Today’s News 22nd March 2022

• Where The Crypto Hype Is Taking Over
  Where The Crypto Hype Is Taking Over

  The hype around cryptocurrencies is spreading around the world, with blockchain-based currencies like Bitcoin, Ethereum or Binance piquing the interest of more and more people – at least in some countries.

  As Statista’s Katharina Buchholz notes, according to the Statista Global Consumer Survey, India, South Korea, the U.S. and Germany are countries where the number of crypto users and owners increased significantly between 2019 and 2021.

  

  You will find more infographics at Statista

  In India, for example, the number of those “invested” in crypto more than doubled from 7 percent to 18 percent over that time span.

  In other countries, on the other hand, interest in cryptocurrencies more or less stagnated between the two years in question.

  Those countries included Brazil and Mexico. Modest gains could be seen in China and Spain.

  Tyler Durden
  Tue, 03/22/2022 – 02:45

• Ukraine Can Hold Out As Long As West Keeps Supplying Weapons: Former UK Intelligence Chief
  Ukraine Can Hold Out As Long As West Keeps Supplying Weapons: Former UK Intelligence Chief

  By Alexander Zhang of The Epoch Times,

  Ukraine may be able to withstand the Russian invasion for “as long as we can supply them” with weaponry and “for as long as their morale holds up,” the former head of the UK’s Defence Intelligence has said.

  

  Air Marshal Philip Osborn said on March 20 that the Ukrainians have been “amazing” in their resistance so far. He told Sky News: “We need to bear in mind that they have been preparing for this. This, for most of the West started three weeks ago. For Ukraine, this started nearly a decade ago. They have had time to prepare and think. They have also got a strength of will and the application of good weaponry.

  “Frankly, I think they will hold out as long as we can supply them and for as long as their morale holds up, and those are two very easy things to say but really challenging to do.”

  

  He added, “Focusing on supporting a brave people to do what is right for them has to be one of those things that the West does to show strength and resolution.”

  In contrast to Ukraine’s resistance, Osborn said, Russia’s military campaign is “pretty demoralised, pretty stuck, and pretty stalled.”

  Russian forces are “demoralised because they were poorly prepared and proven to be inadequate,” and are now stalled because they have “lost momentum.”

  He added: “We are seeing them pull resources and manpower from across Russia, even from Syria, and that is not a good indication for a supposed superpower. They are stalled because they are running out of options. “Really what is left to them now is to double down on brute force to put pressure on the Ukrainian government.”

  According to the latest intelligence update from the UK’s Ministry of Defence (MoD), Russian forces made only “limited progress” in capturing a number of cities in Eastern Ukraine.

  “Instead, Russia has increased its indiscriminate shelling of urban areas resulting in widespread destruction and large numbers of civilian casualties,” it said.

  Olha Stefanishyna, Ukraine’s deputy prime minister for European and Euro-Atlantic integration, told Sky News that the situation in her country is becoming “more and more severe.”

  “Russia has committed nearly all possible war crimes which humanity has seen over the Second World War,” she said.

  She said Ukrainians are continuing to fight for their country but “it’s absolutely clear that only a Ukrainian army, and only a Ukrainian president, will not be able to withstand it alone.”

  She called on political leaders from around the world, including the United States, the European Union, and Asia, to establish an anti-war coalition.

  Tyler Durden
  Tue, 03/22/2022 – 02:00

• McMaken: We Must Now Learn The Lesson Of 1914, Not The Lesson Of 1938
  McMaken: We Must Now Learn The Lesson Of 1914, Not The Lesson Of 1938

  Authored by Ryan McMaken via The Mises Institute,

  With proponents of military intervention and war, it’s always 1938, and every attempt to substitute diplomacy for escalation and war is “appeasement.” 

  

  Last week, for example, Ukrainian legislator Lesia Vasylenko accused Western leaders of appeasement during Moscow’s invasion of Ukraine, stating, “This is the same as 1938 when also the world and the United States in particular were averting their eyes from what was being done by Hitler and his Nazi Party.” The week before that, Estonian legislator Marko Mihkelson declared, “I hope I’m wrong but I smell ‘Munich’ here. “

  These, of course, are references to the notorious Munich conference of 1938, when UK prime minister Neville Chamberlain (and others) agreed to allow Adolf Hitler’s Germany to annex the Sudetenland in Czechoslovakia as a means to avoid a general war in Europe. The “appeasement,” of course, failed to prevent war because Hitler’s regime actually planned to annex much more than that. 

  Ever since, the “lesson of Munich” for advocates of military intervention is that it’s always best to escalate international conflicts and meet all perceived aggressors with immediate military force rather than embrace compromise or nonintervention. 

  Americans have made similar references, with pundits from Larry Elder to Peter Singer peppering their musings on the Ukraine war with the Munich analogy. One need only enter “Munich” and “1938” into a Twitter search to receive an apparently endless number of tweets from newly minted American foreign policy experts about how anything less than World War III is Munich all over again. Historically, countless American politicians have used the analogy as well. Cold Warriors of the 1980s denounced Ronald Reagan’s efforts to limit nuclear weapons as Munich-style appeasement. Republicans routinely claimed Barack Obama’s Iran diplomacy was the same thing. 

  But it is not, in fact, the case that every act of diplomacy or compromise designed to avoid war is appeasement. Moreover, we can find countless examples in which nonintervention and a refusal to escalate a situation was—or would have been—the better choice. 

  In other words, it’s not always 1938. Rather than fixating on the “lesson of 1938” the better lesson to learn is often the “lesson of 1914” or perhaps even the lessons of 1853, 1956, or 1968. In all these cases, military escalation was—or would have been—the wrong response. Moreover, in the age of nuclear weapons—something that did not exist in 1938—the world is a different place, and confrontation with a nuclear power could potentially bring about the end of human civilization. Casually bandying about demands for a “no-fly zone”—which would mean war with Russia—is both irresponsible and the sort of rhetoric fit for a nonnuclear world that ceased to exist many decades ago. 

  The Foundations of the “Lesson of Munich”

  The supposed lesson of Munich is based on two basic pillars. The first is the assumption that any act of military aggression will lead to many more acts of military aggression if not forcefully countered. It is basically a variation on the domino theory: if one nation submits to conquest by an aggressive neighbor, other nations will soon be forced to submit as well. This assumes every allegedly aggressive state has the same motivations as Nazi Germany and can plausibly seek a large, region-wide chain of military conquests across numerous states. 

  The second pillar of the lesson of Munich is that since every aggressive military act is likely to lead to many more, the only realistic option is to meet aggression with escalation and a no-compromise response. 

  This is precisely why Western advocates of military adventurism repeatedly equate every foreign leader Western elites don’t like with Hitler. Or, as noted at The Conversation:

  This kind of parallelism is not new; it is used every time there is a new enemy the public opinion should focus on. In recent years, according to Western rhetoric, Adolf Hitler has already been apparently reincarnated several times—as Saddam Hussein, Mohammad Qaddafi, Mahmoud Ahmadinejad, and more besides.

  In 2022, Putin is the new Hitler, which necessarily means to some that any failure by the West to respond to the Russian invasion with a full-blown military escalation is a Munich-style appeasement. 

  The fact that the events of 1938 are so well known by so many has helped considerably in pushing the narrative that compromise or nonintervention is appeasement. For most Americans, it’s likely the only event in the history of diplomacy they actually know anything about. Never mind the fact that the lesson of Munich has often been proven quite inapplicable to the modern world. As noted by Robert Kelly at the hardly noninterventionist publication 1945: 

  This frightening image of falling dominoes is not actually historically common though, thankfully. It was in the 1930s, but it was not, for example, in the Cold War. Aggressors do not always read one victory in place to mean they can automatically push on other “dominoes.” Deterrence is structured by local and historical factors; some commitments are much more credible than others. So even though the US lost in Vietnam, North Korea or East Germany did not attack South Korea or West Germany, just as the US did not attack Cuba or Nicaragua after the Soviet defeat in Afghanistan.

  In Ukraine that means that Western reticence to fight directly against the Russians in Ukraine does not automatically mean that Putin will test NATO’s collective security commitment or that China will attack Taiwan.

  But none of this matters when the public believes what it’s told by politicians and the media about how every rogue state is the equivalent of Nazi Germany. There is no foreign policy lesson to learn except that of opposing each new “Hitler.”

  The Lesson of 1914 

  Yet there are competing lessons to be learned. Lessons can be found, say, in the lead-up to the Crimean War in 1853 or the July Crisis of 1914. (Ask the average American about either of these, and you will probably receive a blank stare.)

  In both of these cases, regimes claimed they were countering aggression by foreign states and protecting either “allies” or oppressed minorities in the lands being subjected to conquest. 

  The lead-up to the First World War provides an especially cautionary tale about rushing to intervene in the name of supporting allies. The Austrian regime issued an ultimatum to the Serbians, and the Russians—with the support of France, Europe’s biggest democracy—mobilized in support of traditional ally Serbia. The Germans then mobilized in support of Austria-Hungary. Later, the regimes in the United Kingdom and the United States employed propaganda about alleged German war crimes in Belgium to ensure their respective countries entered the war. British politicians also claimed they must intervene to assist Britain’s Entente allies in resisting aggression. Four years of preventable and utterly pointless bloodshed ensued. Thanks to calls to oppose aggression and defend allies, what should have been a regional war in the Balkans became a major Europe-wide war. Even worse, with the Treaty of Versailles and the inclusion of the absurd “War Guilt” clause against Germany, the war set the stage for the far more destructive Second World War. 

  Yet the war was a result of regimes doing—from their own perspectives—what the “lesson of Munich” dictates: rush to war, immediately escalate, and confront “enemies” with military force in the name of countering aggression.

  The lesson of 1914 is certainly instructive today. Escalation is extraordinarily unwise, especially if there is the potential of turning limited wars into megascale disasters. Moreover, in the case of the United States, the complexity of the war’s causes meant there was no justifiable reason at all for the United States to enter. There was no “good guy” in the war, and American participation only further extended the bloodshed. 

  Fortunately, in spite of its pretensions of being the global guarantor of freedom always and everywhere, the United States has, at least twice, behaved as if it had learned the lesson of 1914. The first time was in 1956, when Soviet tanks rolled into Hungary when the Hungarian regime—an ostensibly sovereign state—became too uppity to suit Moscow. So, Soviet military might moved in to ensure Hungary remained sufficiently under Moscow’s control. Thousands of Hungarians were killed. Did the North Atlantic Treaty Organization mobilize against this aggression? Did Dwight Eisenhower ready America’s bombers? No.

  Then, in Prague in 1968, Czechoslovakian resistance to Moscow led to an invasion of two hundred thousand foreign troops and twenty-five hundred tanks from the pro-Soviet regimes of the Warsaw Pact. Again, the United States took no action. 

  This, of course, was the right decision on the part of the US and NATO. Heeding the Lesson of Munich, on the other hand, would have meant direct confrontation between NATO and the Soviet Union—a de facto confrontation between the United States and the USSR. This would have greatly increased the likelihood of global nuclear war.

  Naturally, some anti-Soviet activists cried “Appeasement!” at the time. Fortunately, they were ignored. A curious difference between 1956 and now, however, is that at the time, most of the critics of American inaction were on the anti-Soviet Right. Today, it is mostly the Left where we find those howling about Munich and blithely pushing for a US-Russia war while downplaying the risk of a nuclear apocalypse. But those who are now demanding World War III are a cautionary example of what happens when we obsess over the lesson of 1938 and ignore the lesson of 1914. 

  Tyler Durden
  Mon, 03/21/2022 – 23:40

• WEF Issues Ominous Warning Over Coming Food Crisis, Recommends 'More Sustainable Diets'
  WEF Issues Ominous Warning Over Coming Food Crisis, Recommends ‘More Sustainable Diets’

  Did you see the ratio Bloomberg just earned for a tweet which recommends getting used to lentils instead of meat, switching to public transportation, and avoiding buying things in bulk?

  

  The piece, written by economist Teresa Ghilarducci, recommends that families earning under $300,000 per year consider switching to public transportation, embracing a veggie diet, and “rethink those costly pet medical needs.”

  The intellectual heavyweight oddly retweeted someone slamming her advice.

  

  Which is being parodied throughout social media…

  pic.twitter.com/jy1kY2R51Y

  — Sid Prabhu (@sidprabhu) March 20, 2022

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

  Unsurprisingly, Ghilarducci and the far-left “New School for Social Research” she works for is affiliated with the World Economic Forum (WEF) – which, in addition to bragging about having ‘infiltrated‘ various world governments – infamously suggested that people get used to eating bugs due to inevitable food shortages, and

  

  Yes, this WEF:

  

  Which brings us to the WEF’s latest – warning of an impending food crisis kicked off by the war in Ukraine.

  Key points:

  • More people around the world will go hungry as a result of the pandemic, high fuel prices and the conflict in Ukraine.
  • Russia and Ukraine are also major producers and suppliers of fertilizers and their raw materials.
  • Existing logistical issues with moving grain and food are likely to worsen.
  • Disruptions will put further pressure on this year’s harvest and lead to higher food prices.
  • Even before the pandemic, the FAO estimated that 690 million people or 9% of the world’s population, were facing food insecurity.

  In short, the Ukraine war is accelerating the existing problem of inflation and food shortages, so hold on to your hats and consider a ‘more sustainable diet’ because things are about to get much, much worse.

  We are currently witnessing the beginning of a global food crisis, driven by the knock-on effects of a pandemic and more recently the rise in fuel prices and the conflict in Ukraine. There were already clear logistical issues with moving grain and food around the globe, which will now be considerably worse as a result of the war. But a more subtle relationship sits with the link to the nutrients needed to drive high crop yields and quality worldwide.

  …

  In this context, calling for an immediate government intervention to the market is therefore the natural thing to do. Yet government budgets are severely stretched after COVID, leaving little room for direct monetary support and contribution. In view of the recent promises to remove all Russian oil and gas from our imports, there will be some tough decisions ahead for governments, farmers and consumers alike.

  In the medium term, it highlights the need to transform our food system, using more green energy. We should also be encouraging more sustainable diets, which contain fewer grain fed animal products; and regenerative agricultural practices, which improve soil health and the efficiency of nutrient use by the crop. -WEF

  So… eat the bugs and be happy?

