Today’s News 20th April 2022

• UK Energy Execs Tell MPs That "Fuel Poverty" Will Crush Households Into Debt 
  UK Energy Execs Tell MPs That “Fuel Poverty” Will Crush Households Into Debt 

  Living standards in Britain continue a death spiral as a large number of customers will go into debt due to soaring power bills, according to Bloomberg. 

  European electric utility executives told MPs on the business, energy, and industrial strategy select committee in parliament that emerging signs show an alarming number of customers have trouble paying their power bills. 

  

  European electric utility E.ON SE’s chief executive officer Michael Lewis told lawmakers that customer borrowings would increase by 50%.  

  “We are expecting a severe impact on customers’ ability to pay.

  “That will see a significantly larger number of people moving into fuel poverty … and a consequent significant increase in bad debt.

  “Government action won’t be nearly enough to mitigate the full impact of the price increase,” Lewis said. 

  Keith Anderson, CEO of Scottish Power Ltd, told a similar warning to the parliamentary panel:

  “Come October, that’s going to get horrific, truly horrific. 

  “The size and scale of this is beyond what I can deal with, beyond what I think the industry can deal with. It needs a massive shift, significant shift in the government’s approach to this,” Anderson said. 

  Chris O’Shea, CEO of the UK’s biggest supplier Centrica Plc, warned:

  “It will get worse without any further intervention in October, a lot worse,” O’Shea said.

  In Britain, living costs skyrocket as wages fail to outpace inflation amid rising energy costs. According to the Resolution Foundation, the average family will be paying 1,100 pounds more over the next 12 months to satisfy their energy needs. This will break the bank for lower-income households that will go into debt. To mitigate some of the stress on families, the government pledged a nine billion-pound rescue package for consumers. 

  High inflation has pushed the UK Misery Index, an economic indicator to gauge how the average person is doing, to three-decade highs. 

  

  Discontent is soaring across the country as the most significant living standards decline since the 1950s is underway as inflation crushes households. Energy prices could continue to rise if Europe bans all Russian oil. JPM warned Tuesday that crude could hit $185 a barrel if that happened.  

  Tyler Durden
  Wed, 04/20/2022 – 02:45

• The Cost Of 'New Energy' In Europe, But Not In Money…
  The Cost Of ‘New Energy’ In Europe, But Not In Money…

  Authored by Giulio Meotti via The Gatestone Institute,

  • “When I left Nantes in 1984, it was tranquility itself, even in the traditionally more working-class neighborhoods… Today Nantes has become Lebanonized. And its history is that of France…” — Ivan Rioufol, journalist, Le Figaro, April 7, 2018.

  • One might even be forgiven for thinking that Qatar’s ultimate goal was to Islamize Europe. In the words of a television documentary, it is Qatar’s “war of influence”.

  • “[T]he Assalam mosque,” Le Figaro recounts, “was built on land sold by the municipality, benefiting from a ‘cultural’ contribution of 200,000 euros and a loan guarantee of 346,800 euros”. The city financed its own self-conquest. …

  • Russian gas is not free; Qatari gas as well.

  • The German website Tichys Einblick comments that “instead of Putin’s war, we will finance Islamic terrorism”. The unconditional will to shine morally has harmful consequences — all because nuclear power is “haram” (forbidden).

  As Europe turns from its masochistic energy dependence on Russia, and the potential blackmail that came with it, will it now fall into the open arms of other dictatorships that stand ready to pump gas into its markets, such as Algeria? Even more dangerous might be a new partnership formed between Germany and Qatar. They have just agreed on a huge long-term energy partnership to reduce dependence on Russian gas, according to German Economy Minister Robert Habeck, who last month visited the Persian Gulf and met with the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani. Italy was the first to negotiate with Qatar, a country that, according to Freedom House, numbers 25 out of 100 on its the freedom score, only slightly above Russia, at 19.

  

  Qatar is now saying that it stands “in solidarity” with Europe.

  Solidarity?

  Qatar is an Islamist state where “Islam is the official religion… and Sharia is the main source of legislation”, claims its constitution. Qatar is governed as an absolute monarchy. Political parties are banned and elections are sham, and it is illegal to be homosexual. According to Open Doors, there are only 18 states in the world where a Christian is worse off than in Qatar. As for the billion euros that Qatar has spent on building mosques and Koranic schools in Europe, perhaps the champions of “progressivism” feel expansively “diverse” with that. However, even the newspaper of the French left, Libération, has referred to “Qatar, financier of European Islam”.

  “Qatar and Turkey are the two main supporters of the Muslim Brotherhood ideology in the world,” Elie Chouraqui told i24NEWS.

  “They presented themselves well and proclaimed themselves privileged interlocutors of the political world which welcomed them with open arms to the point of entrusting them with the training of imams of France”.

  At the same time as the economy minister of Germany went to the sheikh to implore him for more gas, in France the ambassador of Qatar was receiving an award from the mayor of Nice, Christian Estrosi.

  Qatar has been extremely active in France. The emirate graciously financed the Islamic Center of Villeneuve-d’Ascq and France’s first state-funded Muslim faith school, the Lycée-Collège Averroès. Unfortunately, the Lycée Averroès soon became the center of a scandal. One of its teachers resigned after writing that the school was “a hotbed of anti-Semitism and ‘promoting Islamism’ to pupils”. Qatar, meanwhile, has financed many mosques in France, including the Great Mosque of Poitiers, which sits in the vicinity of the site of the Battle of Tours (also known as the Battle of Poitiers), where Charles Martel, ruler of the Franks, stopped the advancing Muslim army of Abdul al-Rahman in the year 732.

  The Assalam mosque in Nantes and the Grand Mosque of Paris are other examples of Qatari generosity. Qatar, in fact, has been funding many mega-mosques across Europe. One might even be forgiven for thinking that Qatar’s ultimate goal was to Islamize Europe. In the words of a television documentary, it is Qatar’s “war of influence“.

  “Woman’s month for the city of Nantes, a veiled woman on the streets of the city. Unacceptable complacency towards Islamism! This is the real threat that hangs over France!” is how Eric Ciotti, a senior leader of the Les Republicans party, described the municipal billboards in a large city that he sees as lost to Islamization.

  Nantes is the city of the Dukes of Brittany, steeped in history on the Loire estuary. Its story is emblematic of how Europe is sinking. Ivan Rioufol wrote in Le Figaro:

  “Having been a journalist in Nantes for a long time, I know this city where I was born very well. When I left Nantes in 1984, it was tranquility itself, even in the traditionally more working-class neighborhoods… Immigrants were a minority… Today Nantes has become Lebanonized. And its history is that of France…

  “The Malakoff mosque… seats 1,200 and has erected a 17-meter minaret. In addition to this ‘cathedral mosque’ there are four other mosques in the city, not to mention those in neighboring communities. This influence of Islam accompanied the new settlement of the working-class neighborhoods, under the encouragement of the socialist municipalities”.

  Today, in Nantes alone, there are ten mosques.

  The Assalam Mosque was constructed with Qatari money — but not only. The Assalam mosque,” Le Figaro recounts, “was built on land sold by the municipality, benefiting from a ‘cultural’ contribution of 200,000 euros and a loan guarantee of 346,800 euros”. The city financed its own self-conquest. And who was the mayor of the city at the time of the financing and the agreement with Qatar? Jean-Marc Ayrault, mayor of Nantes from 1989 to 2012 and socialist prime minister of France from 2021 to 2014 …

  Pierre Vermeren , in his book Déni français (French Denial), noted:

  “In Nantes, Jean-Marc Ayrault practiced a patronage that led to the construction of three, four, community mosques distributed among the Muslim Brotherhood, Morocco and Turkey, as well as a Salafi mosque on the outskirts of his city. He is accused, like the former mayor of Paris, of violating the religious funding law. In Bordeaux, Alain Juppé (former prime minister) canceled the Great Mosque project when it was discovered that the funds came from Qatar and Azerbaijan…”

  The magazine L’Incorrect explains how Qatari money is changing the French landscape.

  “When you think of Alsace, you imagine a thousand small flowered villages lost in the vineyards on the side of the Vosges mountains, whose names give you a headache. We are (for the moment) in Christian land, as evidenced by the chapels that line roads and paths. But mosques sprout like mushrooms after the rain, even in villages with a few thousand inhabitants. This phenomenon reveals a slow but sure Islamization of this region”.

  We are in the region where the other capital of the EU, Strasbourg, is located.

  “The European capital has among its buildings the most important mosque in Europe, the center of An-Nour. The largest building of its kind in France, this center is not just a place of worship, but a cultural and political one, funded by Qatar”.

  This is happening not only in France. The Great Mosque of Copenhagen received a donation of 30 million euros from Hamad bin Khalifa al Thani, former Emir of Qatar, who is also a leading supporter of the Muslims in Belgium. Europe’s Parliament was also asked to investigate Qatari mosques in Kosovo.

  Russian gas is not free; Qatari gas as well.

  The German website Tichys Einblick comments that “instead of Putin’s war, we will finance Islamic terrorism”. The unconditional will to shine morally has harmful consequences — all because nuclear power is “haram” (forbidden).

