- Europe's Runaway Train Towards Full Digitization Of Money & Labor
Authored by Peter Koenig via The Saker blog,
The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?
This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large – as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines – your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.
The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest – and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.
When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. ‘We are already closing all bank tellers, and so are most of the other banks’. Which means staff layoffs – which of course makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they have study hundreds of extra hours within a few months to pass a test – usually planned for weekends, so as not to infringe on the banks’ business hours. You got to chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the ‘retraining’ – but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.
Surveillance is everywhere. Now, not only our phone calls and e-mails are spied on, but our bank accounts are too. And what’s worse, with a cashless economy, our accounts are vulnerable to be invaded by the state, by thieves, by the police, by the tax authority, by any kind of authority – and, of course, by the very banks that have had your trust for all your life. Remember the ‘bail-ins’ first tested in early 2013 in Cyprus? – Bail-ins will become common practice for any bank that has abused its greed for profit and would go belly-up, if there wouldn’t be all those deposits from customers. Even shareholders are not safe. This has been quietly decided on some two years ago, both in the US and also by the non-elected white-collar mafia, the European Commission – EC.
The point is, ‘banks über alles’. And which country would be better suited to introduce ‘cashless living’ than Switzerland, the epicenter – along with Wall Street – of international banking. Bank’s will call the shots in the future, on your personal economy and that of the state. They are globalized, following the same principles of deregulation worldwide. They are in collusion with globalized corporations. They will decide whether you eat or become enslaved. They are one of the tree major weapons of the 0.1 % to beat the 99.9% into submission. The other two at the service of the master hegemon’s Full Spectrum Dominance drive, are the war- and security industry and the ever more brazen propaganda lie-machine. Banking deregulation has become another little-propagated rule of the World Trade Organization (WTO). Countries who want to join WTO, must deregulate their banking sector, prying it open for the globalized money-sharks, the Zion-controlled banking conglomerates.
Retrenchment of personnel in the banking employment market is increasing. The news only selectively reports on it, when there are large amounts of jobs being eliminated. Statistics lie everywhere, in the EU as well as in Washington. – Why scare people? They will be scared enough, when they are offered jobs at salaries on which they can barely survive. That’s happening already. It used to be a tactic applied for developing countries: Keep them enslaved by debt and low pay, so they don’t have time and energy to take to the streets to protest – they have to look for food and work, whatever menial jobs they can get, to feed their families. It’s now hitting Europe, the West in general. Some countries way more than Switzerland.
Cashless trials are going on elsewhere, especially in Nordic countries, where selected department stores and supermarkets do no longer take cash. Another monstrous trial has been carried out in India a year ago, in the last quarter of 2016, where from one day to another 80% of the most popular money notes were eliminated, and could only be exchanged for new notes by banks and through bank accounts. And this in an almost pure cash country, where half the population has no bank account, and where remote rural areas have no banks. People were lied to so that the sudden introduction had maximum effect.
It caused massive famine and thousands of people died, as they had suddenly no acceptable cash to buy food – all instigated by the USAID Project ‘Catalyst’, in connivance with the Indian rulers and central bank. It was a trial. It was a disaster. If it works in India with 1.3 billion people, two thirds of whom live in rural areas and most of them have no bank account, the scam could be applied in any developing country – see also India – Crime of the Century – Financial Genocide
What is going on in Switzerland is a trial with the high end of populations. How is the upper crust taking to such radical changes in our daily monetary routine? – So far not many protests have been noticed. There is a weak referendum being launched by a group of people who want the Swiss Central Bank be the only institution that can make money, like in the ‘olden days’. Though a very respectable idea, the referendum has no chance in today’s banking and debt-finance environment, where youth is being indoctrinated with the idea that swiping your card in front of an electronic eye is cool. Today, most money is made by private banks, like elsewhere in Europe and the US. Worldwide banking deregulation, initiated by the Clinton Administration in the 1990s – today a rule for any member of the World Trade Organization (WTO) – has made this all possible.
Digitalization and robotization is just beginning. Staffed check-out counters in supermarkets are dwindling; most of them are automatic – and that happened within the last year. – Where are the employees gone? – I asked an attendant who helped the customers through the self-checkout. ‘They joined the ranks of unemployed’, she said with a sad face, having lost several of her colleagues. ‘It will hit me too, as soon as they don’t need me anymore to show the customers on how to auto-pay.’