  

  Tyler Durden
  Mon, 03/21/2022 – 23:20

• The Takeover Of America's Legal System
  The Takeover Of America’s Legal System

  Authored by Aaron Sibarium via Common Sense with Bari Weiss,

  If you are a Common Sense reader, you are by now highly aware of the phenomenon of institutional capture. From the start, we have covered the ongoing saga of how America’s most important institutions have been transformed by an illiberal ideology—and have come to betray their own missions.

  Medicine. Hollywood. Education. The reason we exist is because of the takeover of newspapers like The New York Times.

  Ok, so we’ve lost a lot. A whole lot. But at least we haven’t lost the law. That’s how we comforted ourselves. The law would be the bulwark against this nonsense. The rest we could work on building anew.

  But what if the country’s legal system was changing just like everything else?

  Today, Aaron Sibarium, a reporter who has consistently been ahead of the pack on this beat, offers a groundbreaking piece on how the legal system in America, as one prominent liberal scholar put it, is at risk of becoming “a totalitarian nightmare.”

  This is a long feature on a subject we think deserves your time. Save it, share it, or print it to read in a quiet moment And please support stories like this one by subscribing today.

  

  In 2017, the super lawyer David Boies was at a corporate retreat at the Ritz-Carlton in Key Biscayne, Florida, hosted by his law firm, Boies, Schiller and Flexner. Boies was a liberal legend: He had represented Al Gore in Bush v. Gore, and, in 2013, successfully defended gay marriage in California, in Hollingsworth v. Perry, paving the way for the landmark Supreme Court ruling two years later.  

  On the last day of the retreat, Boies gave a talk in the hotel ballroom to 100 or so attorneys, according to a lawyer who was present at the event. Afterwards, Boies’s colleagues were invited to ask questions.

  Most of the questions were yawners. Then, an associate in her late twenties stood up. She said there were lawyers at the firm who were “uncomfortable” with Boies representing disgraced movie maker Harvey Weinstein, and she wanted to know whether Boies would pay them severance so they could quit and focus on applying for jobs at other firms. Boies, who declined to comment for this article, said no.

  That lawyers could be tainted by representing unpopular clients was hardly news. But in times past, lawyers worried about the public—not other lawyers. Defending communists, terrorists, and cop killers had never been a crowd pleaser, but that’s what lawyers had to do sometimes: Defend people who were hated. 

  When congressional Republicans attacked attorneys for representing Guantanamo detainees, for example, the entire profession rallied around them. The American Civil Liberties Union noted that John Adams took pride in representing British soldiers accused of taking part in the Boston Massacre, calling it “one of the best pieces of service I ever rendered to my country.”

  But that’s not how the new associates saw Boies’s choice to represent Weinstein. They thought there were certain people you just did not represent—people so hateful and reprehensible that helping them made you complicit. The partners, the old-timers—pretty much everyone over 50—found this unbelievable. That wasn’t the law as they had known it. That wasn’t America.

  “The idea that guilty people shouldn’t get lawyers attacks the legal system at its root,” Andrew Koppelman, a prominent liberal scholar of constitutional law at Northwestern University, said. “People will ask: ‘How can you represent someone who’s guilty?’ The answer is that a society where accused people don’t get a defense as a matter of course is a society you don’t want to live in. It’s a totalitarian nightmare.”

  ---

  ‘Operating in a Panopticon’

  The adversarial legal system—in which both sides of a dispute are represented vigorously by attorneys with a vested interest in winning—is at the heart of the American constitutional order. Since time immemorial, law schools have tried to prepare their students to take part in that system.

  Not so much anymore. Now, the politicization and tribalism of campus life have crowded out old-fashioned expectations about justice and neutrality. The imperatives of race, gender and identity are more important to more and more law students than due process, the presumption of innocence, and all the norms and values at the foundation of what we think of as the rule of law.

  Critics of those values are nothing new, of course, and certainly they are not new at elite law schools. Critical race theory, as it came to be called in the 1980s, began as a critique of neutral principles of justice. The argument went like this: Since the United States was systemically racist—since racism was baked into the country’s political, legal, economic and cultural institutions—neutrality, the conviction that the system should not seek to benefit any one group, camouflaged and even compounded that racism. The only way to undo it was to abandon all pretense of neutrality and to be unneutral. It was to tip the scales in favor of those who never had a fair shake to start with.

  But critical race theory, until quite recently, only had so much purchase in legal academia. The ideas of its founders—figures like Derrick Bell, Alan David Freeman, and Kimberlé Crenshaw—tended to have less influence on the law than on college students, who by 2015 seemed significantly less liberal (“small L”) than they used to be. There was the Yale Halloween costume kerfuffle. The University of Missouri president being forced out. Students at Evergreen State patrolling campus with baseball bats, eyes peeled for thought criminals.

  At first, the conventional wisdom held that this was “just a few college kids”—a few spoiled snowflakes—who would “grow out of it” when they reached the real world and became serious people. That did not happen. Instead, the undergraduates clung to their ideas about justice and injustice. They became medical students and law students. Then 2020 happened. 

  All of sudden, critical race theory was more than mainstream in America’s law schools. It was mandatory. 

  Starting this Fall, Georgetown Law School will require all students to take a class “on the importance of questioning the law’s neutrality” and assessing its “differential effects on subordinated groups,” according to university documents obtained by Common Sense. UC Irvine School of Law, University of Southern California Gould School of Law, Yeshiva University’s Cardozo School of Law, and Boston College Law School have implemented similar requirements. Other law schools are considering them. 

  As of last month, the American Bar Association is requiring all accredited law schools to “provide education to law students on bias, cross-cultural competency, and racism,” both at the start of law school and “at least once again before graduation.” That’s in addition to a mandatory legal ethics class, which must now instruct students that they have a duty as lawyers to “eliminate racism.” (The American Bar Association, which accredits almost every law school in the United States, voted 348 to 17 to adopt the new standard.)

  Trial verdicts that do not jibe with the new politics are seen as signs of an inextricable hate—and an illegitimate legal order. At the Santa Clara University School of Law, administrators emailed students that the acquittal of Kyle Rittenhouse—the 17-year-old who killed two men and wounded another during a riot, in Kenosha, Wisconsin—was “further evidence of the persistent racial injustice and systemic racism within our criminal justice system.” At UC Irvine, the university’s chief diversity officer emailed students that the acquittal “conveys a chilling message: Neither Black lives nor those of their allies’ matter.” (He later apologized for having “appeared to call into question a lawful trial verdict.”) 

  Professors say it is harder to lecture about cases in which accused rapists are acquitted, or a police officer is found not guilty of abusing his authority. One criminal law professor at a top law school told me he’s even stopped teaching theories of punishment because of how negatively students react to retributivism—the view that punishment is justified because criminals deserve to suffer.

  “I got into this job because I liked to play devil’s advocate,” said the tenured professor, who identifies as a liberal. “I can’t do that anymore. I have a family.”

  Other law professors—several of whom asked me not to identify their institution, their area of expertise, or even their state of residence—were similarly terrified.

  Nadine Strossen, the first woman to head the American Civil Liberties Union and a professor at New York Law School, told me: “I massively self-censor. I assume that every single thing that is said, every facial gesture, is going to be recorded and potentially disseminated to the entire world. I feel as if I am operating in a panopticon.” 

  This has all come as a shock to many law professors, who had long assumed that law schools wouldn’t cave to the new orthodoxy.

  At a Heterodox Academy panel discussion in December 2020, Harvard Law School Professor Randall Kennedy said that, until recently, he’d thought that fears of law schools becoming illiberal—shutting down unpopular views or voices—had been overblown. “I’ve changed my mind,” said Kennedy, who, in 2013, published a book called “For Discrimination: Race, Affirmative Action, and the Law.” “I think that there really is a big problem.”

  The problem has come not just from students, but from administrators, who often foment the forces they capitulate to. Administrators now outnumber faculty at some universities—Yale employs 5,066 administrators and just 4,937 professors—and law schools haven’t been spared the bloat. Several law professors bemoaned the proliferation of diversity, equity, and inclusion offices, which, they said, tend to validate student grievances and encourage censorship. 

  The distinction between DEI and the rest of the administration is often wafer thin. At Yale Law School, the Office of Student Affairs told students in an email last week that they could “swing by” the office to grab a “Critical Race Theory T-Shirt!” The T-shirt repeated the phrase “reparations & prison abolition” five times, Bart Simpson-style, before delivering the kicker: “critical race theory & yale law school.”

  

  Law school deans have further entrenched this culture. In 2020, 176 of them petitioned the American Bar Association to require “education around bias, cultural competence, and anti-racism” at all accredited law schools, which led to the new ABA standards this February. 

  As the new ideology has been institutionalized, the costs of disobeying it have grown steeper, both for faculty and for students. ​​

  At the University of Illinois Chicago, for example, a law professor’s classes were cancelled and his career threatened for including a bleeped out “‘n____’” on an exam in a hypothetical scenario about employment discrimination. (He had used the same scenario for years without incident.)

  A Harvard Law professor told me that students face “social death” if they buck the consensus. Students at other law schools—including Yale, NYU, Boston College, Georgetown, and Northwestern—told me much the same thing. “You want to have friends, so you don’t want to say anything controversial,” one Georgetown Law student explained. 

  At Boston College Law School this semester, a constitutional law professor asked students: “Who does not think we should scrap the constitution?” According to a student in the class, not a single person raised their hand.

  Those students and organizations who do dissent often encounter a tsunami of hate. When members of Northwestern University Pritzker School of Law’s Federalist Society chapter invited the conservative writer Josh Hammer to campus in October 2021, the law school’s all-student listserv lit up with invective. 

  “I’d be completely unsurprised (and in fact, willing to bet) that Joshie Hammer fucks (or at least tries to fuck—he probably was rejected repeatedly) we the trannies in his free time,” one student emailed. “Or—more likely—he just wants (and needs) to get just fucked in the ass . . . Maybe our lovely, idiotic FedSoc board is experiencing a similar dilemma within their own psychosexual selves.”

  That was nothing compared to what happened at Yale Law School earlier this month, when the school’s chapter of the Federalist Society hosted a bipartisan panel on civil liberties. More than 100 law students disrupted the event, intimidating attendees and attempting to drown out the speakers. When the professor moderating the panel, Kate Stith, told the protesters to “grow up,” they hurled abuse at her and insisted their disturbance was “free speech.”

  The fracas caused so much chaos that the police were called. After it ended, the protesters pressured their peers to sign an open letter endorsing their actions and condemning the Federalist Society, which they claimed had “​​profoundly undermined our community’s values of equity and inclusivity.”

  “I’m sure you realize that not signing the letter is not a neutral stance,” one student told her class group chat. She was upset that the panel had included Kristen Waggoner of the Alliance Defending Freedom, a conservative legal nonprofit that’s won a slew of religious liberty cases at the Supreme Court.

  As similar messages clogged listservs and Discord forums, nearly two-thirds of Yale Law’s student body wound up signing the letter.

  Stith, the professor who was lambasted for telling students to “grow up,” doesn’t see the pile-on as an isolated incident. 

  “Law schools are in crisis,” she told me. “The truth doesn’t matter much. The game is to signal one’s virtue.”

  ---

  The Associates Want to ‘Burn the Place Down’

  We don’t need to speculate about how temper tantrums in New Haven will reshape American institutions. The ideas underlying these outbursts have already spread to boardrooms and government agencies. 

  Last year, NASDAQ demanded that companies listing shares on its exchanges meet racial and gender quotas. Uber and Postmates waived delivery fees from black-owned restaurants. Montana and Vermont gave non-white residents priority access to Covid-19 vaccines. 

  Some high-profile initiatives have been blocked—for example, the Biden administration’s attempt to prioritize minority-owned restaurants while doling out pandemic relief. But the legal guardrails that once ensured against this sort of tipping of the scales are coming undone.

  That was the lesson of Rebecca Slaughter, one of the five commissioners who run the Federal Trade Commission.

  In a Twitter thread in September 2020, Slaughter declared: “#Antitrust can and should be #antiracist.”

  Then she added: “There’s precedent for using antitrust to combat racism. E.g., South Africa considers #racialequity in #antitrust analysis to reduce high economic concentration & balance racially skewed business ownership.”

  Here was a prominent government official—educated at Yale Law School, formerly senior counsel for Senator Chuck Schumer—proposing that a federal agency jettison its mandate (protecting consumers, ensuring competition) in the service of a political goal (narrowing the racial wealth gap) that no one had debated or voted on. 

  In practice, several attorneys said, that meant a company with a majority-white board could be penalized for something that a company with a majority-black board might not be. The government might even block a merger if the resulting conglomerate would be insufficiently diverse—something that has actually happened in South Africa, the country Slaughter held up as a model. Jobs, plants, investments, market share: all of it was on the line.

  “That’s hugely corrosive,” said a corporate lawyer in Virginia, who, like most attorneys contacted for this article, would not go on the record for fear of losing his job. “You see it in all of the worst things we see in Donald Trump. ‘The law means what I say it means. The election was stolen because I lost.’ Once you depart from the idea that we’re all people under the law, it really matters who is in power. That starts to feel like the rule of man, not the rule of law.” 

  Two weeks after posting her thread, Slaughter appeared on CNBC. “I want to be working to promote equity, rather than reinforce inequity,” she said. She had come to the conclusion that “it isn’t possible to really be actually neutral, nor should we be neutral in the face of systemic racism and structural racism.” 

  Slaughter’s statement was not a one-off. It captured the zeitgeist not just of post-Floyd progressivism, but of an increasingly large chunk of the legal profession. The idea that lawyers can’t be neutral, that confronting injustice must supersede all else, has eroded the norm that legal representation—like the ability to obtain medical care or buy a train ticket—is something every American deserves.

  “Partners are being blindsided by associates who they think are liberals in their own image,” an attorney in Washington, D.C., told me. “But they’re not. The associates want to burn the place down.”

  Lawyers at top law firms in New York, Washington, D.C., and Los Angeles said they fret constantly about saying the wrong thing—or taking on the wrong client.

  “It’s much worse than McCarthyism,” Alan Dershowitz, a professor emeritus at Harvard Law, told me. “McCarthyism was a reflection of dying, old views. They were not the future. But the people today who are imposing litmus tests for who they represent—they are the future.”

  When Dershowitz was accused, in 2014, of sexual relations with an underage girl at Jeffrey Epstein’s various residences, he said he had trouble finding representation. (A federal judge eventually struck the allegations from the record.)

  Law firms have been known to avoid unpopular clients—Big Tobacco, for example—but the scope and frequency of these evasions have increased, dozens of lawyers interviewed for this story agreed. That’s partly because young lawyers, like the one who accosted David Boies, see representing someone as tantamount to endorsing them. 

