- Negative Rates & The Destruction Of Money: Sweden Ends Its Experiment
Negative Rates & The Destruction Of Money: Sweden Ends Its Experiment
Negative rates are the destruction of money, an economic aberration based on the mistakes of many central banks and some of their economists who start from a wrong diagnosis:
the idea that economic agents do not take more credit or invest more because they choose to save too much and therefore saving must be penalized to stimulate the economy.
Excuse the bluntness, but it is a ludicrous idea.
Inflation and growth are not low due to excess savings, but because of excess debt, perpetuating overcapacity with low rates and high liquidity and zombifying the economy by subsidizing the low productivity and highly indebted sectors and penalizing high productivity with rising and confiscatory taxation.
Historical evidence of negative rates shows that they do not help reduce debt, they incentivize it, they do not strengthen the credit capacity of families, because the prices of non-replicable assets (real estate, etc.) skyrocket because of monetary excess, and the lower cost of debt does not compensate for the greater risk.
Investment and credit growth are not subdued because economic agents are ignorant or saving too much, but because they don’t have amnesia. Families and businesses are more cautious in their investment and spending decisions because they perceive, correctly, that the reality of the economy they see each day does not correspond to the cost and the quantity of money.
It is completely incorrect to think that families and businesses are not investing or spending. They are only spending less than what central planners would want. However, that is not a mistake from the private sector side, but a typical case of central planners’ misguided estimates, that come from using 2001-2007 as “base case” of investment and credit demand instead of what those years really were: a bubble.
The argument of the central planners is based on an inconsistency: That rates are negative because markets demand them, not because they are imposed by the central bank. If that were the case, why don’t they let rates float freely if the result was going to be the same? Because it is false.
Think for a moment what type of investment, company or financial decision is one that is profitable with rates at -0.5% but unviable with rates at 1%. A time bomb. It is no surprise that investment in bubble-prone sectors are rising with negative rates and non-replicable and financial assets skyrocket.
Public debt trades at artificially low yields and, instead of strengthening economies, negative rates make governments more dependent on cheap debt. Politicians abandon any reformist impulse and prefer to accumulate more debt.
The financial repression of central banks begins with a misdiagnosis, assuming that low growth and below-target inflation is a problem of demand, not of the previous excess, and ends up perpetuating the bubbles that they sought to solve.
The policy of negative types can only be defended by people who have never invested or created a job because no one that has worked in the real economy can believe that financial repression will lead economic agents to take much more credit and strengthen the economy.
Negative rates are a huge transfer of wealth from savers and real wages to the government and the indebted. A tax on caution. The destruction of the perception of risk that always benefits the most reckless. The bailout of the inefficient.
Central banks ignore the effects of demography, technology and competition on inflation and growth of consumption, credit, and investment, and with the wrong policies generate new bubbles that become more dangerous than the previous ones. The next bubble is to increase again the fiscal imbalances of the countries. Even worse. When central banks present themselves as the agent that will reverse the effect of technology and demographics, they create a greater risk and bubble.
Sweden launched its failed negative rate plan almost five years ago and now reverses it due to the financial risks that are created. The most interesting thing is that it reverses the policy of negative rates precisely because of the risk of an economic slowdown because the evidence shows that investment and consumption decisions do not increase with financial repression.
In Sweden, with negative rates, the real estate price index has increased 50% (from 160 points to 240), the average residential index has risen 27%, non-replicable assets have risen between 30% and 70 % (infrastructure, etc.), the stock market has risen more than 20%. In that period, household consumption and investment (gross capital formation) have increased very little and real wages have remained stagnant.
Monetary policy has gone from being a support for structural reforms to an excuse to avoid them. Now, governments are delighted to read that “fiscal measures” must be implemented. And when a government hears “fiscal measures” it translates into “spending.” And when the eurozone governments start spending, the result is always the same: more debt and higher taxes.
In the eurozone, the economic aberration of negative rates continues despite the evidence of the collateral risks they generate. Meanwhile, you and I are blamed for not spending and borrowing more. What can go wrong?
Tyler Durden
Tue, 12/24/2019 – 02:00 - Turkey Can't Handle New Refugee Explosion & Greece Will Be First To Feel Impact: Erdogan
Turkey Can’t Handle New Refugee Explosion & Greece Will Be First To Feel Impact: Erdogan
At a moment Erdogan has his hands dirty in Syria and is preparing to get more militarily involved in Libya, Turkey’s president has yet again threatened Europe with a refugee horde so large no country will be able to handle it. He’s now specifically threatened Greece as being among the first to bear the brunt of the first waves of refugees unleashed by Turkey.
His threats are now centering on the major uptick in airstrikes by Russia and Syria on Idlib province, said to number in the “hundreds” since a new operation began on Dec.16. Since then, tens of thousands of civilians living under al-Qaeda’s Hayat Tahrir al-Sham (HTS) have reportedly fled.
“Turkey cannot handle a fresh wave of migrants from Syria, President Tayyip Erdogan said on Sunday, warning that European countries will feel the impact of such an influx if violence in Syria’s northwest is not stopped,” Reuters reports.
File image: refugee crisis hit the Greek island of Lesvos in 2015. Common estimates now put the number of Syrian refugees hosted on Turkish soil at 3.7 million, with another 3 million inside war-torn Idlib province, which means the refugee crisis is set to explode dramatically higher in terms of numbers — a likely scenario given Damascus has vowed to return “every inch” of Idlib and all Syrian territory to its control.
Thus far thousands have fled into neighboring Turkey, but there’s been on the ground reports suggesting HTS militants are blocking the bulk of refugees from leaving, perhaps using them as ‘human shields’ amid the Russian-Syrian onslaught.
During a public speech in Istanbul on Sunday night, Erdogan claimed over 80,000 people were currently fleeing Idlib for the safety of Turkey, and repeated his urgent appeal for Europe to give additional support.
HTS reportedly impeding the movement of civilians trying to flee Maarat al-Numan: pic.twitter.com/BPqDlsSefr
— Lindsey Snell (@LindseySnell) December 21, 2019
https://platform.twitter.com/widgets.js
“If the violence toward the people of Idlib does not stop, this number will increase even more. In that case, Turkey will not carry such a migrant burden on its own,” Erdogan said.
And he named Greece while invoking the peak of the migrant crisis in 2015, promising a “repeat” if nothing is done:
“The negative impact of the pressure we will be subjected to will be something that all European nations, especially Greece, will also feel,” he said, adding that a repeat of the 2015 migrant crisis would become inevitable.
“We call on European countries to use their energy to stop the massacre in Idlib, rather than trying to corner Turkey for the legitimate steps it took in Syria,” Erdogan said, referencing the Turkish army’s own ongoing ‘Operation Peace Spring’ against US-backed Syrian Kurds.
Erdogan further called the some $3 billion in support offered by the United Nations refugee agency last week “not enough”.
As for Erdogan’s targeting Greece in his latest remarks, this comes amid Turkey’s new jostling to secure oil and gas exploration and drilling rights across a broad swath of the eastern and southern Mediterranean, especially following a contentious deal with Libya’s GNA in Tripoli.
Greek sources: Foreign Minister Nikos Dendias traveled to Benghazi, Libya, on Sunday, where he met with the head of the Libyan National Army, General Khalifa Haftar, according to a ministry statement.
Επίσκεψη ΥΠΕΞ @NikosDendias σε Λιβύη, Αίγυπτο & Κύπρο – Συνάντηση με Στρατάρχη Khalifa Haftar, επικεφαλής Λιβυκού Εθνικού Στρατού (LNA) στη Βεγγάζη
🔗 https://t.co/g8ecDQuZJi pic.twitter.com/pp41Se8dcz
— Υπουργείο Εξωτερικών (@GreeceMFA) December 22, 2019
https://platform.twitter.com/widgets.js
Athens is reportedly preparing to formally recognize Gen. Khalifa Haftar’s Benghazi-based administration as the official government of Libya, at a moment he and Turkey are in direct open war with each other, given Ankara is said to be shipping more military supplies and possibly even troops to help repel his ongoing offensive against Tripoli. Turkey is the closest military supporter to the UN-recognized government in Tripoli, despite the UN-led arms embargo in place (which no one seems to be abiding by).
Greece has also vowed to thwart Turkish exploration and drilling vessels from traversing its waters to enter disputed maritime regions off Libya.
Thus with Athens now more closely embroiled in the emerging maritime dispute involving Turkey, Cyprus, Libya and Egypt, Erdogan has all the more reason to target Greece with threats of flooding the islands with migrants — as happened in 2015, and which has been a steady stream of new arrivals ever since.
Tyler Durden
Tue, 12/24/2019 – 01:00 - The Christmas Truce Of WWI Paused The Murderous Demands Of The State
The Christmas Truce Of WWI Paused The Murderous Demands Of The State
Authored by Will Grigg via The Libertarian Institute,
For a tragically short time, the Spirit of the Prince of Peace drowned out the murderous demands of the State.
In August 1914, Europe’s major powers threw themselves into war with gleeful abandon. Germany, a rising power with vast aspirations, plowed across Belgium, seeking to checkmate France quickly before Russia could mobilize, thereby averting the prospect of a two-front war. Thousands of young Germans, anticipating a six-week conflict, boarded troop trains singing the optimistic refrain: “Ausflug nach Paris. Auf Widersehen auf dem Boulevard.” (“Excursion to Paris. See you again on the Boulevard.”)
The antagonists found themselves mired along a static line of trenches running for hundreds of miles through France and Belgium.
The French were eager to avenge the loss of Alsace and Lorraine to Germany in 1870. The British government, leery of Germany’s growing power, mobilized hundreds of thousands of young men to “teach the Hun a lesson.” Across the continent, writes British historian Simon Rees, “millions of servicemen, reservists and volunteers … rushed enthusiastically to the banners of war…. The atmosphere was one of holiday rather than conflict.”
Each side expected to be victorious by Christmas. But as December dawned, the antagonists found themselves mired along the Western Front – a static line of trenches running for hundreds of miles through France and Belgium. At some points along the Front, combatants were separated by less than 100 feet. Their crude redoubts were little more than large ditches scooped out of miry, whitish-gray soil. Ill-equipped for winter, soldiers slogged through brackish water that was too cold for human comfort, but too warm to freeze.
The unclaimed territory designated No Man’s Land was littered with the awful residue of war – expended ammunition and the lifeless bodies of those on whom the ammunition had been spent. The mortal remains of many slain soldiers could be found grotesquely woven into barbed wire fences. Villages and homes lay in ruins. Abandoned churches had been appropriated for use as military bases.
Many of those pressed into service on the Western Front had not succumbed to the initial frenzy of bloodlust. Fighting alongside French, Belgian, and English troops were Hindus and Sikhs from India, as well as Gurkhas from the Himalayan Kingdom of Nepal.
As losses mounted and the stalemate hardened, war fever began to dissipate on both sides.
These colonial conscripts had been transported from their native soil and deployed in trenches carved out of wintry Belgian cabbage patches. Highland Scots were also found at the Front, proudly wearing their kilts in defiance of the bitter December cold.
The German troops were led by elite Prussian officers, representatives of the bellicose Junker aristocracy. The German rank and file included Bavarian, Saxon, Westphalian, and Hessian reservists, more than a few of whom had lived – or even been born – in England and spoke perfect English. Bismarck’s efforts to unite the scattered German principalities notwithstanding, many German troops remained more attached to their local communities than to what for them was an abstract German nation.
Comrades at Arms
Wallowing in what amounted to cold, fetid sewers, pelted by freezing rain, and surrounded by the decaying remains of their comrades, soldiers on both sides grimly maintained their military discipline. On December 7, Pope Benedict XV called for a Christmas cease-fire. This suggestion earned little enthusiasm from political and military leaders on both sides. But the story was different for the exhausted frontline troops.
A December 4 dispatch from the commander of the British II Corps took disapproving notice of a “live-and-let-live theory of life” that had descended on the Front. Although little overt fraternization was seen between hostile forces, just as little initiative was shown in pressing potential advantages. Neither side fired at the other during meal times, and friendly comments were frequently bandied about across No Man’s Land. In a letter published by the Edinburgh Scotsman, Andrew Todd of the Royal Engineers reported that soldiers along his stretch of the Front, “only 60 yards apart at one place… [had become] very ‘pally’ with each other.”
With Christmas approaching, the scattered gestures of goodwill across enemy lines increased.
Rather than flinging lead at their opponents, the troops would occasionally hurl newspapers (weighted with stones) and ration tins across the lines. Barrages of insults sometimes erupted as well, but they were delivered “generally with less venom than a couple of London cabbies after a mild collision,” reported Leslie Walkinton of the Queen’s Westminster Rifles.
As December waxed, the combat ardor of the frontline troops waned. With Christmas approaching, the scattered and infrequent gestures of goodwill across enemy lines increased. About a week before Christmas, German troops near Armentieres slipped a “splendid” chocolate cake across the lines to their British counterparts. Attached to that delectable peace offering was a remarkable invitation:
We propose having a concert tonight as it is our Captain’s birthday, and we cordially invite you to attend – provided you will give us your word of honor as guests that you agree to cease hostilities between 7:30 and 8:30…. When you see us light the candles and footlights at the edge of our trench at 7:30 sharp you can safely put your heads above your trenches, and we shall do the same, and begin the concert.
The concert proceeded on time, with the bewhiskered German troops singing “like Christy Minstrels,” according to one eyewitness account. Each song earned enthusiastic applause from the British troops, prompting a German to invite the Tommies to “come mit us into the chorus.” One British soldier boldly shouted, “We’d rather die than sing German.” This jibe was parried instantly with a good-natured reply from the German ranks: “It would kill us if you did.” The concert ended with an earnest rendition of “Die Wacht am Rhein,” and was closed with a few shots deliberately aimed at the darkening skies – a signal that the brief pre-Christmas respite was ended.
