Feb 21

Today’s News 21st February 2022

  • The Next Step For The World Economic Forum
    The Next Step For The World Economic Forum

    Authored by Roger Koops via The Brownstone Institute,

    It has been obvious since early 2020 that there has been an organized cult outreach that has permeated the world as a whole. It’s possible that this formed out of a gigantic error, rooted in a sudden ignorance of cell biology and long experience of public health. It is also possible that a seasonal respiratory virus was deployed by some people as an opportunity to seize power for some other purpose. 

    Follow the money and influence trails and the latter conclusion is hard to dismiss. 

    The clues were there early. Even before the WHO declared a pandemic in March 2020 (at least several months behind the actual fact of a pandemic) and before any lockdowns, there were media blitzes talking about the “New Normal” and talk of the “Great Reset” (which was rebranded as “Build Back Better”). 

    Pharmaceutical companies such as Pfizer, Johnson & Johnson, Moderna, and Astra-Zeneca were actively lobbying governments to buy their vaccines as early as February 2020, supposedly less than a month after the genetic sequence (or partial sequence) was made available by China. 

    As a person who spent his whole professional career in pharmaceutical and vaccine development, I found the whole concept of going from scratch to a ready-to-use vaccine in a few months simply preposterous. 

    Something did not add up.

    I knew of the names with which everyone has become familiar. Bill Gates, Neil Ferguson, Jeremy Farrar, Anthony Fauci, and others had either been lobbying for or pursuing the lockdown strategies for many years. But still, the scope of the actions seemed too large to even be explained by those names alone.

    So, the fundamental questions that I have been asking myself have been why and who? The “Why” seems to always come back to issues besides public health. Of course the “Who” had the obvious players such as the WHO, China, CDC, NIH/NIAID, and various governments but there seemed to be more behind it than that. These players have been connected to the “public health” aspect but that seemed to be only scratching the surface. 

    I am not an investigative journalist and I would never claim that role, but even I can do some simple internet searches and start to see patterns evolve. The searches that I have done have yielded some very interesting “coincidences.”

    If I give you the names of the following people – Biden, Trudeau, Ardern, Merkel, Macron, Draghi, Morrison, Xi Jinping – what do you think that they have in common? Yes, they are all pampered and stumble over themselves, but that is also not the connection.

    One can see very quickly that these names certainly connect to lockdown countries and individuals who have ignored their own laws and/or tried in some way to usurp them. But, there is more to it than that and I will give a hint by providing a link with each name.

    They are all associated with the World Economic Forum (WEF), a “nonprofit” private organization started (in 1971) and headed by Klaus “You will own nothing and be happy” Schwab and his family. This is a private organization that has no official bearing with any world governance body, despite the implication of the name. It could just as well have been called the “Church of Schwabies.” The WEF was the origin of the “Great Reset” and I would guess that it was the origin of “Build Back Better” (since most of the above names have used that term recently).

    If you think that the WEF membership ends with just leaders of countries, here are a few more names:

    Allow me to introduce more of the WEF by giving a list of names for the Board of Trustees. 

    • Al Gore, Former WP of the US

    • Mark Caney, UN Special Envoy for Climate Action

    • T. Shanmugaratnam, Seminar Minister Singapore

    • Christine Lagarde, President, European Central Bank

    • Ngozi Okonja-Iweala, Director General, WTO

    • Kristalian Georggieva, Managing Director, IMF

    • Chrystia Freeland, Deputy Minister of Canada

    • Laurence Fink, CEO, BlackRock 

    You can see a cross section of political and economic leaders on the board. The leader of the organization, that is the leader of the Board, is still Klaus Schwab. He has built an impressive array of followers.

    If you want to really see the extent of influence, go to the website and pick out the corporate name of your choice; there are many to choose from: Abbott Laboratories, Astra-Zeneca, Biogen, Johnson & Johnson, Moderna, Merck, Novartis, Pfizer, Serum Institute of India, BASF, Mayo Clinic, Kaiser Permanente, Bill and Melinda Gates Foundation, Wellcome Trust, Blackrock, CISCO, Dell, Google, Huawei, IBM, Intel, Microsoft, Zoom, Yahoo, Amazon, Airbus, Boeing, Honda, Rakuten, Walmart, UPS, Coca-Cola, UBER, Bank of China. Bank of America. Deutsche Bank, State Bank of India, Royal Bank of Canada, Lloyds Banking, JP Morgan-Chase, Equifax, Goldman-Sachs, Hong Kong Exchanges, Bloomberg, VISA, New York Times, Ontario (Canada) Teacher’s Pension Plan

    The extent of reach is huge even beyond the worldwide leader network. For example, we all know what Bill Gates has been doing with his wealth via the Bill and Melinda Gates Foundation (BMGF). But, the Wellcome Trust is equal to the task. Who is the Director of the Wellcome Trust? One named Jeremy Farrar, of the United Kingdom SAGE and lockdown fame – arguably the architect of the US-UK lockdowns in 2020 – is closely associated with WEF. 

    Concerning the reach that can occur, let me give some examples from the BMGF alone, and it comes from the time that I spent in 2020 reading their extensive funding list.

    A few years ago, the BMGF awarded the Institute for Health Metric Evaluation (IHME) a ten-year, almost $280 million award. IHME (associated with the University of Washington in Seattle) was at the forefront of the computer modeling that was driving the lockdowns and the nonpharmaceutical Interventions during 2020. People have seen their name often in print or on MSNBC or CNN. 

    In 2019, IHME awarded the Editor of the Lancet (Dr. Richard Horton) a $100,000 award and described him as an “activist editor.” The Lancet, once considered one of the best medical journals, has been at the forefront of censoring opposing scientific viewpoints since 2020 and publishing “papers” that were not fit to be published. I never could understand what it meant to be an “activist” editor in a respected scientific/medical journal because, stupid me, I always thought that the first job of the editor was to be impartial. I guess I learned in 2020 how wrong I was.

    Of course, the Lancet is also heavily funded from pharmaceutical companies such as Pfizer (also a member of the WEF). 

    But, the BMGF reach goes far beyond just IHME and these connections have been quite recognizable. Here are some examples of the organizations and moneys received during 2020 alone broken down by areas.

    Bill Gates has also invested heavily in Moderna and his investments have paid out nicely for him. The BMGF has also given close to $100 million to the Clinton Health Access Initiative.

    The questions now have to be asked: 

    • Is this some beginning of a controlled authoritarian society intertwined via the WEF? 

    • Has the Covid panic been staged to set the stage? Please note, I am not a “Covid Denier” since the virus is real. But, has a normal seasonal respiratory virus been used as an excuse to activate the web?

    The next questions, for those of us who at least pretend to live in “Democratic” societies, have to be:

    • Is this what you expected and/or want from the people you elect?  

    • How many people knew of the “Associations” of the people that they voted for? (I certainly did not know of the associations until I did the searches but maybe I am just out of touch)

    Can we anticipate their next moves? There may be some hints.

    The Next Move 

    Jeremy Farrar of The Wellcome Trust recently wrote an article for the WEF with the CEO of Novo Nordisk Foundation, Mads Krogsgaard Thomsen. It is a summary of a larger piece written for and published by the Boston Consulting Group. 

    In this article, they propose that the way to “fix” the problem of antibiotic resistant bacteria is via a subscription service. That is, you pay a fee and when you need an antibiotic, presumably an effective one will be available for you. 

    My guess is that they have the same philosophy for vaccines and that certainly seems to be the approach with Coronavirus. Keep paying for and taking boosters. 

    In view of this philosophy, the vaccine mandates make sense. Get society “addicted” to an intervention, effective or not, and then keep feeding them. This becomes especially effective if you can keep the fear going.

    This approach is so shortsighted, from a scientific viewpoint, it astounds me. But, like much of recent history, I think science has little to do with it. The goal is not scientifically founded but control founded. 

    After the discovery of penicillin almost one century ago, there were scientists who warned that antibiotic usage should be considered very carefully in practice because evolutionary pressures would lead to antibiotic resistant species of bacteria. At that time, they were considered to be rogue scientists; after all, didn’t we suddenly have a miracle cure for many deadly problems?

    From the time of discovery, it took over a decade before fermentation methods were developed to produce sufficient quantities of antibiotics to be practical. These methods allowed for the use of penicillin on the battlefield towards the end of WWII and undoubtedly saved many lives then and later in subsequent wars (Korea and Vietnam) by preventing serious infections resulting from wounds sustained during battle. 

    However, it did not take long before the medical establishment was handing out antibiotics like candy. I experienced this myself when I was a child in the 1960s. It seemed like every time we went to the doctor, no matter what the problem, I was given a series (not just one) of injections of penicillin. There were never any attempts to determine if I had a virus, bacteria, or even an allergy. The answer was: in with the needle. I cannot count how many times I was “jabbed” as a child.

    It didn’t take long before resistance species started to appear. The result was that more and more money was pumped into R&D for antibiotics. When I was in graduate school during the 1980s, one sure way to get some NIH funding was to tie the research into the “antibiotic” search. Antibiotics became big business. 

    We now have several classes of antibiotics that are used for specific cases. We have Aminoglycosides (Streptomycin, Neomycin, etc.), Beta-Lactams Cephalosporins (four generations including Cefadroxil-G1, Cefaclor-G2, Cefotaxime-G3, Cefepime-G4 , Beta-Lactams Penicillins (including Ampicillin, Amoxicillin, and Penicillin), Other Beta-Lactams (Meropenem), Fluoroquinolones (Levofloxacin, Gemifloxicin, etc.), Macrolides (Azithromycin, Clarithromycin, etc.), Sulfonamides (Sulfisoxazole, etc.), Tetracyclines, and others such as Clindamycin and Vancomycin (typically reserved for resistant bacteria). All in all, physicians have over 50 different choices for antibiotics.

    The most common place to encounter antibiotic resistant bacteria is in a hospital. Most people who get some sort of infection in the normal routine of life, like a sinus infection or skin infection, will not likely encounter an antibiotic resistant species. 

    Except there has been another source of the problem and that has been in the food supply. Antibiotics have become very popular with large scale meat production facilities of all types including beef, poultry, swine, and even fish. These include actual farms where the animals are raised as well as in the processing of the meat. The overuse of antibiotics in these industries has also produced resistant forms of bacteria.

    For example, in attempts to limit the bacteria e. coli, common to mammalians, antibiotics have been used and this has resulted in some antibiotic resistant forms of e. coli. An infection via e. coli (antibiotic resistant or not) can be avoided by proper cooking and handling of meats. However, sometimes that does not happen and there are e. coli outbreaks (also from improperly washed vegetables that may use contaminated irrigation water). 

    For most healthy people, experiencing e. coli (either resistant or not) is only a passing discomfort that includes intestinal cramps, diarrhea, and other GI complaints. Depending on the amount of contamination, a person may suffer for a day or two or for several days. 

    But, with some people, it can be serious or deadly (such as in elderly people in poor health and young children). If that occurs, then the presence of an antibiotic resistant form can be a serious matter. Presence of a non-resistant form can be treated more readily.

    A few years ago I had pneumonia; a relatively mild case. I was given a choice of in-patient treatment or out-patient and it was a no-brainer. If I wanted to make sure that my pneumonia could be handled by the normal course of antibiotics (I was given a quinolone), staying at home and away from the hospital was important. I knew that hospital-acquired pneumonia could be a much more serious situation. So, I stayed at home and easily recovered. That did not mean I was guaranteed getting a more serious resistant form in the hospital but I understood that the risk was much greater. 

    Producing more antibiotics and giving them on subscription to the users is not the answer. That will only lead to more resistant forms and there will be this continuing loop of antibiotic use. But, if the actual goal is societal addiction to antibiotics out of fear, just like addiction to universal Covid vaccines out of fear, then it makes sense. 

    Finding a few universal antibiotics that deal with the resistant forms is important and it is also important to use those sparingly and only as a last resort. In addition, better management of antibiotic use in our society would go a long way to attenuating the problem. 

    There is nothing particularly controversial about that observation. It was accepted by nearly every responsible health professional only two years ago. But we live now in different times of extreme experimentation, such as the deployment of world-wide lockdowns for a virus that had a highly focused impact, with catastrophic results for the world. 

    It was the WEF on March 21, 2020 that assured us “lockdowns can halt the spread of Covid-19.” Today that article, never pulled much less repudiated, stands as probably the most ridiculous and destructive suggestion and prediction of the 21st century. And yet, the WEF is still at it, suggesting that same year that at least lockdowns reduced carbon emissions. 

    We can easily predict that the WEF’s call for a universal and mandated subscription plan for antibiotics – pushed with the overt intention of shoring up financial capitalization of major drug manufacturers – will meet the same fate: poor health outcomes, more power to entrenched elites, and ever less liberty for the people. 