Bitcoins
Digitalization also includes the cryptocurrencies, the blockchain moneys floating around – of which the most famous one is Bitcoin. It brings digitalization of money to an apex. The system is complex and seems to lend itself only to ‘experts’. Cryptocurrencies are fiat money, based on nothing, not even on gold. Cryptos are electronic, invisible and highly, but highly speculative, an invitation for gangsters and fraudsters. With extreme speculative values, it looks as if cryptocurrencies were designed for crooks and speculators.
Bitcoin was allegedly invented by Satoshi Nakamoto which could be a pseudonym of a man or a group of people, suspected to live in the US. “Nakamoto’s” identity is believed to be commonwealth origin, due to the vocabulary used in his writings. One of his close associates is purportedly a Swiss coder, who is also an active member of the cryptocurrency community. He is said to have graphed the time stamp of each of Nakamoto’s more than 500 bitcoin forum posts. Such ‘forum posts’ exist in the thousands, worldwide. They form an elaborate network based on algorithms.
Bitcoin was formally created in January 2009 with a fix amount of 21 million ‘coins’, of which more than half are already in circulation, and 1 million, or about 4.75% (of the total) can be traced to Nakamoto – which according to the current market value corresponds to close to US$15 billion. Today’s overall Bitcoin market cap is more than US$ 315 billion. The market is highly volatile. Drastic daily fluctuations are common, especially within the last 12 months. If one of the major Bitcoin holders, like Nakamoto, would capitalize his profit by selling a big portion of his holdings, the Bitcoin price would be in free fall, functioning pretty similar to the regular stock exchange.
On 24 August 2010, when Bitcoin was first traded, its value was US$ 0.06. On 24 December 2017, the coin was worth US$ 13,800, an increase of 230,000%. In the last twelve months, its value increased from about US$ 800 in December 2016 to a peak of close to US$ 20,000 in December 2017, an increase of nearly 2,500 %. However, in the last 7 days, the price has dropped by US$ 5,160, i.e. by more than 27%, and the trend seems to be downward; perhaps a sign of quick profit-taking? However, this shows how instable this cryptocurrency is, apparently much more so than trading corporate shares on the stock market.
The number of cryptocurrencies available over the internet as of 27 November 2017 is above 1300 and growing. A new cryptocurrency can be created at any time and by anyone. By market capitalization, Bitcoin is presently the largest blockchain network (database network, storing data in different publicly verifiable places), followed by Ethereum, Bitcoin Cash, Ripple and Litecoin.
Bitcoin may be the next bubble, bringing down a parallel economy which has already its fingers clawing into our regular western economy. Cryptocurrencies are officially forbidden in Russia and China, though stopping cryptocurrency dealings by individuals is hardly possible. They do not touch the traditional banking system. That’s why major banks hate them. They circumvent the banking suckers, prevent them from making ever higher profits from horrendous commissions, against which the people at large are powerless.
Here is Bitcoin’s positive value. It escapes bank and state controls. If countries’ economies were run on Bitcoins or another cryptocurrency, they would escape US sanctions which function only because western currencies are foster-children of the US-dollar, hence, subject to the dollar hegemony; meaning all international transactions have to pass through a US bank. A typical case is ‘banking blockades’, when Washington decides to stop all international transactions of a country until it submits to the wishes of the empire. It is blackmail; totally illegal, but unless there is a monetary alternative, the (western) world is subject to this system.
A typical case was Argentina, when she was forced by a New York judge in June 2014 to pay a New York based Vulture Fund US$1.6 billion, an illegal ruling according to a UN resolution. Argentina refuse to pay, so the judge, interfering in a sovereign nation, blocked more than US$ 500 million in Argentina’s debt payment to creditors, bringing Argentina to the brink of a second bankruptcy in 13 years. Eventually, neoliberal Macri negotiated a deal with the Vultures of a payment in excess of US$ 400 million.
