity repricing”, right?
Tyler Durden
Sat, 01/18/2020 – 19:19 - Mystery Chinese Virus Has Likely Infected Over 1,700 As It Sweeps Across China And Japan
Mystery Chinese Virus Has Likely Infected Over 1,700 As It Sweeps Across China And Japan
While there have been more than 60 confirmed cases of a new mystery virus emerging from Wuhan, China, UK experts estimate that closer to 1,700 have been sickened with the SARS-like pneumonia, according to the BBC. Meanwhile, SCMP reports three suspected cases in Shenzhen, Shanghai.
“I am substantially more concerned than I was a week ago,” disease specialist Prof Neil Ferguson told the outlet.
The work was conducted by the MRC Centre for Global Infectious Disease Analysis at Imperial College London, which advises bodies including the UK government and the World Health Organization (WHO). –BBC
The estimate was calculated by the Imperial College of London based on the following assumptions:
- Wuhan International Airport has a catchment population of 19 million individuals [1].
- There is a mean 10-day delay between infection and detection, comprising a 5-6 day incubation period [8,9] and a 4-5 day delay from symptom onset to detection/hospitalisation of a case (the cases detected in Thailand and Japan were hospitalised 3 and 7 days after onset, respectively) [4,10].
- Total volume of international travel from Wuhan over the last two months has been 3,301 passengers per day. This estimate is derived from the 3,418 foreign passengers per day in the top 20 country destinations based on 2018 IATA data [11], and uses 2016 IATA data held by Imperial College to correct for the travel surge at Chinese New Year present in the latter data (which has not happened yet this year) and for travel to countries outside the top 20 destination list.
According to the report, “It is likely that the Wuhan outbreak of a novel coronavirus has caused substantially more cases of moderate or severe respiratory illness than currently reported. The estimates presented here suggest surveillance should be expanded to include all hospitalised cases of pneumonia or severe respiratory disease in the Wuhan area and other well-connected Chinese cities. This analysis does not directly address transmission routes, but past experience with SARS and MERS-CoV outbreaks of similar scale suggests currently self-sustaining human-to-human transmission should not be ruled out.”
To that end, airports in Singapore and Hong Kong have been screening passengers from Wuhan, while three US airports announced similar measures on Friday at three major airports; San Francisco, Los Angeles and New York. While most of the cases have occurred in China, there has been at least one reported in Japan, after a Chinese national traveled from Wuhan to his home in Kanagawa Prefecture.
About the virus:
The BBC also reports that this virus is just one of six Coronaviruses known to infect people.
At the mild end they cause the common cold, but severe acute respiratory syndrome (Sars) is a coronavirus that killed 774 of the 8,098 people infected in an outbreak that started in China in 2002.
Analysis of the genetic code of the new virus shows it is more closely related to Sars than any other human coronavirus. –BBC
Preliminary analysis of the novel coronavirus (in red) believed to be responsible for an outbreak of pneumonia in Wuhan, China shows it’s closely related to SARS CoV. https://t.co/Vf6U2W4oYR pic.twitter.com/3WbFpQ02Pc
— EcoHealth Alliance (@EcoHealthNYC) January 11, 2020
https://platform.twitter.com/widgets.js
According to Ferguson, it’s “too early to be alarmist” over the virus, but that “people should be considering the possibility of substantial human-to-human transmission more seriously than they have so far,” adding “It would be unlikely in my mind, given what we know about coronaviruses, to have animal exposure, be the principal cause of such a number of human infections.”
Understanding how a novel virus is spreading is a crucial part of assessing its threat.
The WHO’s China office said the analysis was helpful and would help officials plan the response to the outbreak.
“Much remains to be understood about the new coronavirus,” it said. “Not enough is known to draw definitive conclusions about how it is transmitted, the clinical features of the disease, the extent to which it has spread, or its source, which remains unknown.” –BBC
So far just two deaths have been reported.