    Tyler Durden
    Mon, 02/21/2022 – 00:05

  • Trump's "Truth Social" Platform Set For President's Day Release In Apple App Store
    Trump’s “Truth Social” Platform Set For President’s Day Release In Apple App Store

    More than a year has passed since President Donald Trump was officially banned from Twitter, YouTube and Facebook following the J6 riot.

    But the time for his triumphant return to the political conversation has arrived. After months of building “buzz” and interest, President Trump’s new “Truth Social” platform is expected to launch in the Apple app store Monday,  coinciding with the President’s Day holiday, according to a statement from the company’s Chief Product Officer, Billy B. 

    Comments about the Apple app store release from the “Truth Social” executive were shared on the platform’s beta product Sunday, according to Reuters.

    In a series of posts late on Friday, a verified account for the network’s chief product officer, listed as Billy B., answered questions on the app from people invited to use it during its test phase. One user asked him when the app, which has been available this week for beta testers, would be released to the public, according to screenshots viewed by Reuters.

    “We’re currently set for release in the Apple App store for Monday Feb. 21,” the executive responded.

    News and hints about Trump’s position on the network have been arriving in a steady stream for weeks. On Feb. 15, Trump’s eldest son Donald Jr. posted on a screenshot of his father’s verified @realDonaldTrump Truth Social account on Twitter. The post included one message uploaded to his father’s Truth Social account on Feb. 14 assuring his audience:  “Get Ready! Your favorite President will see you soon!”

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

    Led by former Republican Rep. Devin Nunes, Trump Media & Technology Group – the company responsible for the app – certainly has competition in the area of social media platforms that see themselves as champions of open expression. Some of their bigger rivals include Gettr, Gab, Rumble and Parler. 

    “There’s excitement on our platform right now and it’s inspirational. It’s honestly very moving to me to see people on the platform who have been canceled,” Nunes said, before explaining that this week the app would roll out to iPhone users. 

    Asked if “Truth Social” would be “beholden to big tech”, Nunes responded by insisting that they wouldn’t censor anything: “people just want to be left alone…they feel like they’re free.”

    He also clarified that following the app store launch, the product would likely be “fully operational” by the end of March. Reuters affirmed that the app had just been updated to version 1.0, after having been at version 0.9 as recently as Wednesday. 

    Readers can watch the full Nunes interview below. His comments about “Truth Social” begin at around the 8-minute mark.

    https://video.foxnews.com/v/embed.js?id=6298226709001&w=466&h=263Watch the latest video at foxnews.com

    On Friday, Nunes was on the app urging users to follow more accounts, share photos and videos and participate in conversations, in an apparent attempt to drum up activity, according to a person with knowledge of the matter.

    When asked about features of the app, Nunes said that users wouldn’t have the ability to edit their posts, which will be called “truths” – at least, “not yet”. The next significant feature to be released on the platform would be direct messages, or DMs, between users, the executive wrote.

    The SPAC that TMTG will be merging with to finalize its hurried public listing is called DWAC. After the deal, it stands to receive $293M in cash that DWAC holds in a trust, assuming no DWAC shareholder redeems their shares, TMTG said in an Oct. 21 press release. Additionally, in December TMTG raised $1 billion of committed financing from private investors. Unsurprisingly, federal regulators from the the SEC have already revealed that they’re looking into the SPAC’s financing for evidence of anything suspicious. 

    Because of this, they say the deal is likely “months away” from closing. 

    Tyler Durden
    Sun, 02/20/2022 – 23:30

  • Limits To Green Energy Are Becoming Much Clearer
    Limits To Green Energy Are Becoming Much Clearer

    Authored by Gail Tverberg via Our Finite World,

    We have been told that intermittent electricity from wind and solar, perhaps along with hydroelectric generation (hydro), can be the basis of a green economy. Things are increasingly not working out as planned, however. Natural gas or coal used for balancing the intermittent output of renewables is increasingly high-priced or not available. It is becoming clear that modelers who encouraged the view that a smooth transition to wind, solar, and hydro is possible have missed some important points.

    Let’s look at some of the issues:

    [1] It is becoming clear that intermittent wind and solar cannot be counted on to provide adequate electricity supply when the electrical distribution system needs them.

    Early modelers did not expect that the variability of wind and solar would be a huge problem. They seemed to believe that, with the use of enough intermittent renewables, their variability would cancel out. Alternatively, long transmission lines would allow enough transfer of electricity between locations to largely offset variability.

    In practice, variability is still a major problem. For example, in the third quarter of 2021, weak winds were a significant contributor to Europe’s power crunch. Europe’s largest wind producers (Britain, Germany and France) produced only 14% of installed capacity during this period, compared with an average of 20% to 26% in previous years. No one had planned for this kind of three-month shortfall.

    In 2021, China experienced dry, windless weather so that both its generation from wind and hydro were low. The country found it needed to use rolling blackouts to deal with the situation. This led to traffic lights failing and many families needing to eat candle-lit dinners.

    In Europe, with low electricity supply, Kosovo has needed to use rolling blackouts. There is real concern that the need for rolling blackouts will spread to other parts of Europe, as well, either later this winter, or in a future winter. Winters are of special concern because, then, solar energy is low while heating needs are high.

    [2] Adequate storage for electricity is not feasible in any reasonable timeframe. This means that if cold countries are not to “freeze in the dark” during winter, fossil fuel backup is likely to be needed for many years in the future.

    One workaround for electricity variability is storage. A recent Reuters’ article is titled, Weak winds worsened Europe’s power crunch; utilities need better storage. The article quotes Matthew Jones, lead analyst for EU Power, as saying that low or zero-emissions backup-capacity is “still more than a decade away from being available at scale.” Thus, having huge batteries or hydrogen storage at the scale needed for months of storage is not something that can reasonably be created now or in the next several years.

    Today, the amount of electricity storage that is available can be measured in minutes or hours. It is mostly used to buffer short-term changes, such as the wind temporarily ceasing to blow or the rapid transition created when the sun sets and citizens are in the midst of cooking dinner. What is needed is the capacity for multiple months of electricity storage. Such storage would require an amazingly large quantity of materials to produce. Needless to say, if such storage were included, the cost of the overall electrical system would be substantially higher than we have been led to believe. All major types of cost analyses (including the levelized cost of energy, energy return on energy invested, and energy payback period) leave out the need for storage (both short- and long-term) if balancing with other electricity production is not available.

    If no solution to inadequate electricity supply can be found, then demand must be reduced by one means or another. One approach is to close businesses or schools. Another approach is rolling blackouts. A third approach is to permit astronomically high electricity prices, squeezing out some buyers of electricity. A fourth balancing approach is to introduce recession, perhaps by raising interest rates; recessions cut back on demand for all non-essential goods and services. Recessions tend to lead to significant job losses, besides cutting back on electricity demand. None of these things are attractive options.

    [3] After many years of subsidies and mandates, today’s green electricity is only a tiny fraction of what is needed to keep our current economy operating.

    Early modelers did not consider how difficult it would be to ramp up green electricity.

    Compared to today’s total world energy consumption (electricity and non-electricity energy, such as oil, combined), wind and solar are truly insignificant. In 2020, wind accounted for 3% of the world’s total energy consumption and solar amounted to 1% of total energy, using BP’s generous way of counting electricity, relative to other types of energy. Thus, the combination of wind and solar produced 4% of world energy in 2020.

    The International Energy Agency (IEA) uses a less generous approach for crediting electricity; it only gives credit for the heat energy supplied by the renewable energy. The IEA does not show wind and solar separately in its recent reports. Instead, it shows an “Other” category that includes more than wind and solar. This broader category amounted to 2% of the world’s energy supply in 2018.

    Hydro is another type of green electricity that is sometimes considered alongside wind and solar. It is quite a bit larger than either wind or solar; it amounted to 7% of the world’s energy supply in 2020. Taken together, hydro + wind + solar amounted to 11% of the world’s energy supply in 2020, using BP’s methodology. This still isn’t much of the world’s total energy consumption.

    Of course, different parts of the world vary with respect to the share of energy created using wind, hydro and solar. Figure 1 shows the percentage of total energy generated by these three renewables combined.

    Figure 1. Wind, solar and hydro as a share of total energy consumption for selected parts of the world, based on BP’s 2021 Statistical Review of World Energy data. Russia+ is Russia and its affiliates in the Commonwealth of Independent States (CIS).

    As expected, the world average is about 11%. The European Union is highest at 14%; Russia+ (that is, Russia and its Affiliates, which is equivalent to the members of the Commonwealth of Independent States) is lowest at 6.5%.

    [4] Even as a percentage of electricity, rather than total energy, renewables still comprised a relatively small share in 2020.

    Wind and solar don’t replace “dispatchable” generation; they provide some temporary electricity supply, but they tend to make the overall electrical system more difficult to operate because of the variability introduced. Renewables are available only part of the time, so other types of electricity suppliers are still needed when supply temporarily isn’t available. In a sense, all they are replacing is part of the fuel required to make electricity. The fixed costs of backup electricity providers are not adequately compensated, nor are the costs of the added complexity introduced into the system.

    If analysts give wind and solar full credit for replacing electricity, as BP does, then, on a world basis, wind electricity replaced 6% of total electricity consumed in 2020. Solar electricity replaced 3% of total electricity provided, and hydro replaced 16% of world electricity. On a combined basis, wind and solar provided 9% of world electricity. With hydro included as well, these renewables amounted to 25% of world electricity supply in 2020.

    The share of electricity supply provided by wind, solar and hydro varies across the world, as shown in Figure 2. The European Union is highest at 32%; Japan is lowest at 17%.

    Figure 2. Wind, solar and hydro as a share of total electricity supply for selected parts of the world, based on BP’s 2021 Statistical Review of World Energy data.

    The “All Other” grouping of countries shown in Figure 2 includes many of the poorer countries. These countries often use quite a bit of hydro, even though the availability of hydro tends to fluctuate a great deal, depending on weather conditions. If an area is subject to wet seasons and dry seasons, there is likely to be very limited electricity supply during the dry season. In areas with snow melt, very large supplies are often available in spring, and much smaller supplies during the rest of the year.

    Thus, while hydro is often thought of as being a reliable source of power, this may or may not be the case. Like wind and solar, hydro often needs fossil fuel back-up if industry is to be able to depend upon having electricity year-around.

    [5] Most modelers have not understood that reserve to production ratios greatly overstate the amount of fossil fuels and other minerals that the economy will be able to extract.

    Most modelers have not understood how the world economy operates. They have assumed that as long as we have the technical capability to extract fossil fuels or other minerals, we will be able to do so. A popular way of looking at resource availability is as reserve to production ratios. These ratios represent an estimate of how many years of production might continue, if extraction is continued at the same rate as in the most recent year, considering known resources and current technology.

    Figure 3. Reserve to production ratios for several minerals, based on data from BP’s 2021 Statistical Review of World Energy.

    A common belief is that these ratios understate how much of each resource is available, partly because technology keeps improving and partly because exploration for these minerals may not be complete.

    In fact, this model of future resource availability greatly overstates the quantity of future resources that can actually be extracted. The problem is that the world economy tends to run short of many types of resources simultaneously. For example, World Bank Commodities Price Data shows that prices were high in January 2022 for many materials, including fossil fuels, fertilizers, aluminum, copper, iron ore, nickel, tin and zinc. Even though prices have run up very high, this is not an indication that producers will be able to use these high prices to extract more of these required materials.

    In order to produce more fossil fuels or more minerals of any kind, preparation must be started years in advance. New oil wells must be built in suitable locations; new mines for copper or lithium or rare earth minerals must be built; workers must be trained for all of these areas. High prices for many commodities can be a sign of temporarily high demand, or it can be a sign that something is seriously wrong with the system. There is no way the system can ramp up needed production in a huge number of areas at once. Supply lines will break. Recession is likely to set in.

    The problem underlying the recent spike in prices seems to be “diminishing returns.” Such diminishing returns affect nearly all parts of the economy simultaneously. For each type of mineral, miners produced the easiest-t0-extract materials first. They later moved on to deeper oil wells and minerals from lower grade ores. Pollution gradually grew, so, it too, needed greater investment. At the same time, world population has been growing, so the economy has required more food, fresh water and goods of many kinds; these, too, require the investment of resources of many kinds.

    The problem that eventually hits the economy is that it cannot maintain economic growth. Too many areas of the economy require investment, simultaneously, because diminishing returns keeps ramping up investment needs. This investment is not simply a financial investment; it is an investment of physical resources (oil, coal, steel, copper, etc.) and an investment of people’s time.

    The way in which the economy would run short of investment materials was simulated in the 1972 book, The Limits to Growth, by Donella Meadows and others. The book gave the results of a number of simulations regarding how the world economy would behave in the future. Virtually all of the simulations indicated that eventually the economy would reach limits to growth. A major problem was that too large a share of the output of the economy was needed for reinvestment, leaving too little for other uses. In the base model, such limits to growth came about now, in the middle of the first half of the 21st century. The economy would stop growing and gradually start to collapse.