  ​​“It used to be that most lawyers could work for Catholic hospital system even if they were pro-choice,” a recently retired lawyer told me. “But now people just say, ‘I oppose this client, so I can’t work for them.’” (The lawyer had planned to stay at his law firm—one of the largest in the US—for a long time. He told me he retired in 2020 after the firm’s culture became “simply unbearable,” with younger associates excoriating him for being “old and white, and part of the reason we have systemic racism in America.”)

  Law firms also worry about losing their corporate clients, which, like many American institutions, have grown more stridently ideological in recent years. “I knew of and heard of clients protesting cases we were taking,” the recently retired lawyer said. “If you were going to do a gun rights case, you would incur the wrath of other clients.”

  Since 2011, law firms have been pressured to drop or turn down a long list of clients: fossil fuel companies, foreign universities, a GOP-controlled House of Representatives, employers challenging Biden’s vaccine mandate, and, of course, Donald Trump.

  These pressures—both internal and external—have had a chilling effect. If defending anti-vaxxers can cost you business, law firms reason, imagine the blowback of defending a transphobe or a racist. 

  “It doesn’t even occur to people to take controversial cases,” one lawyer in Washington, D.C., said. Religious liberty cases, for example, are “totally off the table. I wouldn’t even think to bring it up.” 

  Another lawyer, who specializes in First Amendment litigation, described being forced to turn away a client with far-right views because the firm thought that any association with the client—even if the claims advanced were meritorious—would be bad for business.

  The problem, Strossen said, is that rights mean nothing without representation. “ANYONE who doesn’t have access to counsel in defending a right, as a practical matter, doesn’t have a meaningful opportunity to exercise that right,” the former ACLU chief told me in an email. “Hence, undermining representation for any unpopular speaker or idea endangers freedom for ANY speaker or idea, because the tides of popularity are constantly shifting.”

  Ken Starr, the former solicitor general who led the 1998 investigation of Bill Clinton, agreed. “At a time when fundamental freedoms are under assault around the globe, it is all the more imperative that American lawyers boldly stand up for the rule of law,” Starr said. “In our country, that includes—especially now—the representation of controversial causes and unpopular clients.”

  ---

  Undermining the Impartial Judiciary 

  Another cornerstone of the rule of law is an impartial judiciary. Some judges, however, have begun to see themselves not as impartial adjudicators, but as agents of social change—believing, like Slaughter, that they cannot be neutral in the midst of moral emergencies.

  During the Black Lives Matter protests in 2020, for example, Massachusetts Superior Court judge Shannon Frison vowed on Facebook to “never be silent or complicit again, in any courtroom or any context.” “As the very keepers of justice,” she said, judges “not only stand with the protesters—we fall with them.” 

  The Washington State Supreme Court put out a statement recognizing “the role we have played in devaluing black lives,” and encouraged judges to strike down “even the most venerable precedent” if it is “incorrect and harmful.”

  Such statements are not mere virtue signaling. They reflect sincerely held beliefs with real-world consequences. 

  Case in point: the case of Montez Terriel Lee, Jr.

  On May 28, 2020, Lee, Jr., then 25 years old, broke into the MaX it PAWN Shop, in Minneapolis. It had been three days since George Floyd had been murdered by a white police officer, about ten blocks south, and the city had been engulfed by riots. As looters grabbed whatever they could find, Lee poured lighter fluid all over the pawn shop. Then, he set it on fire. Outside, Lee raised his arm and clenched his fist. In a video, he can be seen saying, “Fuck this place. We’re gonna burn this bitch down.”

  At the time, Lee was unaware that Oscar Stewart, Jr., a 30-year-old father of five, was trapped inside and that he would die of smoke inhalation and excessive burns. A little over two weeks later, police arrested Lee, who pleaded guilty to arson. 

  Usually, this sort of crime, according to federal sentencing guidelines, would have landed Lee in prison for up to 20 years. But the prosecutor, Assistant U.S. Attorney Thomas Calhoun-Lopez, only asked for 12 years. 

  In his pre-sentence filing, Calhoun-Lopez portrayed Lee not as a rioter but a protester. “Mr. Lee was terribly misguided, and his actions had tragic, unthinkable consequences. But he appears to have believed that he was, in Dr. King’s eloquent words, engaging in ‘the language of the unheard.’”

  The judge, Wilhelmina Wright, appeared to buy that argument. On January 14, she handed down a sentence of just 10 years—even fewer than the prosecution had asked for. 

  “Motivation is a relevant factor in sentencing, and it was appropriate for the prosecutor and judge to consider the fact that the defendant did not intend to kill anyone when he set fire to the store,” Rebecca Roiphe, a professor of legal ethics at New York Law School, said in an email. But, she added, “Rewarding someone for having the correct beliefs is almost as bad as punishing someone for having the wrong ones. More importantly, a criminal justice system that does the former likely does the latter as well.”

  Strossen was more pointed: “For anyone who might applaud the Minneapolis situation, I would ask: ‘How would you feel about a judge who has religious objections to abortion giving a lighter sentence to a pro-life crusaders who attacks clinic property or personnel?’”

  Judge Wright’s willingness to tip scales didn’t come out of nowhere. When she was a student at Harvard Law School, she’d taken a class with Derrick Bell, the founder of critical race theory, who asked students to submit written reflections on the assigned readings.  Bell published many of the reflections—including Wright’s—in a 1989 article for UCLA Law Review: “Racial Reflections: Dialogues in the Direction of Liberation.” 

  In one reflection, Wright said that “American liberalism”—especially the liberal “notion that property is neutral”—was “equally” as “damaging” as overt “racial supremacy.” Her chambers are eight miles away from the MaX it PAWN Shop, one of 1,500 businesses—many minority-owned—that were damaged or destroyed in the record-setting riots of 2020.

  ---

  ‘The Anti-Innocence Project’

  Minneapolis is a microcosm of a larger trend. As progressives have set about repurposing the law, they seem to have lost sight of the people they insist they’re saving: the poor, the vulnerable, the indigent—including many racial minorities.

  Consider the movement to abolish the right to eliminate members of a jury pool. 

  The so-called peremptory strike allows attorneys, in a trial case, to toss out potential jurors they deem biased. Peremptories, as criminal-defense attorneys see it, offer their least sympathetic clients—those against whom all the cards have been stacked—a glimmer of hope. 

  The problem, as progressives see it, is peremptory strikes have also been used to disproportionately exclude potential black jurors. Supreme Court Justice Steven Breyer was among the most prominent to call for an end to peremptories, arguing in a 2005 opinion that they magnify racial bias in the legal system. But it wasn’t until the last year or so that the cause gained momentum. 

  In August, the Arizona Supreme Court announced that the state would no longer allow peremptory challenges at civil and criminal trials. This came after a pair of Arizona judges launched a petition arguing that peremptories perpetuate “discrimination.” The New Jersey Supreme Court is considering a similar move.

  It hasn’t gone over well with defense attorneys.

  “This is the stupidest fucking thing in the world,” Ambrosio Rodriguez, a criminal-defense attorney in Los Angeles, said. “Is my voice clear just how pissed off I am about this thing?” Rodriguez noted that the peremptory is one of the few tools at his disposal to help “level the playing field.”

  “Suppose a woman married to a police officer says she can be fair,” Josh Kendrick, a criminal-defense attorney in Columbia, South Carolina, told me. “I won’t be able to strike her from the jury, even though we all know she can’t really be fair.”  

  Then there’s the erosion of the principle that one is innocent until proven guilty beyond a reasonable doubt. “The Anti-Innocence Project,” one criminal-defense attorney in San Francisco joked.

  ​​Progressive lawyers have become more determined to turn a blind eye to certain defendants while cracking down with even greater than usual fervor on certain crimes. “The same people who are anti-incarceration for some defendants will support life plus cancer for others,” said Scott Greenfield, a criminal-defense attorney in New York. “Good people—which in practice means blacks and Hispanics, regardless of what they did—should be free. Bad people—which in practice means sex offenders and financial criminals—should go to jail.” 

  In 2019, for example, the American Bar Association nearly passed a motion urging state legislatures and courts to adopt a new definition of “consent” in cases of sexual misconduct that would flip the burden of proof from the accuser to the accused—despite fierce criticism of the standard from legal scholars, and despite some evidence that it has unfairly hurt black, male students on college campuses.

  The motion was expected to pass but failed at the last minute, after key attorneys withdrew their support. Even so, nearly 40 percent of ABA delegates voted for it. 

  This sort of progressive carceralism isn’t confined to sexual assault. After the Rittenhouse verdict, in November, some left-wing legal scholars zeroed in on the definition of “self-defense.” Changing that definition—insisting that whoever was the first to point his gun was the presumptive aggressor—would have made it harder for Rittenhouse to have been acquitted. It would also preempt future Rittenhouses. 

  Kendrick, the criminal defense attorney, was skeptical. “These reforms aren’t going to be weaponized against white males or the GOP,” he said. “They’re going to be weaponized against criminal defendants.”

  Criminal defendants like Stephen Spencer.

  In July 2017, Spencer, a black man, endured a series of racist taunts at a bar. When he went outside, a group of white men followed him and shouted: “We’re going to get you, n—–!” Taking them at their word, Spencer turned around, pulled out his gun, and fired, killing one of his pursuers. 

  A jury acquitted Spencer on all counts. But under a different definition of self-defense—one reverse engineered to put the Rittenhouses of the world in jail—the case could easily have gone another way.

  “There’s a real risk Stephen Spencer would be a convicted murderer instead of a free man, because he displayed a lawfully possessed firearm when he was menaced by a racist mob,” a prominent second-amendment lawyer told me.

  ---

  Brave New World

  The old-school liberals, those who have been around for three or four decades, say that none of this was supposed to happen.

  Several attorneys called FTC commissioner Rebecca Slaughter’s thread—and her almost off-the-cuff reference to South Africa—deeply unsettling. Of all places, they said, South Africa? Did she know what was going on there? (Slaughter and her assistant did not return calls and text messages.) 

  In July, there had been rioting, looting, Molotov cocktails, people pulled from their cars and families hacked to death in their homes. The demonstrations had been sparked by the arrest of former President Jacob Zuma, now serving a 15-month sentence for contempt of court. But the real causes had been percolating for decades: a faltering economy, corruption, and the deeply divisive policies of the ruling African National Congress, which Slaughter held up as a model of “#racialequity.”

  It started in 1998 with the Competition Act, an antitrust law that effectively required businesses to be partly black-owned. The act was an early example of “Black Economic Empowerment”—race-conscious policies aimed at lifting black South Africans out of poverty.

  It was a disaster. Soon, companies were being forced to cede large chunks of their equity to black shareholders, many of whom were well-connected to the ANC. Foreign investment dried up—the regulations imposed huge costs on businesses—and corruption and unemployment soared. 

  By 2009, Moeletsi Mbeki, a black South African political economist, was warning that South Africa’s race-conscious policies would “collapse” the country. By 2021, South Africa’s unemployment rate was 44%, the highest in the world. 

  All this had culminated in the riots that killed 300 people and destroyed scores of businesses. This was the country a U.S. antitrust official wanted to emulate. 

  At stake, said Noah Phillips, also an FTC commissioner, was not just trade or competition but the American justice system itself. How we govern ourselves. What we mean by democracy and the rule of law.

  “We should strive to meet the promise that is literally chiseled into the stone of the Department of Justice and courthouses across the country,” Phillips told me. “That is: the law should be applied equally. Deliberately attempting to apply the law in an unequal fashion, based on the preferences of those in power, is inimical to the rule of law.”

  On November 12, the FTC released a draft strategic plan for the next five years. One of its main objectives: use the agency’s power to “advance racial equity.”

  Tyler Durden
  Mon, 03/21/2022 – 23:00

• US Angered After Syria's Assad Makes Historic Visit To UAE
  US Angered After Syria’s Assad Makes Historic Visit To UAE

  Since it became clear that the Assad government emerged victorious after the decade-long proxy war to effect regime change in Damascus sponsored by the West and Gulf powers, there have been slow but consistent efforts by Arab countries to normalize relations with Syria once again. 

  On Friday, for the first time since the war began in 2011, Syrian President Bashar al-Assad visited an Arab state to meet with its leader. It was none other than US and Saudi ally UAE. After long being branded an international ‘pariah’ it was a shock for some to see Assad in photographs speaking warmly to Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan.

  

  The UAE sheikh “stressed that Syria is a fundamental pillar of Arab security, and that the UAE is keen to strengthen cooperation with it”, according to UAE state news. Assad also met with prime minister of the UAE, Sheikh Mohammed bin Rashid Al Maktoum.

  The Associated Press called it “clear signal” of Assad’s coming reengagement with the Arab world as he “comes in from the cold” – with the likelihood of Syria eventually rejoining the Arab League.

  And The Wall Street Journal wrote, “The Emirates, Egypt and Jordan are trying to bring him back into the Arab diplomatic fold—a move that could unlock trade benefits for all sides and reduce Iran’s influence. U.A.E. Foreign Minister Sheikh Abdullah bin Zayed met with Mr. Assad in Damascus in November, making him the most senior Emirati official to visit Syria since the start of the civil war.”

  Perhaps to be expected, Washington was angered by UAE authorizing and welcoming the visit, slamming it as an “apparent attempt to legitimize” Assad.

  “We are profoundly disappointed and troubled by this apparent attempt to legitimize Bashar al-Assad, who remains responsible and accountable for the death and suffering of countless Syrians” said State Department spokesman Ned Price said of the visit.

  The UAE’s normalization effort isn’t new. But to roll out the red carpet for Assad on a symbolic anniversary for Syrians, and while his Russian ally is in the midst of waging war on Ukraine… well, that’s quite a message https://t.co/cniRtkcrET

  — Gregg Carlstrom (@glcarlstrom) March 19, 2022

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  He also warned countries wanting to deal with Syria about US-led sanctions, saying they must “weigh carefully the horrific atrocities visited by the regime on the Syrians over the last decade,” according to the statement. He said the US won’t lift sanctions or provide waivers for anyone doing business with Damascus “until there is irreversible progress toward a political solution, which we have not seen.”