  Former German Foreign Minister Sigmar Gabriel provided a glimpse of the relativism that dominates our ruling classes:

  “Qatar does not threaten anyone, does not finance terrorist organizations, but hosts Hamas and the Taliban at the request of the USA (!) in order to be able to negotiate with them in Doha. Qatar is simply a reliable partner of the West.”.

  Shortly before his death, Christophe de Margerie, the late head of French oil giant Total, said: “Anything can be bought, including men, it’s just a question of price”.

  What is Europe’s price?

  “This tiny Persian Gulf kingdom is emerging as one of Europe’s best hopes for weaning itself off Russian natural gas, in another sign of how the war in Ukraine is changing the world’s energy relationships”, The Wall Street Journal reported. “Germany, France, Belgium and Italy are in talks with Qatar to buy liquefied natural gas on a long-term basis, said Qatari and European officials”. The EU last month dropped antitrust investigations into Qatar Petroleum, the state energy company, clearing the way for the country to pursue more long-term contracts with Europe.

  Le Figaro tells one of these extraordinary evenings in which Qatar supported the French cultural élite:

  “Dozens of guests flocked to Place de l’Étoile… home to the Qatari embassy. In the rooms with gilded panels with mosaics and frescoes of languid nymphs, His Excellency Mohamed al-Kuwari awarded cartoonist Jean Plantu and Amirouche Laïdi, president of the Averroes Club, with the ‘Doha Arab Cultural Capital’ award. The ambassador awarded André Miquel (famous Arabist from the Collège de France), Dominique Baudis (writer), Bernard Noël (art critic) and the poet Adonis. From former Culture Minister Jack Lang to Nouvel Observateur founder Jean Daniel, a total of 66 French cultural figures have been decorated by Qatar”.

  Making fun of the deal with Qatar, the German newspaper Die Welt ironically proclaimed:

  “The relief in Germany is enormous. They are finally no longer dependent on gas supplies from an autocratically-ruled country that makes life difficult for homosexuals and does not always take human rights very seriously.”

  Before the suspicion arises however, that German environmentalist-progressive-woke circles are throwing their noble principles overboard, it must be said that Qatar is willing to make major concessions to the German “Greens”. The emirate has promised to install wind turbines in the desert and to host the next COP26 conference about how to create a “sustainable world”.

  Tyler Durden
  Wed, 04/20/2022 – 02:00

• Woke Investors Threaten The West's Security
  Woke Investors Threaten The West’s Security

  Submitted by Rupert Darwall,

  Since Russia attacked Ukraine two months ago, Western governments have been learning the hard way about the critical importance of energy to their national security. Germany’s 20-year, trillion-dollar “Energiewende” (Energy Transformation) has made its economy totally dependent on supplies of Russian natural gas and paralyzed its response to Russian aggression. French president Emmanuel Macron faces a tougher re-election fight this month thanks to soaring energy prices and failure to replace the nation’s aging fleet of nuclear power stations. The Biden administration is tapping America’s Strategic Petroleum Reserve in an effort to tamp down energy costs as inflation heads toward double digits. 

  

  As the West grapples with the energy implications of a hostile Sino-Russian alliance, the steering group of the Net-Zero Asset Owner Alliance, whose members manage over $10.4 trillion of assets, issued a statement urging Western governments not to sacrifice climate goals for energy security. “The world is still heading for an excess of fossil fuel-based energy use that will vastly exceed the carbon budget needed to meet the 1.5° Celsius Paris agreement goal. This trend must be halted,” the United Nations-backed alliance said in its April 8 statement, arguing that “the national security argument for accelerating the net-zero transition has strengthened considerably.”  

  What, one might ask, is the standing of asset managers to opine on national security matters? They have no expertise in this domain. It turns out that their understanding of the economics of energy policy is defective, too.   

  The Net-Zero Asset Owner Alliance claims that development of new oil and gas reserves will lock in fossil fuel subsidies, exacerbating market distortions. In fact, the International Energy Agency (IEA) in its 2021 net-zero report states that under its net-zero pathway, tax revenues from oil and gas retail sales fall by about 40% over the next twenty years. “Managing this decline will require long-term fiscal planning and budget reforms,” the IEA warns. Similarly, Britain’s Office of Budget Responsibility estimates that net zero policies will result in the loss of tax receipts representing 1.6% of GDP. So much for the fossil fuel subsidy myth. If fossil fuels were heavily subsidized, eliminating them would mean fossil fuel subsidies disappear. Instead, it’s tax revenues that would melt away to zero. 

  The net-zero investors cite figures for the decline in solar and wind energy costs. These numbers are based on so-called levelized cost of energy (LCOE), a metric that aims to measure a plant’s lifetime costs. Wind and solar power are intermittent, but LCOE metrics exclude the costs of intermittency, which increase the more wind and solar are put on the grid. Because wind and solar output responds to weather and not to demand, the value of this output declines the more installed wind and solar capacity is available. It was for these reasons that MIT professor of economics Paul Joskow concluded in a foundational 2011 paper that using LCOE metrics to compare intermittent and dispatchable generating technologies, such as coal and natural gas, is a “meaningless exercise.” 

  Wind and solar investors don’t need to understand the economics of the grid to make money – they are shielded from the intermittency costs their investments inflict on the rest of the grid, which is one reason why their views on energy policy can be taken with a pinch of salt. Their economic illiteracy does, however, make it easy for them to subscribe to the green fairy tale of 100% renewables. They’re not responsible for keeping the lights on – that depends on traditional power plants staying fueled up and ready to spin, which is what Germany can’t do without Russian gas. Adopt the net-zero alliance’s call for no new fossil-fuel investment, and the cost of energy is bound to spiral. And if the lights go out, politicians – not woke investors – get the blame.  

  Investors’ opinions on energy and national security would matter less if they didn’t have political power. Bloomberg opinion writer Matt Levine argues that asset managers of giant funds form a parallel system of government that exercises overlapping legislative powers with those of governments. These government-by-asset-managers, as Levine calls them, tell companies to do things they think are good for society as a whole, “making big collective decisions about how society should be run, not just business decisions but also decisions about the environment and workers’ rights and racial inequality and other controversial political topics.” 

  Foremost among these areas is climate policy. Although the Biden administration has set a net-zero goal, Congress has not legislated it, and it lacks the force of law. The absence of legislation passed by democratically accountable legislators, however, presents no barrier to government-by-asset-managers legislating climate policy for the companies in which they invest. “Investors are making net zero commitments for themselves and demanding that companies issue greenhouse gas reduction targets and transition plans for meeting those targets,” says the Reverend Kirsten Snow Spalding of the not-for-profit Ceres Investor Network on Climate Risk and Sustainability.  

  Neither Spalding nor the Net-Zero Asset Owner Alliance make a case that forcing net-zero targets on companies will boost investor returns, demonstrating that this is not about investors’ traditional concerns – making money – but about pursuing politics by other means. In this, the Securities and Exchange Commission (SEC) is working hand in glove with woke climate investors. Commenting on the SEC’s newly proposed rule on climate-risk disclosure, Spalding says that for investors who have committed zero emissions by 2050, “this draft rule is absolutely critical.”  

  It’s no coincidence that SEC chair Gary Gensler chose Ceres to make his first appearance to talk about the SEC’s proposed rule. Of course, Gensler didn’t justify it in the same terms as Spalding. To have done so would have heightened the risk of the courts striking down the rule in subsequent litigation. Instead, Gensler attempted to justify the rule as bringing “some standardization to the conversation” and putting material climate information – the SEC issued guidance in 2010 on how companies should disclose such risks – in one place, saving investors the bother of piecing together the information from different sources. Gensler’s explanation, to put it politely, is an implausible one for imposing on corporate America what amounts to a parallel climate-reporting regime to the established framework of financial reporting. Whatever Gensler might say in public, the effect of the SEC rule – if implemented – would be to empower investors to impose net-zero targets on companies, to monitor progress in meeting them, and to hold company boards to account for them.  

  Unlike elected politicians, woke climate investors are not accountable for the effects of their climate policies: They exercise power without responsibility. This arrangement weakens America’s ability to respond to the geopolitical challenges of a revanchist Russia and an expansionist China. “We are on a war footing – an emergency,” Energy Secretary Jennifer Granholm declared at the CERA energy conference in Houston last month. “We have to responsibly increase short-term supply where we can right now to stabilize the market and to minimize harm to American families.” Addressing oil executives in the audience, Granholm told them: “I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply . . .  right now, we need oil and gas production to rise to meet current demand.” 

  As Granholm suggested, woke investors have been trying to do the opposite. Despite the war in Ukraine, there has been no let-up in investor pressure on oil and gas companies to scale down their operations. Whatever criticisms might be made of the Biden administration’s handling of the war in Ukraine, it is responsible for taking the awesome decisions that war involves. Investors, by contrast, have no responsibility for the nation’s security and America’s ability to lead the West. By helping investors impose their desired energy policies on American oil and gas companies, the SEC is undermining the national security prerogatives of the Biden administration and eroding America’s ability to meet the challenges of a dangerous world. The SEC is playing in a domain that it has no business being in. 