    [6] The world economy seems already to be reaching limits on the extraction of coal and natural gas to be used for balancing electricity provided by intermittent renewables.

    Coal and natural gas are expensive to transport so, if they are exported, they primarily tend to be exported to countries that are nearby. For this reason, my analysis groups together exports and imports into large regions where trade is most likely to take place.

    If we analyze natural gas imports by part of the world, two regions stand out as having the most out-of-region natural gas imports: Europe and Asia-Pacific. Figure 4 shows that Europe’s out-of region natural gas imports reached peaks in 2007 and 2010, after which they dipped. In recent years, Europe’s imports have barely surpassed their prior peaks. Asia-Pacific’s out-of-region imports have shown a far more consistent growth long-term growth pattern.

    Figure 4. Natural gas imports in exajoules per year, based on data from on data from BP’s 2021 Statistical Review of World Energy.

    The reason why Asia-Pacific’s imports have been growing is to support its growing manufacturing output. Manufacturing output has increasingly been shifted to the Asia-Pacific region, partly because this region can perform this manufacturing cheaply, and partly because rich countries have wanted to reduce their carbon footprint. Moving heavy industry abroad reduces a country’s reported CO2 generation, even if the manufactured items are imported as finished products.

    Figure 5 shows that Europe’s own natural gas supply has been falling. This is a major reason for its import requirements from outside the region.

    Figure 5. Europe’s natural gas production, consumption and imports based on data from BP’s 2021 Statistical Review of World Energy.

    Figure 6, below, shows that Asia-Pacific’s total energy consumption per capita has been growing. The new manufacturing jobs transferred to this region have raised standards of living for many workers. Europe, on the other hand, has reduced its local manufacturing. Its people have tended to get poorer, in terms of energy consumption per capita. Service jobs necessitated by reduced energy consumption per capita have tended to pay less well than the manufacturing jobs they have replaced.

    Figure 6. Energy consumption per capita for Europe compared to Asia-Pacific, based on data from BP’s 2021 Statistical Review of World Energy.

    Europe has recently been having conflicts with Russia over natural gas. The world seems to be reaching a situation where there are not enough natural gas exports to go around. The Asia-Pacific Region (or at least the more productive parts of the Asia-Pacific Region) seems to be able to outbid Europe, when local natural gas supply is inadequate.

    Figure 7, below, gives a rough idea of the quantity of exports available from Russia+ compared to Europe’s import needs. (In this chart, I compare Europe’s total natural gas imports (including pipeline imports from North Africa and LNG from North Africa) with the natural gas exports of Russia+ (to all nations, not just to Europe, including both by pipeline and as LNG)). On this rough basis, we find that Europe’s natural gas imports are greater than the total natural gas exports of Russia+.

    Figure 7. Total natural gas imports of Europe compared to total natural gas exports from Russia+, based on data from BP’s 2021 Statistical Review of World Energy.

    Europe is already encountering multiple natural gas problems. Its supply from North Africa is not as reliable as in the past. The countries of Russia+ are not delivering as much natural gas as Europe would like, and spot prices, especially, seem to be way too high. There are also pipeline disagreements. Bloomberg reports that Russia will be increasing its exports to China in future years. Unless Russia finds a way to ramp up its gas supplies, greater exports to China are likely to leave less natural gas for Russia to export to Europe in the years ahead.

    If we look around the world to see what other sources of natural gas exports are available for Europe, we discover that the choices are limited.

    Figure 8. Historical natural gas exports based on data from BP’s 2021 Statistical Review of World Energy. Rest of the world includes Africa, the Middle East and the Americas excluding the United States.

    The United States is presented as a possible choice for increasing natural gas imports to Europe. One of the catches with growing natural gas exports from the United States is the fact that historically, the US has been a natural gas importer; it is not clear how much exports can rise above the 2022 level. Furthermore, part of US natural gas is co-produced with oil from shale. Oil from shale is not likely to be growing much in future years; in fact, it very likely will be declining because of depleted wells. This may limit the US’s growth in natural gas supplies available for export.

    The Rest of the World category on Figure 8 doesn’t seem to have many possibilities for growth in imports to Europe, either, because total exports have been drifting downward. (The Rest of the World includes Africa, the Middle East, and the Americas excluding the United States.) There are many reports of countries, including Iraq and Turkey, not being able to buy the natural gas they would like. There doesn’t seem to be enough natural gas on the market now. There are few reports of supplies ramping up to replace depleted supplies.

    With respect to coal, the situation in Europe is only a little different. Figure 9 shows that Europe’s coal supply has been depleting, and imports have not been able to offset this depletion.

    Figure 9. Europe’s coal production, consumption and imports, based on data from BP’s 2021 Statistical Review of World Energy.

    If a person looks around the world for places to get more imports for Europe, there aren’t many choices.

    Figure 10. Coal production by part of the world, based on data from BP’s 2021 Statistical Review of World Energy.

    Figure 10 shows that most coal production is in the Asia-Pacific region. With China, India and Japan located in the Asia-Pacific Region, and high transit costs, this coal is unlikely to leave the region. The United States has been a big coal producer, but its production has declined in recent years. It still exports a relatively small amount of coal. The most likely possibility for increased coal imports would be from Russia and its affiliates. Here, too, Europe is likely to need to outbid China to purchase this coal. A better relationship with Russia would be helpful, as well.

    Figure 10 shows that world coal production has been essentially flat since 2011. A country will only export coal that it doesn’t need itself. Thus, a shortfall in export capability is an early warning sign of inadequate overall supply. With the economies of many Asia-Pacific countries still growing rapidly, demand for coal imports is likely to grow for this region. While modelers may think that there is close to 150 years’ worth of coal supply available, real-world experience suggests that coal limits are being reached already.

    [7] Conclusion. Modelers and leaders everywhere have had a basic misunderstanding of how the economy operates and what limits we are up against. This misunderstanding has allowed scientists to put together models that are far from the situation we are actually facing.

    The economy operates as an integrated whole, just as the body of a human being operates as an integrated whole, rather than a collection of cells of different types. This is something most modelers don’t understand, and their techniques are not equipped to deal with.

    The economy is facing many limits simultaneously: too many people, too much pollution, too few fish in the ocean, more difficult to extract fossil fuels and many others. The way these limits play out seems to be the way the models in the 1972 book, The Limits to Growth, suggest: They play out on a combined basis. The real problem is that diminishing returns leads to huge investment needs in many areas simultaneously. One or two of these investment needs could perhaps be handled, but not all of them, all at once.

    The approach of modelers, practically everywhere, is to break down a problem into small parts, and assume that each part of the problem can be solved independently. Thus, those concerned about “Peak Oil” have been concerned about running out of oil. Finding substitutes seemed to be important. Those concerned about climate change were convinced that huge amounts of fossil fuels remain to be extracted, even more than the amounts indicated by reserve to production ratios. Their concern was finding substitutes for the huge amount of fossil fuels that they believed remained to be extracted, which could cause climate change.

    Politicians could see that there was some sort of huge problem on the horizon, but they didn’t understand what it was. The idea of substituting renewables for fossil fuels seemed to be a solution that would make both Peak Oilers and those concerned about climate change happy. Models based on the substitution of renewables for fossil fuels seemed to please almost everyone. The renewables approach suggested that we have a very long timeframe to deal with, putting the problem off, as long into the future as possible.

    Today, we are starting to see that renewables are not able to live up to the promise modelers hoped they would have. Exactly how the situation will play out is not entirely clear, but it looks like we will all have front row seats in finding out.

    Tyler Durden
    Sun, 02/20/2022 – 22:55

  • "Suisse Secrets": Massive Leak Of Credit Suisse Bank Records Exposes $100 Billion Held By 18,000 Spies, Strongmen And Criminals
    “Suisse Secrets”: Massive Leak Of Credit Suisse Bank Records Exposes $100 Billion Held By 18,000 Spies, Strongmen And Criminals

    Credit Suisse has had an extremely difficult year already, but on Sunday, dozens of respected newspapers and other media organizations from around the globe dealt Switzerland’s second-largest bank by assets a major blow: releasing reporting on leaked banking records involving 18,000 clients considered “sensitive” for their ties to corrupt government officials, Middle Eastern autocrats or foreign spymasters. 

    “Suisse Secrets” – as the leak is being called – was coordinated by the Organized Crime and Corruption Reporting Project, the same organization that spearheaded “the Pandora Papers” and the “Pegasus Project”, two earlier major leaks involving topics ranging from official corruption to illicit software-enabled surveillance.  Like “Pandora” and the “Panama Papers” leaks, the records exposed in “Suisse Secrets” are mostly financial data, like bank account information, as well as evidence of internal red flags that were routinely raised – and routinely ignored. 

    The statistics from the leak are staggering: 18K accounts, $100 billion in aggregate assets, some of the accounts dated back to the 1940s, but even the most recent details date to the mid-2010s, allowing Credit Suisse’s PR team enough plausible deniability to insist that most of the accounts exposed in the leak have already been closed. 

    Clients identified in the leak included easily identifiable leaders like Jordan’s King Abdullah II as well as shadowy Pakistani intelligence chief General Akhtar Abdur Rahman Khan.

    Before we break down the findings of the report, it’s worth noting that a CS spokeswoman said the bank “strongly rejects” the reports’ characterization of the bank’s “business practices.” 

    Candice Sun, a spokeswoman for the bank, said in a statement that “Credit Suisse strongly rejects the allegations and inferences about the bank’s purported business practices.” She said many of the accounts in the leak date back decades to “a time where laws, practices and expectations of financial institutions were very different from where they are now.”

    Ms. Sun said that while Credit Suisse can’t comment on specific clients, many of the accounts identified in the leaked database have already been closed. “Of the remaining active accounts, we are comfortable that appropriate due diligence, reviews and other control related steps were taken, including pending account closures,” she said.

    Ms. Sun added that the leak appears to be part of “a concerted effort to discredit the bank and the Swiss financial marketplace, which has undergone significant changes over the last several years.”

    Switzerland’s banking secrecy laws have long made it a haven for stashing ill-gotten gains. Back in 2014, however, US authorities started cracking down on American customers of Swiss banks, and eventually, CS struck a settlement where it paid billions in restitution. But the DoJ and Senate Finance Committee are investigating whether Americans continue to hold unregistered assets at the bank. Meanwhile, it recently went on trial for helping a Bulgarian wrestling star/cocaine trafficker launder millions. 

    Without further ado, the following are some of the individuals named in the leak: 

    • Nervis Villalobos – a former Venezuelan vice minister of energy, CS opened an account for Villalobos in 2011 into which he deposited millions despite red flags from compliance that the money had resulted from public corruption.
    • Alaa and Gamal Mubarak – the sons of former Egyptian strongman Hosni Mubarak, Alaa and Gamal held six accounts at various points including one containing nearly $200 million in 2003. 
    • King Abdullah II of Jordan – one of the few officials in the leaks who remains in power, had six accounts, including one whose balance exceeded $224 million.
    • General Akhtar Abdur Rahman Khan – A Pakistani intelligence chief from the 1980s who helped funnel US arms and money to the mujahideen soldiers fighting an insurgency against the Soviet-backed government in Afghanistan and the Soviet military. Interestingly, in 1985, the same year President Ronald Reagan called for more oversight of the aid going into Afghanistan, an account was opened in the name of three of General Khan’s sons. Years later, the account would grow to hold $3.7 million.
    • Saad Kheir – the head of Jordan’s intelligence agency, opened an account in 2003, the same year the US invaded Iraq, that would eventually hold $21.6 million.
    • Billy Rautenbach – a notorious mining magnate who was eventually sanctioned by the US for his role in financing the violent outbursts around Zimbabwe’s 2008 election. The accounts were opened weeks before a mining deal funneled $100 million to the government of former Zimbabwean strongman Robert Mugabe and his government, according to the OCCRP.
    • Rza and Seymur Talibov – the sons of an Azerbaijani strongman received roughly $20 million in suspicious wire transfers. 
    • Rodoljub Radulović – a.k.a. Misha Banana, the Balkan gangster and drug smuggler controlled two accounts at Credit Suisse, with one holding almost 3.4 million Swiss francs.

    Readers looking for a more complete breakdown can find one on the OCCRP’s site here. 

    Of the dozens of news organizations who were provided documents from the “Suisse Secrets” leak, none were Swiss. This is by design since Switzerland has strict laws barring journalists from writing about leaked bank records. 

    Those bank secrecy laws cut both ways. 