This US blackmail would not have been possible had Argentina been able to make its foreign transactions in Bitcoins or another cryptocurrency. Venezuela is currently using a national cryptocurrency for some of its foreign transactions, thereby escaping the sanctions stranglehold of Washington. Had Greek and Cyprus citizens had a cryptocurrency alternative to the euro, they would not have been subject to the cash control imposed by the European Central Bank.
On the other hand, funding of terror organizations, like ISIS, cannot be disrupted, if the terror group deals in cryptocurrencies. – This shows, for good or for bad, Bitcoins, or cryptocurrencies are for now unique in resisiting censure and blackmail, or any kind of authoritarian outside interference in electronic money transactions.
Cashless Living
If Switzerland accepts the change to digital money, a country where until relatively recently most people went to pay their monthly bills in cash to the nearest post office – then we, in the western world, are on a fast track to total enslavement by the financial institutions. It goes, of course, hand-in-hand with the rest of systematic and ever faster advancing oppression and robotization of the 99.9% by the 0.1%.
We are currently at cross-roads, where we still can either decide to follow the discourse of a new electronic monetary era, with ever less to say about the product of our work, our money; or whether, We the People, will resist a banking / finance system that has full control over our financial resources, and which can literally starve us into submission or death, if we don’t behave. In order to resist we need an alternative monetary system or monetary network, away from the dollar-euro hegemony.
All the more important is the ascent of another economy, another payment and transfer scheme which already exists in the East, the Chinese International Paymen, totally System (CIPS), effectively a replacement of SWIFT, totally privately run and linked to the US-dollar and US banks. The world needs a multipolar economy, based on the real output of a country or society, as is the case in China and Russia, not one based on fiat money as is the current western economy.
Will Switzerland, the stronghold of world finance, along with New York, London and Hongkong, resist the temptation of increased profit, power and control, offered by digital money? – We, the People, have still the chance to decide either for continuing rotting in a fraud economy, based on wars and greed – for which digital money, exacerbated by cryptocurrencies, is a new tool for a new maximizing profit bonanza on the back of the common people; or do we opt for an honest future and for a life that leaves us free to take sovereign political and monetary decisions in a full cash society. For the latter we must wake up to see the propaganda fraud going on before our eyes, and to resist the robot and electronic money onslaught being unleashed on us.
- A Lambo For Under 10 Bitcoin: You Can Now Buy Supercars For Cryptos
Listening to the CNBC today one would be left with the impression that once having purchased bitcoin, there is nothing one can do with it (except check its price 30 times per minute of course). Which, of course, is dead wrong: one can buy pretty much anything that Overstock (among increasingly more online retailers) has to offer, one can purchase a home not only in the US but also the UK, and as of a week ago, one could pay an Albany car dealer the digital currency and drive off with any vehicle off the lot.
And now, rushing to capitalize on the countless brand new crypto millionaires minted in the past year, is Moonlambos, an online dealership for supercars with offices in Santa Monica and London which dubs itself “the premier destination for exotic supercars that deals exclusively in cryptocurrency.”
The innovative dealership catering exclusively to bitcoin buyers, sells Aston Martins, Ferraris, Lamborghinis, Mclarens, Porsches and other coupes and convertibles, with a price rangins from 5 bitcoins for a Mercedes 230 SL Pagoda, to a 9 bitcoin Lamborghini Gallardo. to 20 bitcoin for a Ferrari 488, all the way to a 44 bitcoin Lamborghini Aventador LP 750-4 Superveloce.
What some may find most fascinating, however, is the constantly changing price in bitcoin for any one car – a result of the most volatile underlying asset currently in circulation (with the possible exception of electricity).
However, the real news here is not that there is now an exclusive online outlet aimed at bitcoin millionaires: it is that – as we have mused previously – there are so few of them when one considers that the population of crypto nouveau (ultra) riche has exploded in recent months, and is so very eager to spend its newfound wealth. It is almost as if, due to ideological barriers or other irrational considerations, retailers – who are all hurting in Amazon’s shadow – think they are too good to accept a new currency which millions would be delighted to spend, and would rather file for bankruptcy than accept the likes of bitcoin, ether and ripple.
Oh, and for those who say that cryptos are too volatile for any merchant to accept, here is a word you can ask Alexa to look up: “hedging.”