Elsewhere along the Front, arrangements were worked out to retrieve fallen soldiers and give them proper treatment or burial.
In a letter to his mother, Lt. Geoffrey Heinekey of the 2nd Queen’s Westminster Rifles described one such event that took place on December 19. “Some Germans came out and held up their hands and began to take in some of their wounded and so we ourselves immediately got out of our trenches and began bringing in our wounded also,” he recalled.
“The Germans then beckoned to us and a lot of us went over and talked to them and they helped us to bury our dead. This lasted the whole morning and I talked to several of them and I must say they seemed extraordinarily fine men…. It seemed too ironical for words. There, the night before we had been having a terrific battle and the morning after, there we were smoking their cigarettes and they smoking ours.”
Football in No Man’s Land
Soon talk along the Front turned to the prospect of a formal cessation of hostilities in honor of Christmas. Again, this idea met resistance from above. Comments historian Stanley Weintraub, in his book, Silent Night: The Story of the World War I Christmas Truce:
Most higher-ups had looked the other way when scattered fraternization occurred earlier. A Christmas truce, however, was another matter. Any slackening in the action during Christmas week might undermine whatever sacrificial spirit there was among troops who lacked ideological fervor. Despite the efforts of propagandists, German reservists evidenced little hate. Urged to despise the Germans, [British] Tommies saw no compelling interest in retrieving French and Belgian crossroads and cabbage patches. Rather, both sides fought as soldiers fought in most wars – for survival, and to protect the men who had become extended family.
In a sense, the war itself was being waged within an extended family, since both Germany’s Kaiser Wilhelm II and England’s King George V were grandsons of Queen Victoria. More importantly, the warring nations were all part of what had once been known as Christendom. The irony of this fact was not lost on those sentenced to spend Christmas at the Front.
By Christmas Eve, the German side of the Front was radiant with glowing Tannenbeume – small Christmas trees set up, sometimes under fire, by troops determined to commemorate the holy day. “For most British soldiers, the German insistence on celebrating Christmas was a shock after the propaganda about Teutonic bestiality, while the Germans had long dismissed the British as well as the French as soulless and materialistic and incapable of appreciating the festival in the proper spirit,” writes Weintraub. “Regarded by the French and British as pagans – even savages – the pragmatic Germans were not expected to risk their lives on behalf of each beloved Tannenbaum. Yet when a few were felled by Scrooge-like gunfire, the Saxons opposite the [British line] stubbornly climbed the parapets to set the endangered trees up once more.”
Troops extracted themselves from their trenches and dugouts, approaching each other warily, and then eagerly, across No Man’s Land.
The radiant Christmas trees reminded some Indian conscripts of lanterns used to celebrate the Hindu “Festival of Lights.” Some of them must have been puzzled over finding themselves freezing, undernourished, and confronting a lonely death thousands of miles from their homes as soldiers in a war which pitted Christian nations against each other. “Do not think that this is war,” wrote one Punjabi soldier in a letter to a relative. “This is not war. It is the ending of the world.”
But there were souls on each side of that fratricidal conflict determined to preserve the decencies of Christendom, even amid the conflict. As Christmas dawned, German Saxon troops shouted greetings to the British unit across from it: “A happy Christmas to you, Englishmen!” That welcome greeting prompted a mock-insulting reply from one of the Scottish troops, who was mildly irritated at being called an Englishman: “The same to you Fritz, but dinna o’er eat youself wi’ they sausages!”
A sudden cold snap had left the battlefield frozen, which was actually a relief for troops wallowing in sodden mire. Along the Front, troops extracted themselves from their trenches and dugouts, approaching each other warily, and then eagerly, across No Man’s Land. Greetings and handshakes were exchanged, as were gifts scavenged from care packages sent from home. German souvenirs that ordinarily would have been obtained only through bloodshed – such as spiked pickelhaube helmets, or Gott mit uns belt buckles – were bartered for similar British trinkets. Carols were sung in German, English, and French. A few photographs were taken of British and German officers standing alongside each other, unarmed, in No Man’s Land.
Near the Ypres salient, Germans and Scotsmen chased after wild hares that, once caught, served as an unexpected Christmas feast. Perhaps the sudden exertion of chasing wild hares prompted some of the soldiers to think of having a football match. Then again, little prompting would have been necessary to inspire young, competitive men – many of whom were English youth recruited off soccer fields – to stage a match. In any case, numerous accounts in letters and journals attest to the fact that on Christmas 1914, German and English soldiers played soccer on the frozen turf of No Man’s Land.
British Field Artillery Lieutenant John Wedderburn-Maxwell described the event as “probably the most extraordinary event of the whole war – a soldier’s truce without any higher sanction by officers and generals….”
This isn’t to say that the event met with unqualified approval. Random exchanges of gunfire along the Front offered lethal reminders that the war was still underway.
From his rearward position behind the lines, a “gaunt, sallow soldier with a thick, dark mustache and hooded eyes” witnessed the spontaneous eruption of Christian fellowship with hateful contempt. The German Field Messenger of Austrian birth heaped scorn on his comrades who were exchanging Christmas greetings with their British counterparts. “Such a thing should not happen in wartime,” groused Corporal Adolf Hitler. “Have you no German sense of honor left at all?” “More than patriotic scruples were involved” in Hitler’s reaction, notes Weintraub. “Although a baptized Catholic, he rejected every vestige of religious observance while his unit marked the day in the cellar of the Messines monastery.”
What If…?
In a January 2, 1915 account of the Christmas Truce, the London Daily Mirror reflected that “the gospel of hate” had lost its allure to soldiers who had come to know each other.
“The soldier’s heart rarely has any hatred in it,” commented the paper. “He goes out to fight because that is his job. What came before – the causes of the war and the why and wherefore – bother him little. He fights for his country and against his country’s enemies. Collectively, they are to be condemned and blown to pieces. Individually, he knows they’re not bad sorts.”
“Many British and German soldiers, and line officers, viewed each other as gentlemen and men of honor,” writes Weintraub. The rank and file came to understand that the man on the other end of the rifle, rather than the soulless monster depicted in ideological propaganda, was frightened and desperate to survive and return to his family. For many along the Front, these realities first became clear in the light cast by the German Tannenbaum.
The informal truce held through Christmas and, at some points along the Front, through the following day.
In the shared symbol of the Christmas tree – an ornament of pagan origins appropriated by Christians centuries ago – British and German troops found “a sudden and extraordinary link,” observed British author Arthur Conan Doyle after the war (a conflict that claimed his son’s life). “It was an amazing spectacle,” Doyle reflected, “and must arouse bitter thought concerning the high-born conspirators against the peace of the world, who in their mad ambition had hounded such men on to take each other by the throat rather than by the hand.”
In a remarkable letter published by The Times of London on January 4, a German soldier stated that “as the wonderful scenes in the trenches [during Christmas] show, there is no malice on our side, and none in many of those who have been marshaled against us.” But this was certainly not true of those who orchestrated the war, the “high-born conspirators against the peace of the world.” As British historian Niall Ferguson points out, the war-makers’ plans for the world required “Maximum slaughter at minimum expense.”
The informal truce held through Christmas and, at some points along the Front, through the following day (known as “Boxing Day” to British troops). But before New Year’s Day the war had resumed in all of its malignant fury, and the suicide of Christendom continued apace.
Most wars are senseless exercises in mass murder and needless destruction. World War I, however, is remarkable not only for being more avoidable and less justifiable than most wars, but also for its role in opening the gates of hell. Mass starvation and economic ruin inflicted on Germany during the war and its aftermath cultivated the National Socialist (Nazi) movement. Nearly identical ruin wrought in Russia thrust Lenin and the Bolsheviks to power. Benito Mussolini, a socialist agitator once regarded as Lenin’s heir, rose to power in Italy. Radical variants of intolerant totalitarian nationalism ulcerated Europe. The seeds of future wars and terrorism were deeply sewn in the Middle East.
The truce – a welcome fermata in the symphony of destruction – illustrated a timeless truth.
What if the Christmas Truce of 1914 had held? Might a negotiated peace have ensued, preserving Christendom for at least a while longer? We do not know. It is doubtful that the “high-born conspirators against the peace of the world” would have been long deterred in pursuing their demented plans. But the truce – a welcome fermata in the symphony of destruction – illustrated a timeless truth of the nature of the human soul as designed by its Creator.
Reflecting on the Christmas Truce, Scottish historian Roland Watson writes: “The State bellows the orders ‘Kill! Maim! Conquer!’ but a deeper instinct within the individual does not readily put a bullet through another who has done no great offense, but who rather says with them, ‘What am I doing here?’”
For a tragically short time, the Spirit of the Prince of Peace drowned out the murderous demands of the State.
Tyler Durden
Mon, 12/23/2019 – 23:45 - Baltimore Resurrects Spy Plane Program To Monitor Citizens
Baltimore Resurrects Spy Plane Program To Monitor Citizens
Baltimore City announced last week the return of a surveillance plane program that will use high-tech sensors to monitor citizens and help deter violent crime, reported WJZ Baltimore.
Police Commissioner Michael Harrison held a press conference Friday about three new spy planes that could hit the skies by May 2020.
Harrison said the new pilot program could utilize as many as three spy planes and will test whether the planes can aid investigators in solving violent crimes.
Ross McNutt, the president of Persistent Surveillance Systems, the company that operates the spy planes, told WJZ that the aircraft would be used to “save as many lives as possible.” McNutt said as many as three planes could start flying next May.
Ross McNutt, the president of Persistent Surveillance Systems, tells #WJZ, “We’re trying to save as many lives as possible.” He says there were ongoing discussions with city leaders and police about putting the planes back in the sky. 3 will begin flying in May. @wjz pic.twitter.com/1Fg66W4fQE
— Mike Hellgren (@HellgrenWJZ) December 20, 2019
We noted several months ago about the possibility of the planes returning to the skies of Baltimore.
Each plane has high-tech sensors that can monitor up to 32 square miles at a time, and each would fly 45 to 50 hours a week.
As early as 2015, we reported that Persistent was flying a Cessna 182T Skylane over the streets of Baltimore during the riots.
The funding for the planes will be provided by Texas billionaire philanthropists John and Laura Arnold. There’s no expense to taxpayers to fly the aircraft for the first six months.
“We will be the first American city to use this technology in an effort to deter violent crime, “Harrison said. “It is important we are transparent about how the program will and will not be used going forward. “
We noted Monday morning that Baltimore City’s homicide count for 2019 stands at 336, likely to breach the all-time high of 342 in the coming week, resulting in one of the worst years ever for violent crime in the city.
The resurrection of the spy plane program shows what happens when an American city implodes — the response by politicians is to create a surveillance state.
Tyler Durden
Mon, 12/23/2019 – 23:25 - After Blowing $3 Trillion On Lies In Afghanistan, Congress Just Authorized A Trillion More For 2020
After Blowing $3 Trillion On Lies In Afghanistan, Congress Just Authorized A Trillion More For 2020
Authored by Daisy Luther via The Organic Prepper blog,
It’s rare that I read something on the Washington Post that I don’t find highly biased, even repugnant. But with their recent article on the Afghanistan Papers, they truly knocked the ball out of the park.
The facts they shared should have every American protesting in the streets.
Trillions of dollars have been spent on a war that the Pentagon knew was unwinnable all along. More than 2300 American soldiers died there and more than 20,000 have been injured. More than 150,000 Afghanis were killed, many of them civilians, including women and children.
And they lied to us constantly.
Congress just proved that the truth doesn’t matter, though. A mere 22 hours after the release of this document, the new National Defense Authorization Act that breezed through the House and Senate was signed by the President. That bill authorized $738 billion in military spending for 2020, actually increasing the budget by $22 billion over previous years.
So, how is your representation in Washington, DC working out for you?
What are the Afghanistan Papers?
The Afghanistan Papers are a brilliant piece of investigative journalism published by the Washington Post and the article is very much worth your time to read. I know, I know – WaPo. But believe me when I tell you this is something all Americans need to see.
This was an article that took three years of legal battles to bring to light. WaPo acquired the documents using the Freedom of Information Act and got more than 2000 pages of insider interviews with “people who played a direct role in the war, from generals and diplomats to aid workers and Afghan officials.” These documents were originally part of a federal investigation into the “root failures” of the longest conflict in US history – more than 18 years now.
Three presidents, George W. Bush, Barack Obama, and Donald Trump, have been involved in this ongoing war. It turns out that officials knew the entire time this war was “unwinnable” yet they kept throwing American lives and American money at it.
Here’s an excerpt from WaPo’s report. Anything that is underlined is taken verbatim from the papers themselves – you can click on them to read the documents.
In the interviews, more than 400 insiders offered unrestrained criticism of what went wrong in Afghanistan and how the United States became mired in nearly two decades of warfare.
With a bluntness rarely expressed in public, the interviews lay bare pent-up complaints, frustrations and confessions, along with second-guessing and backbiting.
“We were devoid of a fundamental understanding of Afghanistan — we didn’t know what we were doing,” Douglas Lute, a three-star Army general who served as the White House’s Afghan war czar during the Bush and Obama administrations, told government interviewers in 2015. He added: “What are we trying to do here? We didn’t have the foggiest notion of what we were undertaking.”
“If the American people knew the magnitude of this dysfunction . . . 2,400 lives lost,” Lute added, blaming the deaths of U.S. military personnel on bureaucratic breakdowns among Congress, the Pentagon and the State Department. “Who will say this was in vain?” (source)
The important thing to note about these interviews is that the interviewees never expected their words to become public. They weren’t “blowing the whistle.” They were answering questions for a federal investigation. So they didn’t hold back. These aren’t “soundbites.” It’s what the real witnesses are saying.