Tyler Durden
Sat, 01/18/2020 – 18:45 - Watch: The Fed's Evil Juggernaut
Watch: The Fed’s Evil Juggernaut
Authored by Adam Taggart via PeakProsperity.com,
Juggernaut: (n) massive inexorable force, campaign, movement, or object that crushes whatever is in its path
The US Federal Reserve is once again force-feeding liquidity into the system. At its fastest rate ever.
The result? Record high stock prices whose valuations defy all logic.
What’s wrong with that? Shouldn’t we just enjoy the party and be grateful for our rising 401ks?
What’s wrong is that the Fed’s actions are dooming us. Their poisonous cocktail of endless cheap money and rock-bottom interest rates is hastening a terminal breakdown of the economy, while deliberately enriching a tiny cadre of elites to the ruin of everyone else.
Though most remain blind to this, Fed policy (and the similar ones pursued by the other major world central banks) is directly responsible for, or a major contributor to, many of the biggest challenges society is facing.
Tens of millions of Boomers who can’t afford to retire. Tens of millions of Millennials who can’t afford to purchase a home. History’s largest wealth gap between the 1% and everyone else. Relentless increases in the cost of living while real wages remain stagnant. Depletion and degradation of our key natural resources by zombie companies run without profits. We can thank the Fed for all of these ills, plus many more.
All we’re offered in return is the fake reassurance that “everything is awesome” because stocks are higher today than they were yesterday. As if that really makes a difference when the top 1% owns 50% of all stocks and the top 10% owns over 90%.
And when today’s epicly distorted markets reach their breaking point — which may be imminent given the truly manic action recently — not only will the resulting damage be commensurately epic, but it will injure the 99% FAR more than the 1% who benefitted from it.
Mass layoffs. Bankruptcies. Destroyed retirement portfolios and pensions. State and city budget crises. Higher taxes. More fees. Cancelled social services. Hollowed-out communities.
The Fed’s deliberate policy of privatized gains for the elite and socialized losses for the masses ensures that Joe Sixpack is going to take it in the shorts while Reginald Caviar-Maybach will still receive his record bonus from Goldman Sachs.
Which is why the video below is essential viewing for anyone not currently CEO of a too-big-to-fail bank or too busy counting their $billions.
We brought together several of the best monetary and macroeconomic minds to explain exactly what is transpiring and what concerned individuals like you should be preparing for.
Here’s our full 90-minute video WTF: What The Fed?!?, featuring Grant Williams, Mike Maloney, Charles Hugh Smith and Chris Martenson:
Understanding the nature of what is underway is critical. While the Fed’s liquidity juggernaut rolls on, it will continue to crush equality, opportunity and fairness for the masses. But once it stalls, the systemic crash and societal upheaval that will follow will be even more horrific for those not prepared for it.
Tyler Durden
Sat, 01/18/2020 – 18:20 - Trump Blasts "Brazen, Unlawful" Coup Attempt After House Files "Framers' Worst Nightmare" Legal Brief
Trump Blasts “Brazen, Unlawful” Coup Attempt After House Files “Framers’ Worst Nightmare” Legal Brief
Ahead of Tuesday’s opening arguments in the Senate impeachment trial, House Democrats – seven impeachment managers led by Intelligence Committee Chairman Adam Schiff – filed their legal brief today.
The 111-page summons urges the Senate to “eliminate the threat that the President poses to America’s national security” as it lays out the case against President Trump.
The House legal filing (due by 5pmET) reiterates the findings of the House Intelligence and Judiciary panels, which, after hearing from witnesses and experts, settled on charging Trump with abuse of power and obstruction of Congress.
Additionally, the case that House prosecutors sent to the Senate references new evidence that wasn’t part of the impeachment inquiry, including material from Lev Parnas, an associate of Trump’s personal lawyer Rudy Giuliani, according to Democratic officials familiar with the argument.