  *  *  *

  Rupert Darwall, is a senior fellow at RealClearFoundation, researching issues from international climate agreements to the integration of environmental, social, and governance (ESG) goals in corporate governance.

  Tyler Durden
  Wed, 04/20/2022 – 00:05

• Cognitive Biases: Three Common Types Illustrated
  Cognitive Biases: Three Common Types Illustrated

  In a world of information overload, we can fall victim to all sorts of cognitive biases. Since they can lead us to generate false conclusions, Visual Capitalist’s Jamie Robinson notes that it’s particularly important to understand what these biases are and how they work, as the consequences can become quite drastic.

  Confirmation bias, sampling bias, and brilliance bias are three examples that can affect our ability to critically engage with information. Jono Hey of Sketchplanations walks us through these cognitive bias examples, to help us better understand how they influence our day-to-day lives.

  Confirmation Bias

  

  One of the most-commonly encountered and understood, you’re likely to have already heard about confirmation bias. This cognitive bias affects the way we test and evaluate hypotheses every day.

  In simple terms, confirmation bias is the tendency to seek out or interpret evidence in such a way that supports our own strongly-held beliefs or expectations. This means that, given access to the same set of data and information, different people can come to wildly differing conclusions.

  Feeding into confirmation bias can lead us to make ill-informed choices or even reinforce negative stereotypes. For this reason, it is important to remember to seek out information that both confirms and contradicts your presumptions about a certain topic.

  Sampling Bias

  

  Sampling bias is a kind of bias that allows us to come to faulty conclusions based on inaccurate sample groups or data. Generally, the cause of sample bias is in poor study design and data collection.

  When polling individuals for survey questions, it is important to get a representative picture of an entire population. But this can prove surprisingly difficult when the people generating the study are also prone to human flaws, including cognitive biases.

  A common example involves conducting a survey on which political party is likely to win an election. If the study is run by a professor who only polls college students, since they are around and therefore easier to collect information from, the poll will not accurately reflect the opinions of the general population.

  To avoid sampling bias, it is important to randomize data collection to ensure responses are not skewed towards individuals with similar characteristics.

  Brilliance Bias

  

  Brilliance bias is another common cognitive bias that makes us more likely to think of genius as a masculine trait. This is in part due to the lack of female representation in both traditional academic and executive positions.

  In fact, The Journal of Experimental Social Psychology published an in-depth study on brilliance bias in 2020. It suggests that a likely source of this bias is in the uneven distribution of men and women across careers typically associated with higher level intelligence.

  While this distribution is a remnant of historical factors that limited access to education and career choices for women in the past, its presence has made us (wrongly) conclude that women are less brilliant instead. Naturally, as the cycle perpetuates the uneven distribution of women in these careers, it only reinforces this bias.

  Other Cognitive Bias Examples

  These few examples from Jono Hey give a good overview of some of the biases we face when trying to understand the data given to us, but they are just the tip of the iceberg.

  It is important to be cognizant of these biases in an era where we are constantly engaging with information, especially if we want to combat some of the harmful consequences they entail.

  Tyler Durden
  Tue, 04/19/2022 – 23:45

• Is There A Case For The Pre-1914 Gold Standard? Yes, If You Believe Inflation Is A Bad Thing
  Is There A Case For The Pre-1914 Gold Standard? Yes, If You Believe Inflation Is A Bad Thing

  Authored by Vibhu Vikramaditya via The Mises Institute,

  The Russian central bank recently announced that it will stop buying gold at a fixed rate and will instead buy them at the negotiated rate from banks. Following the numerous sanctions which were imposed on Russia. The Ruble had fallen tremendously against the US dollar, to get out of such a situation it had announced that it would buy gold at a fixed price of 5,000 rubles a gram until June 30. Since that announcement, the ruble has strengthened sharply against the dollar for over one month. Five thousand rubles was worth around $52 on March 25 and around $63 on Thursday.

  The mechanism which led to the increase was to allow the markets to play themselves out, in order to combat sanctions, they asked the nations to transact in their currency which, due to the extensive and growing array of sanctions by the western front, was becoming devalued by each day. It was here, by demanding payment in rubles, are attempting to increase demand for their currency which led to its increase where being pegged to hard currency allowed the confidence of the markets to increase so ruble wasn’t dumped extensively

  But because once you allow for sound money such as gold pegged to your currency which is dictated by the effective allocating mechanism of the market you cannot ignore the market valuation any longer, therefore the bounce-back and effective strengthening of the ruble which took place more and earlier than expected has now forced them to abandon the fixed-rate currency and move towards a more flexible exchange rate mechanism which would allow them to set the rates effectively in line with the motivation of sellers while discounting for factors such as immediacy, global credit standing and the turns of the global economy.

  

  A classical gold standard requires the central bank to exchange by the process of both purchasing and selling gold and the national currency for each other and to do so according to a fixed weight or quantity of gold per unit of currency. Thus, while neither the pegged currency nor the negotiated rates of exchange comprise the classical gold standard, they nonetheless serve as a great case study into the commendatory effects of having hard money serving as the medium of change in the economy.

  In the much-celebrated book of his time, Tract on Monetary Reform, economist John Maynard Keynes urged the United States and Great Britain to abandon the gold standard, calling it a “barbarous relic.” In the decades that followed the book’s publication, countries around the globe heeded Keynes’ advice and relegated the gold standard to the dust bin. It is one of the great historical ironies that almost every advice of from Keynes was taken up by the world in the latter half of the 20th century and that none of the supposed benefits of stability, full employment have come to fruition.

  The Problem of Gold standard in the Keynesian system

   Keynes’s dictum on the gold standard has become the fountainhead of claims against a return back to the gold standard.

  Keynes in his analysis found the gold standard to be a barbarous relic of the past that was unscientific and unfit to meet the demands of a modern world.

  It is his arguments against the gold standard which have been repeated time and again, thus they serve as an excellent case for demonstration as to why the gold standard is superior based on the very allegations which are leveled against it.

  Inflation and Gold standard

  He wrote in his tract on monetary reform about the ills of inflation “ Inflation redistributes wealth…. Its most striking consequence is its injustice to those who in good faith have committed their savings to titles to money rather than to things…. Injustice on such a scale has further consequences…. Inflation has… destroyed the atmosphere of confidence which is a condition of the willingness to save….

  Reading this one might form the opinion that the author of such lines might be highly unsavory and unscrupulous towards a monetary regime which causes destruction of the price mechanism and people’s stored up wealth through the artificial increase in prices but unfortunately one cannot do so without committing a grave error as both instances in modern history when prices have run amok namely the stagflation of the 70s and the massive rise in prices of around 10% today are both a result of Keynesian economics.

  The most widely recognized virtue of the historical gold standard is its low average inflation rate. The rate of inflation was lowest, on average, under the gold standard when compared with the Bretton woods system of a pegged dollar and fluctuating system of fiat dollar reserve. (p. 30).

  This was the era of the classical gold standard which lasted from 1880 to 1914, Inflation over this time period, while it fluctuated on a year-to-year basis, was virtually zero, and as a result, prices whose proper role lies in giving signals about market scarcity ensured proper allocation of resources due to which real income per capita in the United States increased by over 60 percent in a generation and a half. This low inflation is not a coincidence but a direct effect that is to be expected when the money supply is bound to the supply of gold. While the central bank can create thousands of dollars out of thin air to increase the money supply with its high stock to flow ratio, gold has the lowest price elasticity of supply, which is calculated as the percentage increase in quantity provided over price rise.

  This implies the effects of the increased supply which would be prompted by increases in the price of gold through higher demand would be quite insignificant to cause changes in the absolute price level. For instance, the year 2006 witnessed a 36% rise in the spot price of gold. For any other commodity, this would be expected to increase mining output significantly to flood markets and bring the price down. Instead, annual production in 2006 was 2,370 tons, 100 tons less than in 2005, and it would drop a further 10 tons in 2007. (p. 34).

  With changes in money supply being largely unaffected by changes in prices of gold, the general rise in prices which are caused when the supply of money is greater than the demand to hold it doesn’t occur. An economy where price increases are not caused due to an increase in money supply experiences price rise as a function of scarcity based on underlying consumer preferences which lead entrepreneurs to allocate resources properly in line with consumer demand.

  Gold Standard and boom-bust cycles

  A fiduciary media such as paper currency or bank deposits which are effectively used as the medium of exchange which is redeemable in gold enjoys certain properties which create a mechanism whereby artificial increases in money supply are either discouraged or its effects are reversed.

  Suppose if commercial banks were to increase the supply of fiduciary media beyond what its coffers can handle, an increase in supply would first increase the cash balance holdings of its lenders who would when then start spending it on the various inputs of production thereby increasing its price, this increased price would accrue higher profits to the sellers of those inputs who would in-turn increase their output.

  The process where sellers of inputs increase their input would lead them to hire more labor and capital goods which in turn would put further inflationary pressures on wages and other consumer goods when the rise in input prices are materialized into higher consumer goods prices.

  Due to such an increase in prices, the goods of other economies would gain a competitive advantage over domestic ones which would lead to an increase in demand for gold to trade with other countries, as the demand for gold increases, the over-issued fiduciary media would find themselves back to banks who would then be put in dangers of bank runs and defaulting on their claim. This discipline of defaulting over time would root out banks that would have the habit of overissuing fiduciary media which is the source of an artificial unsustainable boom that eventually bursts and leads the economy towards a recession.