- From Snowden To Russia-Gate – The CIA And The Media
The promotion of the alleged Russian election hacking in certain media may have grown from the successful attempts of U.S. intelligence services to limit the publication of the NSA files obtained by Edward Snowden.
In May 2013 Edward Snowden fled to Hong Kong and handed internal documents from the National Security Agency (NSA) to four journalists, Glenn Greenwald, Laura Poitras, and Ewen MacAskill of the Guardian and separately to Barton Gellman who worked for the Washington Post. Some of those documents were published by Glenn Greenwald in the Guardian, others by Barton Gellman in the Washington Post. Several other international news site published additional material though the mass of NSA papers that Snowden allegedly acquired never saw public daylight.
In July 2013 the Guardian was forced by the British government to destroy its copy of the Snowden archive.
In August 2013 Jeff Bezos bought the Washington Post for some $250 million. In 2012 Bezos, the founder, largest share holder and CEO of Amazon, had already a cooperation with the CIA. Together they invested in a Canadian quantum computing company. In March 2013 Amazon signed a $600 million deal to provide computing services for the CIA.
In October 2013 Pierre Omidyar, the owner of Ebay, founded First Look Media and hired Glenn Greenwald and Laura Poitras. The total planned investment was said to be $250 million. It took up to February 2014 until the new organization launched its first site, the Intercept. Only a few NSA stories appeared on it. The Intercept is a rather mediocre site. Its management is said to be chaotic. It publishes few stories of interests and one might ask if it ever was meant to be a serious outlet. Omidyar has worked, together with the U.S. government, to force regime change onto Ukraine. He had strong ties with the Obama administration.
Snowden had copies of some 20,000 to 58,000 NSA files. Only 1,182 have been published. Bezos and Omidyar obviously helped the NSA to keep more than 95% of the Snowden archive away from the public. The Snowden papers were practically privatized into trusted hands of Silicon Valley billionaires with ties to the various secret services and the Obama administration.
The motivation for the Bezos and Omidyar to do this is not clear. Bezos is estimated to own a shameful $90 billion. The Washington Post buy is chump-change for him. Omidyar has a net worth of some $9.3 billion. But the use of billionaires to mask what are in fact intelligence operations is not new. The Ford Foundation has for decades been a CIA front, George Soros' Open Society foundation is one of the premier "regime change" operations, well versed in instigating "color revolutions".
It would have been reasonable if the cooperation between those billionaires and the intelligence agencies had stopped after the NSA leaks were secured. But it seems that strong cooperation of the Bezos and Omidyar outlets with the CIA and others continue.
The Intercept burned a intelligence leaker, Reality Winner, who had trusted its journalists to keep her protected. It smeared the President of Syria as neo-nazi based on an (intentional?) mistranslation of one of his speeches. It additionally hired a Syrian supporter of the CIA's "regime change by Jihadis" in Syria. Despite its pretense of "fearless, adversarial journalism" it hardly deviates from U.S. policies.
The Washington Post, which has a much bigger reach, is the prime outlet for "Russia-gate", the false claims by parts of the U.S. intelligence community and the Clinton campaign, that Russia attempted to influence U.S. elections or even "colluded" with Trump.
Just today it provides two stories and one op-ed that lack any factual evidence for the anti-Russian claims made in them.
In Kremlin trolls burned across the Internet as Washington debated options the writers insinuate that some anonymous writer who published a few pieces on Counterpunch and elsewhere was part of a Russian operation. They provide zero evidence to back that claim up. Whatever that writer wrote (see list at end) was run of the mill stuff that had little to do with the U.S. election. The piece then dives into various cyber-operations against Russia that the Obama and Trump administration have discussed.
A second story in the paper today is based on "a classified GRU report obtained by The Washington Post." It claims that the Russian military intelligence service GRU started a social media operation one day after the Ukrainian President Viktor Yanukovych was illegally removed from his office in a U.S. regime change operation. What the story lists as alleged GRU puppet postings reads like normal internet talk of people opposed to the fascist regime change in Kiev. The Washington Post leaves completely unexplained who handed it an alleged GRU report from 2014, who classified it and how, if at all, it verified its veracity. To me the piece and the assertions therein have a strong odor of bovine excrement.