“The evidence overwhelmingly establishes that he is guilty of both. The only remaining question is whether the members of the Senate will accept and carry out the responsibility placed on them by the Framers of our Constitution and their constitutional Oaths,” the brief reads.
“History will judge each Senator’s willingness to rise above partisan differences, view the facts honestly, and defend the Constitution.”
Compiled by the seven Democrats serving as impeachment managers, the brief describes the president’s conduct as “the Framer’s worst nightmare” in arguing that he should be impeached and removed from office.
“President Trump’s ongoing pattern of misconduct demonstrates that he is an immediate threat to the Nation and the rule of law. It is imperative that the Senate convict and remove him from office now, and permanently bar him from holding federal office,” they write.
Read the House Democrats full legal brief below:
President Trump’s legal team outlined the fiery response to its impeachment summons, calling the two articles of impeachment passed by the House last month “a dangerous attack on the right of the American people to freely choose their president.”
The six-page document – which they stressed is different from the brief that is not due until Monday – offers a taste of the rhetoric expected to be deployed by the president’s defenders in the Senate.
“This is a brazen and unlawful attempt to overturn the results of the 2016 election and interfere with the 2020 election, now just months away,” the filing states.
Trump’s legal team, led by White House counsel Pat Cipollone and Trump personal lawyer Jay Sekulow, is challenging the impeachment on both procedural and constitutional grounds, claiming Trump has been mistreated by House Democrats and that he did nothing wrong.
Read the president’s full response to articles of impeachment:
Notably, at least four of the impeachment managers, including Schiff, are scheduled to appear Sunday on political talk shows.
Former Rep. Trey Gowdy (R-SC) told Fox News this week that he predicts President Donald Trump’s Senate trial will be short and that the president’s best defense is a review of the transcript.
“The transcript is the single best piece of evidence that the president has,” Gowdy said. “Who brought up Rudy Giuliani’s name? It wasn’t Donald Trump. It was Zelensky. This was the second call, not the first call. If President Trump were really hell-bent on ensuring that Ukraine investigate the Bidens, would he not have brought that up in the first telephone call he had with Zelensky? Why wait till the second?”
“As far as the timing of this trial is concerned, Trey, they are estimates that it could be quick, it could last as long as six weeks,” Fox News co-host Sandra Smith said. “Where do you fall on that, and what is the length of time mean?”
“I mean God help us if it lasts six weeks,” Gowdy responded. “The investigation is over, so it’s Schiff’s job to present the case. If he’s going to present the case on the paper with the depositions, it shouldn’t take that long. I don’t need Adam to read the depositions to me; the jury can go read it themselves.”
“If they open it up to witnesses, and they want Bolton, and then there’s some Republicans that want four or five other witnesses, it could last six weeks,” Gowdy continued. “Sandra, I just have not met anyone whose opinion has changed during the pendency of this investigation. I can’t identify – maybe three open-minded jurors in the U.S. Senate. I just don’t, no matter how long it lasts, I don’t think it’s gonna change anyone’s mind in the Senate or among my fellow citizens. The shorter the better.”
Fox News co-host Bill Hemmer asked, “Did you want to give us a time frame for that?”
“I’m saying two weeks,” Gowdy said. “If it goes six weeks, then they’re going to have to make some hard decisions on which witnesses are important enough to hear from and which ones, while they may have relevant evidence, we just don’t – I think in terms of a real trial.”
“Why would you ever not call a witness if that witness has relevant information?” Gowdy continued. “How do you pick which ones to call and which ones not to? You can never do that in a real trial. So, if we’re going to open this thing up anew to a brand new investigation, then call everybody, and God knows how long that’ll take.”
“President Trump has done nothing wrong and is confident that this team will defend him, the voters, and our democracy from this baseless, illegitimate impeachment,” White House Press Secretary Stephanie Grisham said in a statement on Friday night.