The U.S. government has not carried out a comprehensive accounting of how much it has spent on the war in Afghanistan, but the costs are staggering.
Since 2001, the Defense Department, State Department and U.S. Agency for International Development have spent or appropriated between $934 billion and $978 billion, according to an inflation-adjusted estimate calculated by Neta Crawford, a political science professor and co-director of the Costs of War Project at Brown University.
Those figures do not include money spent by other agencies such as the CIA and the Department of Veterans Affairs, which is responsible for medical care for wounded veterans.
“What did we get for this $1 trillion effort? Was it worth $1 trillion?” Jeffrey Eggers, a retired Navy SEAL and White House staffer for Bush and Obama, told government interviewers. He added, “After the killing of Osama bin Laden, I said that Osama was probably laughing in his watery grave considering how much we have spent on Afghanistan.” (source)
The US government deliberately misled the American people.
What’s more, if you officials, up to and including three presidents, knew they were throwing money at something that could never be achieved. They did it anyway and they lied to our faces about it.
The documents also contradict a long chorus of public statements from U.S. presidents, military commanders and diplomats who assured Americans year after year that they were making progress in Afghanistan and the war was worth fighting.
Several of those interviewed described explicit and sustained efforts by the U.S. government to deliberately mislead the public. They said it was common at military headquarters in Kabul — and at the White House — to distort statistics to make it appear the United States was winning the war when that was not the case.
Every data point was altered to present the best picture possible,” Bob Crowley, an Army colonel who served as a senior counterinsurgency adviser to U.S. military commanders in 2013 and 2014, told government interviewers. “Surveys, for instance, were totally unreliable but reinforced that everything we were doing was right and we became a self-licking ice cream cone. (source)
It’s been an epic 18-year-long exercise in CYA. (Cover Your A$$). I don’t see how anyone could fail to be outraged by this. And what I’ve cited here is just the crap icing on the maggot cupcake. It’s a festering mess and I urge you, if you really want to know the truth, to read this article on WaPo and click on these links.
How was all this money spent?
A lot of it went to building infrastructure in Afghanistan. It was flagrantly and frivolously used there while we live in a place where people are going bankrupt at best and dying at worst because they can’t afford medical care and there are places in our country without clean running water or toilets.
One unnamed executive with the U.S. Agency for International Development (USAID) guessed that 90 percent of what they spent was overkill: “We lost objectivity. We were given money, told to spend it and we did, without reason.”
… One unidentified contractor told government interviewers he was expected to dole out $3 million daily for projects in a single Afghan district roughly the size of a U.S. county. He once asked a visiting congressman whether the lawmaker could responsibly spend that kind of money back home: “He said hell no. ‘Well, sir, that’s what you just obligated us to spend and I’m doing it for communities that live in mud huts with no windows.’ ” (source)
Aren’t you angry about this? Don’t you feel betrayed as more Americans struggle to pay their bills and eat food and keep a roof over their heads each month?
Who benefits from this?
As usual, follow the money.
The defense industry certainly reaped rewards and it’s highly likely a lot of people who had the power to allow it to go on made some “wise investments” that have paid off for them. But for the rest of us, this conflict has done nothing except ensure that our tax dollars are not here improving our infrastructure or helping Americans lead better and more productive lives.
Dr. Ron Paul refers to this as the crime of the century.
It is not only members of the Bush, Obama, and Trump Administrations who are guilty of this massive fraud. Falsely selling the Afghanistan war as a great success was a bipartisan activity on Capitol Hill. In the dozens of hearings I attended in the House International Relations Committee, I do not recall a single “expert” witness called who told us the truth. Instead, both Republican and Democrat-controlled Congresses called a steady stream of neocon war cheerleaders to lie to us about how wonderfully the war was going. Victory was just around the corner, they all promised. Just a few more massive appropriations and we’d be celebrating the end of the war.
Congress and especially Congressional leadership of both parties are all as guilty as the three lying Administrations. They were part of the big lie, falsely presenting to the American people as “expert” witnesses only those bought-and-paid-for Beltway neocon think tankers.
What is even more shocking than the release of this “smoking gun” evidence that the US government wasted two trillion dollars and killed more than three thousand Americans and more than 150,000 Afghans while lying through its teeth about the war is that you could hear a pin drop in the mainstream media about it. Aside from the initial publication in the Washington Post, which has itself been a major cheerleader for the war in Afghanistan, the mainstream media has shown literally no interest in what should be the story of the century. (source)
And it’s most likely that nobody will ever face punishment for this deception. If this is not the very definition of the term “war crimes” I can hardly imagine what is. Dr. Paul continues:
We’ve wasted at least half a year on the Donald Trump impeachment charade – a conviction desperately in search of a crime. Meanwhile one of the greatest crimes in US history will go unpunished. Not one of the liars in the “Afghanistan Papers” will ever be brought to justice for their crimes. None of the three presidents involved will be brought to trial for these actual high crimes. Rumsfeld and Lute and the others will never have to fear justice. Because both parties are in on it. There is no justice. (source)
The response? Silence and a budget increase.
The people in government don’t care that we know about all this. Sure, it’s mildly inconvenient but “whatever.”
How do I know this?
Simple. Less than a full day after the story broke, the new NDAA ended up on President Trump’s desk and was signed, authorizing an additional 22 billion dollars for next year’s defense spending. And all anyone can talk about is, “Oooohhhh Space Force!!!”
Government: “Merry Christmas. We’re going to blow through more of your tax money and you won’t get a damned thing for it.”
I couldn’t make this up if I tried. In a notable, must-read op-ed, Darius Shahtahmasebi cited some horrific incidents and concluded:
We can’t let this recent publication obscure itself into nothingness. The recent reaction from Congress is a giant middle finger designed to tell you that (a) there will never be anything you can do about it and (b) they simply don’t care how you feel. Democracy at its finest from the world’s leading propagator of democratic values. (source)
When is enough going to be enough? Why are we not enraged en masse? Why haven’t we recalled these treasonous bastards and taken our country and our budget back?
For a country that is ready to take up arms and waste countless hours “impeaching” Trump over something he said on a phone call, it sure says a lot about those same people ignoring 18 years of treasonous behavior by three separate administrations.
Why isn’t the media raising hell over this? Why aren’t these lives important? Why isn’t sending trillions of our dollars to be frittered away an outrage?
People love to say “America First” and “impeach Trump for treason” and all that jazz. They love to call anti-war people “un-American” and recommend a quick, one-way trip to Somalia if we don’t “support our troops.” However, I think is far more evidence of supporting our troops to want out of there, not risking their lives based on a castle of lies that further enriches powerful and wealthy people who have nothing to lose.
Most people love to be outraged about frivolous matters. But when a report like this and its following insult are met with resounding silence, it’s pretty obvious that hardly anybody is really paying attention.
Tyler Durden
Mon, 12/23/2019 – 23:05 - China Slams New US Space Force As Weaponizing A "New Battlefield"
China Slams New US Space Force As Weaponizing A “New Battlefield”
Entirely to be expected, China has slammed Trump’s newly established Space Force, calling it an unnecessary first move on the part of Washington to weaponize space.
Warning of a new Cold War style weapons space race, China’s Foreign Ministry said it is “deeply concerned” and “resolutely opposed” to the United States’ newest sixth branch of the military, calling it a threat to peaceful space missions undertaken by other countries.
Coming days after Trump signed into law the defense bill which formally establishes United States Space Force, foreign ministry spokesman Geng Shuang said: “The relevant U.S. actions are a serious violation of the international consensus on the peaceful use of outer space, undermine global strategic balance and stability, and pose a direct threat to outer space peace and security,” according to the Associated Press.
Illustration image via Axios He also said the US initiative marking the first time in 70 years that a new branch has been established could make space into a “new battlefield”.
However, Washington officials and pundits have pointed to Beijing’s own ambitious space program which has advanced rapidly since China’s first crewed mission in 2003, per the AP:
China in 2007 conducted an unannounced missile strike against one of its own defunct satellites, creating an enormous amount of space debris.
Geng dismissed such concerns, calling them “unfounded counter charges” that merely provided the U.S. with a justification for its own actions. China, he said, has consistently opposed the weaponization of space and believes international treaties on arms control in outer space need to be negotiated.
According to a prior report in Axios, China’s ambitions and intentions in space remain somewhat ambiguous, and while it “has publicly maintained that its goals in space are peaceful” it remains that it’s “military is also working toward shoring up its capabilities in space, driving the U.S. to take stock of its own orbital defenses.”
The Chinese Foreign Ministry spokesman added further: “We hope that the international community, especially the major powers concerned, will adopt a cautious and responsible attitude to prevent outer space from becoming a new battlefield and work together to maintain lasting peace and tranquility in outer space.”
Trump’s own remarks upon signing the 2020 NDAA which authorized the Space Force didn’t bring Beijing any reassurances. He had said:
“The Space Force will help us deter aggression and control the ultimate high ground.”
“For the first time since President Harry Truman created the Air Force over 70 years ago — think of that — we will create a brand new American military service. That’s such a momentous statement,” Trump said at the signing ceremony.
“With my signature today, you will witness the birth of the Space Force, and that will be now officially the sixth branch of the United States Armed Forces. That is something really incredible. It’s a big moment. That’s a big moment, and we’re all here for it. Space, going to be a lot of things happening in space,” he added.
Tyler Durden
Mon, 12/23/2019 – 22:45 - What The Hell Is A 'FinTech' Anyway?
What The Hell Is A ‘FinTech’ Anyway?
Authored by Omid Malekan via Medium.com,
Decentralized Finance, or DeFi, has really shined in the past year, and proven resilient during the crypto bear market. If you haven’t been paying attention, there is now a rich ecosystem of blockchain-based, fully-transparent and mostly-decentralized applications that offer lending, saving, trading, market making, derivatives, synthetic assets and even insurance.
MakerDAO, the leader of the bunch and by far the most sophisticated project on the Ethereum platform, recently pulled off a successful transition to version 2.0. It now boasts a $115m loan portfolio backed by close to $350m in assets. It also outputs the most reliable stablecoin in the blockchain ecosystem, one that is always fully backed (unlike Tether) based on sound financial principles (unlike Basis) and doesn’t have any corporate baggage (unlike Libra).
If Maker were a FinTech, the VC community would be tripping over itself to get access. The Fintech Insider podcast wouldn’t stop blabbing about it and PYMNTS would have done an entire series on the transition to multi collateral Dai. But nobody considers Maker a FinTech. If you google “MakerDAO + FinTech” the only hit is the project’s own GitHub.
Most FinTech experts probably don’t even know it exists. That’s not due to size, as Maker is presently at half-Unicorn status. It’s not due to traction either given the over 100,000 different loans the service has already dished out and the hundreds of millions of dollars worth of assets it currently holds as collateral. Maybe the experts are thrown off by the fact that MakerDAO is profitable , violating the sacred notion that the best startups are the ones that lose money today and will lose even more tomorrow.
Or maybe it’s just a lack of imagination. Most FinTechs are nothing more than an old business model using new infrastructure. Stripe is a digital knuckle-buster that embeds into websites. Robinhood is a discount broker with a slick interface (but without the profits discount brokers used to be known for.) PayPal is Western Union using TCP/IP instead of telegraph. Revolut is digitized travelers checks with some random other businesses thrown in (because when losing money is a virtue, you should go into as many random business as possible). Chime is a bank, like any other bank, except that it’s done away with branches, and positive cash flows.
These companies have smart and hard working founding teams and millions of loyal users, for which they deserve credit. They also have the old guard of financial services on their toes to upgrade their systems, which is good for everyone. Some even deploy new tech such as AI in genuinely creative ways. They are incrementally innovative, but only by the standards of existing financial services, an industry that only recently discovered the internet.
Fintechs are far from revolutionary. Most still do what their predecessors have done for centuries — use proprietary ledgers to move client money around or intermediate between savers and borrowers. They have typical management structures and, like those who came before them, gain user trust from reputation and regulation. You, as a concerned client, know as much about what’s going on inside their systems as customers of the First Bank of Wichita did 100 years ago (actually FBW had a banking license, which many Fintechs don’t, so it probably had tighter disclosure requirements). But hey, they use Python, so there’s that.
DeFi projects like Maker are actually different because the root of trust on top of which they are designed is an open, decentralized and censorship resistant blockchain platform. Here is the actual list of every loan Maker has ever given out, open for anyone to see. It’s also the first bank to tell you, Joe Schmo Public, its exact leverage ratio in real-time — a privilege that even the CEO of the hottest challenger bank probably doesn’t have.
Like all DeFi projects, MakerDAO has never discriminated based on race, gender, nationality, income level or any other factor beyond financial qualification. A poor person in Vietnam borrowing a few dollars from Maker pays the same interest rate as a billionaire in America taking down a giant loan. Can your favorite FinTech offer the same?
Then there is the superfluidity of the DeFi ecosystem. Every user can move seamlessly from borrowing to saving to trading to market making to investing in synthetic assets, and from crypto exposure to dollars to gold to the S&P 500, all within a few minutes and for just pennies in fees.
Compare that to the FinTech world where PNC Bank just kicked out Plaid so users can’t cash out from Venmo. That’s problematic for Venmo users wanting to transfer a balance to PayPal, because even though both services are owned by the same company, they don’t interoperate. #innovation
Despite the best efforts of many smart people, the FinTech industry is a lot closer to the legacy financial system than the blockchain-based one. There are projects on Ethereum such as Uniswap for which there is no historical analog. The word innovation has been abused to the point of meaninglessness, but if we are to ever resurrect it, it should mean “that which has not existed before, but should.”