An op-ed in the very same Washington Post has a similar smell. It is written by the intelligence flunkies Michael Morell and Mike Rogers. Morell had hoped to become CIA boss under a President Hillary Clinton. The op-ed (which includes a serious misunderstanding of "deterrence") asserts that Russia never stopped its cyberattacks on the United States:
Russia’s information operations tactics since the election are more numerous than can be listed here. But to get a sense of the breadth of Russian activity, consider the messaging spread by Kremlin-oriented accounts on Twitter, which cybersecurity and disinformation experts have tracked as part of the German Marshall Fund’s Alliance for Securing Democracy.
The author link to this page which claims to list Twitter hashtags that are currently used by Russian influence agents. Apparently the top issue Russia's influence agents currently promote is "#merrychristmas".
When the authors claim Russian operations are "more numerous than can be listed here" they practically admit that they have not even one plausible operation they could cite. Its simply obfuscation to justify their call for more political and military measures against Russia. This again to distract from the real reasons Clinton lost the election and to introduce a new Cold War for the benefit of weapon producers and U.S. influence in Europe.
None of the Russia-gate stories so far has held up to scrutiny. There is no proof at all, nor reasonable evidence, that Russia interfered in elections in the U.S. or elsewhere. There is no evidence of "collusion" with the Trump campaign.
One of the most complete debunking of the false claims can be found in the recent London Review of Books: What We Don’t Talk about When We Talk about Russian Hacking. Consortium News has published many pieces on the issue as well as analyses and warnings of what may follow from it. Many other writers have caught up and debunk the various false claims. The Nation lists various cases of journalistic malpractice with regard to Russia-gate.
The people who promote the "Russian influence" nonsense are political operatives or hacks. Take for example Luke Harding of the Guardian who just published a book titled Collusion: Secret Meetings, Dirty Money, and How Russia Helped Donald Trump Win. He was taken apart in a Real News interview (vid) about the book. The interviewer pointed out that there is absolutely no evidence in the book to support its claims. When asked for any proof for his assertion Harding defensively says that he is just "storytelling" – in other words: its fiction. Harding earlier wrote a book about Edward Snowden which was a similar sham. Julian Assange called it "a hack job in the purest sense of the term". Harding is also known as plagiarizer. When he worked in Moscow he copied stories and passages from the now defunct Exile, run by Matt Taibbi and Mark Ames. The Guardian had to publish an apology.
The Mexican government controls the media by buying an immense amount of advertisement. It thus guarantees income as long as its political line is followed. The U.S. government has its own ways of controlling the media. In the 1950s to 1970s the CIA ran Operation Mockingbird which gave it control over much of the news and opinion output in U.S. media. During that time up to 400 main stream journalists were working for the CIA.
The method of control has likely changed. The handling of the Snowden affair lets one assume that the CIA induces billionaires to buy up media and to implement the CIA's favored policies through them. We do not know what the billionaires get for their service. The CIA surely has many ways to let them gain information on their competition or to influence business regulations in foreign countries. One hand will wash the other.
James Clapper as Director of National Intelligence, John Brennan as CIA head and James Comey from the FBI "assessed" that Russia influenced the U.S. presidential election. Annex B of their report, which hardly any report bothered to mention, read:
Judgments are not intended to imply that we have proof that shows something to be a fact. Assessments are based on collected information, which is often incomplete or fragmentary, as well as logic, argumentation and precedents.
That sentence is the core of Russia-gate. There are lots of claims, assertions and judgments but no proof at all that any of the alleged Russian influence really happened.
It is probably due to the undue influence of the intelligence services that media have adopted that Annex B standard for themselves. With regards to Russia (and other issues), assertions are now enough – there is no need to investigate, to find the truth or to verify claims.
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How will that system work if an accident happens, some jet gets shot down and the issue escalates. Will there be any reporter left in the main stream media who is allowed to ask real questions?
- Visualizing The Future Of Shipping: Green & Autonomous
Space travel may be exciting, and self-driving cars certainly get a lot of hype.
However, as Visual Capitalist's Jeff Desjardins points out, there remains a good argument that the world’s oceans – and the ships that roam them – often get overlooked when it comes to advances in transportation technology.
How will shipping change in the coming years, and what trends can we look to for guidance on the future of shipping?