Tyler Durden
Sat, 01/18/2020 – 17:55 - Browbeaten Target Employee Gets GoFundMe Vacation After Public Shaming By 'Gaping A**hole' Journalist
Browbeaten Target Employee Gets GoFundMe Vacation After Public Shaming By ‘Gaping A**hole’ Journalist
A GoFundMe for a browbeaten Target manager has reached more than $18,000 after a notorious internet troll’s temper tantrum over a mispriced toothbrush went viral.
Target Tori and David Leavitt (via Heavy.com) Liberal journalist David Leavitt – who the late Anthony Bourdain once called a “gaping asshole” for mocking victims of a terrorist bombing – tried to publicly shame the Target manager, known as “Target Tori” after she refused to sell him a $90 toothbrush which had accidentally been marked at .01c, based on a Massachusetts law (he likely misinterpreted).
When Tori put her foot down, Leavitt called the cops and threatened to take Target to court.
I just had to call the police because @target Refused to sell me the toothbrush
— David Leavitt (@David_Leavitt) January 17, 2020
https://platform.twitter.com/widgets.js
After Leavitt’s post went viral, he was caught in a lie trying to defend himself when he claimed to have not been to a dentist in over three years – only for an old tweet to surface in which he bragged about turning off Fox News in the Dentist’s office.
— notoriously irritable 🌹 (@manda_writes) January 18, 2020
And while the internet came to Tori’s defense, President Trump’s favorite meme maker – Carpe Donktum – set up a GoFundMe to send ‘#TargetTori on a vactation’ which has raised more than $23,000 as of this writing.
https://platform.twitter.com/widgets.jsTori was reached, and full control of the GoFundMe has been granted to her.
Tyler Durden
Sat, 01/18/2020 – 17:30 - Facebook Apologizes For Translating Xi Jinping's Name As "Mr Shithole"
Facebook Apologizes For Translating Xi Jinping’s Name As “Mr Shithole”
Winnie the shit?
Facebook said on Saturday it was trying to figure out how the name of China’s president-cum-dictator for life, Xi Jinping, appeared as “Mr Shithole” in posts when translated into English from Burmese, apologizing for any offense caused and saying the problem had been fixed.
Mr Shithole and Mark Zuckerberg The “error” emerged on the second day of Xi Jinping’s visit to the Southeast Asian country, where Xi and state counselor Aung San Suu Kyi signed dozens of agreements covering massive Beijing-backed infrastructure plans. A statement about the visit published on Suu Kyi’s official Facebook page was littered with references to “Mr Shithole” when translated to English, while a headline in local news journal the Irrawaddy appeared as “Dinner honors president shithole”.
Umm. Facebook seems to be translating “Xi Jinping” written in Burmese as “Mr Shithole”.
This is a post on Aung San Suu Kyi’s official page, recounting her meeting with him yesterday… h/t @felizysolo
”kingdom of Mr Shithole” pic.twitter.com/B4V2cYjPJw
— Poppy McPherson (@poppymcp) January 18, 2020
https://platform.twitter.com/widgets.js
It was unclear how long the issue had lasted but Google’s translation function did not show the same error, prompting amused commentary on social media.
“Xi Jinping”
Google translate?
No problem. 👍Facebook translate?
“Mr Shithole”Keep your head down, Zuck. 😬 https://t.co/UVk7Li8SK2
— Rt Rev Sir Chris Pamplemousse Esq. 🇪🇺 #FBPE🕷 (@ChrisMousse3) January 18, 2020
https://platform.twitter.com/widgets.js
In a statement, Facebook said that “we have fixed an issue regarding Burmese to English translations on Facebook and are working to identify the cause to ensure that it doesn’t happen again,”
This issue is not a reflection of the way our products should work and we sincerely apologize for the offence this has caused,” Facebook added and it had plenty of reasons to be concerned: China is Facebook’s biggest country for revenue after the US and the company is setting up a new engineering team to focus specifically on the lucrative advertising business there, Reuters reported last week.