  Tyler Durden
  Mon, 03/21/2022 – 22:40

• Jan. 6 Suicide Victim Was Told 'He Would Not Receive A Fair Trial In This Town'
  Jan. 6 Suicide Victim Was Told ‘He Would Not Receive A Fair Trial In This Town’

  Authored by Joseph M. Hanneman via The Epoch Times (emphasis ours),

  The 14-month ordeal battling charges from his time at the U.S. Capitol on Jan. 6, 2021, had put so much stress on Matthew L. Perna that he began throwing up blood.

  

  When the U.S. Department of Justice (DOJ) asked to delay his sentencing and announced that it would seek more prison time, it was a bridge too far. Perna took his own life on Feb. 25 in Sharon, Pennsylvania. He was 37.

  “Worry, anxiety, stress had worn him down,” Geri Perna, his aunt, said at a Capitol Hill news conference on March 17. “He suffered constant nightmares and began throwing up blood. He was no longer comfortable leaving his home.

  “One setback after another took its toll on him. And he just wanted it to be over. His attorney encouraged him to plead guilty by telling him that he would not receive a fair trial in this town.”

  Perna stood in driving rain near the steps of the Capitol, alongside three members of Congress, to decry the treatment of Jan. 6, 2021, Capitol breach defendants by the DOJ, much of society, and influencers on social media.

  ‘A Feeling of Shame’

  Collectively, they sounded the alarm that U.S. society is at a precipice, close to losing the freedoms that have been taken for granted for so long.

  “Matt walked through an open door into this Capitol building, a monument that has been called the People’s House,” Geri Perna said. “Standing here in front of this building does not give me a sense of pride, but instead [it] is replaced by a feeling of shame.”

  Matthew Perna had pleaded guilty to one felony count of obstruction of an official proceeding, the congressional certification of the presidential election results. He also pleaded guilty to three misdemeanor charges.

  He spent about 20 minutes inside the Capitol on Jan. 6. After his sentencing was initially scheduled for March 3, prosecutors announced that they sought to add penalty enhancers that would have meant 41 to 51 months in prison.

  “Although Matthew Perna may have taken his last breath on Feb. 25, his death began in January 2021 after he was arrested and a nightmare like no other began,” Geri Perna said. “It affected everyone in our family, but we stood by his side proudly.”

  Rep. Louie Gohmert (R-Texas) ripped the DOJ for the sentencing delay.

  “The Department of Justice wasn’t sure they had beat up on this guy enough,” Gohmert said.

  He lauded Matthew Perna for a life of service, including a mission trip to hurricane-ravaged Haiti.

  

  “This is not an insurrectionist that does these kinds of things. He didn’t break, touch, or steal anything,” Gohmert said. “He didn’t harm anyone. And yet the Biden Department of Justice sought to throw the book at him for what really was a mistake, that now … led to the end of his life, a life he used to serve others.”

  Gohmert asked where today’s DOJ prosecutors were in June 2016, when Democrats staged a sit-in on the House floor and prevented regular business from being conducted for more than 12 hours.

  “If the Biden administration cared so deeply about sending a message that you should never obstruct an official session of Congress, they had much that they could have gone after the Democrats who sat on the floor,” Gohmert said. “I knew at the time they were violating many House rules. I didn’t realize at the time they were committing federal felonies.

  

  “How long did they sit in jail? How long were they in pretrial confinement? Did they have a DOJ prosecutor that said, ‘Wait a minute, I want to make sure every one of these Democrats gets 41 months in prison,’ like he felt the gentleman named Matt Perna should have? No. No, they didn’t do any of that.”

  He accused the DOJ of trying to exact political revenge.

  “This is a very dangerous policy that this Department of Justice, this administration is pursuing in pursuing vengefulness,” Gohmert said. “Republics don’t last much longer when they get like this. They need to be careful that they’re not leading us into a dark chapter of our country.”

  The DOJ has refused to comment on the Perna case, although it did dismiss the charges after Perna’s death.

  Rep. Marjorie Taylor Greene (R-Ga.) criticized the DOJ for not living up to legal obligations to turn over potentially exculpatory evidence to defense attorneys.

  “At this time, the Department of Justice is still withholding hundreds of thousands of FBI records from defense attorneys,” Greene said. “They’re not allowing them to have the records to prepare their cases. Trials are starting and defendants still don’t have all of their discovery. They deserve this to be able to defend themselves.”

  ‘Two-Tiered Justice System’

  Greene opened her remarks by blasting federal judges in the District of Columbia Circuit for holding so many Jan. 6, 2021, Capitol breach pretrial defendants in jail without bond.

  “I’d like to start by saying shame on every single judge that is using their courtroom to persecute pretrial Jan. 6 defendants,” she said. “This should never happen in our country. We have a two-tiered justice system in America today. And it’s wrong.”

  Greene also shamed her congressional colleagues for not speaking out more about the issue.

  

  “There are very few Republicans, very few members of Congress that are willing to speak out and stand up for these people’s due process rights,” she said. “Do they even believe in America and a fair justice system? Shame on them! Shame on everyone that will not speak out against this outrage. It’s enough.”

  Rep. Andy Biggs (R-Ariz.), a member of the House Judiciary Committee, said the Department of Justice “really wanted to make an example of Matthew Perna.”

  ‘Some of Them Have Been Tortured’

  Biggs said many of the Jan. 6, 2021, Capitol breach defendants who have been jailed for 14 months have experienced extended periods in solitary confinement.

  “Solitary confinement for more than two weeks in international law is considered torture,” he said. “These individuals, some of them have been tortured. That’s what’s going on here.”

  Biggs called out judges, “particularly the judges who’ve been biased because of political reasoning.”

  “Just stop it. This is America. You have to grant due process,” Biggs said. “The persecution that Matt Perna underwent by the mob on social media is too great for him to bear. We must correct it. We are a self-governing people. We can fix this, and we must fix this. This should never, ever be a situation again.”

  Geri Perna said the mistreatment that her nephew experienced will lead to more victims if something doesn’t change.

  “I agreed to come to this press conference today because I do not want Matthew Perna’s name forgotten,” she said. “There are hundreds of other people just like him, standing in his shoes. I do not know how much more they can take.

  “Still I promise you that if something is not done to stop this evil torture that is being inflicted upon these people who have not even been convicted of a crime, more are going to make the choice that Matthew Perna made.”

  Geri Perna said the silence from most of Congress is revealing.

  “Their silence speaks volumes. Shame on everyone who has a voice and could have intervened,” Perna said. “Maybe this tragedy would never have occurred. We are disappointed and angry. And we are seeking justice for Matthew Perna.

  “I stand here today only because my nephew is dead. No one cared about Matthew Perna’s sufferings at the hands of this Justice Department when he was alive. And now it is too late to help him. But anyone who knew Matt would say that he would want others to receive the help that he himself was denied.”

  Despite the hate mail directed at Matthew Perna’s father and other family members, Geri Perna said the family believes that Matthew is in Heaven.

  “He’s finally free. But the people responsible for this tragedy, they will stand before God someday for the part they played,” she said. “But there is an evil surrounding these same people, and I do not think that they are hoping to enter the gates of Heaven anyway.”

  Tyler Durden
  Mon, 03/21/2022 – 22:20

• Oil Price Spike Has Yet To Spark Gasoline Demand Destruction 
  Oil Price Spike Has Yet To Spark Gasoline Demand Destruction 

  Worries about demand destruction for gasoline appear overblown. Consumers are tolerating record-high prices at the pump as demand continues to rise. 

  US Energy Information Administration (EIA) data show gasoline prices are up a staggering 51% from a year ago, averaging around $4.32 a gallon on a national level.

  

  Record-high prices at the pump trigger fear that demand destruction is imminent, but that’s not what the data shows in the first half of March. 

  EIA noted gasoline consumption is up 6% over the year, to 8.9 million barrels per day for the week ending March 11. Demand was 2.3% higher than the two weeks prior. Over the last month, average weekly US gasoline consumption is up 8.6% versus the prior year, to 8.8 million barrels a day. 

  

  Skyrocketing fuel prices and significant inflationary pressure have yet to crimp demand as consumers appear to tolerate high prices as they must drive to work, drop off their kids at school, and run errands. Yes, millions of Americans are furious with the Biden administration about soaring costs but being irate and actually cutting back are two separate things. 

  “Higher oil and gasoline prices are certainly crimping consumer pocketbooks, but they are not yet causing a decline in demand,” research firm DataTrek said. 

  On Sunday, Patrick De Haan, head of petroleum analysis for Gas Buddy, verified the trend and said weekly gasoline demand “surged to highest since last summer.” 

  Weekly US gasoline demand surges to highest since last summer… data incoming

  — Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 20, 2022

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  DataTrek continued: “Given more workers commuting back to the office and incremental employment, we expect demand to continue to improve as the year continues. It always amazes us that the US uses the better part of 10 million barrels/day of gasoline…” 

  Consumers are reducing their discretionary spending to offset high gas prices. For instance, BofA’s research analyst Sara Senatore points out all restaurant spending through the week ending March 12 decelerated. The decline in restaurant spending coincides with the spike in fuel prices following Russia’s invasion of Ukraine in late February. 

  

  Other indications consumers are paring back discretionary spending comes from consumer goods companies who said their ability to continue raising prices has likely hit the ceiling. Macy’s Inc. CEO Jeff Gennette recently told WSJ that price increases on mattresses and sofas were met with fierce consumer pushback. Clothing brand Bella Dahl hiked shirt prices by $20 and immediately saw sales crater. “There was a revolt,” said Steven Millman, Bella Dahls’ brand officer. “If we go any higher, we’ll do half the sales.”

  The good news is Americans’ average monthly wage share for fuel costs is by far the least among all OECD countries. This means the wage share can increase though discretionary spending will decrease. 

  

  Gas is a necessity, and even though consumers complain about soaring prices, they are belt-tightening and reducing spending elsewhere to offset their driving needs. Prices might have to rise much higher to reach the demand destruction threshold. 

  Tyler Durden
  Mon, 03/21/2022 – 22:00

• Stockman Slams Zelenskyy's Hyperbole: Pearl Harbor My Eye!
  Stockman Slams Zelenskyy’s Hyperbole: Pearl Harbor My Eye!

  Authored by David Stockman via AntiWar.com,

  We were already getting sick and tired of this Zelensky clown, but the sheer chutzpah of comparing Ukraine’s predicament with Pearl Harbor or 9/11 is just fricking outrageous. To paraphrase Senator Lloyd Bensten’s famous retort to Dan Quayle in the 1992 VP debate: We knew the United States of America and Ukraine isn’t any United States.

  To the contrary, it is a cesspool of corruption, mal-governance and rank stupidity on the foreign policy front. For crying out loud, its situation is comparable to the drug cartels taking over Mexico, demanding the return of the Gadsden Purchase and then seeking to join a Russian-led anti-American treaty organization.

  That is to say, Ukraine brought the Russian attack on itself by poking the bear in its eyes repeatedly since the 2014 coup. Yet now its leader has the gall to petition the US Congress to start WWII via standing-up a No Fly Zone in lieu of the obvious solution: Namely, Zelensky should resign and make way for a collaborationist government that will sue for peace on the following basis:

  • Recognize that Crimea is Russian territory and always has been since it was purchased by Catherine the Great in 1783;

  • Permit the separation of the Donbass Republics from Ukraine because the overwhelmingly Russian speaking populations there has been part of “New Russia” for more than 300 years and do not wish to be ruled by the anti-Russian fascists and oligarchs who control Kiev;

  • Amend the constitution of the rump state of Ukraine to prohibit its joining NATO or any similar western alliance, while reducing its military to a domestic law enforcement agency.

  Those terms may seem harsh, but it’s the only alternative to the complete destruction of Ukraine and an eventual Russian win anyway. The fact is, the NATO cavalry simply ain’t coming no matter how many standing ovations are stumped up by the armchair warriors of the US Congress.

  That’s because even the bully boys of Washington and Brussels aren’t ready to trigger WWIII over the broken remnants of a country that never had been a country historically until Lenin, Stalin and Khrushchev made it an administrative district of the Soviet Empire – the latter being a stain on mankind that thankfully disappeared into the dustbin of history 31 years ago.

  Yet without direct US/NATO engagement with the Russian military forces now occupying growing segments of Ukrainian territory the expedient of sending arms – even highly advanced lethal anti-air and anti-tank weapons – is futile. Russia now has total air superiority over Ukraine’s skies, meaning that incoming NATO weapons (and the so-called “foreign legion” fighters, too) will be destroyed long before they can make a difference.

  So for god’s sake Washington needs to stop standing on ceremony and leading the hapless Ukrainian government down the primrose path to national destruction. There is no way out of the current catastrophe except for Washington to:

  • concede that recruiting Ukraine to join NATO and potentially putting NATO missile bases within one minute’s cruise missile flight time from Moscow was an egregious mistake; and

  • that its demonization of Putin as a modern day Hitler on a quest to revive the Soviet Empire is just plain War Party hogwash and is no justification for its sweeping Sanctions War, most especially if Kiev capitulates to Moscow’s terms.

  The truth, in fact, is more nearly the opposite. That is, there really are not two distinct nations there, one invading the other. Russia and Ukraine have never been neighboring independent states like Germany and France or Spain and Portugal or Columbia and Peru. To the contrary, they have been an intermingled territory and peoples for the last 1300 years with borders, governing arrangements episodic external invasions all over the lot.

  The Ukrainian language itself is testimony to that history and geography. The dialects spoken in the Donbas (brown and yellow areas) are a mixture of Ukrainian and Russian; the old Galician territories of Western Ukraine centered in Lviv (red areas) are heavily influenced by Polish, Slovakian and Rumanian vocabularies.; and the blue areas of the North present dialects heavily influenced by Belarusian.

  What is also true is that these segmented populations have never been united under a common polity except by communist arms between 1922 and 1991; then between 1991 and 2014 by tenuous and continuously shifting electoral balances after the Ukrainian administrative entity was arbitrarily disgorged from the old Soviet Union; and finally after the February 2014 coup by dint of a Kiev government based on central and western Ukraine that essentially declared a civil war on Crimea (which seceded) and the eastern, Russian-speaking Donbas regions that have tried to do the same.

  So again, what’s wrong with partition? At the end of the day, Zelensky stood before Congress and had the gall to demand WWIII in behalf of an abortion of a nation that has virtually no chance of long-term survival in its present form. Yet the knuckleheads from both parties are in such war heat that they vociferously applauded the unctuous rantings of a clown who should have stuck to the comedy business.

  

  Still, for want of doubt about the madness of defending Ukraine by economic warfare now, and military confrontation with Russia if the warmongers get their way, just recall how the arbitrary borders depicted above got here. If this mongrel merits all out defense in behalf of the “rule of law,” then the rule of law be damned.