    Tyler Durden
    Sun, 02/20/2022 – 22:20

  • Extreme Backwardation Suggests One Of The Tightest Oil Markets Ever
    Extreme Backwardation Suggests One Of The Tightest Oil Markets Ever

    Authored by Tsvetana Paraskova via OilPrice.com,

    • Oil futures are seeing the steepest backwardation in history, suggesting we are witnessing one of the tightest oil markets ever.

    • While oil prices fell on Thursday morning due to rumors of an Iran nuclear deal coming to fruition, the near-term oil market will remain very tight.

    • The price of Dated Brent physical cargoes traded in the North Sea hit $100.80 per barrel on Wednesday, the first time Brent exceeded $100 since 2014.

    The oil futures curve is in such an extreme backwardation that it suggests the oil market is very tight right now, despite Thursday’s move lower after Iran said that a possible nuclear deal was “closer than ever.”

    Brent oil prices fell early on Thursday to below the $93 mark, after Iran’s main negotiator, Ali Bagheri Kani, tweeted late on Wednesday:

    “After weeks of intensive talks, we are closer than ever to an agreement; nothing is agreed until everything is agreed, though. Our negotiating partners need to be realistic, avoid intransigence and heed lessons of past 4yrs. Time for their serious decisions.”

    In case a deal is indeed reached – and the U.S. has said that the window of reaching an agreement is closing fast – Iran could return some 1.3 million barrels per day (bpd) to the market within several months after the U.S. lifts sanctions on its oil exports.

    This, of course, is still in the realm of possibility, but the immediate signals reflected in the futures prices are shouting that the market has rarely been so tight.

    Some of the futures spreads are in their steepest backwardations in history, according to Bloomberg.

    The price of Dated Brent, physical cargoes traded in the North Sea, hit $100.80 per barrel on Wednesday. That was the first time Dated Brent has exceeded the $100 a barrel threshold since September 2014. The jump in physical cargo prices suggests that traders are willing to pay $100 per barrel for actual crude supply right now in a sign of a very tight market, Bloomberg notes.

    “The only way to balance this market over the medium term remains high oil prices to slow demand growth,” analysts at Energy Aspects wrote in a note to clients cited by Bloomberg.

    Meanwhile, crude stocks at Cushing, Oklahoma—the designated delivery point for WTI Crude oil futures contracts—dropped by another 1.9 million barrels, to stand at just 25.8 million barrels as of February 11—the lowest level since 2018. 

    Tyler Durden
    Sun, 02/20/2022 – 21:45

  • "The Wait Is Over" – 'Fortress Australia' Reopens To Tourists After Nearly 2 Years
    “The Wait Is Over” – ‘Fortress Australia’ Reopens To Tourists After Nearly 2 Years

    Despite grappling with a new COVID outbreak in remote Western Australia, where authorities recorded a record 257 new COVID cases on Saturday and another 200+ on Sunday, the Australian government is finally raising its “drawbridge” on Monday as it allows the first tourists to enter the county after two years of stringent travel restrictions.

    As Reuters quips early in its report on the occasion, Australia’s notoriously strict policy earned it the nickname “Fortress Australia.” And while the “drawbridge” approach helped its eradicate COVID for a time, case numbers finally surged to record highs during the global omicron wave, which hasn’t quite yet subsided. PM Scott Morrison told a group of reporters assembled that the “wait is over”.

    According to the latest national case numbers, the 7-day average is at the very least trending lower, having just broken below 25K/day. Deaths have fallen to just under 50/day, on average.

    Souce: WorldoMeter

    All this means Australia’s death rate is just 19.37 per 100,000, one of the lowest in the world.

    Australia’s draconian immigration policy was brought to national attention just last month when tennis superstar Novak Djokovic was eventually deported after being detained for nearly a week (before being freed by a judge) despite having secured an official exemption from the country’s stringent vaccination mandate.

    The big question now is whether Australia’s tourism industry, which was growing nearly 2x as fast as GDP before the pandemic, will recover (real tourism GDP expanded 3.4% in 2018-2019, compared with overall GDP growth of 1.9% during the same period.

    Unvaccinated tourists entering the country will still be required to quarantine, the government said. Reuters reports:

    “Fully vaccinated tourists will not need to quarantine,” but those who have not received two doses “will require a travel exemption to enter the country and will be subject to state and territory quarantine requirements.”

    Australians are among the most heavily vaccinated people in the world. Roughly 94% of the over-16 population is now at least double-jabbed, and many have received a booster dose.

    As protests and public backlash intensified, Australia finally started rolling back its restrictions in November, first allowing Australians to travel in and out, then admitting international students and some workers. Now, travelers for both leisure and business will be allowed to enter the country more or less freely – provided they have the proper “documentation”, of course.

    Tyler Durden
    Sun, 02/20/2022 – 21:10

  • Futures Surge After Putin Accepts Macron Proposal For Ukraine Summit With Biden
    Futures Surge After Putin Accepts Macron Proposal For Ukraine Summit With Biden

    After a barrage of pro-war headlines earlier on Sunday…

    • U.S. WARNS THAT RUSSIA MAY TARGET MULTIPLE CITIES IN UKRAINE

    … and this…

    • ALL INDICATIONS RUSSIA ‘ON BRINK’ OF INVADING UKRAINE: BLINKEN

    … and a tweet just before 8pm ET from NBC’s Howard Fineman, quoting CBS “superb reporter” David Martin that “Putin has just ordered Russian forces to invade Ukraine in its entirety, with reserve units following to run an occupation”…

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

    … futures – which had opened down substantially from Friday’s already depressed level – soared just before 800pm ET (almost exactly as the CBS tweet hit), after reports that the ongoing talks to halt escalation in Ukraine were successful, and that late on Sunday French President Emmanuel Macron has convinced President Biden and Russian President Vladimir Putin to meet at a summit to discuss the security situation in Ukraine. Here’s more from Reuters:

    US President Joe Biden and Russian President Vladimir Putin have agreed in principle to a summit over Ukraine, the office of French President Emmanuel Macron said, provided Russia does not invade its neighbor.

    In a statement released early Monday, the Elysee Palace said Macron had pitched both leaders on a summit over “security and strategic stability in Europe.”

    “Presidents Biden and Putin have both accepted the principle of such a summit,” the statement said, before adding that such a meeting would be impossible if Russia invaded Ukraine as Western nations fear it plans to.

    The White House did not immediately return a message seeking comment.

    The announcement – released after a volley of phone calls between Macron and leaders on both sides of the Atlantic – comes after a week of heightened tensions spurred by Russia’s military buildup up and down the Ukrainian border.

    Naturally, Biden – who is likely asleep by now – is scrambling to take full credit for the Macron-brokered summit, and the White House confirmed that President Biden has agreed to the meeting with Vladimir Putin, brokered by France, if Russia doesn’t invade Ukraine, while adding the usual disclaimer that “Russia appears to be continuing preparations for a full-scale assaults on Ukraine very soon.“

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

    Would the US really be agreeing to a summit like this if it honestly expected Russia to invade Ukraine? Obviously, the summit will be moot if a large-scale incursion were to occur, but it’s not like algos can read nuance. 

    As for the broken record that an invasion is imminent, even the president of El Salvador is now openly mocking the dismal failure that is US intelligence (we can’t wait for an AP hit piece declaring the bitcoin-friendly leader to be serving Russian propaganda).

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    The bottom line:

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

    In any case, after sliding in early Sunday trading, US equity futures stepped off the ledge and jumped as much as 55 points on news of the upcoming summit…

    … with safe havens such as gold and Treasuries sliding, as the invasion clock is once again reset back to square one.

    Tyler Durden
    Sun, 02/20/2022 – 21:04

  • How We Would Pay For The War
    How We Would Pay For The War

    By Michael Every, Hugo Erken, Michiel van der Veen, Ryan Fitzmaurice and Stefan Voge of Rabobank

    Summary

    • Fears of a Russian invasion of Ukraine linger despite recent possible de-escalation
    • We build on our recent ‘Ukraine metacrisis’ to model three macroeconomic war scenarios
    • Scenario A assumes a short disruptive war; scenario B a war and effective sanctions on Russia; and scenario C a war, effective sanctions on Russia, and secondary sanctions on others still trading with Russia
    • In scenario A, some economic pain is clear; in B, severe in places; in C, so bad as to be paradigmatic (and unquantifiable with a traditional macro model)
    • Worryingly, we also see a high risk/reward scenario for Russia rather than just downside, which argues for scenario B (risking C), not A, to play out – or for a more violent world order
    • Keynes argued “How to Pay for the War”: we would all pay for this war if we have it, but how much and by whom varies

    “A reluctance to face the full magnitude of our task and overcome it is a coward’s part. Yet the nation is not in this mood and only asks to be told what is necessary. It is a fool’s part too. For victory may depend on our making it evident, that we can so organize our economic strength as to maintain indefinitely the excommunication of an unrepentant enemy from the commerce and society of the world.”  – J. M. Keynes, “How to Pay for the War” (1940

    How We’d Pay For the War…Depends on the War

    Contrary to the public claims of US intelligence, Wednesday 16 February 2022 did not see a Russian invasion of Ukraine. Yet despite promises from Russian President Putin to withdraw some troops, the situation remains extremely tense: US sources indicate Russian forces are now actually closer to the Ukrainian border and could still advance at any time. Moreover, the broader geostrategic backdrop between Russia and Ukraine described in detail here is not one that can be easily or quickly resolved.

    This report, which builds on our previous ‘Ukraine metacrisis’ analysis, does not assert the probability of any geopolitical outcome: it attempts to assess the global macroeconomic impact if an invasion of Ukraine were to occur. We see three broad war scenarios: in one, the economic pain is notable but bearable; in another it is severe in places; in another, it is so bad as to be paradigmatic.

    As will be shown, we would all pay for the war one way or another – although how much and where varies. We actually quantify this in per capita contributions relative to a no war base case.

    Three War Scenarios

    Let’s begin by defining the parameters of the three scenarios we project. Economic forecasting is a hazardous exercise with a poor track record – and far more so given a backdrop of binary-outcome geopolitical decisions with very fat tails. Indeed, it is impossible to capture all possible outcomes vis-à-vis Ukraine. This report simply assumes a short war occurs and Russia wins. From there, we see only three realistic scenarios to test in terms of their macroeconomic impact:

    From here, we now need to clarify the various assumptions we make for key markets as inputs to our macro modelling – although the specific price-points for some commodities are obviously of interest themselves. We will start with scenarios A and B, before going on to scenario C separately.

    Assumption 1: Global Trade Flows

    Scenario A, war, disrupts global trade for a maximum of six months. We assume significant drops in EU-Russia trade flows in particular.

    Scenario B, war and effective sanctions, assumes the same, and that sanctions are imposed on Russia, occupied Ukraine, and Belarus by the US, EU, Australia, New Zealand, Japan, and Korea, altering global trade patterns. Yet some countries will try to evade such sanctions: China has stated it will work with Russia to do so. We therefore assume that $100bn in commodity trade previously seen between sanctioning countries and Russia is rerouted to China at a discount while other countries pay higher prices.

    In scenario C, we assume the West also imposes effective secondary sanctions on China and other non-compliant economies.

    Assumption 2: Risk Premia

    War would result in global financial market turmoil, and war fears have already seen global equities pressured lower: indeed, Bloomberg recently noted a call that a Ukraine war could be a “polar vortex” for markets. To gauge this shift, we raise the investment premium in our model scenarios to reflect wider spreads between risk-free interest rates and the return on risky assets.

    In scenario A, war, we adopt a relatively small overall rise in the global investment risk premium, comparable to the rise seen after the annexation of Crimea in 2014.

    In scenario B, war and effective sanctions, we increase the global investment risk premium to match the increase seen during the second Gulf War in 2003.

    However, not all countries would be hit equally. To simplify which would and how much, we focus on the direct macroeconomic impact of energy prices as a standardized measure. The extent to which the risk premium is raised per country then depends on its exposure to Russian energy imports. Methodologically:

    • Net energy exporters are left out of the equation, as they are seen as better insulated;
    • We then look at the share of energy imports within total imports;
    • We then look at the share of Russian energy imports within energy imports.

    Of course, there can be other financial risk transmission mechanisms, such as interest rates — where central banks already face inflation/growth dilemmas– and a loss of ‘animal spirits’. However, we believe this energy metric speaks best to the most powerful,  immediate economic and financial shock that would be delivered globally.

    Assumption 3: Oil and Natural Gas Prices

    There is a long and storied history of geopolitics and supply disruptions impacting oil and gas prices. A Ukraine war has the potential to be a major market-mover given Russia’s dominant position as a global energy supplier.