“We are aware of an issue regarding Burmese to English translations on Facebook, and we’re doing everything we can to fix this as quickly as possible,” a spokesperson said in a statement.
“This issue is not a reflection of the way our products should work and we sincerely apologize for the offense this has caused.”
This is not the first time Facebook has faced problems with translation from Burmese. In 2018 it temporarily removed the function after a Reuters report showed the tool was producing bizarre results. An investigation documented how the company was failing in its efforts to combat vitriolic Burmese language posts about Myanmar’s Rohingya Muslims, some 730,000 of whom fled a military crackdown in 2017 that the United Nations has said was conducted with “genocidal intent”.
It also showed the translation feature was flawed, citing an anti-Rohingya post advocating killing Muslims that was translated into English as “I shouldn’t have a rainbow in Myanmar.”
Tyler Durden
Sat, 01/18/2020 – 17:09 - Trump Suggests He Ordered Soleimani Killed For "Saying Bad Things About Our Country"
Trump Suggests He Ordered Soleimani Killed For “Saying Bad Things About Our Country”
Adding more to the ever evolving rationale for the Jan.3 Qassem Soleimani killing which has brought the Middle East to the brink of a new major war, President Trump told Republic donors Friday night that the IRGC Quds force chief was “saying bad things” about the U.S. before his death.
High-dollar donors were gathered for a fundraiser at Trump’s Mar-a-Lago estate, where Trump offered a play-by-play of sorts surrounding the decision-making behind the admittedly bold and risky move to strike the elite Iranian military leader via drone as he passed through Baghdad’s international airport. Soleimani was “saying bad things about our country” prior to the US taking action, Trump described of his decision.
“How much of this shit do we have to listen to?” Trump was quoted as saying in audio of the event obtained by CNN. “How much are we going to listen to?” The president continued, suggesting that Soleimani’s anti-American invectives were ultimately a convincing enough reason to sway Trump toward issuing the final order.
Image via Daily Beast/Getty Trump further admitted the killing “shook up the world” given that from the perspective of Iran and its allies “He was supposed to be invincible”.
However, like with prior official statements surrounding the controversial military operation, which subsequently triggered a move in Iraqi parliament to boot American forces from the country, no specific evidence was offered that Soleimani was an “imminent” threat to US national security in the region. Previously contradictory statements have come out of the administration saying US embassies in the region were under threat of bombing.
Describing that the drone strike took out “two for the price of one” — in reference to slain Iraqi Shia paramilitary commander Abu Mahdi al-Mohandes, who had been at the airport to greet Soleimani, Trump gave a more detailed accounting than ever before of proceedings in the ‘situation room’ (which had been set up at Mar-a-Lago) that night.
According to CNN’s summary of the new details recounted in the speech:
He went on to recount listening to military officials as they watched the strike from “cameras that are miles in the sky.”
“They’re together sir,” Trump recalled the military officials saying. “Sir, they have two minutes and 11 seconds. No emotion. ‘2 minutes and 11 seconds to live, sir. They’re in the car, they’re in an armored vehicle. Sir, they have approximately one minute to live, sir. 30 seconds. 10, 9, 8 …’ “
“Then all of a sudden, boom,” he went on. “‘They’re gone, sir. Cutting off.’ “
“I said, where is this guy?” Trump continued. “That was the last I heard from him.”
During these latest remarks Trump spoke of Soleimani as a “noted terrorist” who “was down on our list” and “was supposed to be in his country” before he landed in Iraq that fateful night.
However, during the night of boasting the president predictably avoided the question of what’s next in terms of US relations with its uneasy Middle East ally. Washington now finds itself in the awkward and increasingly precarious situation of being at the center of popular Iraqi anger and wrath, while also wanting to ‘stay the course’ in the country to “curtail Iran”.
It goes without saying the Soleimani killing has set off a chain of events which are entirely unpredictable and possibly disastrous for Americans in the region, which could lead to a another significant military conflict and quagmire in the region.