  Kiev Is the Ancestral Homeland of Russia

  In the first place, Putin is essentially correct when he says that Russia and much of the Ukrainian territory have been one through long stretches of history. Ironically, therefore, the Kiev today being laid to waste by the Russian army is actually the birthplace of Russia!

  As an excellent Washington post history recently explained,

  The “Rus” – the people whose name got tacked on to Russia – were originally Scandinavian traders and settlers who made their way from the Baltic Sea through the marshes and forests of Eastern Europe down toward the fertile riverlands of what’s now Ukraine. Other Viking adventurers journeyed to Constantinople, the great capital of the Byzantine Empire, to find their fortune – sometimes as hired muscle.

  The first major center of the “Rus” was at Kiev, established in the 9th century. In 988, Vladimir, a prince of the Kievan Rus, was baptized by a Byzantine priest in the old Greek colony of Khersonesos on the Crimean coast. His conversion marked the advent of Orthodox Christianity among the Rus and remains a moment of great nationalist symbolism for Russians. Putin invoked this older Vladimir in a speech when justifying his annexation of Crimea.

  

  However, successive Mongol invasions beginning in the 13th century subdued Kiev’s influence, and led the Russians to eventually migrate north. That led to the rise of other Rus settlements including Moscow, while the Turkic descendants of the Mongol Golden Horde formed their own Khanate along the northern rim of the Black Sea and Crimea.

  During the next several centuries the Ukrainian territory was a no man’s land, hosting successive invasions and occupations by external forces. The land that’s now Ukraine lay on the margins of competing empires, making it a region of permanent contest and shifting borders.

  At length, the Polish-Lithuanian Commonwealth, which, at its peak encompassed a huge swath of Europe, dominated much of the land. But over the centuries Ukraine would also see the incursions of Hungarians, Ottomans, Swedes, bands of Cossacks and the armies of successive Russian czars.

  By the late 17th century after much of Europe had congealed into today’s borders, there was still no nation of Ukraine. Instead, as these meandering borders appeared and disappeared repeatedly, Russia and Poland (Polish-Lithuanian Commonwealth) eventually split much of the territory of what’s now Ukraine along the Dnieper River, as shown in the map below. Approximately 355 years ago (1667), to be exact, the areas to the east of the Dnieper, which now include the Donbas, were acquired by Russia and incorporated into the Russian State.

  So, yes, the current day rebel provinces in the Donbas, which were giving partial autonomy from Kiev by the Minsk Agreements of 2015, have actually been “Russian” for more than three and one-half centuries and “Ukrainian” for about 31 years. Or as Secy Blinkey would say, because it’s borders.

  The Rise of New Russia

  Russia’s advance continued a century later during the 18th century rule of Catherine the Great, who proclaimed her domains along the Black Sea constituted “Novorossiya” or “new Russia.” Back then, the Russian court even harbored dreams of collapsing the Ottoman empire entirely, extending Moscow’s reach to Istanbul and even Jerusalem.

  The infamous architect of Catherine’s imperialism, Grigoriy Potemkin, thus told his sovereign:

  Believe me, you will acquire immortal fame such as no other sovereign of Russia ever had,” when offering the empress counsel in 1780 on plans to wrest Crimea away from Ottoman suzerainty. “This glory will open the way to still further and greater glory.”

  Meanwhile, the partitions of Poland in the late 18th century led to the city of Lviv– once a major regional hub and a center of Jewish culture in Eastern Europe – falling under the rule of the Austro-Hungarian empire. So even in the west there was still no state of Ukraine, but as the Washington post further noted,

  It was there in the mid-19th century where Ukrainian nationalism began to take hold, rooted in the traditions and dialects of the region’s peasants and the aspirations of intellectuals who had fled the stifling rule of Russia rule further to the east.

  

  The State the Commies Made

  The striking thing is that as of 1900, when much of Europe was fully formed albeit in part under the rubric of the Hapsburg’s empire, there was still no nation called Ukraine. In the east, Russia and today’s Ukrainian territories were one, while in the west the Galician territories were part of the Hapsburg Empire.

  Needless to say, World War I and the Bolshevik revolution in 1917 triggered more traumas and upheaval in the areas that now constitute Ukraine. The new Bolshevik government was desperate to end hostilities with Germany and its allies and signed a treaty in the town of Brest-Litovsk in 1918 . As the Washington Post further amplified, the treaty ceded,

  ….some of Russia’s domains to the Central powers and recognized the independence of others, including Ukraine.

  The terms of the treaty were nullified by Germany’s defeat later in the year, but the genie of Ukrainian nationalism was out of the bottle. Independence movements of various stripes sprung up in cities like Lviv, Kiev and Kharkiv, but were eventually all swept away amid the wider struggle for power in Russia.

  

  That struggle was mightily fueled at the misbegotten Versailles “peace” conference where the long dead nation of Poland was revived by Woodrow Wilson. The latter nearly single-handedly resurrected the nation of Poland, doing so with a keen eye not to the historic maps of Europe but to the polish vote in Cleveland, Detroit and Chicago.

  Soon thereafter a revived Poland reclaimed Lviv and a chunk of what’s now western Ukraine on the grounds that this was sacred Polish, not Ukrainian, territory.

  In any event, the region became a key battleground of the Russian Civil War, which pitted Bolshevik forces against an array of White Russian armies, led by loyalists to the old czarist regime as well as other political opportunists. After a lot of bloodshed – and other battles with Poland – the Bolsheviks emerged triumphant and officially declared the Ukrainian Socialist Soviet Republic in 1922.

  At long last, therefore, the maps of the world now at least had something that roughly resembled modern Ukraine – even if it was wrested by Bolshevik rifles.

  The years that followed, however, would be even more traumatic. In the late 1920s and early 1930s, Ukraine suffered heavily under the rule of Soviet despot Josef Stalin. A vast segment of Ukraine’s rural population was displaced and dispossessed by Stalin’s aggressive collectivization policies. A man-made famine (the Holodomor) in 1932-3 led to the deaths of some three million people.

  To make up the numbers, Russian speakers from elsewhere immigrated to eastern Ukraine’s hollowed out towns and cities, leaving a demographic footprint that defines Ukraine’s divisive politics to this day.

  As shown in the map below, the tiny principality of Ukraine as of 1654 (dark blue area) had not been much to write home about until the Russians – Czars and Commissars, alike – bestirred themselves with nation-building. Russian nation-building, that is.

  The yellow areas being the winnings of Catherine the Great and other Russian Czars over 1654-1917, while the added territories seconded by Lenin’s Red Army are represented by the purple area of the map below. These were historic “new Russia” territories added to the Ukraine administrative entity for ease of Communist rule.

  Later came the rest of Ukraine proper via added gifts from Stalin’s Red Army (light blue area, 1939-1945) . These territories were stolen from the modern artificial state of Poland confected at Versailles. And the previously mentioned gift of Crimea (red area) was added by Khrushchev in 1954.

  In short, it needs be recalled that America’s borders were established by democratic politicians and have stood the test of 167 years of time during which they have been perfectly fixed. By contrast, today’s Ukraine depicted below is the handiwork of tyrants and commies, which changed by the decade.

  So the question recurs. Who in their right mind would select the historical mongrel depicted below to bring the world to the brink of nuclear war in order to establish the purported universal rule of law and sanctity of borders?

  

  Indeed, we’d say it’s only folks who have lost their minds to the TDS (Trump Derangement Syndrome). This entire imbroglio, in fact, is not about the nation of Russia, the rule of law, foreign policy or the genuine safety and liberty of the American homeland.

  To the contrary, it’s about a single member of the 7 billion-strong human race – the utterly demonized, vilified and reviled Vladimir Putin. The Biden mainstream of the Dem party is still not over the shock of November 2016, and apparently mean to do battle permanently with the ogre of Moscow whom they falsely hold accountable for their own self-inflicted defeat.

  As it happens, their endlessly repeated mantra that Putin’s expansionist intentions were revealed when he “seized” Crimea in 2014 tells you all you need to know. That claim is so hypocritical, threadbare and tendentious that only minds possessed with TDS would even dare to peddle it.

  That’s because it amounts to saying is that the dead hand of the Soviet presidium must be defended at all costs – as if the security of North Dakota depended upon it!

  As previously mentioned, however, the allegedly “occupied” territory of Crimea was actually purchased from the Ottomans by Catherine the Great in 1783, thereby satisfying the longstanding quest of the Russian czars for a warm-water port. Over the ages, Sevastopol then emerged as a great naval base at the strategic tip of the Crimean peninsula, where it became home port to the mighty Black Sea Fleet of the czars and then the Soviet commissars, too.

  For the next 171 years Crimea was an integral part of Russia (until 1954). And that’s a fact that you can look up in the Google/CIA archives!

  In fact, that span equals the 170 years that have elapsed since California was annexed by a similar thrust of “Manifest Destiny” on this continent, thereby providing, incidentally, the United States Navy with its own warm-water port in San Diego.

  While no foreign forces subsequently invaded the California coasts, it was most definitely not Ukrainian rifles, artillery and blood that famously annihilated The Charge of the Light Brigade at the Crimean city of Balaclava in 1854, either: The defending combatants were Russians fighting for their homeland against invading Turks, French and Brits.

  At the end of the day, security of its historical port in Crimea is and long has been Russia’s Red Line, and thereby none of Washington’s business.

  Unlike today’s feather-headed Washington pols, even the enfeebled Franklin Roosevelt at least knew that he was in Soviet “Russia” when he made port in the Crimean city of Yalta in February 1945.

  Maneuvering to cement his control of the Kremlin in the intrigue-ridden struggle for succession after Stalin’s death a few years later, Nikita Khrushchev allegedly spent 15 minutes reviewing his “gift” of Crimea to his subalterns in Kiev.

  As it happened, therefore, Crimea became part of the Ukraine only by writ of the former Soviet Union:

  On April 26, 1954 The decree of the Presidium of the USSR Supreme Soviet transferring the Crimea Oblast from the Russian SFSR to the Ukrainian SSR. Taking into account the integral character of the economy, the territorial proximity and the close economic and cultural ties between the Crimea Province and the Ukrainian SSR….

  So, yes, there is every reason for a Kiev government which finally sues for peace to return Crimea to Russia, which owned it all along; and in which Ukrainians accounts for less than 15% of the predominant Russian speaking population. For Washington to claim otherwise and encourage Zelensky to hold out is tantamount to a naked case of hegemonic arrogance.

  After all, during the long decades of the Cold War, the West did nothing to liberate the “captive nation” of Ukraine – with or without the Crimean appendage bestowed upon it in 1954. Nor did it draw any red lines in the mid-1990s when a financially desperate Ukraine rented back Sevastopol and the strategic redoubts of Crimea to an equally pauperized Russia.

  In short, in the era before we got our Pacific port in 1848 and even during the 170-year interval since then, America’s national security has depended not one whit on the status of Russian-speaking Crimea and the Donbas regions of eastern Ukraine. The fact that the local population of the former in March 2014 chose fealty to the Grand Thief in Moscow over the ruffians and rabble that have seized Kiev amounts to a giant, “So what?”

  Still, it was this final aggressive drive of Washington and NATO into the internal affairs of Russia’s historical neighbor and vassal, Ukraine, that largely accounts for the current dangerous confrontation. Likewise, it is virtually the entire source of the false claim that Russia has aggressive, expansionist designs on the former Warsaw Pact states in the Baltics, Poland and beyond.

  The latter is a nonsensical fabrication. In fact, it was the neocon meddlers from Washington who crushed Ukraine’s last semblance of democratic governance when they enabled ultra-nationalists and crypto-Nazis to gain government positions after the February 2014 coup, which threw-out Ukraine’s legitimately elected, Russia-leaning president.

  In this context, moreover, the history of the 1930s and 1940s must never be forgotten. As indicated above, Stalin decimated upwards of 15% of the Ukrainian population during the Holodomer (starvations) and then moved huge numbers of Russian-speakers into the Donbas to safeguard its chemical, steel and armaments industries from the defiant locals who were sent to Siberia.

  Thereafter, when Hitler’s Wehrmacht came charging through Ukraine on its way to the bloody battle of Stalingrad, it had no trouble recruiting hundreds of thousands of vengeance-seeking Ukrainian nationalists to its ranks to do its dirty work: That is, the brutal liquidation of Jews, Poles, Gypsies and other untermenschen.

  In fact, during the fall of 1941 began the mass killings of Jews that continued through 1944. An estimated 1.5 million Ukrainian Jews perished, and over 800,000 were displaced to the east; at Baby Yar in Kyiv nearly 34,000 were killed in just the first two days of massacre – and all of these depredations were assisted and often executed by local Ukrainian nationalists.

  Then, of course, the tide turned and the Red Army came marching back though the rubble of Ukraine on its way to Berlin. After their victory over the Germans at the Battle of Stalingrad in early 1943, the Soviets launched an equally brutal scorched earth counteroffensive westward, searching high and low for traitors and collaborators among the Ukrainian population who had allegedly aided the Wehrmacht.

  The Germans thus began their slow retreat from Ukraine in mid-1943, leaving wholesale destruction in their wake. In November the Soviets reentered Kyiv, where guerrilla activity intensified amid bloody revenge killings which claimed huge numbers of civilian victims. By the spring of 1944 the Red Army had penetrated into Galicia (western Ukraine), and by the end of October Ukraine was a bloody wasteland, once again under Red Army control.

  So it may be fairly asked: What Washington lame brains did not understand that triggering “regime change” in Kiev in February 2014 would reopen this entire blood-soaked history of sectarian and political strife?

  Moreover, once they had opened Pandora’s Box, why was it so hard to see that an outright partition of Ukraine with autonomy for the Donbas and Crimea, or even accession to the Russian state from which these communities had originated, would have been a perfectly reasonable resolution?

  Certainly that would have been far preferable to dragging all of Europe into the lunacy of the current military showdown and further embroiling the Ukrainian factions in a suicidal civil war.

  Needless to say, Zelensky gets none of this in the slightest – even though as a native and Russian speaking son of southeastern Ukraine, he actually grew up in a part of modern Ukraine that had been Russian for 370 years!

  That’s right. He’s just the perennial short guy feasting on his 15 minutes of fame. But enough is enough already. In a rational world this double-talking creep should have been sent packing this morning by the US Congress, but these war-obsessed nincompoops can’t see the handwriting on the wall.