So what the hell is a FinTech anyway? Depends on what you are looking for. If you are looking for easy to understand projects with nice interfaces and fat valuations, look to the traditional names. If you are looking for originality, then it’s time to start paying attention to DeFi. You’ll know you are confronted by actual innovation by how confusing most of the projects will be at the outset. Confusion is a necessary condition of understanding something seminal.
Just as 2019 was the year stablecoins exploded onto the scene, 2020 will be the year DeFi breaks the world, in a great way. Business models will be challenged, the uninformed will be embarrassed and regulators will have yet another freak out. The world will actually change a little bit.
Tyler Durden
Mon, 12/23/2019 – 22:25 - Here Are The 50 US Housing Markets Already Turning Ugly
Here Are The 50 US Housing Markets Already Turning Ugly
Plunging mortgage rates in late 2018 through 2019 wasn’t enough to revive the housing market (despite the hope of 20-year homebuilder sentiment). Cracks are already starting to appear in many metro areas across the country, as a more profound slowdown could be imminent.
Last week, Home Depot ruined the party and pretty much declared that a housing boom in 2020 is non-existent.
The home-improvement chain cut its sales forecast for 2020, signaling that real estate and consumers could exhibit weakness in the year ahead.
The disappointing 2020 forecast comes amid a report that 50 housing markets across the country are already showing signs of a downturn.
GOBankingRates evaluated 500 metro areas for high rates of foreclosures and underwater mortgages, variations in median home listing prices, the number of days homes are on the market, and the percentage of for-sale listings with price cuts, against the national average and determined the 50 most at-risk metro areas that are already turning south.
GOBankingRates determined that Peoria, Illinois, is the most at-risk metro area of seeing its housing market implode. Florida had the highest amount of real estate markets that were slowing. Here’s the full list:
50. Fort Myers, Florida
-
Median list price: $249,999
-
2-year price change: -1.4%
-
Percentage of underwater mortgages: 6.9%
-
Foreclosures: 1 in every 1,921 homes
House prices are dropping in this city in southwest Florida. While home prices nationwide have climbed an average of 9.4% over the past two years, prices have dropped 1.4% in Fort Myers over the same period. Plus, houses for sale spend 105 days on the market in Fort Myers, on average, compared with a national average of 66 days.
49. Newport News, Virginia
-
Median list price: $190,000
-
2-year price change: 8.4%
-
Percentage of underwater mortgages: 19.2%
-
Foreclosures: 1 in every 2,172 homes
The percentage of underwater mortgages in this city in southeastern Virginia near Virginia Beach is more than double the national average of 8.2%. However, the real estate market here hasn’t turned too ugly yet. In fact, the percentage of listed home with price cuts in Newport News — 12.6% — is lower than the national average of 17.5%.
48. Cumming, Georgia
-
Median list price: $383,511
-
2-year price change: 1.2%
-
Percentage of underwater mortgages: 4%
-
Foreclosures: 1 in every 2,311 homes
Home prices still are rising in this suburb of Atlanta — but not nearly as much as the national average. In fact, home prices in Cumming increased an average of just 0.7% over the past year. And 21.8% of listed homes here have seen price cuts compared with a national average of 17.5%.
47. Toledo, Ohio
-
Median list price: $84,900
-
2-year price change: 8.8%
-
Percentage of underwater mortgages: 24.7%
-
Foreclosures: 1 in every 1,428 homes
Home price growth has slowed over the past year in this western Ohio city on the banks of Lake Erie. However, the bigger problem here is the high percentage of underwater mortgages — which is about three times the national average. Plus, the number of foreclosed homes is higher than the national average.
46. Naperville, Illinois
-
Median list price: $439,990
-
2-year price change: -2.2%
-
Percentage of underwater mortgages: 6.5%
-
Foreclosures: 1 in every 3,897 homes
This Chicago suburb has made it onto plenty of “best places to live” lists. However, the housing market has been slumping here. Home prices have dropped more than 2% over the past two years. And at 26.4%, Naperville has the highest percentage of listed homes with prices cuts of any city on this list.
45. Sarasota, Florida
-
Median list price: $359,000
-
2-year price change: 5.6%
-
Percentage of underwater mortgages: 4.5%
-
Foreclosures: 1 in every 1,520 homes
South of Tampa on Florida’s Gulf Coast, Sarasota has a real estate market that could turn ugly. Home price growth has slowed. Houses for sale are sitting on the market for an average of 99 days, far longer than the national average of 66 days. On top of that, the foreclosure rate is higher in Sarasota than it is nationwide.
44. Fort Lauderdale, Florida
-
Median list price: $499,900
-
2-year price change: -0.2%
-
Percentage of underwater mortgages: 7%
-
Foreclosures: 1 in every 1,507 homes
The current housing market is slumping in this tourist destination about 30 miles north of Miami. Home prices in Fort Lauderdale have fallen in the past two years. And the average number of days houses stay on the market here — 133 — is double the national average.
43. Menifee, California
-
Median list price: $380,000
-
2-year price change: 8.3%
-
Percentage of underwater mortgages: 5.5%
-
Foreclosures: 1 in every 808 homes
This city in Southern California is part of the Los Angeles metro area. The median home price in Menifee is well above the national median. However, the housing market here could be headed for trouble. Menifee has the third-highest foreclosure rate among cities on this list.
42. Tuscaloosa, Alabama
-
Median list price: $207,988
-
2-year price change: 0%
-
Percentage of underwater mortgages: 11.7%
-
Foreclosures: 1 in every 2,393 homes
Home to the University of Alabama, Tuscaloosa has a higher percentage of homeowners with negative equity than the nation as a whole. Nearly 12% of mortgages are underwater here compared with about 8% nationwide. The foreclosure rate also is slightly higher in Tuscaloosa than the average across the U.S.
41. Wilmington, Delaware
-
Median list price: $194,550
-
2-year price change: 0.5%
-
Percentage of underwater mortgages: 15%
-
Foreclosures: 1 in every 1,218 homes
The percentage of foreclosed properties in Delaware’s largest city is twice as high as the national average. And the percentage of underwater mortgages in Delaware is almost double the percentage nationwide.
40. Naples, Florida
-
Median list price: $407,990
-
2-year price change: -8.8%
-
Percentage of underwater mortgages: 6%
-
Foreclosures: 1 in every 2,515 homes
The housing market has been slowing in this city on Florida’s Gulf Coast. While home prices nationwide have climbed 9.4%, on average, over the past two years, they’ve fallen 8.8% in Naples over the same period. And the average number of days that homes are on the market here — 140 — is more than double the national average.
39. West Palm Beach, Florida
-
Median list price: $298,000
-
2-year price change: 1.4%
-
Percentage of underwater mortgages: 7.3%
-
Foreclosures: 1 in every 1,297 homes
Although home prices have risen slightly in West Palm Beach over the last two years, they’ve fallen in the past year. In addition, houses for sale stay on the market in this city north of Miami an average of 119 days compared with an average of 66 days nationwide. The foreclosure rate here is also higher than the national rate.
38. Waterbury, Connecticut
-
Median list price: $125,000
-
2-year price change: 11.9%
-
Percentage of underwater mortgages: 29.4%
-
Foreclosures: 1 in every 1,159 homes
Home prices have risen more in this city 77 miles northeast of New York City over the past two years than across the U.S. However, the housing market in Waterbury could be in trouble. The percentage of underwater mortgages here is higher than in any other city on this list.
37. Plainfield, Illinois
-
Median list price: $284,450
-
2-year price change: 3.6%
-
Percentage of underwater mortgages: 7.7%
-
Foreclosures: 1 in every 1,138 homes
Home prices have been rising in this village 35 miles southwest of Chicago but not at the same pace as the national average. More telltale signs, though, that the housing market in Plainfield could be turning ugly are the relatively high foreclosure rate and percentage of homes for sale with price cuts. In fact, Plainfield has the second-highest percentage of listed homes with price cuts at 25.3%.
36. Bakersfield, California
-
Median list price: $276,400
-
2-year price change: 1.1%
-
Percentage of underwater mortgages: 11.8%
-
Foreclosures: 1 in every 1,095 homes
Home price growth is slowing in this agriculture hub in California’s Central Valley region. However, foreclosures and underwater mortgages are even bigger problems for Bakersfield’s real estate market. The rates for both are higher than the national averages.
35. Jacksonville, Florida
-
Median list price: $219,000
-
2-year price change: 11.8%
-
Percentage of underwater mortgages: 11.2%
-
Foreclosures: 1 in every 814 homes
Home prices are rising at a faster rate in Florida’s largest city, on average, than across the U.S. But Jacksonville has one of the highest foreclosure rates of any city on this list. The percentage of underwater mortgages in this city on the Atlantic Coast also tops the national average.
34. Orlando, Florida
-
Median list price: $289,000
-
2-year price change: 5.7%
-
Percentage of underwater mortgages: 6.6%
-
Foreclosures: 1 in every 1,328 homes
The current housing market in Orlando could use some Walt Disney World magic to keep it from turning ugly. Home price growth in this tourist destination has been slowing. And the percentage of listed homes with price cuts — 21.2% — is higher than the national percentage. The foreclosure rate in Orlando also is higher than the foreclosure rate nationwide.
33. McKinney, Texas
-
Median list price: $379,243
-
2-year price change: -1.3%
-
Percentage of underwater mortgages: 4.3%
-
Foreclosures: 1 in every 2,546 homes
Home prices have been falling in this fast-growing city that is 30 miles north of Dallas. While home prices have risen an average of 9.4% over the past two years across America, prices have fallen 1.3% in McKinney. Plus, McKinney has one of the highest percentages of listed homes with price cuts among the cities on this list.
32. Summerville, South Carolina
-
Median list price: $268,293
-
2-year price change: 4.9%
-
Percentage of underwater mortgages: 6.3%
-
Foreclosures: 1 in every 1,279 homes
Houses for sale are lingering on the market longer in Summerville than the national average — 72 days versus 66 days. The increase in home prices in this city 24 miles northwest of Charleston also is lagging behind the national average. And the foreclosure rate in Summerville is twice as high as the rate nationwide.
31. Annapolis, Maryland
-
Median list price: $499,181
-
2-year price change: 0.7%
-
Percentage of underwater mortgages: 9.5%
-
Foreclosures: 1 in every 3,964 homes
Although the foreclosure rate in Annapolis is lower than the rate nationwide, the capital of Maryland’s housing market is showing some signs of trouble. Home price growth has slowed over the past year. In fact, the city has a higher percentage of listed homes with price cuts than the percentage nationwide. And houses are staying on the market 14 days longer than the U.S. average.
30. Stamford, Connecticut
-
Median list price: $569,950
-
2-year price change: 3.5%
-
Percentage of underwater mortgages: 11.1%
-
Foreclosures: 1 in every 4,498 homes
The housing market is slowing in this city about 30 miles from New York. Home prices haven’t risen over the past year, and houses for sale are staying on the market longer than the U.S. average. Plus, the percentage of mortgages underwater in Stamford is higher than the percentage nationwide.
29. Champaign, Illinois
-
Median list price: $164,900
-
2-year price change: 3.2%
-
Percentage of underwater mortgages: 11%
-
Foreclosures: 1 in every 2,173 homes
The housing market in this city that is home to the University of Illinois is showing signs of weakness. The growth in home prices has been slowing. Houses spend more days on the market in Champaign than they do nationwide. And both the foreclosure rate and percentage of homes underwater are higher than the national rates.
28. Port Saint Lucie, Florida
-
Median list price: $247,280
-
2-year price change: 7.6%
-
Percentage of underwater mortgages: 6.2%
-
Foreclosures: 1 in every 1,171 homes
Although the percentage of underwater mortgages is below the national average in this city that’s halfway between Miami and Orlando, the foreclosure rate is twice as high. Plus, home price growth has slowed in Port Saint Lucie.
27. Bradenton, Florida
-
Median list price: $293,700
-
2-year price change: 1.7%
-
Percentage of underwater mortgages: 6.6%
-
Foreclosures: 1 in every 1,799 homes
The housing market is slowing more in Bradenton than in neighboring Sarasota. Home prices have fallen 0.3% over the past year. And 21% of listed homes have price cuts compared with 19.8% in Sarasota and 17.5% nationwide.
26. Ocala, Florida
-
Median list price: $181,900
-
2-year price change: 8.9%
-
Percentage of underwater mortgages: 10.3%
-
Foreclosures: 1 in every 972 homes
The foreclosure rate in this city in north-central Florida is among the top 10 highest on this list. Plus, the percentage of underwater mortgages in Ocala is higher than the U.S. average. To top it off, home price growth has slowed over the past year.
25. Dayton, Ohio
-
Median list price: $67,000
-
2-year price change: 16.5%
-
Percentage of underwater mortgages: 27.6%
-
Foreclosures: 1 in every 1,820 homes
The big increase in home prices in Dayton over the past two years might signal to some that the real estate market in this southwestern Ohio city is doing just fine. However, Dayton has the second-highest percentage of underwater mortgages among the cities on this list. And the foreclosure rate is higher here than the national rate.
24. Lehigh Acres, Florida
-
Median list price: $180,000
-
2-year price change: 6.5%
-
Percentage of underwater mortgages: 6.9%
-
Foreclosures: 1 in every 1,189 homes
Although the percentage of underwater mortgages in Lehigh Acres is lower than the percentage nationwide, the foreclosure rate is higher here than the U.S. average. In addition, this city in the Fort Myers metro area on Florida’s Gulf Coast has seen a slowdown in home price growth over the past year. Twenty percent of homes listed for sale here have had price cuts.
23. Rockford, Illinois
-
Median list price: $100,00
-
2-year price change: 10.5%
-
Percentage of underwater mortgages: 21%
-
Foreclosures: 1 in every 890 homes
Rockford’s real estate market could turn ugly because a significant percentage of homeowners here have negative equity. More than 20% of mortgages are underwater in this northern Illinois city compared with about 8% nationally. Plus, the foreclosure rate in Rockford is one of the highest among cities on this list.