  The same restrictions apply to the central banks as well where they can’t run an easy money policy without running the risk of a run on their reserves, given if a central bank lowers its lending rate of interest on its gold reserves to commercial banks in order to create a boom.

  It would lead to capital outflows as investors would look to invest in countries where the interest rate is higher, this would mean that the demand for gold by investors to exchange it against foreign currency will increase. This outflow of gold reserves will decrease the quantity of money in the economy which will again lead to an increase in the rate of interest, therefore it not only means that the monetary policy would be rendered ineffective but also lead central banks to lose out on important gold reserves.

  The problems of the pseudo gold standard

  One of the greatest benefits of the gold standard lies in its ability to restrict and bind the hands of the government. This perhaps becomes most evident when one revisits the episodes of how the gold standard was one by one abandoned by all countries in line for preparation of war efforts of the first world war. Each country in order to build up reserves for arms and ammunition had to increase its defense spending which couldn’t take place under the restraining system which protects individual liberty. Once the war ended there were some attempts at coming back to the gold standard but since they were not based on the underlying dynamic of a market-based gold-currency exchange rate mechanism, it failed to restore the price stability and economic prosperity of the classical gold standard. Each of the countries that participated in the war thus spent huge amounts of money and had massively inflated their currencies, thus economic conditions had changed equilibrium exchange rates between national currencies, and hence gold parities should have been adjusted. If 1914 is taken as the base (= 100), wholesale prices in December 1918 were as follows: USA 202, France 355, UK 246.

  After the war in 1918, the USA immediately announced that it would maintain the dollar price of gold at its prewar level. That is, it is willing to export gold at $20.67 per ounce. It was thought that Britain’s national honor was at stake. Failure to restore the prewar parity of the pound would undermine confidence in the pound.

  Accordingly, Britain resorted to a deflationary policy and restored the value of the pound to its pre-WW1 levels, this turned out to be a disaster for the British economy and other economies connected to it. Artificially lowering the value of the pound despite the increased money supply during the war period distorted the entire structure of prices whose role is to guide entrepreneurs, it could be compared to a situation wherein amid congestion of traffic, the signals reflect guidance for coordinating yesterday’s traffic.

  The USA was able to survive the artificial deflation on the account of its massive gold reserves which had grown during the war and the piling up of debt that countries owned to the United States. This allowed the USA to pursue an easy money policy which first sparked a temporary boom and then characteristically culminated in a bust. This mechanism was explained most adequately by Rothbard in his seminal work America’s Great Depression. Had the currencies been allowed to change as per a fixed weight of gold units per unit of currency, the picture may well have been different.

  Conclusion

  Keynes began his mission to enunciate his system of economics where the invisible hand of the market will be replaced by the visible hand of policymakers where an increase in government spending through the increase in aggregate demand as a result of the multiplier mechanism will provide full or near full employment. But before such a project could be undertaken, it was important to show why the gold standard fails to provide an order to the society as the foundations of his economic system relies on the fact that a country has independence in monetary and fiscal matters where it is not directly affected by the policies of other economies. There can be no such thing as a Keynesian state on the gold standard, any more than a cocaine addict or compulsive gambler can be on a strict budget.

  But now on the backs of substantial evidence and analysis, it becomes quite clear that not only was Keynes incorrect about the question of instability of the value of money and on the gold standard as a monetary system. A stronger case has also been made to show the classical gold standard is superior on every front and a return to the gold standard will cure several economic ills of inflation, improper allocation of resources, and a continuous cycle of booms and busts. This now calls into question a reevaluation of the entire foundation of the fiat money system along with the Keynesian worldview.

  Tyler Durden
  Tue, 04/19/2022 – 23:25

• "I'm Done Talking" – MSNBC Analyst Quits To Fight Russians In Ukraine 
  “I’m Done Talking” – MSNBC Analyst Quits To Fight Russians In Ukraine 

  From virtue signaling to taking action, a former MSNBC foreign affairs analyst ditched the teleprompter for a full-body kevlar suit and rifle and allegedly joined an international legion to fight alongside the Armed Forces of Ukraine against Russia. 

  On Monday night, Malcolm Nance, a longtime analyst for the network and a former U.S. naval intelligence officer, appeared on MSNBC’s “The ReidOut” hosted by Joy Reid. 

  Nance told Reid that he joined the International Legion of Territorial Defense in Ukraine.

  “The more I saw of the war going on, the more I thought, I’m done talking. 

  “It’s time to take action here. So, about a month ago, I joined the international legion here in Ukraine, and I am here to help this country fight, you know, what essentially is a war of extermination,” he said. 

  The international legion has more than 20,000 volunteers from 52 countries who enlisted to help Ukraine repel Russian forces from the war-torn country. 

  “I spent quite a bit of time here in the pre-war period and when the invasion happened, I had friends who were in Donetsk, who were in the Ukrainian army, who were writing to us and telling us, ‘We’re not going to survive tonight. We’ve been hit 500 times,'” Nance said. 

  He added: “This is an existential war, and Russia has brought it to these people and is mass-murdering civilians. And there are people here like me who are going to do something about it.”

  The 61-year-old has authored several books that accuse Russia of planning to “destroy democracy” and getting Donald Trump elected president to “betray America.”

  Reid asked Nance whether he was in “any special danger” because “you clearly are not Ukrainian when they see you.” He replied that Moscow had waged war against everybody. 

  Nance’s Twitter account appears to be very active with retweets and personal tweets for someone allegedly fighting in a war. One wonders how he makes the time to maintain a social media presence while dodging Russian bullets but also getting cellular reception since Ukrainians have needed Elon Musk’s Starlink space internet since infrastructure has been severely damaged. 

  I’m DONE talking. #JoinTheLegion #StopRussia #SlavaUkraini pic.twitter.com/ob3gL1cZ7P

  — Malcolm Nance (@MalcolmNance) April 19, 2022

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  We’re looking forward to Nance tweeting his own combat footage, or maybe he’ll just be an MSNBC guest in a military outfit. 

  Tyler Durden
  Tue, 04/19/2022 – 23:05

• The Dam Is Finally Cracking
  The Dam Is Finally Cracking

  Authored by Charles Hugh Smith via The Daily Reckoning,

  We all sense the global order has cracked. The existing order is breaking down on multiple fronts.

  

  Those who have benefited from this arrangement are doing everything in their power to patch the cracks, while those who chafed under the old order’s chains seek a new order that suits their interests.

  The task now is to make sense of this complex inflection point in history. Two statements summarize the transition from the existing global order to the next iteration:

  1. Finance dominated resources in the old order. Now the roles will reverse and real-world resources will dominate finance. We can’t “print our way” out of scarcities.

  2. Reshuffling currencies and credit will not stop the breakdown of the global order’s “waste is growth” Landfill Economy Model.

  Playing financial tricks has extended the life of an unsustainable economic model that glorified “growth” from wasting resources. By expanding credit “money,” the current global order fueled unsustainable consumption driven by unsustainable speculation.

  Stop expanding “money” and credit and the global order of “growth” implodes.

  The Dam Is Finally Cracking

  Unfortunately for all those who benefited from soaring wealth and income inequality, the trick of expanding “money” and credit has reached systemic limits. The dam holding all the toxic debt, leverage and fraud is finally cracking.

  The dominance of resources over finance leads to a multipolar global order, an order that has the potential to be far more stable and sustainable than the unsustainable, destabilizing “waste is growth” model that depends on financial fraud to maintain the illusion of “growth.”

  As I explain in my book Global Crisis, National Renewal, scarcity leads to either social disorder or rationing. This article explains how government’s role will shift from boosting demand (the Keynesian Cargo Cult) to limiting demand in ways that maintain the social contract.

  Nations that fail to adapt to the end of financialization and globalization will unravel. Every nation has a choice which path it takes:

  Cling on to the doomed existing order of financialization, globalization and the “waste is growth” Landfill Economy or embrace a multipolar world and a degrowth model of doing more with less and incentivizing efficiency and durability rather than the shoddy planned obsolescence of the debt-dependent Landfill Economy.

  Free Money Is the Solution

  Under various guises, labels and rationalizations, “free money” has now been established as the default policy fix for any problem. Stock market falters? The solution: free money! Economy falters? The solution: free money! Bankers face collapse from ruinously risky bets? The solution: free money! Infrastructure crumbling?

  The solution: free money!

  Inflation raging? The solution: free money! Ruh-roh. We have a problem free money won’t fix. Instead, free money accelerates the conflagration. Dang, this is inconvenient; the solution to every problem makes this problem worse. Now what do we do?

  Despite the apparent surprise of the policy-makers, pundits and apologists, this was common sense. Create trillions of dollars out of thin air and spread the money around indiscriminately (fraudsters and scammers getting more than the honest, of course) after global supply chains were disrupted and shelves were bare, then open the floodgates of speculative gambling in stocks, cryptos, housing, used cars, bat guano, quatloos, etc., and what do you think will happen?