  So once again, here it is. This is where the story ends – even as Washington wages Sanctions War on the entire global economy and thereby the American people as well.

  How Ukraine Will Be Partitioned After Kiev Capitulates

  

  In any event, a TV actor who has no script other than that handed to him by his Washington/NATO overseers is one thing. And at the end of the day, it small potatoes compared to the grotesque negligence and misdirection of Sleepy Joe’s own keepers.

  That is to say, Secy Blinkey and Snake Sullivan should be bent over the above map in earnest conversation with their Russian counterparts as to the fine points of the partition, and the meaning of “neutrality,” “de-nazification” and “demilitarization” of the green area of the map, which is to become the future “Ukraine,” if there is to be anything left at all.

  Needless to say, they are not even talking to the Russians. They are, in fact, so red in tooth and claw with the blood of economic warfare that they would drive the global economy to collapse rather than acknowledge that they – and they alone – brought this horrendous situation to the doorstep of the world.

  Tyler Durden
  Mon, 03/21/2022 – 21:40

• Elon Musk Says Starlink Internet Access Is Ready In Ukraine
  Elon Musk Says Starlink Internet Access Is Ready In Ukraine

  It looks as though Elon Musk has officially activated Starlink internet service in Ukraine. Over the weekend, the Tesla CEO said that SpaceX had activated the service after officials in Kyiv lobbied for stations. 

  Musk heard the call, and Tweeted this weekend: “Starlink service is now active in Ukraine…more terminals en route.”

  Ukrainian Minister of Digital Transformation Mykhailo Fedorov had lobbied for Musk’s help immediately after his country was invaded by Russia, a new report from Yahoo News says. 

  “While you try to colonize Mars — Russia try to occupy Ukraine! While your rockets successfully land from space — Russian rockets attack Ukrainian civil people! We ask you to provide Ukraine with Starlink stations,” he pleaded with Musk on Twitter. 

  

  Additionally he asked Musk “to address sane Russians to stand” against Russia’s invasion. The country has seen a “series of significant disruptions to internet service”, according to internet monitor NetBlocks.

  Curiously, an unlisted video appeared on the internet about a week and a half ago showing how to set up and use the Powerwall as a mobile power station. The video appeared after Tesla sent equipment to Ukraine to try and help ensure uninterrupted internet, Tesmanian wrote.

  The video shows how you can deploy a mobile power station in minutes without actually taking the equipment out of the box. To do this, you need to get the cables and connect them together in the appropriate order. The video also demonstrates how solar panels can be easily connected to the Powerwall, which will charge the battery, so you can get an independent power source even in the field.

  Starlink is hoping its more than 2,000 satellites will help not only Ukraine, but the rest of the planet, have access to internet. 

  Here’s a copy of the unlisted YouTube setup video. It has been viewed almost 14,000 times:

   

  Tyler Durden
  Mon, 03/21/2022 – 21:20

• Volatile Commodities Force Investors To Sell
  Volatile Commodities Force Investors To Sell

  By Tatiana Darie, Bloomberg Markets Live commentator and analyst

  Nickel’s blowout and oil’s roller-coaster this year show commodities have become more volatile across the asset class. That’s a problem because volatility begets volatility as investors are forced to rein in exposure or pay higher hedging costs.

  In the five years before Covid-19 struck markets, the Bloomberg Commodity Index saw daily moves larger than two-standard deviations on average about 14 times per year. Then, in the past year, we suddenly had 33.

  The index’s absolute daily average move has increased by 38% over the past year. Its standard deviation rose to 1.2% from 0.8% during March 2015-2020.

  Looking under the hood also reveals that 16 out of 23 components in the index had a similar dynamic: they’ve moved above or below two-standard deviations more often in the past year than pre-pandemic. Also, 17 out of 23 commodities have seen their absolute average daily move increase since 2021 versus the prior period.

  

  Big swings make it harder to trade and also make hedging more expensive. It forces money managers targeting a certain level of volatility across portfolios to cut exposure. Greater volatility also creates higher hedging costs via options pricing.

  That’s part of the reason why hedge funds have been selling in recent weeks, taking some steam out of the sector’s rally, according to Saxo Bank’s head of commodity strategy Ole Hansen. And that’s also why oil slumped last week.

  That, coupled with the fact that a quick jump in prices tends to hurt demand, could spell risks for the best performing major asset class this year and the most crowded long trade, per Bank of America’s latest global fund survey for the week ending March 10.

  

  A breakdown of the most volatile commodities shows natural gas, aluminum and soybean oil at the top, seeing nearly three, four and six times more two-sigma events over the past year versus the average of the pre-pandemic period. What used to be a two-standard deviation move for soybean oil, one of the most used in cooking, has become the norm, being exceeded in almost every fourth session since March 2021.

  Surprisingly, nickel, Brent and crude oil have been among the more stable commodities, seeing fewer outsized moves. Brent has actually seen its average absolute daily move slip to 1.58% over the past year from 1.60% seen pre-pandemic. At 1.71%, WTI’s is largely unchanged.

  Other resources that have seen large moves less frequently than in the past include: gasoline, lean hogs, sugar and live cattle.

  The study analyzed futures daily price movements to look at how many times a given commodity moved outside of its pre-pandemic two-standard deviation derived from March 9, 2015 to March 9, 2020. It then applied it to the past year starting March 9, 2021.

  As market observers like to say, commodities are their own worst enemies when they jump in price as quickly as they did in March. They’ve proved to be a great bet for investors this year so far, but only for those who’re able to handle the stomach-churning gyrations.

  Tyler Durden
  Mon, 03/21/2022 – 21:00

• Microsoft "Investigating" Potential Breach Of Internal Systems By Group Known For Demanding Bizarre Ransom
  Microsoft “Investigating” Potential Breach Of Internal Systems By Group Known For Demanding Bizarre Ransom

  Microsoft is in the midst of investigating whether or not a “extortion-focused hacking group” has gained access to its internal systems, according to a Monday morning report from Vice. 

  The group in question, LAPSUS$, had formerly compromised companies like Ubisoft and Nvidia. In the case of Nvidia, the group made ransom demands of asking the company to “unlock aspects of its graphics cards to make them more suitable for mining cryptocurrency”. 

  So far, the group has not made any demands of Microsoft, the report says.

  But over the weekend the group put up images of what Vice says “appeared to be an internal Microsoft developer account to their Telegram channel”. The shot appeared to be from an Azure DevOps account and showed projects called “Bing_UX”, “Bing-Source” and “Cortana.”

  

  The terms  “mscomdev,” “microsoft,” and “msblox,” were also included in the screenshot. 

  The image was deleted shortly after it was posted, with an administrator of the channel writing: “Deleted for now will repost later.”

  Microsoft has commented that they are “aware of the claims” and are “investigating”. 

  The group said earlier this month that it was recruiting employees inside of companies like Microsoft. They also listed Apple and IBM as companies where they were looking for insiders to work with. 

  In the last 3 months alone, the group has “breached the Ministry of Health of Brazil, a slew of Brazilian and Portuguese companies, and then Nvidia and Samsung”, the report wrote. They also took credit for breaching Ubisoft earlier this month. 

   

  Tyler Durden
  Mon, 03/21/2022 – 20:40

• Peters: In The Decades To Come, Nuclear Weapons Will Be Thing Protecting Putin From 1.4 Billion Chinese On His Southern Border
  Peters: In The Decades To Come, Nuclear Weapons Will Be Thing Protecting Putin From 1.4 Billion Chinese On His Southern Border

  By Eric Peters of One River Asset Management

  “War is the continuation of politics by other means,” explained The Commander, quoting Carl von Clausewitz, the famous Prussian general and military theorist. “Von Clausewitz advocated that you continue to pound your enemy, you don’t stop a fight until you negotiate an end to it,” he added. “We tend to pause our military actions during negotiations, but Russia is doing as von Clausewitz advised. Putin is continuing to attack even as talks with Ukraine are taking place,” said The Commander. “All military leaders and strategists study von Clausewitz. And we all know our adversaries have internalized his work. Our weapons are more brutal today, but the theories are the same as when he wrote On War in the early 1800s.”

  

  “War is the realm of uncertainty; three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty,” wrote Carl von Clausewitz in the early 1800s. “A sensitive and discriminating judgment is called for; a skilled intelligence to scent out the truth,” continued the Prussian general and military theorist. Like so many of our greatest thinkers, von Clausewitz trained his sights on the essence of what it means to be human. He narrowed that focus to how we behave in times of conflict, which is to say, much of the time. Even now, with a full-scale war underway in Ukraine, a lesser battle has begun over inflation, and a long-simmering conflict over the dollar’s prominence as the global reserve currency is heating up. The backdrop to these conflicts is the internal division we see throughout much of the West, and this is set against the world’s authoritarians who are tightening their grip, attempting to consolidate power. These issues are inextricably woven. All times are unique, and what makes this one unlike others is the degree to which we are all connected, our world shrinking. It both raises the costs of failure and presents new opportunities, possibilities. “No one starts a war – or rather, no one in his senses ought to do so – without first being clear in his mind what he intends to achieve by that war and how he intends to conduct it,” wrote Clausewitz. And we are left to imagine exactly what the protagonists in the conflicts now underway over Ukraine, inflation, and the dollar, intend to achieve and what they are willing to undertake to claim their objectives. “If the mind is to emerge unscathed from this relentless struggle with the unforeseen, two qualities are indispensable,” wrote Clausewitz. “First, an intellect that, even in the darkest hour, retains some glimmerings of the inner light which leads to truth; and second, the courage to follow this faint light wherever it may lead.”

  Military Minds: Carl von Clausewitz’s thoughts on war: – There are times when the utmost daring is the height of wisdom. – Theory must also take into account the human element; it must accord a place to courage, to boldness, even to rashness. – Everything in war is very simple, but the simplest thing is difficult. – There are very few men, and they are the exceptions, who are able to think and feel beyond the present moment. – If we read history with an open mind, we cannot fail to conclude that, among all the military virtues, the energetic conduct of war has always contributed most to glory and success.

  Military Minds II: – The backbone of surprise is fusing speed with secrecy. – If the leader is filled with high ambition and if he pursues his aims with audacity and strength of will, he will reach them in spite of all obstacles. – If we have made appropriate preparations, taking into account all possible misfortunes, so that we shall not be lost immediately if they occur, we must boldly advance into the shadows of uncertainty. – The Statesman who, knowing his instrument to be ready, and seeing War inevitable, hesitates to strike first is guilty of a crime against his country.

  Strength: “Powell developed a doctrine of projecting overwhelming force,” said The Commander, referring to Colin the General, not Jerome the Chairman, who fired last week’s tiny 25bp warning shot at a raging 7.9% inflation advance. “The idea is that there are people in the world who understand one thing, and that is power,” said The Commander. “Powell believed that the best way to avoid conflict was by making it clear to our adversaries that an act of aggression would be met with devastating force.” The Powell Doctrine led to the military buildup ahead of the 1990-91 Gulf War and emphasized ground forces together with widespread public support.

  Weakness: “Kind-hearted people might of course think there was some ingenious way to disarm or defeat an enemy without too much bloodshed and might imagine this is the true goal of the art of war,” wrote Carl von Clausewitz. “Pleasant as it sounds, it is a fallacy that must be exposed; war is such a dangerous business that the mistakes which come from kindness are the very worst,” continued the Prussian. “If our opponent is to be made to comply with our will, we must place him in a situation which is more oppressive to him than the sacrifice which we demand; but the disadvantages of this position must naturally not be of a transitory nature, at least in appearance, otherwise the enemy, instead of yielding, will hold out, in the prospect of a change for the better.”

  Action: “For political and social as well as for military reasons the preferred way of bringing about victory was the shortest, most direct way, and that meant using all possible force,” wrote Clausewitz. “The truth is that there are goons in this world, and they respect only one thing – strength – that’s it,” explained The Commander. “It is tempting to believe we’ve evolved past that kind of thinking, but it is wrong, we haven’t,” he said. “And this can at times create friction between politicians and military leaders, because politicians often seek to avoid conflict in the early stages, while military leaders understand that it is generally best to shut down conflict before it has even started, or at least in its earliest stages. Politicians and military commanders have the same goals, but different experiential perspectives.”

  Anecdote: “Clausewitz taught that we must dismantle our enemy’s center of gravity to achieve victory,” said The Commander. “Each nation has strengths and weaknesses, and it’s natural to capitalize on weakness,” he added. “But it is critical to pick apart the strengths that make up the center of gravity,” explained The Commander. “In the case of the US, our core strengths are superior communications, logistics, and our carrier fleet.” Added to this would undoubtedly be our control of the global reserve currency and payments systems. “So it should not be a surprise that China has invested heavily in offensive space capabilities to target our communications. And they are very focused on hypersonic weapon development to neutralize our carriers.”

  Efforts to unseat the dollar and create an alternative global payments system is also targeting our center of gravity. “In Putin’s case, his center of gravity in this conflict is his proximity. His supply lines are short, so it’s particularly devasting for him that his army failed so badly without anyone else’s help when it came to logistics,” said The Commander. “He miscalculated Ukrainian resistance, but worse still was the misjudgment of his own forces. And what you can now see is that his army is out of practice, and perhaps the worst thing is that it lacks agility,” he said. “In business and markets, I’m sure you understand the importance of agility. Well, in warfare, agility is vital to victory. And the US has the resources to train regularly. A modern army is incredibly complex and requires regular training, exercises.”

  The Russians don’t have these resources and haven’t fought a major war in too long. “Putin understands his many weaknesses. He has no real ability to project force on a global basis other than nuclear. So that is why he’s directed his limited resources to those capabilities.” In the decades to come, they will be the only thing protecting his vast territories and shrinking population from 1.4bln Chinese on his southern border. “And the risk now, learning from Clausewitz, is that the weakness of Putin’s conventional force leads him to abruptly jump to a nuclear conflict. He’s a cornered rat. I wouldn’t rule anything out.”

  Tyler Durden
  Mon, 03/21/2022 – 20:20

• Aviation Experts Baffled By Crash Of China Eastern Airlines Flight MU5735
  Aviation Experts Baffled By Crash Of China Eastern Airlines Flight MU5735

  Monday’s devastating crash of a Boeing 737 operated by China Eastern Airlines has gripped the US aviation industry (aka Boeing) in what’s shaping up to be another major scandal barely a year after the plane manufacturer had finally managed to move beyond the disastrous rollout of the 737 MAX 8, which left hundreds dead as a design flaw led to two crashes, one in Ethiopia and the other in Indonesia.