Tyler Durden
Sat, 01/18/2020 – 16:30 - Investors Face "Grave Danger" – Wait 30 Years For Nothing Or Lose 67% Now
Investors Face “Grave Danger” – Wait 30 Years For Nothing Or Lose 67% Now
As the market is levitated by central bank liquidity to record high after record high despite stagnant fundamentals, one asset manager is quantifying the mass hypnosis and warns investors are in “grave danger.”
“Investors should keep in mind that market valuations stand nearly three times the historically run-of-the-mill valuation levels from which stocks have historically generated run-of-the-mill long-term returns,” says John Hussman, president of the Hussman Investment Trust, in his latest note to investors.
“In fact, the highest level of valuation ever observed at the end of any market cycle in history was in October 2002, and even that level is less than half of present valuation extremes.”
To Hussman, this indicates that there’s a wide disconnect between valuations and underlying fundamentals.
“This doesn’t mean that valuations have ‘stopped working,'” he said.
“It means that speculative psychology plays an important role over shorter segments of the market cycle, and that investors place themselves in grave danger if they assume, at points of extreme confidence, that valuations can be ignored.“
The business media is awash with asset-gatherers and commission-rakers arguing that low interest rates “justify” higher stock market valuations, but as Hussman explains
“…that’s really equivalent to saying that ‘low prospective returns in the bond market justify low prospective returns in the stock market‘… Emphatically, nothing about that argument changes the fact that elevated stock market valuations imply lower future investment returns. We also have to ask how much of a valuation premium is actually ‘justified’ by low interest rates.”
Adding that…
“It’s there that investors have inadvertently created a world of future pain for themselves.”
So just how much pain?
“The risks that investors face don’t care whether their investment horizon is 10 years, or 12 years, or 20 years,” he said. “The problem is that at present valuation extremes, passive investors are locking in dismal future return prospects regardless of their investment horizon.”
And so how do we get back to historically run-of-the-mill valuation norms?
The answer is simple:
“Wait nearly 30 years, allowing both the U.S. economy and U.S. corporate revenues to grow at the same rate as the past two decades, while stock prices remain unchanged, with no intervening periods of recession or investor risk-aversion, or alternatively (and far more likely), watch the S&P 500 lose two-thirds of its value over the completion of this market cycle.”
Couldn’t happen? Ask the Japanese…
Buy… and wait passively.
Presently, Hussman estimates that S&P 500 total returns will fall short of Treasury bond returns by about 2.5% annually over the coming 12-year period, which is equivalent to saying that we estimate negative total returns for the S&P 500 itself over that horizon.
Future generations, Hussman argues, seeing the collapse of this bubble in hindsight, will marvel that today’s speculative extremes were ever possible; that they were ever invited and embraced by investors.
They will look back on the entire episode, just as we look at the aftermath 1929, and 2000, and 2007, shaking their heads at the utter madness of it all.
“What QE actually did was to amplify yield-seeking speculation: in the attempt of each successive holder to get rid of their zero-interest hot potatoes, the valuations of stocks and bonds were progressively bid up until everything – all of it – is now priced at levels that promise near-zero future long-term returns. That’s exactly where we are today.”
Finally, Hussman concludes, one thing is clear: the Federal Reserve seems to have little grasp of the non-linearities involved in managing such a deranged balance sheet.
Tyler Durden
Sat, 01/18/2020 – 16:00 - US Military Jams GPS Across East Coast As FBI Seizes Night-Vision Devices
US Military Jams GPS Across East Coast As FBI Seizes Night-Vision Devices
Authored by Mike Adams via NaturalNews.com,
In case you didn’t fully realize that something big is about to take place in America, file these two facts:
#1: The U.S. military, Carrier Strike Group Four (CSG4), is jamming GPS signals from Jan 16th – 24th
…which may overlap the planned deep state false flag event in Richmond, Virginia. Richmond is just at the margins of the range of the GPS jamming exercise map released by the military (see below). The epicenter of the so-called “exercise” is off the coast of Georgia. The official FAA announcement claims no jamming will take place on Monday, Tuesday or Wednesday next week, but we don’t trust the FAA, so your mileage may vary. Remember, too, that 90% of the American population below the age of 30 has never read a paper map and can’t use a compass.