    Crude oil and refined products

    Russia is one of the world’s top three producers of crude oil, alongside the US and Saudi Arabia. Russia currently produces over 10mb/d (10% of global production) and exports roughly half of that to large consumers globally. Furthermore, Russia is also a meaningful exporter of refined products, such as diesel and gasoline. Importantly, nearly half of Russian crude oil exports (~2.4mb) are sent to Europe via a major long haul and cost-effective pipeline network that stretches from the oil fields of Western Siberia all the way to Germany with important arteries along the way, giving Russia a significant financial edge over competing waterborne imports. This competitive advantage has led to Russia gaining a strong foothold in Europe with a nearly 30% market share of its oil imports and increased geopolitical leverage over its European customers as a result. This dynamic has been on full display recently, with one high ranking Russian official threatening to cut off energy supplies to Europe should Russia be banned from using the SWIFT system in the event of Western sanctions. We therefore consider scenarios whereby Russian energy exports to Europe are (partly) cut-off and re-routed to Asia.

    Scenario A, war, would result in Brent spiking as hoarding, increased transit costs, and the geopolitical risk premium spikes. The last major oil supply disruption to Europe was during the 2011 Libyan civil war, when its oil exports collapsed due to infighting: as Libyan oil production fell from 1.5mb/d to zero, Brent prices spiked from $90 to more than $125 over four months.

    Scenario B, war and effective sanctions, would see oil at $135 and higher for far longer.

    Natural gas

    The situation is even more dire in relation to natural gas given Europe and Asia are already feeling a supply crunch that has sent prices soaring above $200 per barrel of oil equivalent: the push to decarbonize global economies has resulted in robust natural gas demand growth in Asia, forcing Europe into bidding wars for tight supplies of the clean burning fuel.

    Russia is a dominant global producer of natural gas and Europe is even more dependent on it for supplies than it is for oil, with Russia controlling 35% of the market. There is no saying how high natural gas prices could go in the event of a supply disruption given how high prices already are relative to history, but in scenario A we assume $175 per barrel of oil equivalent and in scenario B $215, and for far longer. The one saving grace would be that we are approaching the end of the high-demand winter months, allowing the market a few months to adjust.

    Assumption 4: Food Prices

    War would have a major impact on grains, vegetable oils, and fertilizers.

    Grains

    Scenario A, war, would stop Ukrainian wheat, barley, and corn exports. With very tight global markets, this would drive prices up even if 2/3 of the season’s wheat and barley and 1/3 of the corn crop has already been exported. We expect a 30% rise in wheat and 20% in corn prices. Scenario B, war and effective sanctions, would be worse. Russian wheat and barley have also been 2/3 exported this season, but Russia and Ukraine account for 30% of world wheat exports, which would drive global prices up 30% if removed. If sanctions were still in place by July, when harvesting of the next crop begins, it would cut deeply into global grain availability. Demand rationing would be forced via higher prices: wheat would then double, and corn rise 30%. By autumn 2022, northern hemisphere farmers (where most wheat is grown) could extend their wheat area by cutting back on other crops, especially feed grains; but only by mid-2023, when those crops are harvested, could the wheat market somewhat rebalance.

    Feed grain prices depend on China’s trade with Russia. China imports massive amounts of feed grains (corn, barley, sorghum) from world markets: it can buy these volumes almost exclusively from Russia/Ukraine. China could also buy more Russian/Ukrainian wheat for animal feed to replace global corn/barley, while global buyers could buy from origins previously serving China’s needs. In such a scenario, the impact on corn/barley would be relatively small. However, if China cannot buy from Russia/Ukraine, harvested volumes in Russia have to go into storage, and China buying from world markets would see a further global shortage, driving prices up, albeit not as much as for wheat. We project corn and barley to rise 30% in scenario B.

    Vegetable oil

    Global vegetable oils markets are also very tight, and while sunflower oil is not massive in the global context, Russia and Ukraine still account for 15% of total global vegetable oil exports. Key buyers from the region are China and India, again leaving the question whether China can import from there or not. If China can’t import, global markets will have to cut demand via significantly rising prices. We assume a 20% rise in vegetable oil prices in scenario B.

    Fertilizers

    While prices are currently very high, a further increase cannot be avoided if key exports from Russia/Belarus are disrupted. As natural gas is a key price driver for fertilizer production, world producers would also transfer higher input costs to their finished fertilizer product, driving prices up further. We assume fertilizer prices rising 20% in scenario A and 40% in scenario B. However, China would again be insulated in scenario B if it can trade with Russia.

    Unquantifiable Scenario C

    Scenario C means war, the West imposing effective sanctions on Belarus/Russia, and then effective secondary sanctions on China other economies that deal with Russia.

    Crucially, this would have such a disruptive effect on global trade flows that macroeconomic models cannot capture it: no model of the globalised international economy today can describe its political-economy bifurcation closer towards that which prevailed during the Cold War. However, we can describe it qualitatively. As a contemporary example of this isolation, look at the economic disruption being experienced by Iran; of the US-China trade war; the supply-chain impact of Covid; the border headaches caused by Brexit; or the sudden loss of Chinese export markets experienced by Australian wine producers. A combination of all of these would result from Western sanctions dividing the world into countries ‘with us or against us’ (which is how a former US administration categorised its own military action against Iraq two decades ago).

    Markets are unprepared for such outcomes – as they were for Brexit, the US-China trade war, and Covid, etc. As such, some European economies are nervous about being too tough on Russia, and even the present US administration is cautious about how far it can realistically go in imposing sanctions that others will comply with globally.

    However, as we argued in ‘The Ukraine Metacrisis’, the absence of effective secondary sanctions would itself carry a worrying message in terms of the West’s inability to compel Russia not to resort to war via primary sanctions. (An issue we will return to later.)

    Commodity price shock using NiGEM

    To calculate the impact of a commodity price shock resulting from war we used the macroeconometric trade model, ‘NiGEM’. Rabobank has been using this econometric model for over a decade, and other institutions, such as the ECB and the Bank of England, use the model as well. In this respect the outcome of our exercise are informative, in that they show what policy makers may be assuming lies ahead ‘geopolitically’.

    The upside of NiGEM is that all relevant variables –commodity prices, trade variables, risk premia– can be adjusted to simulate a potential war and at the same time take into account country-specific interdependencies through trade, competition, financial markets and international asset stocks. However, NiGEM estimates in a ‘New-Keynesian’ framework, and its rigidities result in a slow adjustment process in case of external shocks. We forced adjustments onto the model to account for unorthodox parameters presented by scenario B. The commodity price shocks we use effect countries through a number of mechanisms.

    • First, trade between countries is impacted. NiGEM treats export and import prices as a weighted average of non-commodity and commodity prices, the latter encompassing oil, food, beverage, agricultural raw materials, and metals prices.
    • Second, higher food and energy prices result in consumer price inflation, which erodes disposable income, purchasing power and, consequently, lowers private consumption and GDP growth.
    • Finally, a rise in energy prices affects potential output negatively, as this depends on the energy intensity (i.e. oil, gas, coal, renewables) of a country.

    A downside of NiGEM is that the second-round effects of higher commodity prices on producer prices and, consequently, the feed-through in business investments and consumer prices is modelled rather weakly. NiGEM also cannot handle the extreme scenario C.

    Visualizing the Scenarios

    Having drawn our two quantifiable scenarios A and B, and our key assumptions for inputs, the model’s results can now be described in turn.

    The Macroeconomic Impact

    Inflation

    Scenario A, war, would see a significant upward revision to y/y CPI inflation in 2022, ranging from 0.6 – 1.6ppts, and then flat to -0.7ppts downward revisions in 2023. This would once have been considered a major inflation shock – but against the present backdrop look mild or a continuation of the recent trend, which speaks to the scale of present inflation pressures.

    Scenario B, war and effective sanctions, would see upward revisions to y/y CPI inflation in 2022, ranging from 1.3 – to 3.5ppts, and then a further 1.4 – 5.9ppts in 2023. That is a major continuation of our current inflation shock. Indeed, the overall picture (underlined for the US and Europe in Figures 10 and 11) is that war would ensure what was wrongly described as “transitory” inflation by central banks remains high in 2022; and war and sanctions would mean it remains high in 2022 and 2023. After that, the dynamic reverts back to the vicissitudes of helpful base effects, unhelpful supply chains, uncertain labor markets, and unwelcome fiscal and monetary policy.

    (On which note, partially related to inflation, a potential influx of Ukrainian refugees into the EU could distort supply-demand and labor market dynamics dramatically: some fear millions may try to enter.)

    Meanwhile, the impact on poorer economies –particularly of higher food prices– could prove socio-economically destabilizing. Even in developed economies, where food is a far smaller share of consumption baskets, it could increase pressures for higher nominal wage growth that are already building, and/or fuel political populism. This raises the tail risks for more inflationary pressures building further out, but this is a political economy forecast and not an economic one.

    GDP Growth

    Scenario A, war, sees lower private consumption and investment and so downwards revisions to 2022 and 2023 GDP growth relative to our base scenario. In the dollar-bloc these effects are moderate, with the US seeing growth 0.2ppts lower in 2022 and essentially unchanged in 2023. In Europe, the impact is heavier. Eurozone growth is 0.3ppts lower in both 2022 and 2023. The UK sees 2022 and 2023 growth 0.2ppts lower. In EM, India sees growth 0.7ppts lower in both years due to its higher trend GDP growth rate, while China sees a drag of -0.5ppts for the same reason. Mexico and Brazil are relatively unaffected. Russia’s result will be discussed separately ahead.

    Scenario B, war and effective sanctions, is more dramatic. US growth is 0.4ppts and 0.6ppts lower in 2022 and 2023, and the rest of the dollar bloc see growth 0.2-0.3ppts lower in 2022 and 0.2-0.6ppts lower in 2023, New Zealand hit hardest. Eurozone GDP growth is 0.6ppts lower in 2022 and 1.1ppts in 2023, where headline GDP growth is just 1.1% y/y. The Netherlands sees 2022 growth 0.9ppts lower and 2023 -1.1ppts, with headline growth of only 0.4% y/y. Italy is hit hardest in 2023, with growth 1.5ppts lower and GDP growth of only 0.2% y/y. Germany sees GDP growth 0.8-1.1ppts lower over the period. Outside the EU, UK growth is 0.4-0.7ppts lower. In EM, Indian GDP is 1.1-1.2ppts lower, China’s 0.7-1.2ppts lower, Mexico’s slightly lower in both years, and Brazil’s 0.1ppt lower in 2022 but 0.3ppts higher in 2023.

    Obviously, these are just illustrative scenarios rather than point forecasts: we are fully cognizant of the “known” *and* “unknown unknowns” involved in economic forecasts of an even more dynamic and non-linear geopolitical global economy than usual. Nevertheless, one can see that war would prove painful, but manageable to most countries, yet hitting Europe hardest, while war and effective sanctions would hit harder, and parts of Europe very hard indeed. Regardless, we still do not see outright recession risks – and that is even before we assume how central banks and/or governments may respond with supportive monetary and/or fiscal policy.

    “What Did You Pay in the War, Daddy?”

    We must remember it is the Ukrainian people who would pay the physical, psychological, and economic price of a war. However, other countries’ politicians have to worry about both their principles and their economies – and this has implications for the strategy taken to try to prevent war, as shall be shown. It is therefore necessary to quantify how much other states would ‘pay’.

    We measure this in terms of how much lower per capita GDP growth (in constant US dollars at purchasing power parity, PPP) would be in scenarios A and B relative to if a war had not happened. Of course, citizens do not ‘earn’ all GDP, just the labour share: we include the capital share to illustrate the negative impact of war.

    Scenario A, war, (Table 1) sees ‘lost’ GDP per capita over 2022-23 relative to our base case as marked – though this not a direct loss from actual 2021 GDP per capita levels, but rather a missed opportunity. We see a range from -$33 in Brazil and Mexico to +$951 in Russia – that latter figure in particular has implications we will discuss shortly.

    To equalise these dollar figures between economies of very different sizes we look at the % change in GDP per capita relative to the base case. Here we see an American would be 0.2% worse off than if the war had not happened, mostly due to higher inflation. In dollar bloc countries the figures range from -0.2 to -0.5%; in emerging markets from -1.2% (India) to a surplus of 3.5% (Russia); in the UK -0.4%; and in Europe it runs from -0.5% to -0.7%, with the Eurozone at -0.6%.

    Scenario B, war with effective sanctions, (Table 2) sees the lost opportunity relative to our base case far higher. We see a range from +$25 in Brazil to a huge -$1,440 in Russia – that latter figure again has serious implications. In GDP per capita terms, the dollar  bloc has a -0.3% to -0.9% range; emerging markets run from +0.2% in Brazil to that huge Russian loss of 5.2%, while China sees -1.9%; the UK is -1.1%; and Europe is hit extremely hard, with -2.0% in the Netherlands. Again we stress that this is not a decline in nominal dollars from the 2021 level, but a missed opportunity measured in constant dollars at PPP. Think of it as money left on the table.