THE FUTURE OF SHIPPING
Today’s infographic comes to us from Futurism, and it gives examples of ships already in production – or in the concept phase – that aim to make activity on the world’s oceans greener and more autonomous.
Courtesy of: Visual Capitalist
How does the future of shipping shape up?
There are two main trends that emerge from these upcoming ships: an increased use of alternative energy and higher levels of automation.
GREENER SHIPS
Fuel accounts for about half of the operating costs of the shipping industry – so the type of fuel used to move ships between ports is paramount. Since the 1960s, heavy fuel oil (HFO) has been the dominant choice for the industry. It’s cheap and plentiful, but it’s also extremely dirty.
Shipping today only produces 3% of carbon dioxide emissions – but it’s areas like sulphur (15% of global total) and particulate emissions (11% of total) that are considered a bigger problem.
As a result, the industry is not only moving to use cleaner oil-based fuels – but some companies are aiming to use alternative energy as well. In the ships above, you’ll see the addition of LNG and fuel cells, as well as the use of solar and wind to help power the future of shipping.
MORE AUTONOMOUS SHIPS
Ships won’t only be powered differently – they will be navigated and steered using artificial intelligence along with the aid of commercial drones.
Rolls-Royce is building an autonomous smart ship right now with Google that will monitor its surroundings in intense detail, while making autonomous decisions on the deep seas.
Autonomous shipping is the future of the maritime industry. As disruptive as the smartphone, the smart ship will revolutionize the landscape of ship design and operations”
– Mikael Mäkinen, President, Rolls-Royce Marine
Implementing this technology on the high seas has a longer development cycle than that for autonomous vehicles, but that doesn’t mean the idea is dead in the water.
It just means we’ll have to wait a little longer to see the future of shipping in action – and for now, the prospect of viewing all of the world’s ships in real-time will just have to suffice.
- "Wealth Effect" = Widening Wealth Inequality
Authored by Charles Hugh Smith via OfTwoMinds blog,
Note that widening wealth and income inequality is a non-partisan trend.
One of the core goals of the Federal Reserve's monetary policies of the past 9 years is to generate the "wealth effect": by pushing the valuations of stocks and bonds higher, American households will feel wealthier, and hence be more willing to borrow and spend, even if they didn't actually reap any gains by selling stocks and bonds that gained value.
In other words, the mere perception of rising wealth is supposed to trigger a wave of renewed borrowing and spending.
This perception management only worked on the few households which owned enough of these assets to feel wealthier–the top 5%, the top 6 million out of 120 million households. This chart shows what happened as the Fed ceaselessly goosed financial assets higher over the past 9 years: the gains, real and perceived, only flowed to the top 5% of households earning in excess of $200,000 annually.
Spending by the bottom 95% has at best returned to the levels reached a decade ago in 2007.
By focusing on boosting financial assets to the moon as a means of goosing spending, the Federal Reserve has widened wealth and income inequality to the breaking point. Perception management doesn't actually boost the inflation-adjusted wages of the bottom 95%, which have stagnated for decades. Nor does boosting assets do much good for the vast majority of households which have modest holdings of stocks and bonds, usually in IRA or 401K retirement accounts they can't touch without paying steep penalties.
As the charts below illustrate, the Grand Canyon between the top 5% and everyone else is widening. Let's say a househould has $12,000 in retirement funds and $5,000 in a savings account. (Many households have less than $1,000 in savings, so this example-household is doing pretty well to have $17,000 in cash and financial assets.)
Thanks to the Federal Reserve's Zero Interest Rate Policy (ZIRP), savers have lost ground after adjustments for inflation. The stock market has more than doubled, and most bond funds have appreciated, but precious metals and other commodities have not performed as well. So let's say the household's retirement portfolio rose by a hefty 75%, or $9,000, to a total of $21,000.
Does this modest gain actually change the financial foundation of the household to the point that the household can now afford to buy a new vehicle, college tuition, etc.? The short answer is no; the gains are simply too modest as a percentage of income to make any difference.
Compare this to a top 5% household with hundreds of thousands of dollars of financial assets: gains registered in the hundreds of thousands do indeed move the needle on household wealth and perception management. The top 5% haven't just reaped outsized gains in Fed-goosed assets; they've also reaped the vast majority of any wage gains generated in the past 9 years of "recovery."