  Supply can’t catch up with free-money-boosted demand, prices rise, people instinctively over-order and over-buy, and “don’t fight the Fed” speculative betting begets more betting: the inflation rocket booster ignites, wages soar as workers try to keep pace with rising expenses, speculative bubbles inflate to unprecedented extremes, and all this “wealth without work or productivity” gooses spending and gross domestic product (GDP).

  “Once the Bubbles Pop, GDP Crashes and the Ratio Blows Out”

  Forty years ago, the total debt-to-GDP ratio was 1.6: debt was $4.8 trillion and GDP was $3 trillion. Then the policy solutions of fiscal “borrow and spend” and Federal Reserve “balance sheet expansion.” a.k.a. free money, became the policy default.

  The ratio rose to 2.76 in 2000 and has wobbled around 3.7 for the past decade, a decade that just so happened to see the stock market quadruple and the housing bubble reinflate to new heights as the Federal Reserve kept interest rates near zero as part of the “free money” policy:

  If we’re going to borrow tens of trillions of dollars to squander, we need near-zero interest rates to keep costs of borrowing down.

  Though no one in a position of power or influence dares admit it, the ratio of debt to GDP hasn’t blown out for one reason: speculative bubbles have pushed GDP higher in a massive, sustained distortion of “wealth effect” and winner take most gains for those who knew how to extract the majority of gains from the bubbles.

  Once the bubbles pop, GDP crashes and the ratio blows out. The belief that adding trillions in debt magically adds GDP will be revealed as delusional fantasy.

  Two Paths

  Completely forgotten in the era of Free money as the solution to all problems is the discipline of frugality, which can best be defined as discipline over spending as a means of building long-term financial stability and general well-being.

  Financial discipline (frugality) has been set aside as a needless discomfort: why make difficult tradeoffs and sacrifices when the solution is just to borrow/create more free money? Indeed. Along the same lines, why bother with all the hassles of healthy food and fitness? Just pig out and swallow a couple handfuls of “free” (heh) meds.

  Discipline isn’t just about limiting waste. It’s about investing capital and labor wisely to secure future gains in productivity which is the only real source of income and wealth. Creating “money” out of thin air and spreading it around to satisfy every constituency doesn’t increase productivity. It destroys productivity by incentivizing waste – the waste is growth Landfill Economy – and speculative bets on bubbles never popping.

  Alas, all bubbles pop, and now that creating free money only makes costs rise faster, there is no solution other than – oh, dear, dear, dear – the unforgiving discipline of frugality and investing for productivity gains rather than for speculative bubble “wealth.”

  Which path leads to doom? Free money. Which path leads to revival? Frugality and discipline.

  That’s not what everyone wants to hear, but clinging to delusional fantasies of “free wealth” won’t lead to positive outcomes, any more than swallowing handfuls of meds leads to “free health.”

  Tyler Durden
  Tue, 04/19/2022 – 22:45

• Rising Unaffordability Is Causing Renters To Abandon Hope Of Ever Owning A Home
  Rising Unaffordability Is Causing Renters To Abandon Hope Of Ever Owning A Home

  After two years of a buying frenzy that has become self-reinforcing as investors and speculators have sought to cash in on the trend, it looks like American homebuyers are getting ready to throw in the towel.

  The New York Fed’s 2022 SCE Housing Survey (readers can find a breakdown on the New York Fed’s blog, Liberty Street Economics), released Monday, showed the that respondents believe they would be less likely to buy if they were to move compared to the year-ago survey, marking the first annual decline since the series began in 2014. Compared with last February, the drop amounted to a decline of 10 percentage points.

  The drop was driven by the current renter segment; the Fed’s data showed renters were much less likely to buy compared to renters in the 2021 survey. The survey also showed that while respondents see prices for homes in their zip codes rising over the coming year, they expect that pace to cool five substantially over the next five years, slowing from an average of nearly 6 percentage points, to 2 percentage points, both on an annualized basis.

  What’s more, the share of respondents stating that they believe housing to be a “good” or “very good” investment fell slightly to 71% compared to its series high of 73.6% in February 2021.

  Put another way, this essentially confirms something that we have been warning about for months now. Housing affordability has been crashing by the most on record, as the surge in prices over the last two years has left first-time buyers at a tremendous disadvantage.

  

  The data confirm something that the NAR, BofA and others have warned about as well. For example, BofA in particular has warned that the housing-market euphoria seen last year seemed unlikely to continue. Their reasoning relies mostly on the pickup in mortgage rates, which have surged to one record after another as bond yields relentlessly moved higher.

  

  The drop in affordability has already corresponded with a drop in home sales.

  

  And for what it’s worth, consumers are bracing for rising rents both over the coming year and during the years to come.

  But of all the charts published by the Fed to illustrate the survey data, this probably does the best job: the percentage of renters who believe they will ever own a home has also fallen to the lowest level since the survey began.

  

  So, not only are renters bracing for surging rents in the years to come, but many are giving up hope of ever owning a home.

  Tyler Durden
  Tue, 04/19/2022 – 22:25

• Saudi Economic Growth To Double This Year On High Oil Prices
  Saudi Economic Growth To Double This Year On High Oil Prices

  By Charles Kennedy of OilPrice.com

  High oil prices will push Saudi Arabia’s economy into high-growth mode, more than doubling this year, according to the International Monetary Fund (IMF), which raised its growth forecast for the Kingdom on Tuesday. 

  

  The IMF is targeting 7.6% growth for the Saudi economy this year, raising its forecast by 2.8%. 

  While much of this was attributed to multi-year-high oil prices, the IMF has also noted growth and expected further growth in non-oil revenues. 

  “We raised our estimates of the growth rate of the Saudi economy by 2.8 percentage points, which reflects the increase in oil production in accordance with the OPEC+ agreement, in conjunction with the more non-oil output growth exceeding expectations,” the IMF said in its World Economic Outlook report.

  A Capital Economics report has Saudi oil production rising to 10.3 million barrels per day in March, for 26.7% year-on-year growth, which is classified as the fastest rate of growth for the kingdom in nearly two decades. 

  Capital Economics forecasts the Saudi economy will grow by 10% this year and by 5.3% in 2023. 

  At the same time, Capital Economics economist James Swanston remains optimistic that the Saudis will further increase output beyond what OPEC+ has agreed to, Arab News reports. 

  Capital Economic’s increased Saudi output projection comes despite the cartel’s recent report suggesting that global oil demand would be around 480,000 bpd lower than previously expected due to slower economic growth driven down by Russia’s war in Ukraine and China’s COVID restrictions. 

  The IMF’s double-growth projections for Saudi Arabia come as it slashes its forecast for overall economic growth from 6.1% in 2021 to 3.6% in 2022 and 2023. 

  Tyler Durden
  Tue, 04/19/2022 – 22:05

• Tesla Has Reopened Its Shanghai Plant
  Tesla Has Reopened Its Shanghai Plant

  Tesla has resumed production at its Shanghai plant on Tuesday, according to local China media reports and Reuters. 

  The company’s factory had been shut down for about three weeks as a result of the ongoing Covid lockdowns in China. We also reported yesterday that the company was “sputtering” to re-open and dealing with supply chain issues that were holding it up. 

  “To prepare for the restart, Tesla has recalled workers to its Shanghai plant where they will need to live on site, in line with China’s ‘closed loop management’ process,” two sources told Reuters yesterday. 

  

  Barron’s documented what the re-open would be like for employees: 

  Employees had better bring along their toothbrushes. They could be there for a while, with no sign of China’s zero-Covid policy going away anytime soon. The plant, which has been shut since March 28, could reopen as soon as Monday afternoon, Bloomberg reported, citing an internal company memo.

  Tesla didn’t immediately respond to a request for comment. But the possibility of the workers coming back but not going home or anywhere else—called closed-loop manufacturing —has been building. Shanghai businesses have been in lockdown for weeks as China tries to control a new outbreak with its rigid policy.

  In Tesla’s bubble, Bloomberg reported, employees would sleep on the floor—a sleeping bag and mattress—since the plant doesn’t have a dorm. They also would get catered meals as well as a small daily stipend and have access to showers and entertainment.

  Sounds like paradise…

  Tesla had been preparing to re-open Monday but was forced to push its restart back by a day due “to logistic problems with its supplier”. We also noted yesterday that competitor Volkswagen has reportedly restarted production in China. General Motors is also considering plans for re-opening this week.

  At the same time as this re-open, China continues to extend its lockdowns across parts of the country creating not only chaos domestically, but another coming shock to the supply chain for countries like the U.S., who are highly reliant on importing Chinese goods. 

   

  Tyler Durden
  Tue, 04/19/2022 – 21:45

• Texas Mayor Joins Chorus Urging Biden To Reverse Plan To End Title 42
  Texas Mayor Joins Chorus Urging Biden To Reverse Plan To End Title 42

  By Frank Fang of The Epoch Times

  Javier Villalobos, the mayor of the border city of McAllen, Texas, is imploring President Joe Biden not to end the Title 42 public health provision, telling the president to “prioritize the health and safety” of his community.

  “Although our community is giving, well-prepared, and proactive, no amount of preparation will allow for a local government such as the City of McAllen to respond to the dramatic rise in the undocumented migration that is anticipated as a direct result of the United States federal government announcing the end of Title 42 effective May 23, 2022,” Villalobos wrote in a letter to the president, dated April 13.