The GPS jamming exercise continues through Jan. 24th and effects South Carolina, North Carolina, Virginia, Eastern Tennessee, Alabama and all of Florida. The AOPA (Aircraft Owners and Pilots Association) has posted details of the warning here.
The FAA has also issued a flight advisory warning aircraft pilots that GPS will fail for “several hours each day” during this military jamming exercise. See:
Map of the Carrier Strike Group Four GPS testing
Here are the areas that will be impacted:
Note that this is the U.S. military testing GPS jamming capabilities in anticipation of an event that would require such jamming (obviously). Consider the convergence of events now shaping up:
-
The impeachment trial of President Trump by the U.S. Senate, presided over by the treasonous sellout SCOTUS Justice Roberts, who already sold out America to Obama under the wildly unconstitutional “Obamacare” decision years ago.
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The Jan. 20th “Lobby Day” event in Richmond, Virginia, where deep state operatives are absolutely trying to put together a false flag event to cause violence and blame gun owners.
-
The Mysterious drone flights over Colorado, Oklahoma and Nebraska, recently followed up by an emergency meeting with the Oklahoma legislature on a military base, where they were briefed about something “horrific” and “life altering.”
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The FBI’s sudden attempts to confiscate high-end night vision tubes from distributors, indicating an emergency need for night vision capabilities in an agency led by a treasonous traitor (Chris Wray) and that has a long history of planning and carrying out terrorism plots across America, according to the New York Times and the Kansas City Star.
#2: FBI invokes “eminent domain” to seize high-end night vision tubes
The FBI is now claiming “eminent domain” to essentially seize high-end night vision tubes (that power night vision goggles) from distributors in the United States. This indicates the FBI has an emergency effort under way to acquire large numbers of night vision devices in anticipation of some urgent event which will take place at night (possibly another FBI false flag operation like Oklahoma City or the 1993 attempted World Trade Center bombing which was entirely masterminded by the FBI).
As Dave Hodges is reporting from The Commonsense Show, Bob Griswold from ReadyMadeResources.com relates a shocking event where he had already locked in the purchase of 70 night vision tubes from his distributor, and had those tubes invoiced and committed. Within hours, the FBI claimed eminent domain over the tubes, effectively “seizing” them from Ready Made Resources before they could even be shipped.
We reviewed a letter written to RMR by their distributor, confirming that the government preempted the order to RMR and claimed they had ownership over the gear because they were the government.
An hour ago, I spoke with Griswold on the phone to confirm the situation, and he told me he thought there were, “No more than 200 high-end night vision devices remaining in the entire country.” (This excludes the crappy gen 1 and gen 2 night vision devices, which nobody wants anyway.)
I’m told that inventory units are flying off the shelves and will be gone everywhere in the next 1-2 business days. Yes, there is a run on night vision in America, happening right now.
Here’s the relevant question: What is the FBI planning that would require hundreds of night vision devices?
Answer: Probably another bombing, mass shooting, mass casualty event or some other terrorism flashpoint that the FBI is famous for causing. Just ask the church members of Waco, Texas… or not, since they’re all dead, thanks to the FBI and ATF.
Earlier this week, Alex Jones declared on his broadcast that the deep state was going to “attempt to assassinate Trump next week.” Could this military exercise, and the FBI night vision devices, and the drones scanning the Midwest all be related?
Most likely, yes.
Listen to my urgent false flag warning podcast which covers the possibility of deliberate violence being staged for Monday, Jan. 20th, in Richmond, Virginia:
Tyler Durden
Sat, 01/18/2020 – 15:30 -
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