As this chart shows, the bottom 90% lost ground, and the really substantial gains have accrued only to the top 1%.
Note that widening wealth and income inequality is a non-partisan trend. The political and financial elites have feathered their own nests while the bottom 95% have lost ground.
The Federal Reserve's perverse policy of perception management has exacerbated wealth and income inequality: "wealth effect" = widening wealth inequality.
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- Crazy Eyes is BACK!
From the Slope of Hope: I saw a headline on December 24 which put a damper on my Christmas Eve:
Ummm – – so why on earth would this bug me? I don’t have a dog in this fight. If Theranos goes bankrupt, it doesn’t hurt or help me one bit. If they become the most valuable company in the world (ha!), the situation is the same. Utterly neutral and meaningless. So why should I care?
I’ve been pondering my reaction. Theranos is no stranger to the Slope of Hope, as I’ve written about this train wreck at length on eight separate occasions. For most of 2017, I wondered what had happened to them, because the media went completely silent on them. Ms. Holmes’ own Twitter account hasn’t issued a tweet for over two years (!), and every time I drive by the gorgeous Theranos headquarters here in Palo Alto, I see a completely empty parking lot. So I figured she basically got away with raising $900 million and having a ruined company without any consequence. But it seems I was wrong.
With the $100,000,000 that Fortress Investment is inexplicably throwing at Theranos, the company has now raised a billion bucks. I figure Holmes must have some SERIOUS dirt on somebody, because nothing about this makes any sense at all. Yes, yes, I realize her board of directors used to have every deep state slimeball imaginable, so maybe that helps, but let’s face it, the Theranos name is mud. I would wager its brand has NEGATIVE value. If you were starting a brand new medical device company, and you could give it the Theranos name for, say, ten dollars, would you do it? Yeah, I didn’t think so.
So, again, why should I care? Well, I think part of it is this:
Holmes’ whole schtick was how she was the reincarnation of Steve Jobs. From the bizarre diet to the black turtlenecks to the secrecy (“Hey! Our stuff doesn’t work at all! Shhhhhh! Don’t say anything!”), she held herself out as a younger Steve Jobs who wore a B-cup. For a while, the media gobbled it up, and they actually put her on the front cover of national magazines, repeating the claim that she was worth $4.5 billion. She – – how shall I put this? – – wasn’t.
- Here we see Ms. Holmes describing the $100 million as a great investment on a conference call, whose listeners couldn’t detect the air quotes.
I remain floored anyone would put another dime into this place. As the recent Wall Street Journal article mentioned, “An investigation by the Journal in October 2015 sparked a wave of scrutiny about Theranos’ practices, at a time when the company had a valuation of around $10 billion. Holmes has continued to lead Theranos through settling multiple lawsuits. However, investigations opened by both the Justice Department and the Securities and Exchange Commission are ongoing.” So they are tits-deep in lawsuits and angry shareholders, both Holmes and Theranos have been banned from running labs, and their name has become synonymous with smoke and mirrors. What’s going on here? Just because you throw on a white lab coat doesn’t make you a genius scientist.
Joking aside, I think for me what bugs the holy hell out of me is simply the disappointment. The past eight years have shown us an environment in which fraud, government bailouts, and crooked executives go unpunished, if not celebrated. Once in a blue moon, there’s a piece of shit company which is finally exposed for what it is (other examples – – Color.com and Clinkle.com) and blow up in front of our eyes. We saw that with Theranos, and even though their success or failure doesn’t affect my life one iota, it gave me some minuscule degree of satisfaction that there was still a little bit of judgment, discernment, and fairness to the world.
So when Theranos had an H-bomb dropped on them, and Holmes disappeared from the press, and their parking lot went empty, and their office space went up for least, I thought to myself: there’s still a little bit of sense left out there. But I was wrong. There isn’t. And if you’re a mildly-attractive slender blonde with some razzle-dazzle and the right connections, you can get away with just about anything.