  

  The Trump-era public health provision was invoked in March 2020 as an order issued by the U.S. Centers for Disease Control and Prevention (CDC). It was put in place to stop the spread of COVID-19, allowing illegal immigrants to be quickly turned away at the southern U.S. border rather than processed at immigration detention facilities under Title 8 immigration law.

  The Biden administration kept the measure in place after taking office. However, on April 1, the CDC announced that the provision would end on May 23, saying “public health conditions and an increased availability of tools to fight COVID-19” have rendered the measure unnecessary.

  Villalobos cited data from the U.S. Customs and Border Protection (CBP) in his letter to highlight how COVID-19 infection has remained a serious concern for his city—over the past 12 weeks, 13.6 percent of the immigrants released by CBP officials into McAllen have tested positive.

  The mayor also stated that Hidalgo County, where McAllen is located, has been “disproportionately burdened” by COVID-19. Citing the Texas Department of State Health Services, he said the county ranks sixth among the state’s 254 counties in the number of fatalities and seventh in the number of infection cases.

  “With the BA.2 variant rapidly impacting the northeastern United States such that health and safety protocols are being reconsidered, and reimplemented, a delay in lifting Title 42 affords your administration additional time to mobilize a response to combat the new variant’s threat and protect the health and safety of all Americans,” the mayor wrote.

  BA.1, BA.1.1, and BA.2 are the three common lineages of the Omicron variant of the CCP virus found in the United States. BA.2 accounted for 85.9 percent of infection cases for the week ending April 9, according to CDC data.

  Biden’s decision to lift Title 42 has drawn concerns from both Republicans and Democrats.

  Rep. Byron Donalds (R-Fla.), in a recent interview with Epoch Times sister media outlet NTD, questioned why Biden and Vice President Kamala Harris haven’t come to the southern border to talk with Border Patrol officers before making the decision to end the health provision.

  Sen. Mark Kelly (D-Ariz.), after a visit to the border city of Douglas, Arizona, told Fox News Digital that he believed there’s going to be a “crisis” if Title 42 is lifted without proper plans in place.

  A total of 21 states—including Alabama, Arkansas, Florida, and Georgia—have joined in a lawsuit asking a federal court to block the Biden administration’s order to end Title 42. The lawsuit was initially filed by attorneys general in Arizona, Louisiana, and Missouri on April 4.

  “Ending Title 42 would be a disaster and further the chaos at the southwest border that is making it easier for drug cartels and human smugglers to advance their illicit practices in our country,” Florida Attorney General Ashley Moody said in a statement.

  A bipartisan group of lawmakers has introduced legislation in both the Senate (S.4036) and House (H.R.7458), aiming to delay ending Title 42.

  “I implore you to prioritize the health and safety of my community, Texans and all Americans, and to reconsider the administration’s plan to lift Title 42,” Villalobos concluded. 

  Tyler Durden
  Tue, 04/19/2022 – 21:25

• California Grocery Workers Score Double-Digit Raises After 'Unified And Militant' Threat To Strike
  California Grocery Workers Score Double-Digit Raises After ‘Unified And Militant’ Threat To Strike

  Some 47,000 Southern California grocery workers will receive their largest pay increase in decades, after they ratified a new union contract with the region’s largest food chains on Thursday, according to the LA Times.

  

  Passing with an 87% approval, employees at 540 Ralphs, Albertsons, Vons and Pavillions stores from San Luis Obispo to San Diego will receive raises of 19% to 31% over current levels, while part-time employees – around 70% of the workforce – were guaranteed 28 weekly hours, up from 24.

  The agreement came after four months of bargaining came down to a union-authorized strike – which would have compounded issues caused by inflation and supply chain woes.

  Across California and the nation, a pandemic-driven labor shortage has made it harder to retain and hire staff. Workers are quitting for higher-paying jobs and older employees, fearing infection, are retiring in droves. -LA Times

  “The companies were afraid of a strike,” said Kathy Finn, secretary-treasurer of United Food and Commercial Workers Local 770 in Los Angeles. “Our members were more unified and militant than they’ve been in a long time.”

  Ralphs, owned by parent company Kroger, said in a statement that it was “pleased” with the agreement, while Albertsons described the pay raises – which are more than 2.5x what the chains originally proposed – as “fair and equitable.”

  The grocers had originally proposed a raise of just $1.80 per hour over three years for the highest-paid long-term employees, including cashiers. They ended up agreeing to $4.25, raising wages for those employees to $26.75. Those at the bottom-third of the workforce – baggers and clerk’s helpers – will receive a 95-cent raise to $16.34 per hour.

  “This is the best contract for the employees in 20 years, but also for the companies,” said retail consultant Burt Flickinger. “We have the most acute worker shortage since World War II. Higher wages and benefits are an investment in worker loyalty and productivity.”

  According to Flickinger, the new UFCW contract will help counter nonunion competition, as union membership in the Southern California grocery industry has dropped from 90% to around 35% over the last 25 years due to the growth of big-box stores.

  “Walmart and Target are running out of stocks in key categories because they don’t have enough workers at stores or warehouses. With the high cost of living in Southern California, this contract could bring back experienced workers to union stores — people who retired early because of COVID and now can’t pay their bills,” he said.

  Earlier this month, UFCW workers at Stater Bros., a chain with 15,000 Southern California employees, also gained hefty increases of $4.50 over three years for top-line cashiers, clerks and meat cutters, along with a 28-hour minimum guarantee for most part-timers.

  “Grocery workers and their union scored a big win,” said Occidental College politics professor Peter Dreier, co-author of a recent report by the nonprofit Economic Roundtable on Kroger. Polls showed the public was sympathetic to essential workers who suffered hardships during the pandemic, and the companies would have lost a lot of business in the event of a strike, he said. -LA Times

  In 1990, real wages for Southern California Kroger workers made them the highest-paid clerks at the time, earning $13.65 per hour – which would translate to $28.32 today.

   

  Tyler Durden
  Tue, 04/19/2022 – 21:05

• A Structurally Low-Yield Environment Isn't Over Yet
  A Structurally Low-Yield Environment Isn’t Over Yet

  By Michael Read, Bloomberg Markets Live Commentator and Reporter

  The scale of this year’s move in rates markets goes some way to dent a core thesis on which many macro portfolios are based: that of a structurally low-yield environment. While global rates may well remain elevated, it’s debatable whether or not markets are facing a full-blown regime change. Given the market-implied path of policy tightening and the unprecedented selloff so far this year, it may not be time to completely retire your Never-Sell-Bunds T-shirts.

  While the coronavirus pandemic and Russia’s attack on Ukraine have seen a broad-based and persistent snap higher in inflation, there are several factors at play that push against expectations for continued upward pressure on yields.

  Commodities are in backwardation: the vast majority of the constituents of the Bloomberg Commodity Index show a strong backwardation out to 12 months from now. The bulk of the war-driven supply fears have caused near-term contracts to rocket higher, and while there are solid reasons for prices remaining above pre-Covid averages, there will be a degree of normalization ahead.

  Inflation curves are inverted: whether that’s breakevens or zero-coupon inflation swaps, expectations are for lower inflation ahead. Naturally, lower inflation does not mean “low” inflation in pre-Covid terms by any means. But digging into the sub-components of the latest round of super-hot inflation prints gives some hope that we may be closer to cooler prices. Indeed, year-ahead inflation expectations have barely budged.

  While longer-dated inflation tenors remain comfortably above longer term averages (despite the downward-sloping term structure), this more than likely reflects a variety of step-change inflationary impulses ranging from protectionism to greenflation discussed elsewhere.

  Most developed-market meeting-dated OIS rates are pricing aggressively frontloaded, but ultimately rather short, hiking cycles to tackle their respective series of hot inflation prints.

  This is because ultimately it all comes down to economic growth — something that can be viewed as a function of credit creation. As such, an uncomfortable observation is the turnaround in a measure of the euro-area credit impulse. No credit to tackle unexploited productive investment means stifled growth; less growth means fewer reasons for yields to continue to march higher.

  Nowhere is this clearer than in Europe, whose disparate economies are relatively more exposed to the fallout of war. During the Fourth Phase of ECB monetary policy (blue box), namely ultra-low inflation and QE, we have become accustomed to radical actions with little inflationary impulse. Even as we emerge from that dynamic, much of the recoupling of inflation with yields should come from the inflation side in the months and quarters ahead.

  

  Indeed, we have already seen policy trial balloons suggesting the ECB is working on a crisis tool to deploy in the event of a blowout in the bond yields of weaker euro-zone economies in the event of shocks outside of the control of their respective governments.