  Those crashes prompted global groundings and an extensive investigation which revealed that the FAA had essentially abdicated its oversight responsibility – while one internal Boeing email blasted the MAX 8 for being designed by “clowns who were overseen by monkeys”.

  

  As if the crash itself wasn’t embarrassing enough for the jet-maker, footage of the incident showing the plane essentially falling out of the sky has been seen by thousands, if not millions, of people, many of whom are already hoping for answers.

  Chinese airlines haven’t bought any new Boeing planes for years at this point, and Monday’s crash raises the possibility that Boeing could be barred from the world’s second-largest market for air travel.

  Local Chinese media reported shortly afterward that the crash had been caused by an electrical failure, but whether this is actually true remains unclear. At this point, little is known for certain about the circumstances surrounding the crash (and it will take investigators days, if not weeks, to examine the data from the plane’s “black box”, which must be recovered from the crash site in a mountainous region in Guangxi Province.

  

  But as the investigation begins, the only thing we know for certain is that China’s first passenger airline crash in a decade is extremely unusual as far as plane crashes go. Why? Because, as the video below shows, the plane essentially dropped out of the sky, with the nose of the plane declining at an extreme angle.

  According to experts quoted by Bloomberg, this gives the incident an extremely unusual profile.

  While there have been a handful of crashes in which an airliner plunged from cruising altitude, few, if any, fit the extreme profile of the Boeing Co. 737-800 as it pointed steeply toward the ground, according to veteran crash investigators and previous accident reports.

  “It’s an odd profile,” said John Cox, an aviation safety consultant and former 737 pilot. “It’s hard to get the airplane to do this.”

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

  Just look at the angle of the plane seen in footage of the crash, which has been circulating on social media.

  Dashcam footage of the China Eastern MU5735 crash. pic.twitter.com/H1MRgBWaAl

  — Ian Miles Cheong (@stillgray) March 21, 2022

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  Aviation experts were shocked by the angle of the descent, which was essentially straight down…

  

  …as the plane went from cruising altitude to dropping out of the sky in under two minutes, according to data from flight-tracking services.

  

  The National Transportation Safety Board has already appointed a senior air safety investigator to investigate the incident (although given the pandemic-related travel restrictions still in place in China, it’s unclear how long it will take for US investigators to arrive on scene).

  But as the investigation begins, aviation experts are already saying that the footage of the crash and the data cited above raises more questions, while offering few answers.

  #Chinacrash — It’s often pretty clear in the hours after an airliner crash what the outlines of the failures were. I don’t feel that way at all in this case. #ChinaEastern https://t.co/u9nxqEUJ73

  — Alan Levin (@AlanLevin1) March 21, 2022

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  And as the world waits to learn more, here’s what we know so far.

  • Flight MU5735 was flying at an altitude of about 29,000 feet roughly 100 miles from its destination, about the point at which the pilots would begin the process of descending, when it started plunging at a far greater rate than normal. Instead of gradually dropping by a few thousand feet per minute, the plane began falling at more than 30,000 feet per minute within seconds, according to tracking data logged by Flightradar24.

  • Flight-tracking data show that the plane dropped by 26,000 feet in the span of one minute, 35 seconds.

  • In an unusual twist, the plane’s dive appeared halt for about 10 seconds, and it climbed briefly, adding an unusual twist to the scenario, before resuming the plunge. “It’s very odd,” said Jeff Guzzetti, the former accident investigation chief for U.S. Federal Aviation Administration.

  • While there are some precedents in which passenger planes suddenly dropped from cruising altitude, most of these cases have important differences. For example, Air France Flight 447, which went down in the Atlantic Ocean on June 1, 2009, fell much slower and more erratically after speed sensors iced up and pilots became confused. All 228 people aboard that flight died.

  • Another similar crash occurred on Dec. 19, 1997, when a pilot with Silk Air 737-300 carrying 104 people dove into a river in Indonesia, killing everyone on board. That plane plunged at more than 38,000 feet per minute, according to Indonesian regulators, who concluded that the pilot likely crashed the plane deliberately.

  • Is that what happened in this case? Well, it’s unclear. The 737-800, like most other jetliners, is designed so that it won’t normally dive at steep angles. Forcing the plane to do so would likely require an extreme effort by a pilot, or a highly unusual malfunction.

  • It’s possible the pilot could have suffered a heart attack or some other medical emergency and slumped onto thte control column, lowering the nose.

  Earlier this evening, Boeing CEO David Calhoun sent a message to all employees:

  We are deeply saddened by the news of the accident involving a China Eastern Airlines 737-800 airplane. The thoughts of all of us at Boeing are with the passengers and crew members on Flight MU 5735, as well as their families and loved ones.

  We have been in close communication with our customer and regulatory authorities since the accident, and have offered the full support of our technical experts to the investigation led by the Civil Aviation Administration of China.

  I will keep you apprised of information about the accident as investigation protocols allow. In the meantime, trust that we will be doing everything we can to support our customer and the accident investigation during this difficult time, guided by our commitment to safety, transparency, and integrity at every step.

  Dave

  Answers will likely be forthcoming, although we suspect, given the crash occurred in China, may not be timely. But one thing is clear: something must have gone seriously wrong for the nose of the plane to have declined at such an extreme angle.

  “You need something to hold the nose down,” said Benjamin Berman, a a former NTSB investigator who has experience flying 737s.

  Tyler Durden
  Mon, 03/21/2022 – 20:00

• One Week After Calling Them "Uninvestable", JPMorgan Says Chinese Stocks Are A Buy
  One Week After Calling Them “Uninvestable”, JPMorgan Says Chinese Stocks Are A Buy

  By Ye Xie, Bloomberg Markets Live commentator and analyst

  Depending on whom you listen to at JPMorgan Chase, some Chinese stocks are either “uninvestable” or a screaming buy. While it’s not unusual for different teams at the same bank to have opposite calls, this episode of “JPMorgan versus JPMorgan” shows how divided the markets have become when it comes to China. One thing is for sure: For the markets to recover, Beijing has to back up its words with actions to shore up the economy.

  Chinese stocks lost some momentum Monday after exhibiting the start of a V-shape recovery last week. The State Council pledged stronger monetary policy support for the economy, but also cautioned against flooding the market with liquidity. Top leaders’ vow to stabilize the market has stopped the panic, but investors are waiting for concrete steps to address key concerns, including potential delistings from U.S. exchanges, geopolitical risks and Covid outbreaks.

  The tug-of-war between fear and hope is on full display among JPMorgan’s strategists. JPMorgan analyst Alex Yao caused a splash last week with aggressive cuts to price targets for Chinese internet stocks, contributing to the panic selling last Monday. Saying global investors are undergoing a “regime shift” for pricing in China’s geopolitical risks, Yao recommended his clients avoid the whole sector because the market has become too unpredictable.

  The changes to his calls were almost epic. His price target for Alibaba, for instance, was slashed from $180 to $65. It’s the lowest among analysts surveyed by Bloomberg, and implies another 37% decline from the current level.

  

  Yet just days later, Marko Kolanovic, JPMorgan’s co-head of global research in New York and a widely followed quant guru, came out with a call to buy “beaten-up” stocks, including Chinese, EM, tech, biotech and small caps. “We think tail risks related to China will not materialize,” he wrote in a note published Monday.

  

  Meanwhile, adding to the confusion, his colleagues on the equity team maintain an “overweight” rating on China, saying they are “increasingly confident that a China macro policy pivot will produce strong GDP growth acceleration” and they see “meaningful equity risk premium priced in.”

  To be sure, Kolanovic didn’t specify Chinese internet stocks per se, and he’s been optimistic on China for a while. But given the heavy weighting of tech stocks, it’s hard to have a bullish view on China with a doomsday view on the sector.

  In any case, for Kolanovic to trump his colleague in Hong Kong, he needs Beijing to deliver what’s been promised.

  Tyler Durden
  Mon, 03/21/2022 – 19:40

• April 2020 But In Reverse: One Bank Warns We Are About To Witness A Historic Short Squeeze Eruption In Oil
  April 2020 But In Reverse: One Bank Warns We Are About To Witness A Historic Short Squeeze Eruption In Oil

  We have repeatedly warned that Cushing balances would be tight in coming months due to limited crude oil production growth and strong refinery and export demand…

  WTI Soars Back Above $95 As “Tank Bottoms” Are Close At Cushing https://t.co/Dpev2jL1Vy

  — zerohedge (@zerohedge) February 16, 2022

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  … and now, the Ukraine conflict clearly presents the risk of even greater tightness as report after report from various bullish Wall Street banks warn. Indeed, as BofA’s commodities team writes in a must read note titled “Cushing’s Cushion Wears Thin” published today (available to professional subs), WTI timespreads soared to decade highs ($11.70 for WTI 1-3 spread) recently and have since settled down at still elevated levels, discouraging oil storage. As a result, inventories at Cushing hub have drawn roughly 13 million bbl ytd, reaching 24mn bbl last week, the lowest seasonal level in the shale era. Now, storage levels are likely near operational minimum levels, or “tank bottoms.”

  

  According to BofA, given current backwardation levels, a good portion of these inventories are likely used for blending operations and as a backstop for pipeline flows. Thus, they may not be eligible for delivery against the WTI contract.

  Making matter worse, as inventories trend near operational minimum levels, nearly every price signal is discouraging oil flows to Cushing and will likely limit resupply. To wit: Midland WTI is fetching a $1.50/bbl premium over Cushing, limiting northbound flows to Cushing. Meanwhile, Bakken-WTI spreads of $5/bbl suggest that Bakken barrels may be more likely to bypass Cushing and flow directly to the USGC market. Recent strength in WCS (Cushing) vs WTI spreads, coupled with rich Bakken and Niobrara differentials should also discourage blending to WTI spec.

  

  Finally, WTI-Brent spreads hit multi-year lows of -$9.20/bbl recently and are currently trading near -$5/bbl, which should encourage higher, “potentially record” crude oil exports over the coming weeks.

  

  While refinery turnarounds should offer Cushing some short term relief…

  Refining turnarounds globally are expected to be light this spring, with outages averaging 4.3mn b/d during March and April, compared 6.8mn b/d on average for the same period during 2015-19. In the US, outages are expected to be even lighter (Exhibit 24), averaging about 500k b/d in March and April versus 1.3mn b/d during the same period in 2015-19 (Exhibit 25). However, refining outages north of Cushing (PADD 2, PADD 4, Alberta, and Saskatchewan), which should affect inbound flows to the hub, are expected to average 600k b/d in March and April versus about 475k b/d during the 2015- 19 (Exhibit 25). All else equal, these turnarounds suggests that more barrels will be making their way south, either to Cushing or to the USGC this month and next, which should help lift Cushing inventory levels over the near term.

  

  … balances will likely still be tight post maintenance.

  Historically, Cushing inventories have tracked WTI timespreads with a lag of about 2 months (Exhibit 26). While this relationship may appear linear during periods of normal inventory levels, timespreads should theoretically increase at a parabolic rate (more backwardation) as inventories fall towards tank bottoms and fall at a parabolic rate (more contango) as Cushing nears tank tops (Exhibit 27).

  

  All this means that “front month WTI at risk of a melt-up in 1H22″, similar to what was observed on April 20, 2020 when WTI traded down to negative $40/bbl as there was no place to store the deliverable contract amid the global economic shutdown, and when holders of the front contract were willing to pay others to take the obligation of delivery (which is what sent the price negative). Only in the opposite direction.

  As a reminder, unlike Brent, the WTI contract has a physical delivery mechanism, which forces convergence between the physical market and futures market every month. In April 2020, this convergence was on full display ahead of the May WTI contract expiry, as longs with no ability to take delivery were forced to liquidate their positions at negative prices. Now, BofA cautions, “the market setup has reversed.”

  In other words, with inventories at very low levels there is likely a reduced ability to make delivery against the WTI contract. As a result of limited US supply growth over 1H22 and limited incentives to send barrels to Cushing, inventories will likely scrape  along at low levels.

  Meanwhile, given the market is desperately short barrels in the near term –  and this ignores the record 1 billion barrels in oil futures that were sold and/or shorted in the past month…

  

  … BofA sees “increased risk of a short squeeze as WTI moves towards expiry each month” while also seeing risk that WTI strengthens relative to other North American grades to encourage more oil to flow to the hub.

  In short, in a mirror image of the historic events in April 2020, which saw oil prices freefall to negative prices for the first time ever due to forced liquidations, in the coming weeks we may see the opposite: a historic meltup as shorts scramble to obtain product but can’t find it at any price.

  The full report is available to pro subs in the usual place.

  Tyler Durden
  Mon, 03/21/2022 – 19:20

• Stockman: Why Markets Always Beat Central Bankers And Presidents
  Stockman: Why Markets Always Beat Central Bankers And Presidents

  Authored by David Stockman via InternationalMan.com,

  Goodness me, even the Wall Street Journal is catching on. In a piece about the inflationary rebound theory of a former UK central banker named Charles Goodhart, it actually tees-up the possibility of high inflation for a decade or longer due to an adverse, epochal shift in the global labor supply.

  He argued that the low inflation since the 1990s wasn’t so much the result of astute central-bank policies, but rather the addition of hundreds of millions of inexpensive Chinese and Eastern European workers to the globalized economy, a demographic dividend that pushed down wages and the prices of products they exported to rich countries. Together with new female workers and the large baby-boomer generation, the labor force supplying advanced economies more than doubled between 1991 and 2018.

  He got that right. Now, however, the working-age population has started shrinking for the first time since World War II in developed economies, compounded by an ever more generous banquet of Welfare State free stuff that is shrinking the available labor pool even further. At the same time, China’s working force is expected to contract by a staggering 20% over the next three decades.

  Needless to say, as global labor becomes more scarce, developed world workers will finally have bargaining leverage to push up their own previously stagnant wages. In the US leisure and hospitality sector, for instance, where worker shortages are most acute, Y/Y wage gains have averaged 15% for the last three months running.

  And that’s not a “base effect”, either. On a two-year stacked basis, the gain from the February 2020 pre-Covid peak was 7.3% per annum. That’s nearly triple the average annual gain during much of the last decade.

  Y/Y Change In Hourly Earnings of Leisure And Hospitality Workers, 2012-2022

  

  But on the margin it is the draining of China’s rice paddies of subsistence labor that is fueling the now unfolding epochal change in the global labor cost curve and supply chains. As China’s workforce continues to shrink and fewer rural workers have moved to cities, its domestic labor costs have predictability risen.