    Wealth Effects

    Obviously, a war, effective sanctions, higher inflation, and lower growth would all hit asset prices: global equity markets have already seen risk-off moves over Ukraine war fears. We opted not to try to impute any such negative wealth effects on top of the macro model we used: this was partly because we already had enough “unknown unknowns” to try to capture, and partly because it involved forecasting asset prices as well as macro variables. Instead, we make the simpler point that:

    Scenario A, war, suggests risks of an equity market correction, a 10% decline from present levels assuming this is not yet fully priced in (which we believe is the case).

    Scenario B, war and effective sanctions, suggests risks of an equity bear market, a 20% decline from present levels, assuming this is not yet fully priced in (which we believe is the case)

    As can be seen (Figure 16), the combined decline in stock values in either a correction or a bear market runs into trillions of dollars, led by the huge US market. To many, that makes the possibility of war even more worrying than the projected impact on GDP would suggest.

    Worryingly, however, this fear can create perverse incentives that can actually escalate economic and geopolitical risk scenarios. We will now explain why.

    High Risk/Reward for Russia: and the World!

    Scenario A, war, shows the Russian economy actually *benefits*. Shockingly, our model shows the average Russian would be $951 better off (in constant PPP dollars) if they win the war, and this is not including control of Ukraine’s fertile farmlands, or unquantifiable psychological, geopolitical, or geostrategic benefits. It may be uncomfortable, but that is the result of higher commodity prices for an economy that is so exposed to such commodities.

    Scenario B, war and effective sanctions, however, would force Russian GDP per capita down a massive 5.2%, or $1,440. On one level, the risk/reward is clearly slanted towards Russia not acting,… if economics is a guide to geopolitical behaviour. Yet only if we see *effective* sanctions! Yet these may prove hard to achieve.

    We already showed scenario B would be more inflationary and depress GDP growth for longer, and the impact would be felt by those imposing sanctions as well as Russia. This means some countries may wish to avoid sanctions – leading to scenario A; and if ineffective sanctions were imposed, it again leads to scenario A. If sanctions are effective, evaders would then profit most, incentivising non-compliance; yet extending sanctions to the evaders then leads to scenario C’s huge macroeconomic, financial, and geopolitical tail risks; and not extending sanctions can render them ineffective and lead back to scenario A!

    In short, there appears no middle or ‘muddle’ way. Geostrategic logic, and the economic outcome shown above, suggests risks we either lean towards a world that rewards geopolitical aggression (scenario A), or towards a more bifurcated global economy to try to stop it (scenario C). Either outcome promises unpleasant future macroeconomic shocks, even if they cannot be quantified in traditional macro models.

    Whose part is which scenario

    Although we must stress that NATO will not go to war directly with Russia, and so this is not WW3 we are discussing, the logical argument to embrace the more painful economic scenario B (and then risking C) to prevent the most painful geopolitical outcome (scenario A) means we must end this report as we began it – with what Keynes wrote about paying for WW2 in 1940: “A reluctance to face the full magnitude of our task and overcome it is a coward’s part. Yet the nation is not in this mood and only asks to be told what is necessary.”

    But what mood are the nations in? As just shown, we would all pay for the war. How much we do pay depends on if the West again thinks “victory may depend on our making it evident, that we can so organise our economic strength as to maintain indefinitely the excommunication of an unrepentant enemy from the commerce and society of the world”; or if it instead opts to reduce near-term costs even at the risk of paying a far higher price in more than just economic dimensions at a later date.

    Tyler Durden
    Sun, 02/20/2022 – 20:35

  • 1 Killed, 5 Wounded During Portland Protest Of Police Violence
    1 Killed, 5 Wounded During Portland Protest Of Police Violence

    At least one person was killed and another five were wounded in a shooting during a protest in Portland over police violence. According to preliminary reports from the scene, the shooting took place Saturday night at Normandale Park in the Oregonian city following a “confrontation” between a protester and a nearby homeowner, both of whom were reportedly armed. 

    Police said the scene was “extremely chaotic” and that few witnesses agreed to speak with police: Responding officers found one woman dead, and two men and three other women were taken to the hospital.

    Information about their conditions has not been released, and police have not named anyone involved in the shooting.

    “The scene was extremely chaotic, and a number of witnesses were uncooperative with responding officers,” the police department said in a statement released Sunday. “Most people on scene left without talking to police…This is a very complicated incident, and investigators are trying to put this puzzle together without having all the pieces.”

    Social media event postings show that the shooting occurred during a march that was planned for Amir Locke, a black man who had been fatally shot by police in Minneapolis. The protest was in a way reminiscent of the non-stop police protests during the summer of 2020 that led anarchists in the city to establish a police-free no-go zone. The nightly protests that summer “often spiraled into violence.”

    “I was sitting in the room talking to my wife, and all of a sudden you hear repeated gunshots,” Jeff Pry, who lives in the area, told the New York Times.

    In its wake, the city is now dealing with a rash of gun violence. While last year was marked by record-high numbers of gun violence in Portland, the number of shooting incidents during the first month of 2022 outpaced January 2021. During January alone, police recorded 127 shootings in the city.

    The number of homicides in Portland last year surpassed the number in more populous cities such as San Francisco and Boston, and was more than double the number of slayings in nearby Seattle, which has a population of nearly 200K more people.  

    Locke was shot while police in Minneapolis were executing a no-knock warrant on Feb. 2. The city’s mayor, Jacob Frey, imposed a moratorium on no-knock warrants just a couple of days later.

    Tyler Durden
    Sun, 02/20/2022 – 20:00

  • Hedge Fund CIO: This Is The Kind Of Market That Grinds, Churns Until One Day The Bottom Just Falls Out
    Hedge Fund CIO: This Is The Kind Of Market That Grinds, Churns Until One Day The Bottom Just Falls Out

    By Eric Peters, CIO of One River Asset Management

    Hope all goes well… “Miami’s yachts are way bigger than a few years ago,” bellowed Biggie Too in baritone. “And it’s getting crowded on the water,” he said. “All my boys say this isn’t 2008, we still got time.” Like in 2007. “But things are feeling weird to Biggie,” said Too, sliding comfortably into 3rd person, like a warm bubble bath.

    “We been here, seen this, like right before the pandemic, like when we all were saying this is just another SARS, MERS – like a few hundred get sick in some crowded Hong Kong block, the media gets hysterical, then it’s over,” barked Biggie Too, global chief strategist for one of Wall Street’s too-big-to-fail affairs.

    “But now it’s Putin on the border, and Biggie’s starting to feel like we’re all complacent. Like we think it’ll play out just fine, like it has for decades,” whispered Too. “And this rotation in equities feels like a real bear market.”

    And the Fed hasn’t even hiked or sold a single bond yet. “Biggie smells the kind of market that grinds, churns, until one day the bottom just falls out.”  

    Overall:

    “We are facing a blatant attempt to rewrite the rules of our international system,” said Von der Leyen. “China and Russia seek a ‘New Era’ as they say, to replace the existing international order,” continued the EU Commission Chief. “They prefer the rule of the strongest to the rule of law, intimidation instead of self-determination, coercion instead of cooperation.” The existing international order is a historical anomaly. It took a second world war to thrust humanity sufficiently deep into the darkness that we came to see the light – the first world war was insufficient.

    The 1944 Bretton Woods agreement between 44 allied nations marked a departure from all previous post-war accords. The US could have demanded anything it wanted in exchange for supporting our allies and winning the war. But instead, it agreed to secure global trade routes, and open America’s vast consumer market to imports from allies (even from adversaries). In exchange the US asked for allegiance, but little more.

    It was an utterly extraordinary display of using strength in the service of good, and in so doing, lifting us all, inspiring our better angels. The rise in human prosperity that followed Bretton Woods is unparalleled in human history. We came to accept the resulting stability as a permanent state. This encouraged entrepreneurs to optimize the economy for low latency, just-in-time delivery. It allowed our financiers to leverage balance sheets to generate the highest possible returns.

    The process, in all its complexity, was disinflationary. The pendulum swung from a pre-war position of low profitability and high redundancy to a recent extreme of extraordinary profitability and high fragility. Irrespective of how events unfold in Ukraine and Taiwan in the months and years ahead, that pendulum has begun its long arc back. 

    Tyler Durden
    Sun, 02/20/2022 – 19:25

  • Ponzi Fraudster Bernie Madoff's Sister Dead In Suspected 'Murder-Suicide' At Florida Home
    Ponzi Fraudster Bernie Madoff’s Sister Dead In Suspected ‘Murder-Suicide’ At Florida Home

    The sister of late Ponzi fraudster Bernie Madoff was killed in what’s being called a possible murder-suicide in South Florida, according to Boca Raton News.

    Last Thursday, Sondra Wiener, 86, and her husband Marvin Weiner, 90, were found “unresponsive” inside their private gated community home in Valencia Lakes, located in the Tampa Bay Area. 

    The Palm Beach County Sheriff’s Office confirmed a murder-suicide investigation is underway but would not release names of the deceased. Only Boca Raton News confirmed Bernie’s only sister and her husband died from gunshot wounds. It remains unclear who killed the other.  

    An email was sent out to the residents of Valencia Lakes, confirming the deaths of the Weiners. 

    “Let me start off by stating that as many of you have heard, we had a tragic situation on Barca Boulevard regarding the passing of Sondra and Marvin Weiner. Our thoughts and condolences go out to their family. There is currently an investigation pending. All I can say is at this time there is no security or safety threat to anyone in the community.”

    The couple’s deaths come a little less than a year after Bernie died in federal prison of old age on April 14, 2021. Madoff spent 12 years in jail after operating the largest Ponzi scheme ever that unraveled during the 2008 financial crisis. 

    Bernie’s sister and brother-in-law’s deaths also follow a series of deaths among the Madoff family. In 2010, Bernie’s son hanged himself inside his New York City apartment, and the other, Andrew, died of cancer in 2014. 

    According to NYPost, Ruth Madoff, 80, Bernie’s wife, lives in a multi-million waterfront mansion in Connecticut with a former daughter-in-law’s family. After the Ponzi scheme collapsed, Ruth had $70 million in assets and had most of it garnished by courts. 

    Suicide, death, and illness haven’t just plagued the Madoffs and immediate family members. Three investors and a hedge fund investor who invested with Bernie committed suicide after their investments were wiped out. The most notable was Charles Murphy, 56, who jumped off the luxury Sofitel New York Hotel in 2017 after he invested $7 billion with Bernie. 

    Tyler Durden
    Sun, 02/20/2022 – 18:50

  • Clogged Credit Channel Requires More PBOC Easing
    Clogged Credit Channel Requires More PBOC Easing

    By Ye Xie, Bloomberg Markets Live commentator and analyst

    Three things we learned last week:

    1. More Chinese policy easing is needed. Despite recent interest-rate cuts, the credit spreads of lower-rated onshore bonds remain elevated. Yields on five-year bonds rated A+, the equivalent of junk debt, rose 7 basis points to 8.87% since a month ago, when the benchmark five-year loan prime rate was lowered. In fact, their borrowing costs relative to AAA-rated companies are close to a record high.  

    To economists at Goldman Sachs, the effectiveness of China’s monetary policy has weakened because Beijing’s housing curbs and strict Covid policy have substantially constrained credit demand from the property and consumption sectors. The clogged credit channel suggests monetary policy may have to be eased more to achieve the same growth target as before, the economists said. PBOC Governor Yi Gang pledged last week to maintain supportive monetary policy to help the economy return to its potential growth rate.

    2. The housing market remains weak. New home sales at the top 100 developers slumped 41% from a year earlier in January and the weakness lingered after the Lunar New Year holiday, according to Nomura. To spur demand, banks in several cities have cut mortgage down payments for some homebuyers, according to media reports. Nomura’s economists including Ting Lu were skeptical that such easing measures will be replicated in higher-tier cities. 

    3. The offshore yuan touched the strongest since 2018. Friday’s settlement data showed still-hefty money inflows to China in January. So far, the authorities have tolerated the yuan’s strength.

    Tyler Durden
    Sun, 02/20/2022 – 18:15

  • Putin, Macron Agree To Hold Trilateral Talks "In The Next Few Hours" To Halt Escalation In Ukraine
    Putin, Macron Agree To Hold Trilateral Talks “In The Next Few Hours” To Halt Escalation In Ukraine

    French President Emmanuel Macron and Russian President Vladimir Putin have agreed to take urgent measures to deescalate the situation in eastern Ukraine, the Elysee said in a Sunday statement which followed a phone call between the two leaders in which Putin also discussed his intention to withdraw Russian troops from Belarus.

    Putin and Macron agreed to resume work within the ‘Normandy format’ – which will also include German and Ukrainian leadership – and will begin discussions “in the next few hours“ in order to “obtain a commitment from all the stakeholders” on a ceasefire on the line of contact.