  It’s clearly a long long way from the central bank put of a “Super Mario”-esque intervention that the market has become accustomed to. While the European bond space may remain in a sell-rallies-mode for some time to come as inflation cools, the dilution or outright absence of a calming central bank influence will not stop fixed income’s recent one-way street from moderating as we progress into 2Q

  Tyler Durden
  Tue, 04/19/2022 – 20:45

• Biden Prepping Yet Another Huge Ukraine Arms Package As Total Military Aid Nears $3BN
  Biden Prepping Yet Another Huge Ukraine Arms Package As Total Military Aid Nears $3BN

  Coming off last week’s approved gargantuan $800 million military package for Ukraine, which the broader public and media seemed to not even bat an eye about (but quite the opposite: positively cheering it), what more is there for Biden to do except sign off on another massive weapons package for Kiev… 

  “The Biden administration is preparing to announce another substantial military aid package for Ukraine this week,” NBC News cited five US officials to report Tuesday evening. “Three officials said the package is expected to be similar in size to the $800 million one the administration announced last week.”

  

  Biden previewed the new aid package by answering a simple “yes” when asked by a reporter whether Washington will send more artillery to Ukraine.

  The new transfers are expected to include “tens of thousands more artillery rounds” – notes Bloomberg, and likely along with more anti-tank missiles, as has been consistently shipped stretching back even before Russia’s late February invasion kicked off. 

  It appears to be the administration’s response to Moscow launching a ‘new phase’ in the war: a major force buildup and push to take the Donbas region from Ukraine, which the Kremlin reportedly wants to see fully accomplished by May 9, Victory Day, which commemorates the Soviet defeat of Nazi Germany.

  Without doubt these continual major weapons packages pledged to Ukraine will only push Russia and NATO into increasingly direct confrontation, given the Kremlin’s standing warning that it will target any inbound Western arms transfers.

  Meanwhile, on Monday a senior Pentagon official told Reuters of plans to begin training Ukrainian forces on how to use American-supplied howitzers. It was described, however, that the training would occur outside Ukraine, likely in a neighboring friendly country like Poland. 

  U.S. has sent $2.6 billion in military aid to Ukraine since Russia’s Feb. 24 invasion, with DoD weapons reaching the battlefield within 48 to 72 hours: senior U.S. defense official

  — Jack Detsch (@JackDetsch) April 19, 2022

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  White House Press Secretary Jen Psaki confirmed this week that so far the United States has successfully delivered new weapons to the Ukrainians on four flights – this as overall US aid pledged to Ukraine since Feb.24 has totaled about $2.6 billion and counting.

  Tyler Durden
  Tue, 04/19/2022 – 20:25

• Louisiana Asks SCOTUS To Block Biden Administration From Calculating 'Social Cost' Of Carbon Emissions
  Louisiana Asks SCOTUS To Block Biden Administration From Calculating ‘Social Cost’ Of Carbon Emissions

  Authored by Matthew Vadum via The Epoch Times (emphasis ours),

  Louisiana Attorney General Jeff Landry is vowing to ask the U.S. Supreme Court to prevent the Biden administration from recalculating and using the “social cost” of carbon emissions, a metric used in climate regulation that critics say needlessly drives up operating costs for businesses and prices for consumers.

  

  Critics have long said that the classification of carbon dioxide, the gas humans expel from their lungs when breathing, as a pollutant makes no sense. Carbon dioxide is essential to life on the planet and is used in the process of photosynthesis, which spurs plant growth. But environmentalists claim that human-created carbon dioxide contributes to climate change.

  The social cost of carbon, a measurement in dollars of the damages supposedly caused by releasing a metric ton of greenhouse gases, is used by policymakers to provide cost-benefit analyses and to write regulations. Placing a monetary value on the effect of the gases gives federal regulators ammunition to justify tougher environmental regulations.

  On Inauguration Day, President Joe Biden signed an executive order that resurrected an interagency working group on the social cost of carbon and temporarily set the cost at $51 per metric ton, the level used before President Donald Trump took office in 2017. During his presidency, Trump had reduced the social cost figure to as low as $1 per metric ton. Biden’s working group was studying the social cost with a view to establishing a new, presumably higher rate.

  In February, U.S. District Judge James D. Cain Jr. of the Western District of Louisiana, agreed with Louisiana and nine other states, issuing an order blocking the use of the interim metric. The states told Cain, who was appointed by Trump, that the metric was arbitrary and would boost the cost of producing energy and hike regulatory costs for states.

  At the time, Max Sarinsky, an attorney at the Institute for Policy Integrity at NYU Law School, said Cain’s injunction might not survive.

  “This injunction is extraordinarily broad,” Sarinsky told Axios. “I think it will receive very, very close scrutiny on appeal.”

  In mid-March, the U.S. Court of Appeals for the 5th Circuit stayed Cain’s injunction at the request of the Biden administration in an emergency application. The appeals court held that Louisiana and the other states challenging the metric had raised “merely hypothetical” claims of harm and that they probably didn’t have legal standing to take action in court.

  Greenwire reported that days later, the states asked the 5th Circuit to hear the case, arguing that allowing the use of the social cost metric “lets one of the most consequential regulations in history remain in effect … despite the irreparable harm it’s causing the states.” The appeals court denied the rehearing.

  “We are disappointed in the 5th Circuit’s decision, and we will appeal to the Supreme Court,” Landry’s office told E&E News, a trade publication. “Attorney General Landry will continue fighting the Biden administration’s attempts to inject the government into the everyday lives of Americans.”

  Landry’s comments come as the Supreme Court is considering West Virginia v. EPA, which the court heard on Feb. 28.

  West Virginia Attorney General Patrick Morrisey previously told The Epoch Times that he hopes the Supreme Court will use the case to rein in the far-reaching powers of the U.S. Environmental Protection Agency (EPA) to shut down carbon dioxide-generating industries without regard to the economic well-being of those affected.

  The problem is that the EPA is trying to transform itself from “an environmental regulator into a central energy planning authority,” according to Morrisey, a Republican.

  West Virginia is a major producer of coal, natural gas, and crude oil. West Virginia and 18 other states are challenging the authority that the Clean Air Act provides to the EPA. The challengers hope the high court will resolve whether the U.S. Constitution gives Congress the power to delegate regulatory authority to the EPA to limit so-called greenhouse gas emissions.

  The challenge comes years after the Supreme Court ruled 5–4 in Massachusetts v. EPA (2007) that the agency can regulate greenhouse gas emissions such as carbon dioxide as “air pollutants” under the act. In the decision, the court called climate change “the most pressing environmental challenge of our time.”

  Tyler Durden
  Tue, 04/19/2022 – 20:05

• Watch: Tonga Volcano Unleashed Once-In-A-Century Planetary Shockwave 
  Watch: Tonga Volcano Unleashed Once-In-A-Century Planetary Shockwave 

  An absolutely fascinating visual representation of how an underwater volcano near the Pacific island nation of Tonga in January erupted and unleashed a once-in-a-century planetary shockwave. 

  NYTimes published the shockwave simulation by Ángel Amores, a physical oceanographer at the Mediterranean Institute for Advanced Studies in Majorca, Spain. 

  After the Tonga eruption, the shockwave took approximately 36 hours to circumnavigate the globe. 

  

  Amores first discovered the shockwave after checking data from local weather stations when he saw the radar signature of the wave. He said sudden pressure changes were seen at weather stations worldwide once the shockwave arrived. 

  “Then I was waiting and I said, OK, it should take like 36 hours to come back … And then it passed again. After another 36 hours it passed a third time.

  “This is the first time that I see something like that,” he said.

  Peter W. Brown, a physicist at the University of Western Ontario, said the shockwave circumnavigated the world several times at the speed of sound. He said the phenomenon was “super spectacular.” 

  “Everybody who studies atmospheric waves are all quite, I would say, awe-struck,” Brown said. 

  Here’s a visualization of weather stations across Japan experiencing a spike in air pressure as the shockwave passed. 

  

  Weather stations worldwide detected spikes in pressure, including in China, Australia, France, Britain, Germany, and the United States. NYTimes said, “the shockwave caused small disturbances in local atmospheric properties such as the temperature of water vapor, creating faint ripples that could be seen in satellite images.”

  So the question is, what produces the next planetary shockwave? Will it be another volcanic eruption, an asteroid, or a nuclear bomb? 

  Tyler Durden
  Tue, 04/19/2022 – 19:45

• DeSantis Signs Bill To Reform Higher Education
  DeSantis Signs Bill To Reform Higher Education

  By Jannis Falkenstein of The Epoch Times

  Florida Gov. Ron DeSantis signed a higher education reform bill on April 19 to hold faculty accountable, and ensure transparency with the curriculum.

  

  Under the new law, which takes effect July 1, tenured faculty will be reviewed every five years by a Board of Governors of the State University System of Florida, which will consider such things as accomplishments, productivity, performance metrics. and compensation.

  “Transparency and accountability is absolutely key,” DeSantis said as he signed the bill in The Villages. “We’re going to make sure that our institutions of higher education are committed to excellence, not ideology – we’re going to be even better than we have been, and we’ve been pretty doggone good over the last many years.”

  The Republican governor told a boisterous crowd that Florida’s higher education institutions were ranked No. 1 in U.S. News and World Report for the last five years, but, with these reforms, he wanted to make it even better.

  Senate Bill 7044 addresses three main issues that DeSantis’s administration sees as “eroding higher education,” he said. Accreditation, transparency in course descriptions, tenure reforms and allowing grandchildren of Florida residents in-state tuition.