22. Mobile, Alabama
-
Median list price: $159,900
-
2-year price change: 6.3%
-
Percentage of underwater mortgages: 16.1%
-
Foreclosures: 1 in every 2,149 homes
Home prices are still rising in this port city on the Gulf Coast, but not as fast as prices are increasing across the U.S. However, the bigger problem for Mobile’s real estate market is homeowners with negative equity. The percentage of underwater mortgages here is twice the national average.
21. Cape Coral, Florida
-
Median list price: $262,200
-
2-year price change: 4.2%
-
Percentage of underwater mortgages: 5.5%
-
Foreclosures: 1 in every 1,191 homes
This city near Fort Myers has seen rapid growth, but its current housing market is experiencing a slowdown. Home prices increased just 0.1%, on average, over the past year. Nearly 22% of homes listed for sale have price cuts. And houses in Cape Coral stay on the market an average of 103 days compared with a national average of 66 days.
20. Fort Pierce, Florida
-
Median list price: $199,900
-
2-year price change: 0.5%
-
Percentage of underwater mortgages: 9.7%
-
Foreclosures: 1 in every 1,585 homes
While home prices climbed more than 9% nationwide over the past two years, they barely budged in this small city on Florida’s Atlantic Coast. Nearly 10% of mortgages are underwater in Fort Pierce compared with about 8% nationwide. And the foreclosure rate is higher than the rate across the U.S.
19. Suffolk, Virginia
-
Median list price: $282,785
-
2-year price change: 0%
-
Percentage of underwater mortgages: 14.8%
-
Foreclosures: 1 in every 1,846 homes
Home prices haven’t risen any, on average, over the past two years in Suffolk. And homes for sale stay on the market an average of 76 days compared with a national average of 66 days. The other problems the real estate market is facing in this city — which is part of the Virginia Beach metro area — are the relatively high percentage of underwater mortgages and high foreclosure rate.
18. Laurel, Maryland
-
Median list price: $350,000
-
2-year price change: -2.8%
-
Percentage of underwater mortgages: 12.6%
-
Foreclosures: 1 in every 1,457 homes
Home prices have been falling in this city that’s located between Baltimore and Washington, D.C. On top of that, nearly 13% of mortgages are underwater in Laurel compared with about 8% nationwide. And the foreclosure rate is higher than the U.S. average.
17. Joliet, Illinois
-
Median list price: $169,900
-
2-year price change: 9.6%
-
Percentage of underwater mortgages: 15.5%
-
Foreclosures: 1 in every 812 homes
Although home prices in Joliet increased 9.6% over the past two years, prices haven’t risen any, on average, over the past year. What’s more troubling, though, are the high number of foreclosures and underwater mortgages in this city 30 miles southwest of Chicago. Joliet has the fourth-highest foreclosure rate among cities on this list. And the percentage of underwater mortgages here is almost double the percentage nationwide.
16. Valdosta, Georgia
-
Median list price: $154,900
-
2-year price change: 0%
-
Percentage of underwater mortgages: 22.7%
-
Foreclosures: 1 in every 3,304 homes
The foreclosure rate in this city near the Georgia-Florida border is lower than the U.S. average. However, Valdosta has one of the highest percentages of underwater mortgages among cities on this list. Home prices here have also fallen more than 6% over the past year.
15. Decatur, Illinois
-
Median list price: $99,900
-
2-year price change: 8.5%
-
Percentage of underwater mortgages: 20.4%
-
Foreclosures: 1 in every 5,785 homes
Decatur has the lowest foreclosure rate among the cities on this list. But the housing market in this central Illinois city could turn ugly due to its high percentage of underwater mortgages. Decatur also has a higher percentage of homes with price cuts than half of the cities on this list, and homes for sale spend more days on the market here than in a majority of cities.
14. Elgin, Illinois
-
Median list price: $240,000
-
2-year price change: 7.8%
-
Percentage of underwater mortgages: 11.9%
-
Foreclosures: 1 in every 1,223 homes
The foreclosure rate in this Chicago suburb is twice the national rate. Plus, home price growth in Elgin has slowed over the past year, and nearly 20% of homes listed for sale have had price cuts.
13. Riverview, Florida
-
Median list price: $252,990
-
2-year price change: 2.2%
-
Percentage of underwater mortgages: 7.2%
-
Foreclosures: 1 in every 796 homes
Like other cities in the Tampa area, Riverview has a housing market that could turn ugly. It has the second-highest foreclosure rate on this list. Home price growth has slowed over the past year. And nearly 25% of homes listed for sale have had price cuts compared with 17.5% nationwide.
12. Atlanta
-
Median list price: $339,500
-
2-year price change: 1.6%
-
Percentage of underwater mortgages: 8.8%
-
Foreclosures: 1 in every 1,942 homes
Home prices have dropped 3% over the past year in Georgia’s capital and largest city. Atlanta is also seeing homes stay on the market longer than the U.S. average. Plus, the foreclosure rate here is higher than the rate nationwide.
11. Lawton, Oklahoma
-
Median list price: $99,900
-
2-year price change: 5%
-
Percentage of underwater mortgages: 25.7%
-
Foreclosures: 1 in every 1,661 homes
Lawton has the fourth-highest percentage of underwater mortgages among cities on this list. The foreclosure rate also is higher in this southwestern Oklahoma city than it is nationwide. And homes stay on the market an average of 117 days compared with a U.S. average of 66 days.
10. Hampton, Virginia
-
Median list price: $182,000
-
2-year price change: 4.8%
-
Percentage of underwater mortgages: 19.9%
-
Foreclosures: 1 in every 2,148 homes
Hampton is one of the fastest-growing cities in the Hampton Roads region on the Chesapeake Bay. However, it’s housing market has been slowing. Home prices have fallen nearly 3%, on average, over the past year. And the percentage of underwater mortgages here is double the percentage nationwide.
9. Aurora, Illinois
-
Median list price: $220,000
-
2-year price change: 4.7%
-
Percentage of underwater mortgages: 11.8%
-
Foreclosures: 1 in every 1,491 homes
This Chicago suburb is actually the second-largest city in Illinois. Its current housing market is showing signs of trouble, though. Aurora has the fourth-highest percentage of homes with price cuts at 23.7%. And the foreclosure rate and percentage of underwater mortgages are higher than the U.S. averages.
8. Bridgeport, Connecticut
-
Median list price: $189,900
-
2-year price change: 11.1%
-
Percentage of underwater mortgages: 26.9%
-
Foreclosures: 1 in every 1,453 homes
This port city 60 miles from New York has the second-highest percentage of underwater mortgages on this list. The foreclosure rate is higher than the national rate. And houses stay on the market an average of 102 days compared with a U.S. average of 66 days.
7. Norfolk, Virginia
-
Median list price: $220,000
-
2-year price change: 3.3%
-
Percentage of underwater mortgages: 20.6%
-
Foreclosures: 1 in every 2,094 homes
Home to the world’s largest naval base, Norfolk is located in southeastern Virginia on the Chesapeake Bay. Home prices have been flat this past year, and houses are staying on the market here slightly longer than the national average. The bigger problem in Norfolk, though, is the high percentage of underwater mortgages, which is more than double the percentage nationwide.
6. Miami Beach, Florida
-
Median list price: $499,000
-
2-year price change: -5%
-
Percentage of underwater mortgages: 14.5%
-
Foreclosures: 1 in every 2,374 homes
While home prices have been rising, on average, across the U.S. over the past two years, they’ve fallen 5% in this resort city across the Biscayne Bay from Miami. Plus, houses for sale spend more days on the market here — 225 — than in any other city on this list.
5. Baltimore
-
Median list price: $169,900
-
2-year price change: 17.1%
-
Percentage of underwater mortgages: 26.5%
-
Foreclosures: 1 in every 1,376 homes
Maryland’s largest city has had the biggest percentage increase in median home list prices over the past two years of any city on the list. However, Baltimore saw a 0.6% drop in home prices over the past year; it now has a higher percentage of homes with price cuts than most cities. And Baltimore has the third-highest percentage of underwater mortgages in this study.
4. Columbus, Georgia
-
Median list price: $115,450
-
2-year price change: -10.2%
-
Percentage of underwater mortgages: 22.2%
-
Foreclosures: 1 in every 1,172 homes
Home prices in Columbus have dropped more than in all but two cities on this list. The percentage of underwater mortgages in this city on the Georgia-Alabama border is among the highest rates in the study. And the foreclosure rate here is double the rate nationwide.
3. Portsmouth, Virginia
-
Median list price: $165,700
-
2-year price change: 1.5%
-
Percentage of underwater mortgages: 19.4%
-
Foreclosures: 1 in every 730 homes
This port city in southwestern Virginia has the highest foreclosure rate of any city on this list. Portsmouth also has a higher percentage of underwater mortgages than most cities in our rankings.
2. Lakewood, New Jersey
-
Median list price: $252,000
-
2-year price change: -12.3%
-
Percentage of underwater mortgages: 9.4%
-
Foreclosures: 1 in every 1,187 homes
This city about 70 miles south of New York City has seen home prices tumble more than 12% over the past two years — the second-biggest drop among cities in GOBankingRates’ ranking. The average number of days homes stay on the market here — 135 — is twice the national average. And the foreclosure rate is twice as high as the rate nationwide.
1. Peoria, Illinois
-
Median list price: $124,450
-
2-year price change: -15.9%
-
Percentage of underwater mortgages: 21%
-
Foreclosures: 1 in every 932 homes
Peoria claims the No. 1 spot among cities with real estate markets that are turning ugly for several reasons. This city in central Illinois has seen the biggest drop in home prices over the past two years of any city on this list. The average number of days houses are on the market and the percentage of homes for sale with price cuts are higher than the national averages. The percentage of underwater mortgages here is more than double the percentage nationwide. And the foreclosure rate is among the highest on this list.
Tyler Durden
Mon, 12/23/2019 – 22:05 -
- Can China Dethrone The US Dollar As Global Reserve
Can China Dethrone The US Dollar As Global Reserve
Authored by Steve Brown via TheDuran.com,
On the US dollar as reserve currency, that is a tough thing to break especially for China since the yuan is not freely convertible. China has renminbi and yuan; one they peg to the dollar and the other is circulated in China. Try converting USD to yuan in Paypal for example? The option is not there. Payments from the west to china sellers by Paypal (for example) are only in dollars.
It is a complex subject since China is the only foreign nation with a direct link into the US Treasury for purchase of US debt instruments, bypassing the Fed’s crooked relationship with its crooked primary dealers. This is done to manage China’s global trade relationships via the value of its currency which is somewhat pegged to the dollar (even if China and Trump claim otherwise) thus evading Federal Reserve gamesmanship. That’s why Trump messing with China is so dangerous, even if China has few options right now.
As a result of this ‘trade war’ China has let the yuan slide versus the USD which is a warning to Trump, specifically Mnuchin, popularly known as one of the most slippery dealers (IndyMAC and One West) to ever walk the earth (and China knows that). China is hoping that a lower yuan will offset tariffs just as the US has ‘weaponized’ the dollar and has imposed sanctions and tariffs on China. Because the sums are so vast with China holding so much US debt, and because China depends on exports to the west, China is somewhat boxed in.
So far China has been happy building ghost cities and high-quality infrastructure instead of blowing up their monetary reserves on the battlefield in useless wars as others do. If China wanted to blow up their trillion in US dollar reserves on the battlefield that would be very serious for the west indeed and so far, the Chinese leadership — and for that matter China’s people — have expressed no interest in doing so.
China could reduce its ties to the US dollar (USD) by making the yuan freely convertible, noting the IMF’s inclusion of the yuan in the SDR as a first step. Next, China could reduce its US foreign debt holdings but the question is where that money will go… where is a nation to park billions upon billions or even one+ trillion in surplus if not in the US dollar? That’s still the great quandary for China.
Besides the trade war, the US has engaged in Vicky Kagan-Nuland type jiggery-pokery in Hong Kong (perhaps inspired by John Bolton at the time?) attempting to pencilf China’s leadership in some very risky US gamesmanship along with Britain. And Trump gives the impression he is willing to screw the pooch and throw everything away in the China trade confrontation to make a point about US hegemony.
The point being…. what option does China have in this war? China has another option — rather than sell Treasury’s or fold to US trade demands — China could reveal its physical gold reserves and partially back the yuan with gold. (NB: return to a full gold standard in the present world economy is not possible – we are only discussing a partial backing, which has been the prevalent standard, ie partial not full, throughout modern monetary history until the adoption of a full by-decree currency by the US on August 15, 1971.)
In this scenario China could do the former Swiss thing and partially back the yuan with gold, just as the Swiss once partially backed the swiss franc with gold (40% reduced to 25% in 1997) until the Swiss franc threatened to become the world reserve currency usurping the USD by 1999.
What happened, the Swiss franc got so ‘strong’ against other currencies – and the USD – Swiss industries suffered. Also, the prospect then that the Swiss franc (now called the CHF) would usurp the USD as global reserve currency was absolutely terrifying to Swiss bankers who evidently prefer to be financial parasites instead of monetary leaders. [1]
Deflationary pressures, domestic costs, and tariff problems became so bad by 1999, Switzerland held a public referendum and went off gold in 2000. Then the bankers decided to sell almost two-thirds of their gold reserves — until the US financial collapse of 2008 — for reasons that are still unknown. One suspicion is that the Swiss monetary pharaohs foresaw fiat by-decree currency as a permanent feature and future condition for the global monetary system, but there are many more potential reasons.