    Meanwhile, a meeting between French and Russian ministers of foreign affairs, Jean-Yves Le Drian and Sergey Lavrov, will occur “in the coming days.”

    “This diplomatic work should make it possible to progress on the basis of the latest exchanges by involving all the stakeholders (Europeans, allies, Russians and Ukrainians) in order to achieve, if the conditions are met, a meeting at the highest level in to define a new order of peace and security in Europe.“

    The Kremlin has confirmed the statement, saying “it was agreed to continue contacts at various levels” but did not elaborate on specific details.

    “Serious concern has been expressed over the sharp deterioration of the situation on the line of contact in Donbass. The President of Russia noted that the escalation has been caused by the provocations of the Ukrainian security forces,” reads the Kremlin statement.

    According to Russia’s state-owned RT, Putin brought up “the ongoing pumping of Ukraine with modern weapons and ammunition” by NATO countries, which is pushing Kiev “toward a military solution to the so-called Donbass problem.” Because of the “intensifying shelling,” citizens in self-proclaimed breakaway republics in eastern Ukraine had to evacuate Russia.

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

    Russia and Belarus, meanwhile, will extend their largest joint military drills in years, according to Bloomberg, citing the Belariusian Defense Ministry.

    The training exercises were scheduled to finish on Sunday and Russia had said it would return its troops to their bases afterward. While those drills are in Belarus, which is north of Ukraine, the defense ministry statement cited the deteriorating situation in eastern Ukraine for the extension. It also referred to increased military activity along the borders of Russia and Belarus, a likely reference to NATO’s recent deployment of more troops eastward. -Bloomberg

    In recent days, fighting between Russian-backed separatists and Ukrainian forces in the Donbas region has escalated – with allegations of violations on both sides of a 2015 ceasefire. According to Ukraine, the separatist leaders are increasing the rate of attacks, including on civilian targets, to force a response and create a pretext for a Russian invasion. Donbas leaders say they’re responding to Ukraine firing on them.

    Tyler Durden
    Sun, 02/20/2022 – 17:44

  • WEF 'Infiltration': Rogan Redpilled, Canadian MP Cut Off For Asking – Accused Of Spreading "Disinformation"
    WEF ‘Infiltration’: Rogan Redpilled, Canadian MP Cut Off For Asking – Accused Of Spreading “Disinformation”

    Last month, 2017 footage of World Economic Forum (WEF) head Klaus Schwab resurfaced in which he boasts of having ‘penetrated’ various governments through its Young Global Leaders program. The clip is notable because the WEF – known best for its annual gathering of the global elite in Davos – has been openly pushing for digital IDs and vaccine passports, while leaders of said governments continue to impose Orwellian vaccine mandates which have resulted in widespread protests for medical freedom.

    “I have to say, when I mention now names, like Mrs. (Angela) Merkel and even Vladimir Putin, and so on, they all have been Young Global Leaders of the World Economic Forum … But what we are very proud of now is the young generation like Prime Minister (Justin) Trudeau … We penetrate the cabinets.”

    “So yesterday I was at a reception for Prime Minister Trudeau and I know that half of his cabinet, or even more than half of his cabinet, are actually Young Global Leaders.” -Klaus Schwab

    Watch:

    Other notable Young Global Leaders include: New Zealand Prime Minister Jacinda “this will never end” Ardern, French President Emmanuel Macron, and other high ranking officials from Germany, Finland, Greece, the Netherlands and Denmark. It might even explain Pete Buttigieg’s odd success-to-competence ratio.

    Enter the pandemic

    Three years after Schwab bragged about having ‘penetrated cabinets’ of world governments, he wrote in a June 2020 publication titled Now is the time for a ‘great reset’ how the pandemic presented a “rare but narrow window of opportunity to reflect, reimagine, and reset our world to create a healthier, more equitable, and more prosperous future.”

    Then in May 2021, the WEF acknowledged that “The Forum is involved in the WHO task force to reflect on those [vaccine credential requirements] standards and think about how they would be used.”

    And so, given the WEF’s “infiltration” – people have begun asking questions over the group’s influence in current events.

    Podcaster Joe Rogan appeared shocked at the WEF’s ‘infiltration’ in a recent episode of with Maajid Nawaz.

    Meanwhile, Canadian MP Collin Carrie was cut off when asking about the influence of the WEF in domestic politics.

    “Klaus Schwab is the head of the World Economic Forum and bragged about how his WEF has infiltrated governments around the world,” asked Carrie, who was then cut off when he asked which ministers were behind the WEF agenda – with the speaker saying the sound had become “very poor.”

    Another MP then accused Carrie of “disinformation.”

    Watch:

    Ahem:

    As Jeremy Loffredo and Max Blumenthal wrote last October:

    On paper, the WEF (also known as the International Organization for Public-Private Cooperation) is an NGO and think tank “committed to improving the state of the world.” In reality, it is an international network of some of the wealthiest and most influential people on the planet. The Forum positions itself as the thought leader of global capitalism.

    The organization is best known for its annual gathering of the global ruling class. Each year, hedge fund managers, bankers, CEOs, media representatives, and heads of state gather in Davos to “shape global, regional and industry agendas.” As Foreign Affairs put it, “the WEF has no formal authority, but it has become the major forum for elites to discuss policy ideas and priorities.”

    In 2017, German economist and WEF founder Klaus Schwab introduced the concept of “The Fourth Industrial Revolution” with the title of the book he published that year. The Fourth Industrial Revolution (4IR) denotes the current “technological revolution” that is changing the way people “live, work, and relate to one another,” and with implications “unlike anything humankind has experienced,” according to Schwab.

    For him, the 4IR is the “merging of the physical, digital and biological worlds.” Schwab has even said that the 4IR will inevitably veer into trans-humanism, or human genome editing.

    Why are Canada and other nations dying on this hill of mandates for a virus where the current dominant strain is largely a nuisance for the vast majority of those who contract it?

    Tyler Durden
    Sun, 02/20/2022 – 17:40

  • What's Spooking Credit Markets
    What’s Spooking Credit Markets

    By Vishwanath Tirupattur, head of Quantitative Research at Morgan Stanley

    It has been a rough start to the year for markets. The central banks’ hawkish shift towards removing policy accommodation, the significant bear flattening of yield curves that followed, rising geopolitical tensions, fading prospects for fiscal support, and growing concerns about stretched valuations have all combined to spawn jitters in financial markets. Corporate credit has been no exception. After two years of abundant inflows, the narrative has turned to outflows from credit funds. In conjunction with negative total returns, these outflows conjure up painful memories of 2018, the last time credit markets had to deal with substantial policy tightening.

    Let us focus on the source of negative total returns in credit – sharply higher interest rates and duration versus concerns about credit quality and defaults. Consider leveraged loans, floating-rate instruments that have credit ratings comparable to HY bonds, which are fixed-rate instruments. Since the beginning of the year, leveraged loan spreads have widened by 11bp versus 80bp for HY bonds. Year-to-date, total returns for leveraged loans are at -0.5% versus -4.3% for HY bonds. According to weekly fund flow data from Emerging Portfolio Fund Research, leveraged loan funds have recorded $12.3 billion of inflows in 2022 in contrast to the $14 billion of outflows from HY bond funds. Even among fixed-rate credit bonds, with a total return to date of -6.8%, longer duration (IG) has underperformed lower quality (HY). Clearly, it is duration and not fear of a spike in defaults that is at the heart of credit investor angst.

    Of course, this could eventually turn into a quality challenge. Let us consider corporate credit fundamentals. The median sub-IG corporate is in better shape going into this hiking cycle than any of the last four cycles. For companies in our HY and loan fundamentals database, median net leverage is at the lower end of prior policy inflection points (adjusted for ratings mix) and cash-to-debt is at the high end. Maturity walls are also more back-ended than in prior hiking periods, limiting the need to refinance at unfavorable terms and/or during periods of volatility.

    The low-duration credentials of leveraged loans (and floating-rate assets) do not come free of cost. Higher rates eventually matter for borrowers across the board, but unlike the HY bond market where the transmission to borrower fundamentals happens at refinancing, the transmission into leveraged loan fundamentals is much quicker – interest costs go up immediately. Therefore, rising rates could ultimately turn into a fundamental headwind, depending on earnings growth. The timeline to this tipping point may be much shorter this time around.

    Analyzing the impact of rate hikes on interest coverage ratios (ICRs) for leveraged loan borrowers, my credit strategy colleagues, Srikanth Sankaran and Taylor Twamley, note that what matters more for ICRs is the point at which higher rates become a headwind for earnings growth. Loan ICRs have historically improved early in a hiking cycle as interest expenses are offset by growth in earnings. But eventually, as tighter financial conditions weigh on corporate earnings, coverage ratios inflect sharply to the downside. A steeper trajectory of rates not only results in a rapid rise in interest expenses but also narrows the window of further earnings-related improvement in ICRs. Their analysis shows that median ICR levels may drop from 4.7x currently to 4.0x under a 150bp rate increase, assuming no earnings growth. If the current market consensus earnings growth (+9%) is realized, median ICR levels only drop slightly to 4.5x but fall to 3.8x if earnings growth turns negative (-5%). I draw comfort from this evidence that corporate fundamentals in this cycle are better positioned to deal with our economists’ base case of six 25bp rate hikes this year, unless earnings growth turns sharply negative – not our current view.

    While credit fundamentals look fine, valuations do not. This is where the rubber meets the road. Despite widening year-to-date, credit spreads are still well below long-term average levels, let alone at the onset of a policy tightening cycle. Quantitative tightening will pressure credit spreads as central bank-provided liquidity is gradually drained from the market. We expect that the portfolio rebalancing channel will work its way through the widening of MBS spreads into the corporate credit space, with IG spreads in focus (see Not Giving Credit to MBS (Yet)). So, our stance on credit markets remains the same. We prefer taking default risk over duration and spread risk, and continue to favor leveraged loans over HY bonds over IG bonds.

    Tyler Durden
    Sun, 02/20/2022 – 17:05

  • Jamaica Joins The Bahamas And The Eastern Caribbean In Rolling Out Its Central Bank Digital Currency
    Jamaica Joins The Bahamas And The Eastern Caribbean In Rolling Out Its Central Bank Digital Currency

    Jamaica is in the midst of launching – and perhaps more importantly marketing – its own e-currency. The country’s CBDC is called the Jam-Dex and it carries with it a tagline as relaxed as the nation’s reputation: “No cash, no problem”. 

    The Bank of Jamaica said it went through hundreds of suggestions to try and find a tagline for its CBDC, according to Yahoo Finance. We also hope, you know, that they actually tested the currency, too, and not just the marketing pitch. 

    The bank said the CBDC’s new slogan “is a phrase that instantly evokes Jamaica, and moreover, speaks to exactly the mood we want consumers and businesses to have when they are using Jam-Dex.”

    It’s a play on the country’s fame for being “content in the face of worry”, Yahoo wrote late this week. The logo for the CBDC – a crucial part of any good marketing campaign – is the nation’s national fruit, the ackee. 

    And the country’s central bank looks like they take things just barely serious enough as necessary. Yahoo noted that the country’s central bank logo “is a crocodile holding a key, and it regularly produces reggae songs about inflation targets and economic policy.”

    Jamaica took the digital currency for a test run in 2021, and Prime Minister Andrew Holness has decided that it would be launched nationally this year. The Bahamas and the Eastern Caribbean Central Bank have already rolled out digital currencies of their own. 

    Tyler Durden
    Sun, 02/20/2022 – 16:30

  • How To Reconcile Numbers That Don't Pencil Out
    How To Reconcile Numbers That Don’t Pencil Out

    Authored by MN Gordon via EconomicPrism.com,

    Do you want to make a fortune?

    Then open a Lamborghini dealership in the Midwest.

    That’s what investment biker Jim Rogers recommended in late-2014.  He also recommended becoming a farmer.  According to Rogers, you can make a lot of money as a farmer – even if you’re not any good at it.

    “Buy yourself some land and become a farmer […] because there’s going to be some fortunes made in agriculture and when an industry breaks full faith even mediocre people make a lot of money because everything is going right.

    “So if you really want to make a lot of money, that’s the best way to do it.  Alternatively, you can buy land and lease it out if you can find a good farmer.

    “There are other ways to make money in agriculture, of course.  You can open a chain of restaurants in the agricultural areas of the world because the farmers are going to be much more successful in the next 30 years than in the last 30 years.  Or open shops.  Get the Lamborghini dealership in the Midwest.  There’s more than one way to make money in agriculture.”

    Did farmers get rich during the years since Rogers’ recommendation?  Have Lamborghini dealerships in the Midwest boomed?

    Not exactly.

    But what about the years ahead?  Will there be a great agricultural prosperity?  Will farmers and Lamborghini dealers in the Midwest get rich?

    Was Rogers’ recommendation wrong…or was it early?