  “It’s all about trying to make these institutions more in line with what the state’s priorities are and, frankly, the priorities of the parents throughout the state of Florida,” the governor said.

  The bill sponsored by Republican Senator Manny Diaz will also remove the “stranglehold that faculty unions and accrediting agencies have had on universities and colleges,” a written statement from the governor’s office said. It also “adds common-sense transparency requirements for tuition, fees and cost of materials.”

  Florida’s higher education institutions are required to seek accreditation, but the bill requires them to “seek accreditation from different accreditors in consecutive accreditation cycles.”

  The bill reads: “State Board of Education and Board of Governors (BOG) will identify regional accreditors that are recognized by the U.S. Department of Education (USDOE) that are best suited for each institution. Institutions must seek accreditation from identified regional accreditors and if they are denied by the regional accreditor, they may seek accreditation from any USDOE-approved accreditor that is different from their current accreditor. Prior to this legislation, accrediting agencies had a monopoly on Florida colleges and universities and were able to hold a hand over the operations of educational institutions and remove objectivity from the process.”

  The bill also takes on tenured professors.

  “Tenure was there to protect people so that they could do ideas that maybe would cause them to lose their job, or whatever, and academic freedom. I think what tenure does is [that] … it has created more of an intellectual orthodoxy—and once you’re tenured, your productivity really declines,” DeSantis said.

  “The BOG will be authorized to adopt regulations for performance reviews of tenured professors to hold tenured faculty to the highest standards of accountability. These reviews will help ensure that tenured staff remain active and effective in educating Florida’s university students,” the bill said. “Previously, tenured faculty had to be retained despite repeated instances of political motivations, ineffective teaching practices and overall bad behavior in the classroom.”

  Dr. Michael Poliakoff, President of the American Council of Trustees and Alumni said that the bill is the “guardianship” of the future.

  “There is no doubt tenure without accountability is an invitation to abuse,” he said.

  Florida State University senior Taylor Walker was in attendance, and said she agreed with holding universities accountable.

  “As I go into my classes, my professors hold me to high standards, as they should—but this bill gives me the opportunity to hold them to the same high standards,” she said.

  Walker, a first-generation college student, said her conservative views were sometimes “stifled” and that “woke narratives” are thought by some to be the only narratives that should be taught.

  “When so many in this world, especially in academia, will put their own biased agendas over excellence, it is refreshing to see a government that applies standards to mitigate injustice,” the fourth-year history major said, calling the bill “excellent.”

  Current Florida Secretary of Education Richard Corcoran, with two more weeks before he returns to the private sector, quipped that he was on his “farewell tour.”

  The governor has kept his inaugural promise of making life better for the children of Florida, he said.

  Corcoran also took the opportunity to address the decision on rejecting the math textbooks for reasons of inserting critical race theory (CRT) into the content of the books, which violates Florida law.

  “It’s a math textbook you’re trying to teach two plus two equals four, and it’s like this whole hidden agenda of indoctrination,” he said of the books. “I don’t care how you feel when you’re doing the problem, just be able to solve it.”

  He continued to predict that because of making sure CRT is not “infiltrating” the content of textbooks that Florida will “shoot to the top in all education metrics.”

  Tyler Durden
  Tue, 04/19/2022 – 19:25

• "These Are Incredible Moves" – Yen's Problem Is That Japan Will Also See Inflation In 2022
  “These Are Incredible Moves” – Yen’s Problem Is That Japan Will Also See Inflation In 2022

  As we discussed earlier today in “Why you should pay attention to the crashing JPY“, with the Japanese currency imploding at a never before seen pace, sliding on 13 consecutive days – an uninterrupted streak never once seen in history – things are starting to get scary for the BOJ and adherents of the lunacy that is MMT.

  

  And unfortunately for the BOJ, as Bloomberg’s resident FX experts Mark Cudmore writes, the yen has plenty more downside in 2022 as the BOJ is yet another central bank being lulled into misplaced complacency on inflation.

  Below, Cudmore explains why it about to get much uglier for any remaining yen bulls out there.

  Remember the 2021 idea that “inflation is transitory”?! That was laughable. And so is the idea that Japan won’t see above-target inflation in 2022. The problem is that too many people trust economists on this issue even though the only thing we know from the past year is that, in aggregate, economists, globally and also particularly in Japan, are very poor at forecasting inflation.

  When we suggested in December that consumer price inflation in Japan was a 2022 black swan to watch for, the reaction was extremely dismissive. At the time, the consensus forecast for full-year inflation was 0.7%. It now has jumped to 1.5% and will keep being revised higher by economists chasing the trend rather than looking at the real world around them:

  

  I’m told that Japanese companies struggle to raise prices in a country that hasn’t had inflation for so long. I get that. But reality will overtake them and force everyone to adapt, because the hard facts are that input prices are going parabolic in Japan, and to such an extent that it can’t be ignored any more.

  The Bloomberg Commodity Spot Index rose 8.2% in JPY terms over just the past week. It’s up 29% since end of Feb., more than 48% ytd and 177% over the past two years (all in JPY terms). These are incredible moves:

  

  With the BOJ sticking to its extraordinarily easy policy, the yen’s negative real yields will deepen. And the central bank is trapped because the country’s large sovereign debt pile means that higher rates create a new problem, where the stress outlet will again likely be the currency.

  This post isn’t making any particular call on the short-term price action, but, as outlined last week, any yen rally in 2022 won’t be sustainable without a global growth shock.

  Tyler Durden
  Tue, 04/19/2022 – 19:05

• Biden Having An Increasingly Difficult Time With G-20 Fissures
  Biden Having An Increasingly Difficult Time With G-20 Fissures

  Authored by Mike Shedlock via MishTalk.com,

  Biden made sanction demands on G-20 nations. He hit a BRIC+ wall.

  

  Map of G-20 countries from Atlas Big, annotations by Mish.

  G-20 Pressure Failing 

  The G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. Spain is also invited as a permanent guest.

  The Biden administration wants to increase pressure on Russia, but finds increasing resistance to do more.

  Brazil, Russia, India, and China widely known as BRICs have not bowed to US pressure. Nor have Mexico, Saudi Arabia, or South Africa. 

  The 2022 G-20 meets in November but those nations are also at an IMF summit right now. 

  Treasury secretary Janet Yellen plans to avoid Russian officials at meetings this week, while engaging with countries that haven’t joined in sanctions. 

  Janet Yellen Faces Challenge to Keep Pressure on Russia, While Addressing Global Consequences

  The Wall Street Journal reports Janet Yellen Faces Challenge to Keep Pressure on Russia, While Addressing Global Consequences

  Hanging over gatherings of finance ministers from around the world at the International Monetary Fund and World Bank meetings in Washington this week will be Russia’s war in Ukraine, as well as the sanctions campaign the U.S. and its allies have waged in response. As those sanctions efforts have brought the U.S. and its allies closer together, they are also laying bare deep differences in the broader Group of 20 major economies, which includes Russia, China and India, as well as European allies.

  Ms. Yellen is expected to boycott some G-20 meetings this week that include Russian officials, and she last week warned countries against deepening their economic ties with Russia after the sanctions, singling out China.

  In addition, Ms Yellen’s attempts to build support for an international tax agreement that was the focus of international economic diplomacy last year may not gain traction. Agreement on the deal still faces hurdles both in Congress and among European countries.

  US Boycott

  Yellen will IMF boycott meetings this week that include Russia. But what does that say about the G-20 summit in November. Will the US even go? 

  On March 22, Biden proposed booting Russia from the G-20. Reuters comments on the difficulty.

  “It’s impossible to remove Russia from G20” unless Moscow makes such a decision on its own, said an official of a G20 member country in Asia. “There’s simply no procedure to deprive Russia of G20 membership.”

  With Spain there are 21 G-20 nations so a US boycott would get the group size correct. 

  G-Whatever Meetings Are Useless

  These G-7, G-20, G-Whatever meetings have always been useless.

  G-Whatever meetings typically fail over agriculture, but with little fanfare. 

  Failure is again a given, but usually there is no spotlight on that failure. Now there is. 

  Seven G-20 nations, Brazil, Russia India, China, Mexico, Saudi Arabia, and South Africa, refuse to salute US demands.

  Sanction Limits 

  We are at the limits of sanctions and they have failed. There is little else to do.

  The sanctions did nothing to deter Russia, they have only increased costs and added to inflation across the board. 

  WTIC Oil Price

  

  Meanwhile, oil prices remain well above the price at which Russia invaded Ukraine.

  I asked, Oil Prices Jump Again, Hello Mr. President, What Will You Do For an Encore?

  Biden’s Preposterous Claim 70 Percent of Inflation Jump is ‘Putin’s Price Hike’

  

  CPI data from BLS, PCE data from BEA, chart by Mish

  Also see Biden’s Preposterous Claim 70 Percent of Inflation Jump is ‘Putin’s Price Hike’

  Inflation woes started with supply chain disruptions and free money stimulus, not Putin.

  However, the invasion of Ukraine added to the woes, and so does sanction policy. The unfortunate irony is sanction policy has outright backfired, driving up costs and doing nothing to contain Russia.

  *  *  *

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  Tyler Durden
  Tue, 04/19/2022 – 18:45

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