The Swiss move to sell off 60% of its gold reserves from 2000 – 2008 was particularly surprising in light of Switzerland’s support for the gold carry trade. The old Swiss franc ended in 2000 and the current currency is the CHF.
Back to China’s potential to re-define the yuan with partial gold backing, should the yuan fall further against the dollar that would be the time to introduce such backing. China would have to reveal its true gold reserves and say, for example, back the yuan by 10% of its gold reserves.
But first, let’s posit that a full 1-to-1 ‘gold standard’ has never existed… not even in the United States, except for the period 1900-1913. Even then, National Bank Notes were not issued based on gold reserves although they purchased gold.
[Historically the gold standard was implemented partially by cooperation of all the major monetary powers, where the chart here uses the example of partial gold backing in Britain showing 1830 to 1931 when Britain officially exited gold backing of its currency:
Note that a gold standard based on gold reserves only imposes monetary discipline on the monetary system, when not all governments intend fiat by-decree governmental and private debt issuance to be used for noble purposes, as Modern Money Theory hopes.
Along with universal convertibility of the yuan, a move to 10% gold reserve backing by China would be a magnet to all currency traders since China would commit to maintain the value of its currency, when the US dollar is in process of continued and accelerating decline and devaluation. This is the bottom line that those who maintain the system wonder if you will ever know, that even partial gold backing of the yuan would dethrone the US dollar very quickly.
The problem being that partial backing of the yuan by gold would impact the global economy, and cause China’s money – no longer strictly a currency when partially backed by gold – to strengthen enormously in relation to the dollar, and perhaps even achieve a 3-to-1 ratio over time (just a guess) where the yuan is presently 7-to-1.
Such a move would dethrone the US dollar but would also hurt China and possibly even lead to social unrest there. It would represent a fundamental change where China would have to become more like the US, relying on imports instead of exports; relying on ‘consumers’ to drive the economy, and war, just as the US has relied upon since November 22nd, 1963.
So far, a partial gold backing of the yuan to challenge King Dollar is not in the mindset of China’s leaders despite the pointless trade provocations and arrogant prodding of the dragon and meddling in Hong Kong that the US is engaged in. Thus the odds of a partial gold-backed yuan happening soon do not appear hopeful… and note that HSBC is itself a primary Fed dealer!
Which brings us to Fed dealers and the euro. As far as the euro challenging the USD? …that’s an easy one to address. Some of Europe’s biggest banks are Primary Dealers of the Federal Reserve such as BNP Paribas, Barclays Capital, Credit Suisse AG, Deutsche Bank, and NatWest; they are actively engaged in maintaining the US dollar as global reserve currency. Inducing the European banks to get their hands dirty with Federal Reserve dollars as primary dealers after 1971 was one key to establishing the USD as global reserve.
Ending that European support for the US dollar is an impossibility now, just witness Europe’s inability to work around US Treasury sanctions on Iran regarding Iran’s oil trade to Europe. The big European banks will attempt to maintain parity with the US Dollar and cannot challenge it, since the USD is interwoven into their economies by their status as Federal Reserve primary dealers and their purchase of US securities and debt instruments.
Even the US financial collapse of 2008 saw foreign funds flee to the ‘safety’ of US Treasury debt instruments, when US debt instruments caused that collapse in the first place. The prospect for Europe of China to dethrone the USD as global reserve currency looks bleak for now. Powell and other economists say the USD has at least fifty years remaining to reign supreme. However with the United States on the monetary path it has been on for fifty years now, the idea that the US can persist for another fifty years in its dominance of the global monetary system seems unlikely at best.
Perhaps of interest is the Federal Reserve’s extraordinary program to pump billions in US Federal Reserve digits into the banking system nightly, mostly to four primary dealers according to Wall Street on Parade. The specific trade detail concerning these massive funding injections is largely unknown to the public… and there is no indication that the Fed will reveal the precise nature of this interbank lending issue any time soon. The Fed calls this massive bank of Big overnight funding operation a “technicality” — and, like the Fed itself, is evidently an opaque technicality with no end.
Tyler Durden
Mon, 12/23/2019 – 21:45 - Australian PM Responds To Greta Thunberg: "We'll Do What We Think Is Right For Australia"
Australian PM Responds To Greta Thunberg: “We’ll Do What We Think Is Right For Australia”
Australian Prime Minister Scott Morrison and the patron saint of environmentalists, Greta Thunberg, have been duking it out in headlines as far as who is responsible for the raging brushfires near every major city across Australia.
Morrison rejected Thunberg’s call for political action as bushfires spread across the country, reported Bloomberg.
“We’ll do in Australia what we think is right for Australia.”@ScottMorrisonMP responds to @GretaThunberg. #auspol #AustralianFires pic.twitter.com/4zY68Hsvls
— David Marler (@Qldaah) December 23, 2019
https://platform.twitter.com/widgets.js
Morrison said, during a news conference Sunday, it wasn’t the time to “make commentaries on what those outside of Australia think Australia should do” as he responded to Thunberg’s tweet that draws the connection between climate change and the raging inferno across the country.
Not even catastrophes like these seem to bring any political action. How is this possible?
Because we still fail to make the connection between the climate crisis and increased extreme weather events and nature disasters like the #AustraliaFires
That’s what has to change.
Now. https://t.co/DQcZViKJQz— Greta Thunberg (@GretaThunberg) December 22, 2019
https://platform.twitter.com/widgets.js
Morrison said he’s not trying to “impress people overseas” and won’t cave to international climate change demands:
“I have always acknowledged the connection between these weather events and these broader fire events and the impact globally of climate change. But I’m sure people equally would acknowledge that the direct connection to any single fire event, it’s not a credible suggestion to make that link.”
Morrison said bushfires in Australia are nothing new and have been happening for a long time.
“There are some fires that have been started by just carelessness, others sadly have been the result of direct arson, many have been created by dry lightning strikes,” Morrison said. “The drought conditions have certainly been a big contributor in terms of the dryness of the fuel load. There are also many other issues.”
Left-leaning Green politicians have been critical of Morrison for not drawing the connection between extreme heat fueling some of the worst bushfires in the country’s history.
Google News’ Saffron Howden tweeted a visual representation of the bushfires mapped out across the country, raging around almost every major city.
My god pic.twitter.com/hfmqN7eL2Z
— Saffron Howden (@saffronhowden) December 21, 2019
https://platform.twitter.com/widgets.js
BBC news reported on Saturday that bushfires in Australia’s southeastern state of New South Wales were at the “catastrophic” levels.
“These are the very worst of conditions”
Catastrophic fire warnings are in place across the Australian state of New South Wales, where firefighters are tackling more than 100 blazeshttps://t.co/1jQvxxgMSv pic.twitter.com/IbFJCBMcNo
— BBC News (World) (@BBCWorld) December 21, 2019
https://platform.twitter.com/widgets.js
A firefighter captured video of flames soaring above the treetops in New South Wales, Australia, where a massive fire raging in the Wollemi National Park area had burned nearly 380,000 hectares by Monday morning. #NSWfires pic.twitter.com/p0IrNLbqWB
— The Weather Network (@weathernetwork) December 17, 2019
https://platform.twitter.com/widgets.js
Australia has declared a state of emergency in New South Wales as strong winds fan around 100 bushfires across the state.
Around 2,000 firefighters are battling the blazes, many of which are still uncontrolled.
Read the full story here: https://t.co/m5IXnoIeNa pic.twitter.com/rQnL7wZjqg
— Sky News (@SkyNews) December 19, 2019
https://platform.twitter.com/widgets.js
The map below shows bushfires around Sydney were so bad over the weekend, that most roadways to exit the city were impassible.
There are now only 2 routes out of Sydney. Every other road is blocked by fire. pic.twitter.com/Njx6LveYKq
— David Morgan-Mar (@dmmaus) December 21, 2019
https://platform.twitter.com/widgets.js
And to make matters worse, the Australian Bureau of Meteorology reports there will be no major rain event across the country for at least the next two months.
The Morrison Government appears to be the next target of climate change thugs, led by Thunberg and her “greenie” cult.
Tyler Durden
Mon, 12/23/2019 – 21:25 - Deep Truths Of Deepfakes – Tech That Can Fool Anyone
Deep Truths Of Deepfakes – Tech That Can Fool Anyone
Authored by Shiraz Jagati via CoinTelegraph.com,
In its most basic sense, a deepfake is a combination of face- and voice-cloning AI technologies that allow for the creation of life-like, computer-generated videos of a real person.
image courtesy of CoinTelegraph
In order to develop a high-quality deepfake of an individual, developers need to accumulate tens of hours of video footage associated with the person whose face/voice is to be cloned, as well as a human imitator who has learned the facial mannerisms and voice of the target.
There are two humans involved in the creation of a deepfake, such that the target face/voice is that of the famous person while the other belongs to an unknown individual who is generally closely associated with the project.
From tech to reality
From a technical standpoint, visual deepfakes are devised through the use of machine learning tools that are able to decode and strip down the images of all the facial expressions related to the two individuals into a matrix consisting of certain key attributes, such as the position of the target’s nose, eyes and mouth. Additionally, finer details, such as skin texture and facial hair, are given less importance and can be thought of as secondary.
The deconstruction, in general, is performed in such a way that it is mostly always possible to fully recreate the original image of each face from its stripped elements. Additionally, one of the primary aspects of creating a quality deepfake is how well the final image is reconstructed – such that any movements in the face of the imitator are realized in the target’s face as well.
To elaborate on the matter, Matthew Dixon, an assistant professor and researcher at the Illinois Institute of Technology’s Stuart School of Business, told Cointelegraph that both face and voice can be easily reconstructed through certain programs and techniques, adding that:
“Once a person has been digitally cloned it is possible to then generate fake video footage of them saying anything, including speaking words of malicious propaganda on social media. The average social-media follower would be unable to discern that the video was fake.”
Similarly, speaking on the finer aspects of deepfake technology, Vlad Miller, CEO of Ethereum Express — a cross-platform solution that is based on an innovative model with its own blockchain and uses a proof-of-authority consensus protocol — told Cointelegraph that deepfakes are simply a way of synthesizing human images by making use of a machine learning technique called GAN, an algorithm that deploys a combination of two neural networks.
The first generates the image samples, while the second distinguishes the real samples from the fake ones. GAN’s operational utility can be compared to the work of two people, such that the first person is engaged in counterfeiting while the other tries to distinguish the copies from the originals. If the first algorithm offers an obvious fake, the second will immediately determine it, after which the first will improve its work by offering a more realistic image.
Regarding the negative social and political implications that deepfake videos can have on the masses, Steve McNew, a MIT trained blockchain/cryptocurrency expert and senior managing director at FTI Consulting, told Cointelegraph:
“Online videos are exploding as a mainstream source of information. Imagine social media and news outlets frantically and perhaps unknowingly sharing altered clips — of police bodycam video, politicians in unsavory situations or world leaders delivering inflammatory speeches — to create an alternate truth. The possibilities for deepfakes to create malicious propaganda and other forms of fraud are significant.”
Examples of deepfakes being used for nefarious purposes
Since deepfake technology is able to manipulate and imitate the facial features and personality characteristics of real-world individuals, it raises many legitimate concerns, especially in relation to its use for various shady activities.
Additionally, for many years now, the internet has been flooded with simple tutorials that teach people how to create digitally altered audio/video data that can fool various facial recognition systems.
Not only that, but some truly disturbing instances of audio/video manipulation have recently surfaced that have called into question the utility of deepfakes. For example, a recent article claims that since 2014, deepfake technology has advanced to such levels that today, it can be used to produce videos in which the target can not only be made to express certain emotions but also bear resemblance to certain ethnic groups as well as look a certain age. On the subject, Martin Zizi, CEO of Aerendir, a physiological biometric technology provider, pointed out to Cointelegraph:
“AI does not learn from mistakes, but from plain statistics. It may seem like a small detail, but AI-based on plain statistics — even with trillion bytes of data — is just that, a statistical analysis of many dimensions. So, if you play with statistics, you can die by statistics.”
Zizi then went on to add that another key facet of facial recognition is that it is based on neural networks that are quite fragile in nature. From a structural standpoint, these networks can be thought of as cathedrals, wherein once you remove one cornerstone, the whole edifice crumbles. To further elaborate on the subject, Zizi stated:
“By removing 3 to 5 pixels from a 12 million pixels image of someone’s face brings recognition to zero! Researchers have found that adversarial attacks on neural net attacks can find those 3 to 5 pixels that represent the ‘cornerstones’ in the image.”
One last big example of deepfake tech being misused for financial reasons was when the CEO of an unnamed United Kingdom-based energy firm was recently scammed into transferring 220,000 euros ($243,000) to an unknown bank account because he believed he was on the phone with his boss, the chief executive of the firm’s parent company. In reality, the voice belonged to a scammer who had made use of deepfake voice technology to spoof the executive.
Blockchain may help against deepfakes
As per a recent 72-page report issued by Witness Media Lab, blockchain has been cited as being a legitimate tool for countering the various digital threats put forth by deepfake technology.
In this regard, using blockchain, people can digitally sign and confirm the authenticity of various video or audio files that are directly or indirectly related to them. Thus, the more digital signatures that are added to a particular video, the more likely it will be considered authentic.
Commenting on the matter, Greg Forst, director of marketing for Factom Protocol, told Cointelegraph that when it comes to deepfakes, blockchain has the potential to offer the global tech community with a unique solution — or at least a major part of it. He pointed out:
“If video content is on the blockchain once it has been created, along with a verifying tag or graphic, it puts a roadblock in front of deepfake endeavors. However, this hinges on video content being added to the blockchain from the outset. From there, digital identities must underline the origins and creator of the content. Securing data at source and having some standardization for media will go a long way.”