    Time will tell, of course.

    At the moment, there’s bountiful uncertainty that could drive agriculture prices much higher.  Though it won’t likely line the pockets of Midwestern farmers.

    Diminishing Returns

    The latest report from the Bureau of Labor Statistics showed consumer prices, as measured by the consumer price index (CPI), increased 0.6 percent in January.  However, the food index increased 0.9 percent.

    The index for cereals and bakery products increased the most, rising 1.8 percent over the month.  Dairy and related products followed at 1.1 percent.  And fruit and vegetable prices rose 0.9 percent.

    Yet for farmers, these price increases don’t come anywhere close to covering rising input costs.  The cost of phosphate and nitrogen-based fertilizers, for example, have soared 80 to 200 percent.  At these prices, there’s not much profit left over.  Certainly not enough to buy a new Lamborghini.

    Bill Taylor, who farms 2,500 acres of corn and soybeans in central Missouri, recently described the challenges of higher fertilizer prices:

    “Prices are all higher, it’s just crazy.  Guys like me are talking about reducing the amount we apply, or maybe delaying to see if prices come down.  It’s going to mean lower profits, or not even being able to break even.

    “There is still a lot of penciling to do.  If you don’t raise the crop, what do you do with all these excess inputs?  It’s going to make it hard on these younger guys, too, and the guys who are already struggling.”

    The application of fertilizer, like caffeine or credit, quickly reaches a point of diminishing returns.  Where further additions yield progressively smaller, or diminishing, increases in output.

    And when the rising cost of fertilizer rapidly outpaces the price of corn and soybean, its application becomes less about maximizing crop yield and more about minimizing input costs.  Add government induced supply chain disruptions and labor shortages to the mix, and you have all the ingredients for further food price increases.

    How to Reconcile Numbers that Don’t Pencil Out

    The means and methods for reconciling numbers that don’t pencil out are extremely disagreeable.  Some of the rising input costs can be passed on to consumers.  Some can also be absorbed through lower profit margins.

    But there are natural limits to what price increases can be absorbed and passed along.  When the numbers don’t pencil out, they don’t pencil out.

    For example, when input costs, including fertilizer and labor, push the costs of the final crop production above what the crops can readily be sold for, the business motive breaks down.  Halting operations makes the most business sense.  Consequently, as production is halted, and supply shrinks, consumer prices rise.

    The challenges farmers are facing are but one more example of the ramifications of government policies of extreme dollar debasement.  Rising prices – i.e., declining money – produce strange and painful distortions.  Fertilizer price inflation and labor price inflation, and the subsequent mismatch of agricultural prices, must be reconciled through agricultural supply shortages.

    But it’s not just food.  Used cars.  Gasoline.  Computer chips.  You name it.  Prices are up across the board.

    More than anyone else, the Federal Reserve’s mass money supply expansion policies combined with Washington’s mass money printing policies have brought us to this special place.  Where the relentless effects of rising consumer prices grind far and wide.

    For one, the grind rising prices put on savers and wage earners is extraordinarily painful.  It acts like a hefty tax…eroding family budgets that are already stretched.  Moreover, within this evolving regime of stagflation, personal income gains lag far behind rising consumer prices.

    Up and down, in and out of the economy, the numbers don’t pencil out.  And for the first time in over 40 years, the Fed can’t reconcile them with lower interest rates and fake money.

    In short, the point of diminishing returns has been passed, where greater inputs of credit no longer stimulate the economy.  Rather, they stimulate rising consumer prices.

    Hence, the Fed has a lot of catching up to do.  The federal funds rate is at practically zero.  The CPI is at 7.5 percent.  Raising the federal funds rate 50 or 100 basis points isn’t going to cut it.

    It may bring on a recession.  But it won’t reign in consumer price inflation.  By this, it’ll merely enhance the stagflation.

    In truth, it’ll take much more than a few rate hikes to get the economy’s numbers to pencil out.  If we’re lucky, a decade or two of depression and chaos will do the trick.

    *  *  *

    If you didn’t hear, this week Charlie Munger compared cryptos to venereal disease.  Naturally, you no longer have to mind your Ps and Qs when you’re 98 years old.  Munger also said inflation is how democracies die.  Hence, with the wave of inflation crashing down on the U.S. economy it’s only prudent for investors to employ wealth protection and preservation strategies.  If you’re interested in what this means and how to go about it, check out the Geometric Wealth Building Program.  Just a few simple moves could make all the difference.

    Tyler Durden
    Sun, 02/20/2022 – 15:55

  • Firefighters Struggle To Extinguish Blaze On Cargo Ship Carrying 4,000 Luxury Cars
    Firefighters Struggle To Extinguish Blaze On Cargo Ship Carrying 4,000 Luxury Cars

    Seafaring firefighters are struggling to put out a fire aboard the Felicity Ace, a massive cargo ship that has caught fire off the coast of Portugal’s Azores islands with thousands of luxury cars – including Porsches, Audis and Volkswagens – on board.

    We chronicled the incident a few days ago, noting that the shipment of cars had been bound for the US market, where a shortage of supply and surging demand has led to a serious crunch in new car supply. The shortage has left many American teens struggling to find a suitable used car to buy as their first automobile.

    Maritime law dictates that any party who helps to save the cargo on the ship will be entitled to some remuneration so…in essence, it’s “finders, keepers” for the thousands of cars that may or may not be damaged from the fire and smoke.

    According to Reuters, the Felicity Ace, which according to the latest reports is carrying around 4,000 vehicles (bizarrely, that’s more than the roughly 2,500 it was reported to be carrying earlier in the week) has been complicated by the fact that the lithium-ion batteries aboard some electric vehicles on the ship have caught fire, exacerbating the blaze. The 22 crew members on board were evacuated on the same day the ship caught fire.

    “The intervention (to put out the blaze) has to be done very slowly,” João Mendes Cabeças, captain of the nearest port in the Azorean island of Faial, told Reuters late on Saturday. “It will take a while.”

    Lithium-ion batteries in the electric vehicles on board are “keeping the fire alive”, Cabeças said, adding that specialist equipment to extinguish it was on the way.

    Cabeças previously said that “everything was on fire about five meters above the water line” and the blaze was still far from the ship’s fuel tanks. However, it appears to be getting closer, he said.

    “The fire spread further down,” he said, explaining that teams could only tackle the fire from outside by cooling down the ship’s structure as it was too dangerous to go on board.

    Due to the nature of the blaze, firefights can’t use water because adding weight to the ship could make it more unstable, and traditional water-based fire extinguishers do not stop lithium-ion batteries from burning, Cabeças said.

    Once the fire is out, the ship (or whatever is left of it) and its cargo are expected to be towed to a location in Europe, or the Bahamas.

    Tyler Durden
    Sun, 02/20/2022 – 15:20

  • Crypto & The Mathematical Cycles Of History
    Crypto & The Mathematical Cycles Of History

    Authored by Mark Moss via DailyReckoning.com,

    People think that progress is linear, a step-by-step process. In reality, it’s not linear. It’s actually exponential and cyclical. We have cycles that keep repeating within the overall pattern of progress. So even though things are changing, in one important sense, they’re actually staying the same.

    There are also stages to the way these cycles work. They’re like a pendulum that swings back and forth. The pendulum swings from centralization to decentralization, then the process repeats.

    Cycles also have time periods. That’s pretty interesting because if you’re into technical analysis, you understand everything is mathematical, which is a bit weird. And so we have these cycles within cycles. Roughly speaking, you have 28-year cycles, 84-year cycles and 250-year cycles.

    Look at the math. Three times 28 equals an 84-year cycle. Three times 84 equals a 250-year cycle. So the number three is important here. Not to get too technical (pun intended!), but it’s like what you would see in technical analysis with things such as triple bottoms.

    Let’s start with the 84-year cycle. You might have heard of things like the Fourth Turning, which proposes an 80-year cycle. I like to call these cycles a regime change. I say about 84 years, but it could be 74, or it could be 90 years.

    But let’s just say regime change takes place about every 84 years. In the 1930s, we had regime change. What do I mean? In the United States, FDR’s New Deal essentially took America from a capitalist to more of a centralized, socialist-type country.

    Roughly 84 years before that Karl Marx wrote The Communist Manifesto, which inspired the 1848 European Spring or the Springtime of the Peoples, which was the largest revolution in European history. So every 84 years we’re seeing a popular uprising, which of course we’re seeing today.

    Today you have people in the streets protesting mandates. But people around the world were protesting even before the pandemic. You could see it starting back with Brexit, which was a major blow to the globalist establishment. Trump’s election in the United States was also a rejection of the establishment. We’ve also had BLM and Antifa become a force in 2020, with massive unrest in many cities.

    And so you see a major swing about every 84 years (again, it could be more, it could be less). Right now, we’re at the end of an 84-year cycle, which was a centralizing cycle. But that’s only part of a larger cycle. As I said earlier, three times 84 equals 252.

    And every 250 years, we have a revolution. This is where we are today. About 250 years ago we had the American and French revolutions. In the American case, they were rebelling against British rule. They set up a decentralized government afterward. In the French case they were rebelling against the Old Regime of the crown and the Church.

    Two hundred fifty years before that was the Protestant Reformation. Leading up to the Protestant Reformation, the Church had amassed all the power. The Church was the only way to get to God. But once the printing press had decentralized information, the people could read the Bible themselves and discovered they didn’t need the Church after all. And the Church lost its power.

    When the Church lost its monopoly, we had an explosion of development. We went into the Renaissance age.

    And the Renaissance gave birth to science and technology, which then led to the Industrial Revolution. Then the Industrial Revolution, about 250 years later, brought us technology that started to centralize us again. People moved to the cities from the farms. We built giant factories. We built giant cities. Nation-states became heavily centralized.

    Now we’re at the end of that 250-year timeframe. We’re entering the cycle where the pendulum is ready to swing away from centralization. We’re at peak centralization, and we’re moving toward decentralization. I don’t believe any of this is random. These cycles of history tell us that the pendulum is beginning to swing back.

    The key piece to understand is that these revolutions were pushing against centralized establishments and toward decentralization. And they happen every 250 years or so on average. And if you look back through history, every 84 years, we have a revolution or a populist uprising and every 250 years we have a revolution.

    Incidentally, no empires really lasted more than 250 years. Some may have technically lasted longer, but their heydays were much less. No democracy has really lasted more than 250 years either. So there’s something to the 250-year cycle.

    Technology is a major component of change.  But revolutionary technology is technology that’s disruptive. Technological revolutions build entire new economies and change the way humanity works. Just like the printing press was the technological piece that changed the way the Church had monopoly power over people, today we’re witnessing another technology that’s changing things as well.

    And just like the Church, no matter how many people they killed, no matter how hard they tried, they couldn’t keep the change from happening. I believe we’re in a situation today where no matter how hard establishments try, they can’t stop decentralizing technology either.

    The technology that will decentralize the world is cryptocurrencies. Just like in the Protestant Reformation, we have a new technology that’s decentralizing. What’s interesting is that, at a time when the entire world is at peak centralization and is ready to move toward decentralization, we have a technology that gives us exactly what we need for decentralization.

    So now we have cryptocurrencies that are breaking that centralizing grip. And so no matter how much they want to try to maintain that power like the Church did in 1500, the mega politics have shifted. The world is going from a period of centralization, and now the world is decentralizing.

    The decentralized revolution is the biggest technological revolution. And technological revolutions drive all financial cycles. So a big overarching investment theme for the years ahead is in the decentralized revolution. That means Bitcoin, cryptocurrencies, etc.

    If you look at Bitcoin to measure this, Bitcoin had reached a 10% adoption within a few years, by about 2019. Based on how revolutionary technologies are adopted, we should be at about 90% adoption by 2029.

    Now, new technologies typically have much faster adoption because they build on top of existing technologies. So for example, the internet was adopted much faster than the telephone because it used telephone lines to gain adoption.

    But decentralization is about more than cryptocurrencies. During the centralizing Industrial Revolution, if you wanted to make money, you had to be in the United States. And not just in the United States: You had to be in a city where the jobs were. And because of that centralizing nature, it made it very easy for the governments to squeeze everybody through taxes.

    During the pandemic, people found out they could work from home. And so now, people are moving to places like Wyoming, Idaho and Montana where taxes are much lower.

    They could never live there before because they couldn’t work there before. They can also move to Mexico or Costa Rica and work from there. I have about 15 people that work for me. Everyone’s decentralized all around the world.

    So there’s going to be this great migration. That opens up plays for cash flow and real estate investing, as well as technologies that cater to them. And as people start decentralizing, the government starts losing its ability to squeeze people.

    This new cycle will be well underway by the end of this decade. It could potentially be the most profitable decade of your life if you position yourself accordingly.

    Tyler Durden
    Sun, 02/20/2022 – 14:45

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