  U.S. manufacturing wages, in fact, are now less than four times as much as those in China, compared with more than 26 times when China joined the WTO in 2001, according to recent research by investment firm KKR. And that’s just the warm-up: China’s workforce is expected to shrink by about 100 million over the next 15 years—an economic pile-driver that will cause the deflationary “China Price” of the past three decades to morph into the inflationary “China Price” in the years ahead.

  Moreover, this was all already well underway owing to the natural, baked-in demographics of the global labor market. But now that Washington has jumped the shark with its rabid Sanctions War against the global trading and payments system, the shift is likely to be sharply aggravated.

  That is to say, the 26:1 labor cost advantage China possessed in the early 21st century when the supply chain was globalizing at break-neck speed was even then off-set in part by all the non-labor factors that go into global sourcing of goods. These include transportation costs, insurance costs, extended inventory pipelines, quality control, product delivery and availability risks, periodic premium costs for expedited shipping and much more. Yet on balance the former well outweighed the latter, causing delivered product prices to systematically fall.

  As we have frequently pointed out, the proof of the pudding is in the PCE deflator for durable goods, which got massively off-shored into the low-cost nooks and crannies of the global supply chain during the “inflation sabbatical” of 1995-2019. As it happened, the index dropped by a staggering 40% during that period—a one-time deflationary plunge that has no precedent in economic history.

  PCE Deflator For Durable Goods, 1995-2022

  

  Now, however, the potential upside of all these non-labor supply chain costs and risks have increased dramatically. In a word, global supply chains are going to get reeled-in and shortened dramatically because in many instances the labor differential will no longer profitably offset these associated costs.

  Stated differently, the “lowflation” canard was always a statistical mirage, but under the double-whammy of rising global labor costs and soaring supply chain expense, there will now be no doubt. Substantial, persistent inflation in the cost of goods will become the order of the day, leaving the easy money central bankers of the world no choice except to finally shutdown their printing presses.

  Needless to say, this will leave the permabulls of Wall Street in a world of hurt and for years to come. That’s because the corollary of the now ending Inflation Sabbatical of 1995-2019 was the massive off-shoring of America’s productive economy, tracked by the relentlessly plunging deficit on goods and services.

  The recent release of the January 2022 trade balance leaves little to the imagination, recording a record deficit of $89.7 billion for that month alone. Moreover, this figure includes credit for the $19.2 billion surplus on services, meaning that the actual deficit in merchandise goods taken separately was nearly $109 billion. That’s an annualized run rate of $1.3 trillion!

  Of course, when global goods prices climb steadily higher under the aforementioned double-whammy of rising labor costs and de-globalization of supply chains this massive exposure to imports will whoosh through the US economy like green grass through the proverbial goose. As it does, our clueless Keynesian central bankers will be proverbial too, as is in deer in the headlights.

  That is to say, what we have is an economic boomerang. When the supply chain was going out to the cheapest corners of the global labor market, deflationary forces came flowing back. But the inverse is now happening: Supply chains are reeling back in toward the domestic cost structure, meaning that inflation will come ripping back, as well.

  US Trade Deficit On Goods And Services, 1990-2022

  

  Actually, however, the true picture is more dire than suggested by the chart above. That’s because the non-petroleum share of the trade deficit has ballooned even more egregiously during the last three decades than the overall figure.

  As shown by the red line in the chart below, the ex-petroleum trade deficit was just $8 billion per month in 1998 and now stands at nearly $90 billion per month owing to the fact that the fracking revolution has reduced the petroleum deficit (black line) to zero. This means that the inflationary whirlwind bearing down on the merchandise goods accounts will be all the more virulent.

  

  And while we are on the topic of energy trade and so-called energy independence, now might be as good a time as any to correct that shrill Fox News drumbeat that the Donald got America energy independent and then Sleepy Joe blew it in less than a year.

  The fact is, presidents don’t determine the output level or the trade balance for any sector of the US economy—the forces of supply, demand and investment/disinvestment incentives do. The peak level of domestic crude oil production reached in February 2020 of 13.1 million barrels per day, therefore, was a consequence of the global petroleum price and investment cycle, not the Donald’s arm-waving, including the attempted revival of the Keystone Pipeline.

  The latter was simply a cheaper way than rail to get Canadian tar sands to the refinery markets on the US gulf coast; it would have meant higher netbacks (prices received after transportation and other delivery costs) to Canadian oil sands producers, not more production or lower prices for American consumers.

  Likewise, the Donald’s more sensible public lands leasing policies were clearly superior to those of Obama, but given the long lead-time between lease awards on public lands and actual new production, the impact was irrelevant in the time frame under discussion.

  So what happened is what usually happens: The domestic petroleum production cycle had exactly nothing to do with four-year presidential terms. On that matter, the history is dispositive.

  For example, during the freeze-in-your-cardigan-sweater term of Jimmy Carter, domestic oil production rose from 8.1 million barrel per day in January 1977 to 8.6 million b/d in January 1981, a gain of 5%. By contrast, during the 12-years of Reagan/Bush, where policy clearly was to dismantle Jimmy Carter’s price controls and unleash domestic production, oil output dropped steadily to 6.9 million barrels per day by January 1993, thereby marking a 18% decline in annual production.

  Self-evidently what was at work was not the policy virtue or vice of the temporary Oval Office occupants during these periods, but the global petroleum cycle.

  Likewise, during the pro-production term of Bush the Younger, domestic production declined from 5.9 million barrel per day in January 2001 to 5.2 million barrels per day during January 2009. By contrast, the opposite happened during Obama’s eight years, notwithstanding that the administrator was crawling with anti-fossil fuel types and environmentalist wackadoos.

  Thus, by January 2017 domestic production averaged 8.9 million bbls/day, representing a gain of 70% from the level when ex-oilman Dubya left office. Again, however, this wasn’t presidential policy at work, but the global petroleum price, investment and production cycle.

  And one obvious feature of that is the lag-time between when world oil prices peaked at $150 per barrel in July 2008 and the mobilization of investment and production technology in the US shale patch that brought domestic production roaring back.

  Needless to say, that trend continued unabated during the Donald’s term, meaning that he was riding the inherited wave toward energy independence, not willing it into being through his Oval Office arm-waving and minor pro-production policy initiatives.

  Accordingly, domestic crude oil production peaked at a historic high of 13.1 million bbls/day in February 2020, and then was monkey-hammered like rarely before under the combined impact of the worldwide crash of demand owing to the Covid Lockdowns and the fact that in the spring of 2020, the world oil price actually crashed to below $20 per barrel.

  In the case of the US shale patch, that was an instantaneous death knell for new drilling. Yet owing to the deep and rapid decline rates of shale wells, lack of drilling translates into a plunge of production rates only a few quarters down the road.

  So what Sean Hannity and the other Fox screamers don’t tell you is that by September 2020, domestic production had plunged to 10.7 million bbls/day or by a stunning 18%. That is to say, the retreat from energy independence happened on the Donald’s watch, long before Sleepy Joe ambled into the Oval Office.

  In fact, by January 2021 production had remained plateaued at just above the September bottom at 10.9 million bbls/day. By January 2022, however, it had recovered to 11.5 million barrels per day, thereby digging out further from the hole dug at the end of the Donald’s term.

  US Crude Oil Production Ain’t Got Anything To Do With Presidential Terms

  

  Again, that had nothing to do with Biden’s canceling the Keystone Pipeline (again!) or leases in the Arctic Wildlife Range. To the contrary, it was just the global petroleum cycle doing its thing, again.

  Moreover, now that oil has again hit $130 per barrel and Washington’s madcap Sanctions War is likely to keep it there or higher, we can expect a new burst of drilling and production in the US shale patch. That prospect, in turn, has every probability of causing domestic crude production to top the Donald’s 13.1 million barrel per day record in the not too distant future.

  So perhaps Sean Hannity and the GOP energy independence howlers should be careful of what they wish for.

  *  *  *

  The Fed has already pumped enormous distortions into the economy and inflated an “everything bubble.” The next round of money printing is likely to bring the situation to a breaking point. If you want to navigate the complicated economic and political situation that is unfolding, then you need to see this newly released video from Doug Casey and his team. In it, Doug reveals what you need to know, and how these dangerous times could impact your wealth. Click here to watch it now.

  Tyler Durden
  Mon, 03/21/2022 – 19:00

• Shanghai Reports Record Surge In COVID Cases
  Shanghai Reports Record Surge In COVID Cases

  Shanghai, China’s financial center, reported a record surge in daily COVID infections on Monday despite the CCP’s best efforts to contain the ongoing COVID outbreak, which is the worst outbreak in China since the virus first emerged in Wuhan more than two years ago.

  

  The country’s determined efforts to contain growing outbreaks despite the “mild symptoms” reported led to lockdowns that affected more than 50 million people at their peak; but the deleterious impact on China’s economy has led the CCP to ease some restrictions, particularly in the southern tech hub of Shenzhen.

  Shanghai reported 24 new domestically-transmitted cases with confirmed symptoms on Monday and another 734 local asymptomatic infections, which Wu Jinglei, director of Shanghai Health Commission, attributed to rounds of mass screening in the city last week, according to the SCMP.

  “Shanghai is standing the test of a severe epidemic,” Wu said, referring to the mass testing carried out from last Wednesday to Sunday.

  Across mainland China, 1,947 new locally transmitted cases and a further 2,384 asymptomatic infections were reported on Monday, continuing the run of high infection rates. China has reported more than 37,000 local infections this month. Up until February, the number was slightly more than 100K cases.

  Liang Wannian, head of the expert panel leading China’s COVID response, defended China’s tough approach to outbreaks

  “Ideally, we would achieve zero COVID patients in society but the specificity of the coronavirus that causes Covid-19 means we can’t achieve that for the moment,” Liang told state broadcaster China Central Television.

  “The dynamic zero-Covid approach means we need to swiftly identify the outbreaks and cut the transmission chain to go towards the direction of zero COVID, or the transmission will be continuous and connected, causing a large-scale rebounding of cases.”

  More than 95% of COVID patients in the outbreaks this month showed only mild symptoms or none at all and less than 0.1 percentage point of the 29,127 cases confirmed over the past month were in a severe or critical condition. This includes the elderly, patients with comorbidities and the unvaccinated, according to Jiao Yahui, an official with the National Health Commission.

  Meanwhile, the northern province of Jilin, which accounts for most of the cases reported over the past month, confirmed another 2,091 infections, with and without symptoms, on Monday.

  Tyler Durden
  Mon, 03/21/2022 – 18:40

• US Unexpectedly Sanctions China Officials Hours After Demanding Beijing Condemn Russia
  US Unexpectedly Sanctions China Officials Hours After Demanding Beijing Condemn Russia

  Apparently not content with diplomatic war on one front with Russia, the Biden administration appears ready to escalate with China following on the heels of last week’s persistent accusations that Beijing was mulling cooperation with Moscow on weapons resupplies for its Ukraine operation, as well as assistance on Western sanctions evasion.

  Monday afternoon Secretary of State Antony Blinken announced more visa restrictions on Chinese officials related to prior charges that state authorities are overseeing the ethnic cleansing of Uighurs. It’s certainly interesting timing in terms of pulling out the the human rights card, given that throughout last week the admin’s China criticisms seemed exclusively focused on its “fence-sitting” over Ukraine.

  Perpetrators of human rights abuses must continue to face consequences. The United States has taken action to impose visa restrictions on PRC officials for attempting to intimidate, harass, and repress dissidents and human rights defenders inside and outside of China.

  — Secretary Antony Blinken (@SecBlinken) March 21, 2022

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

  Blinken called on China to “end its ongoing genocide and crimes against humanity in Xinjiang, repressive policies in Tibet, crackdown on fundamental freedoms in Hong Kong, and human rights violations,” as cited in Bloomberg.

  “The United States rejects efforts by (Chinese) officials to harass, intimidate, surveil, and abduct members of ethnic and religious minority groups, including those who seek safety abroad, and U.S. citizens, who speak out on behalf of these vulnerable populations,” Blinken said. “We are committed to defending human rights around the world and will continue to use all diplomatic and economic measures to promote accountability.”

  It’s unclear as yet which and how many Chinese state officials will be impacted by the new visa restriction measures, which will effectively ban them from travel into the United States, and it’s an expansion of prior Trump restrictions.

  Earlier, the White House issued a statement saying – like UK prime minister Boris Johnson’s words over the weekend – that Beijing must condemn Russia’s invasion of Ukraine and stop downplaying it.

  WHITE HOUSE SAYS U.S. WANTS TO HEAR CHINA CONDEMN RUSSIA’S ACTIONS ON THE GROUND IN UKRAINE

  Childish

  — The_Real_Fly (@The_Real_Fly) March 21, 2022

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  Meanwhile, here’s commentary from Rabobank on the implications of how China figures into the Ukraine crisis…

  * * *

  But next up must surely be many in markets. On Friday, I argued if the Biden-Xi call went well, markets would take it as positive; if it went badly, markets would take it as a huge negative; and yet what we were told happened on the call might not be the whole story. Markets saw the bullet points released by the Chinese side *before the call was even over*, which had key words like “peace” and the need for good US-China relations,…. and fell for it hook, line, and stinker even though the US readout was short and brusque.

  That’s a very bad call call. It’s as bad as Eurasia Group’s Ian Bremmer calling for President Biden to visit Kyiv, when if a bomb hits him it’s WW3; or one on Twitter from an Asian hedge fund player (although in truth I find it hard to tell if they are a parody account or not) which says: “Seems initial reaction to Xi – Biden call was positive, as expected, but let’s see how Western media ‘interprets’ it. US and China= BFFs?” And, when someone pushes back, the response being: “…not everyone’s view counts equally. The view of those participating in the capital markets matters disproportionately more, this is why the US runs the world.” Which is ironically what this is all about, while still being completely wrong.

  Geopolitical analysts, including ones who cover markets too, note that underneath the algo-triggering headlines the reality was that Beijing:

  1. Blamed the US for the crisis by expanding NATO, rather than Russia expanding Russia;

  2. Stated the US would have to resolve it using a Chinese idiom;

  3. That this includes addressing Russian security needs too, and linking this all back to Taiwan;

  4. Saying China would help if the US backs off on trade war, tech war, AUKUS, the Quad, etc.

  Tyler Durden
  Mon, 03/21/2022 – 18:20

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