McNew also believes that owing to the blockchain’s overall immutability, once a particular data block has been confirmed by the network, its contents cannot be altered. Thus, if videos (or even photos, for that matter) are made to flow immediately into a blockchain verification application before being made available for sharing, altered videos could be easily identified as fake.
Lastly, a similar idea was shared by Miller, who is of the opinion that blockchain technology in conjunction with artificial intelligence can help solve many of the privacy and security concerns put forth by deepfakes. He added:
“AI perfectly copes with the collection, analysis, sorting and transmission of data, improving the speed and quality of execution of internal processes. The blockchain, in turn, ‘makes sure’ that no one intervenes in the work of AI — it protects data and its sequence from any encroachment.”
Blockchain technology has its own limitations
As things stand, there are a few small drawbacks that are preventing blockchain technology from being actively used to monitor deepfakes on the internet. For starters, the technology is limited in its overall scalability, as the amount of computational resources and memory required to combat digitally manipulated A/V data in real-time is quite intense.
Another potential issue that could arise as a result of blockchain being used for deepfake detection is a substantial curbing of crowdsourced video content (such as the material that is currently available on YouTube). On the issue, Dixon pointed out:
“How does someone in a poor country reach the world with their message if they have to be approved by a Silicon Valley-based company? Should we be entrusting tech companies with such power? Liberty is always at stake when trust weakens.”
A similar opinion is shared by Hibryda, creator and founder of Bitlattice, a distributed ledger system that uses a multidimensional lattice structure to address issues such as scalability, security, timing, etc. In his view:
“The biggest drawback of blockchain tech lies in its inability to determine whether the signed media is really genuine or not. But that isn’t an internal issue of blockchain or related technologies — they only provide ledgers that are extremely hard to manipulate. It’s external and there’s no good way to solve that. While crowd-powered verification could be a partial solution, given crowds can be manipulated it’s rather impossible to build a system that provides reliable and objective fact-checking.”
However, Forst told Cointelegraph that while the majority of people tend to believe that leveraging blockchain might be too expensive for deepfake detection, there are several open-source solutions that seek to do this. Forst then added that, “The biggest drawback is that blockchain doesn’t solve the problem with deepfakes in its entirety, rather it can be a piece of the solution.”
Tyler Durden
Mon, 12/23/2019 – 21:05 - "A Farce" – China Denies Accusations Of Slave Labor After Chilling Note Found In Christmas Card
“A Farce” – China Denies Accusations Of Slave Labor After Chilling Note Found In Christmas Card
China on Monday denied accusations of forced labor at a Shanghai prison, one day after a young girl in a London supermarket was reportedly shocked to find a note from the Chinese gulag, according to Reuters.
The note allegedly read “We are foreign prisoners in Shanghai Qingpu Prison China. Forced to work against our will,” and urged whoever found it to contact British former journalist and corporate fraud investigator Peter Humphrey, who was imprisoned in the same Chinese jail from 2014 – 2015 for illegally obtaining the private records of Chinese citizens and selling the information to various clients – including drugmaker GalaxoSmithKline.
Tesco suspended their relationship with the Chinese Christmas card supplier on Sunday and announced an investigation.
“We were shocked by these allegations and immediately suspended the factory where these cards are produced and launched an investigation,” said a spokesman.
According to Chinese Foreign Ministry spokesman Geng Shuang, however, “I can responsibly say, according to the relevant organs [!?], Shanghai’s Qingpu prison does not have this issue of foreign prisoners being forced to work.“
Ghuang said the entire story was “a farce created by Mr. Humphrey.”
The card was found by six-year-old Florence Widdicombe, who showed it to her alarmed father, who in turn contacted Humphrey on LinkedIn.
Writing in the Sunday Times, Humphrey said he did not know the identities or the nationalities of the prisoners, but he “had no doubt they are Qingpu prisoners who knew me before my release in June 2015”. –Reuters
According to Reuters, Humphrey did not believe his activities in China were illegal. He told Sky News that he believes the card came from the Zheijiang Yunguang Printing factory, where prisoners were used in the production line as slave laborers.
Tyler Durden
Mon, 12/23/2019 – 20:45 - Gold Versus The US Dollar: Correlation Is Not What Most Think
Gold Versus The US Dollar: Correlation Is Not What Most Think
Authored by Mike Shedlock via MishTalk,
Gold is not as correlated to the US dollar as most think.
I commented on this a few days ago in Gold Surprisingly Correlated With the US Dollar.
Gold has been positively correlated to the US dollar for well over a year.
Most of the time gold is inversely correlated to the US dollar.
The problem, as the lead chart shows, is that the strength of moves in gold vs the strength in moves in the US dollar are totally random.
Look at the period between 1995 and 2005. A huge jump in the dollar index yielded a relatively small decline in the price of gold.
Between 2005 and 2012 gold went on a long one-way tear up regardless of what the dollar did. The net result was a huge blast higher in gold vs the move in the US dollar index.
Gold and Miners vs the S&P 500
A few days ago someone Tweeted I was wrong about the positive correlation between gold and the dollar, stating that the correlation was between gold and miners and the S&P 500.
That idea is more than silly as the following charts shows.
Gold vs the S&P 500
$XAU vs S&P 500
Warning: Don’t use short-term charts as a basis for making generalized statements.
Path of Least Resistance
#Gold Price Forecast: A Weaker Dollar Is The Easiest Path To $2,000 Gold#preciousmetals #markets @KitcoNewsNOW @mike_maloney @SeekingAlpha https://t.co/8hOljcJFaY pic.twitter.com/0UumUhlY9W
— Gold Eagle (@GoldEagleCom) December 16, 2019
https://platform.twitter.com/widgets.js
That is another one of those blind statements that feeds the widespread belief that gold is largely about the dollar.
Let’s look at this still one more way.
Various Price Points of Gold
With the US dollar right where it is now, gold has been at $450, $380, $1080, and $1480.
Moreover, and as shown above, sometimes gold has a positive correlation to the US dollar and sometimes negative.
Gold’s Big Surge
Gold went on a huge surge from roughly $450 to $1924 with the US dollar index falling from roughly 90 to 72.70.
Gold then fell to $1045 with gold bears coming out of the woodwork. Moves in the dollar once again do not explain. Here is a chart that does explain.
Gold vs Faith in Central Banks
If you believe the Fed has everything under control, then the primary reason to own gold is insurance in case you are wrong.
But one look at repo action and QE that allegedly is not QE ought to be enough reason to convince anyone that the Fed does not have things under control.
Price Target?
I have no price target, but I do have this observation:
If the dollar falls to 72.70 and gold acts the same way, gold will be at well north of $2000.
That is an “if and” statement, not a prediction. Yet, I do think $2000 gold has a very good shot. Dollar fundamentals help.
Dollar Fundamentals
-
The Fed is no longer tightening. The consensus opinion is the Fed is in for a long pause. I believe the Fed’s next move is another series of rate cuts. For discussion and an amusing set of “dot plots”, please see Fed Eyes Long Pause, No Rate Hikes in 2020
-
European central banks are starting to see the folly of negative rate. If the ECB joins the rate hike party or at least stops QE, that will put upward pressure on the Euro and negative pressure on the dollar.
-
Without a doubt the US stock market is extremely overvalued. This has led to dollar inflows from foreigners. When, not if, that reverses, the US dollar will reverse as well. For discussion, please see Where Will the Stock Market Be a Decade From Now?
-
The US also suffers massively from a Ticking Time Bomb of Record High Corporate Debt. When that breaks, it will not be good for US equities.
Where are We?
Not only are gold fundamentals excellent, dollar fundamentals help.
Got Gold?
Tyler Durden
Mon, 12/23/2019 – 20:25 -
- Baltimore City On Brink Of Worst-Ever Year For Homicides
Baltimore City On Brink Of Worst-Ever Year For Homicides
The latest shooting deaths in Baltimore City bring the homicide count to 336 in 2019, up from 309 last year.
With eight days and 17 hours left in 2019 (as of 7 am est. Monday) — more homicides are expected in the region that could breach the record high of 342, achieved in 2017 and 2015.
A mass shooting occurred over the weekend in Baltimore that got very little attention in the national press. Seven people were shot but no deaths. There were also three homicides, with two on Saturday and one on Sunday.
The violent weekend angered Mayor Bernard C. “Jack” Young in a Sunday afternoon statement to the press that said: “The level of violence late into this weekend is completely unacceptable.”
Baltimore Police Col. Richard Worley said the gunmen in the weekend’s mass shooting were “brazen” and said it is an example of the overall criminal culture in the city.
“I think it’s the same thing that the commissioner [Michael Harrison] has been saying all along. The criminals are just brazen,” Worley said. “This guy gets out of a car with a rifle, not even a handgun, walks up the street and just opens fire on a line of people.”
Cumulative homicide trends in the city show a massive jump in violence was sparked after the 2015 riots. Homicides from 2014 to 2015 jumped 62% over the year, and ever since, have sustained over 300 homicides per year. 2015 and 2016 were record-breaking years for murders, and 2019 could be another year for new highs.
Homicides in Baltimore are seasonal. Homicides ramp up in spring and peak in summer. Winter usually suppresses the number of killings but not this year. Most of the murders are by handguns.
Baltimore is a dangerous city, and if you have plans to visit the collapsing area for the holidays — please be advised you’re risking your life as the per capita homicide rate is some of the highest in the country.
Tyler Durden
Mon, 12/23/2019 – 20:05 - Making A Fortune: 19 Million Public Employees Across America Cost Taxpayers Nearly $1 Trillion
Making A Fortune: 19 Million Public Employees Across America Cost Taxpayers Nearly $1 Trillion
Authored by Adam Andrzejewski via Forbes.com,
For the first time in history, 19 million public employee salaries at every level of government across America have been mapped and posted online.
The work of our auditors at OpenTheBooks.com tells a compelling story: Public service is supposed to be about serving the people. However, the good intentions of America’s 19 million public employees come at a very high price for the people – nearly $1 trillion. In many cases, taxpayers generously fund these employee salaries.
Our online database is free to use and includes most employees within the federal, state, and local governments. You can search in your backyard or across the nation. Find out just how much public employees made last year. The salary records include name, salary, position title, and employer for 2017.
The data is full of stunning examples.
-
Tree trimmers in Chicago lopped off $106,000.
-
New York City school janitors cleaned off $165,000 while out earning the principals at $135,000.
-
Lifeguards in Los Angeles County, California, made up to $365,000.
-
In the small school district in Southlake, Texas (8,000 students), the school superintendent earned $420,000.
Help the reform-minded mayors, school superintendents, legislators and members of Congress by finding the waste, overspending, and bloated government in your very own neighborhood.
Search our interactive map of the top 2 million most highly compensated public employees across America. Just click a pin (your ZIP code) and scroll down to see the results that render in the chart beneath the map. Click here to access the map below.
Search 2 million public employee salaries by ZIP code at OpenTheBooks.com.
Last year, we found 1.7 million public employees earned $100,000 or more. The vast majority – 1.3 million six-figure earners – worked at the state and local levels. There were 105,000 local and state government employees out-earning every governor of the 50 states at a salary of $190,000 or more.
In Texas, 356 municipal employees made more than all governors ($190,000). Some of these towns are small, like Stanton (pop. 2,900), where the manager earned $314,696. In Whitesboro (pop. 4,000) and Manvel (pop. 10,000), the administrators were paid $312,000 and $292,529, respectively.
In Florida, the city attorney of the seaside community Dania Beach, Florida (pop. 32,000) gleaned $436,917 – that’s more than any U.S. president. At the Port Authority of New York and New Jersey, eight police officers and detectives made between $300,000 and $783,000 last year.
Nearly 10,000 employees of the University of California system pulled down more than $200,000. This includes 65 highly compensated public employees who made between $1 million and $3.6 million.
The top 5 locations for highly compensated public employees.
OPENTHEBOOKS.COM
Across the country, some of the largest salaries were paid out to athletic coaches at public universities. The retired football coach at University of Oregon received a $558,689 annual pension, and the fired Arizona State football coach got a $15 million payout. Nick Saban, at the University of Alabama, made $11 million.
What will you find while searching the public payrolls in your community?
Our recent investigation with Fox 32 Chicago found an Illinois superintendent earning $407,000 in a Calumet City district with only 1,100 students and no high school. Another superintendent made $206,000 in a New Lenox district with only 11 teachers and less than 100 students. Still another superintendent retired on a $300,000 pension at a Park Forest district, but, was then rehired on a $1,200 a day consulting contract – same position, same district.
Before complaining about Washington, D.C., people must insist on good government where they live. The people have the power to hold local politicians accountable for tax and spend decisions. Our mission is to make this information available to citizens and policymakers.
Government payrolls are the No. 1 issue affecting every service: public safety, healthcare, and welfare. Pay, perks, and pension benefits for public employees must be a priority in budgeting and deserve a rigorous, fact-based public debate.
Highly compensated public employees banded by 2017 income.
OPENTHEBOOKS.COM
Compiling this database was a spending genome project of sorts. It was a million-dollar effort. In one year, we filed requests and captured data from nearly 60,000 government employers, broke open the files, mapped the information, and posted it online.
The result is treasure-trove of oversight opportunity. It represents approximately 85% of all public employment at every level of government.
Now, it’s up to you to call out waste and inefficiency in your government bodies. Use our interactive map and search by ZIP code, the top 2 million public employees making more than $95,000. Or, use our website to see all 19 million salary records.
Open the books on your local taxing body. See how they are spending your property, sales, and income taxes. Then, raise your voice and demand better government in your own backyard.
Remember, it’s your money.
Tyler Durden
Mon, 12/23/2019 – 19:45 -
- Hunter Biden Denies Ukraine Money Laundering Allegations
Hunter Biden Denies Ukraine Money Laundering Allegations
Update: Biden has denied the allegations against him and asked the court to strike the filing from the record, claiming the allegations were improperly filed, and may constitute “redundant, immaterial, impertinent or scandalous” material, and that it was a “scheme by a non-party simply to make scandalous allegations in the pending suit to gain some quick media attention.”
Biden also asked for attorney’s fees and costs to address the allegations.
Judge Don McSpadden only agreed that it was improperly filed, striking the evidence on a technicality “as it was not filed in any acceptable manner to this court.”
It is unclear whether it may be re-filed pursuant to (Ark R. Civ. P. 24).
According to the New York Post: “Reached by phone, Dominic Casey, the D&A investigator who filed the papers, refused to say whether his group had been retained by Roberts, or sent the information to the court of its own volition.”
***
A new filing in an Arkansas lawsuit against Hunter Biden claims that the former Vice President’s son “is the subject of more than one (1) criminal investigation involving fraud, money laundering and a counterfeiting scheme.”
Filed by private investigator Dominic Casey of D&A Investigations on behalf of Lunden Alexis Roberts – with whom Hunter fathered a child, Monday’s “Notice of Fraud and Counterfeiting and Production of Evidence” alleges that Hunter Biden and associates Devon Archer and John Kerry stepson Christopher Heinz engaged in a money laundering scheme which accumulated over $156 million between March 2014 and December 2015.
According to the document, Biden, Archer and Heinz became directors of consulting firm Rosemont Seneca Bohai, LLC in order to “conceal their family members ownership,” establishing financial accounts at Morgan Stanley and China Bank, the latter of which was used in a money laundering scheme.
Biden and associates are accused of using the counterfeiting scheme “to conceal the Morgan Stanley et al Average Account Value.
The filing also says that “Family members of DEFENDANT Robert Hunter Biden, Devon Archer and Christopher Heinz are business partners of Serhiy Leshchenko and Mykola Zlochevesky in the Ukraine, and are currently under investigation for their part in the counterfeiting scheme.“
Of note, Leshchenko is a former Ukrainian parliamentarian who made headlines in August 2016 for helping to leak the so-called “black ledger” that resulted in the firing of then-Trump campaign manager Paul Manafort – the supposedly ‘debunked’ Ukraine meddling detailed in a November, 2017 Politico article.
Notably, following an outreach to the Ukrainian embassy by Democratic operative Alexandra Chalupa, Artem Sytnyk, Ukraine’s Director of the National Anti-Corruption Bureau of Ukraine and Leshchenko released the “black ledger” containing off-book payments to Manafort. In December of 2018, a Ukrainian court ruled that Sytnyk and Leshchenko “acted illegally” by releasing Manafort’s name – a conviction which was later overturned on a technicality.
Zlochevsky, meanwhile, is the owner of Burisma.
Read below:
Tyler Durden
Mon, 12/23/2019 – 19:30 - Surprise! Trust In Media Edges Down After Brief Recovery
Surprise! Trust In Media Edges Down After Brief Recovery
Often referred to as the “Fourth Estate”, the media plays an important role in any democratic society. A free press is essential to holding governments accountable and informing the public, thus enabling voters to partake in political debate and make qualified decisions.
The United States also has a long history of a free and independent press, with organizations such as the New York Times, TIME or CNN historically renowned and respected around the world.
In recent years however, as Statista’s Felix Richter notes, Americans themselves started losing faith in their country’s media organizations.
You will find more infographics at Statista
While the trend in the loss of faith in the media, as the infographic above shows, has been going on for over two decades, the recent acceleration is possibly inspired by a presidential candidate who made no secret of his aversion towards the press (which has for four years done nothing but attack him and parrot establishment anti-Trump rhetoric – only to be busted for it numerous times thanks to Mueller and Horowitz), the percentage of U.S. adults having a great deal or a fair amount of trust and confidence in mass media dropped to a historic low of 32 percent in 2016, according to Gallup data.
Since then, some trust has been recovered, but 2019 saw the level of trust in American media deteriorate again after consecutive improvements in 2017 and 2018.
Tyler Durden
Mon, 12/23/2019 – 19:25 - How Everyone Messes Up At Once: Austrian Business Cycle Theory, Summarized
How Everyone Messes Up At Once: Austrian Business Cycle Theory, Summarized
Authored by Art Carden via The American Institute for Economic Research,
The price system is a thing of beauty. F.A. Hayek was exactly right when he said that it would be considered among humanity’s greatest achievements had it actually been designed, created, and implemented. Instead, it just emerged without central planning or a wise order from a wise ruler.
The prices free markets generate aggregate and convey important information about what, how, where, when, and for whom to produce. As the economist Tim Harford put it in his book The Undercover Economist, competitive markets create a world of truth: he notes that in a competitive market, we produce the right stuff the right way for the right people and in the right proportions. The properties of competitive equilibrium have a certain beauty to them. We produce everything that is worth more than it costs to produce. We produce nothing that is worth less than it costs to produce. What gets produced is produced by the lowest-cost producers and consumed by the highest-value consumers. It’s an undesigned and unappreciated marvel.
That raises an uncomfortable question. If markets are so great, why do we have business cycles? What’s the deal with the roller coaster rides of boom and bust that create widespread reductions in output and employment, also known as recessions?
There are a lot of reasons.
In what follows, I want to explore one of the elements of the Austrian theory of the business cycle: a cluster of errors by people who, presumably, aren’t stupid and who, presumably, don’t waste resources intentionally.
Here’s the punchline: monetary mischief means that prices are conveying inaccurate information about what, when, where, how, and for whom to produce. The signals that make markets work — prices, profits, and losses — are distorted relative to those that would what would tell the truth about underlying patterns of preferences and production possibilities. Hence, people make systematic errors. The prices, in other words, are lying.
Friedrich Hayek emphasizes the price we pay for the right to use other people’s money and stuff now rather than later: the interest rate. Let’s consider a couple of concrete scenarios. In the first case, the interest rate changes due to a change in saving and tells us the truth about people’s willingness to sacrifice present for future consumption. In the second case, the interest rate lies about what is really going on because the creation of new money is not the same thing as the creation of new resources. Here’s a parable: the parable of the asteroid miners and the chicken restaurants.
Suppose there is a change in people’s saving behavior. For this paper, I have been rereading James M. Buchanan’s Ethics and Economic Progress, and he devotes one chapter to the idea that, by our own standards and preferences, we would be better off if we all saved more — hence, Buchanan argues, the saving ethic has important “economic content.” Suppose that, on hearing this, people generally start saving more. This increases the supply of loanable funds and decreases the interest rate.
In his legendary lectures on Austrian business cycle theory, Roger Garrison distinguishes between the derived-demand effect and the interest rate effect. For retailers, restaurants, and other firms that serve consumers directly, the derived-demand effect dominates. If people suddenly stop buying sandwiches at Popeye’s and Chick-fil-A, this is going to have a larger effect on their production decisions than lower borrowing costs.
In the late stages of production, firms like Popeye’s and Chick-fil-A contract (relative to what they would have done, at any rate) because they aren’t selling as many sandwiches. Their (relative) contraction is a big part of what frees up the resources that make it easier for firms farther removed from immediate consumption to expand — companies like asteroid-mining firms with their eyes on asteroids said to be worth billions or trillions or even quintillions of dollars.
These firms expand because the interest rate effect dominates the derived-demand effect. They are far enough removed from the retail market for chicken sandwiches that what’s going on there isn’t going to affect them much. What will matter will be what the falling interest rates tell them about the wisdom of long-term investment. Lower interest rates make far-future payoffs more valuable.
At an interest rate of 5 percent, $1,000 one year from today is worth $952.38. At an interest rate of 1 percent, it is worth $990.10. The interest rate is transmitting extremely valuable information: people are now more willing to wait than they were before. Hence, it is a better idea to invest in projects that aren’t going to pay off for a very long time. Even if the payoff is a thousand years from now, we can in principle estimate the present value of a $700 quintillion asteroid. Suppose this is off by many orders of magnitude and the asteroid is worth “only” $7 quadrillion. If the interest rate is 1 percent and the payoff isn’t coming for a thousand years, that $7 quadrillion asteroid still has a present value of over $334 billion. At an interest rate of 2 percent, it’s about $17.5 million.
The interest rates are almost certainly too low because asteroid mining is a pretty risky venture. Lloyd’s of London will insure a lot of things, but the possibility of a 70.25-mile-wide asteroid hitting the Earth is a pretty spectacular risk. It probably wouldn’t be as dramatic as this simulation of a 500 km asteroid hitting the Earth, but it would almost certainly be an extinction event. The interest rates are low and the time scale is kind of absurd to make a point: small changes in interest rates can lead to big changes in asset values.
This all goes fine if the changes are happening because of an increase in saving. Some firms and sectors — those closest to consumers — contract. Other firms and sectors — those farthest from consumers — expand. The economy grows faster as we add capital goods.
Things go awry, however, when the change in the interest rate comes from the monetary authority messing around with things rather than a change in saving. A credit expansion, where the monetary authority creates new money, lowers interest rates and begins a cascade of errors because the lower interest rates are sending incorrect signals about what is most valuable where. The monetary authority creates more money; it does not, however, create more real resources to support expanded production.
The lower interest rate has two effects, one on consumers and the other on firms in the early stages of the structure of production like mining, where all the action aims at creating stuff and skills that are a few years away from being finished goods or services. People consume more because interest rates are lower and the reward for delaying gratification isn’t what it used to be. In response to higher sales, firms in the late late stages (like retailers and restaurants) sell more and make plans to expand.
In the earlier stages, the interest rate effect dominates. Firms in these stages, like the companies eyeing what they think are trillion- and quadrillion-dollar asteroids elsewhere in the solar system, see the present value of possible long-term investments rise. They try, therefore, to expand as well. In the short run, everything looks great. People are consuming more. People are investing more. Unemployment is falling, wages are rising. The economy is booming.
There’s just one problem: prices are lying. Specifically, the interest rate is lying, and as Hayek emphasizes, the lying prices sow the seeds of an eventual bust even though everything looks wonderful.
Everyone is trying to expand their operations because of the lower interest rate and higher spending on consumption goods; however, there simply isn’t enough real saving to support everyone’s plans at the same time. To be sure, there are more loanable funds, which gives every appearance of real saving; however, people aren’t actually cutting back on consumption and leaving real materials like lumber, bricks, and nails for others.
Every chicken restaurant orders more chicken at the same time, driving up prices and encouraging their suppliers to expand. They all plan to build new restaurants while, at the same time, asteroid-mining firms are borrowing money and trying to expand. This increases the prices of lumber, land, construction materials, labor, and everything else, but again, the real saving isn’t there to support it. People are making terrible choices and systematically malinvesting capital goods not because they are stupid but because the prices are not reliable. Importantly, this is not a theory of overinvestment, where people invest too much. It is a theory of malinvestment, where people invest in the wrong things.
They find this out when it turns out the prices they expected to remain stable start rising. This is just an unpleasant surprise for some people who may not enjoy as large a profit as they expected when they decided to expand their chicken restaurants and chicken farms and asteroid-mining concerns, but it is a catastrophe for others who were just on the margin of deciding to enter the market and who pulled the trigger once interest rates fell (in the early stages of production) or sales jumped up just a little bit (in the late stages of production).
This means there are half-built restaurants and half-built office towers that can’t be completed without more lumber, concrete, window glass, and copper wiring — but there’s not enough of these materials to go around. A lot of people have nowhere to turn but bankruptcy. The boom is over, and a bust — during which capital, land, and materials are liquidated and reallocated — is the inevitable consequence.
Tyler Durden
Mon, 12/23/2019 – 19:05 - Natgas Futures Plunge Into Bear Market On Warmer Weather Outlook
Natgas Futures Plunge Into Bear Market On Warmer Weather Outlook
Last week we described how “A cold shot of air” was going to blast Boston, New York, Philadelphia, and Washington, D.C., through the weekend, then lead to unseasonably warm temperatures through Jan. 02. Much of the cold weather has already exited the Northeast on Monday, resulting in a plunge in Natgas futures on warmer weather outlooks.
Front-month gas futures on the New York Mercantile Exchange were down .10 cents, or -4.21%, at $2.231 per million British thermal units (mmBtu) at 12:30 am est.
Natgas futures stumbling into a bear market.
“(As) the weather last week was colder than normal we would expect a larger than usual storage draw. However, somewhat normal to above normal weather for this week and the holidays would mean reduced demand significantly,” Zhen Zhu, an economist at Oklahoma City-based C.H. Guernsey, told Reuters.
The Global Forecast System (GFS) shows from Washington, D.C., to New York to Boston, above-trend temperatures will be seen from Dec. 23 through Jan. 01.
The Northeast heating degree day (HDD) index dips this week and won’t rise above trend until Jan. 02/03. This means that energy demand to heat a structure will decline due to warmer temperatures – more reasons why Natgas futures will remain on a decline through this week, or until weather forecasts show cooler weather is on the way.
The Lower-48 HDD also shows energy demand across the U.S. to heat a structure will be on the decline for the next ten or so days.
Traders told Refinitiv that Natgas prices have plunged since early November “due to milder than usual weather and expectations inventories will still rise over the five-year average in the coming weeks. Near-record production enables utilities to leave more gas in storage, wiping away lingering concerns of supply shortages and price spikes during the winter.”
Tyler Durden
Mon, 12/23/2019 – 18:45
Digest powered by RSS Digest
Saving...![<!–[if IE 9]><![endif]–>](https://i0.wp.com/www.zerohedge.com/s3/files/inline-images/Lesvosrefugeecrisis.jpg?ssl=1){kind=link}
![<!–[if IE 9]><![endif]–>](https://i0.wp.com/www.zerohedge.com/s3/files/inline-images/chinaspace.jpg?ssl=1){kind=link}