- 1,000s Of "Micro-Homes" Sprout Up All Over Bay Area To House The Growing Homeless Population
Roughly one year ago we shared the plans of a billionaire real estate developer in San Francisco who wanted to build communities for the homeless in Bay Area neighborhoods using stackable steel shipping containers (see: San Fran Billionaire Luanches Plan To House Homeless In Shipping Containers). Not surprisingly, the efforts were met with some resistance from the liberal elites of Santa Clara who, despite their vocal support of any number of federal subsidy programs for low-income families, would prefer that those low-income families, and their subsidies, stay far away from their posh, suburban, “safe places.”
Alas, as the San Francisco Chronicle points out today, like it or not, the boom in “micro-houses” is just getting started in the Bay Area with nearly 1,000 tiny homes, with less than 200 square feet of living space, currently being planned in San Francisco, San Jose, Richmond, Berkeley, Oakland and Santa Rosa.
Planners say that’s just the beginning. “We’re very excited about micro-homes,” said Lavonna Martin, director of Contra Costa County’s homeless programs. “They could be a big help. They have a lot of promise, and our county is happy to be on the cutting edge of this one. We’re ready.”
Contra Costa has a $750,000 federal homelessness grant to pay for 50 stackable micro-units of supportive housing, and Richmond Mayor Tom Butt would like to see them in his city. Developer Patrick Kennedy brought a prototype of his MicroPad unit to Richmond in November, and county and city leaders say they are leaning toward choosing it.
“They’re very fine, and they make a nice-looking building,” Butt said. “They’d be good for anybody looking for housing.”
The beauty of the tiny units is that they can be built in a fraction of the time it takes to construct typical affordable housing, and at a sliver of the cost, which means a lot of homeless folks can be housed quickly.
The homes have also caught on in San Jose where the City Council just approved $2.4 million to build a village of 40 units to help house the homeless. Of course, just like in Santa Clara, San Jose residents are lashing out at city officials over plans that they say will only serve to increase neighborhood crime.
San Jose resident Sue Halloway told the council she was afraid putting the village near residences would increase “neighborhood crime, neighborhood blight (and) poor sanitation,” and predicted that it would be “a magnet for more homeless.”
City Councilman Raul Peralez said he understands such concerns, but that “there are no facts surrounding these tiny homes and whatever blight or crime they might bring, because we haven’t done them yet.”
“I tell people you really have two options,” said Peralez, who said he wants the village in his downtown district. “You can allow the homeless to live on the streets, or you can provide not only shelter but services in a confined area — with security. In my mind, that’s a way better option for managing this community in an organized way.”
So, what do the stackable units look like? As seen in the video below, prototypes from one manufacturer, MicroPad, come complete with full bathrooms and kitchens and have up to 160-180 square feet of living space…
“These micro-homes may seem small at 160 to 180 square feet, but they’re actually pretty spacious when you’re in them,” she said. “And they go up very fast.”
Kennedy’s MicroPads have showers, beds and kitchens. Individually they resemble shipping containers, but once they’re bolted together with siding and utilities, they look like a regular building.
…which is more or less considered a mansion by struggling New York artist standards…
- The Biggest Factors In Future Oil Production
Authored by Ron Patterson via OilPrice.com,
This assessment is based on the data in the 2017 BP Statistical Review of World Energy available here. As such it uses that review’s definition of oil which is crude and condensate and natural gas liquids, uncompensated for their different energy contents or values of refined product components.
Figure 1: World Oil Production 1990 – 2017
(Click to enlarge)
This analysis was prompted by a chart by Ovi showing that Non-OPEC production less Russia, Canada and the United States has been in decline since 2004. That decline rate is 0.25 million barrels/day/annum. It had previously risen strongly from 1990.
Figure 2: Production Rate Change 2007 – 2016
(Click to enlarge)
The United States LTO patch is widely credited with having caused the oil price collapse of 2014. American production had risen by six million barrels per day since 2007. The United States was not alone with four other countries totaling six million barrels per day of production increase. Iraq and Saudi Arabia contributed two million barrels per day each with Russia and Canada contributing one million barrels per day each.
Figure 3: World Oil Consumption 1990 – 2016
(Click to enlarge)
OECD consumption has been flat even as OECD countries have had an increase in GDP.
Figure 4: Where the Oil Went
(Click to enlarge)
The fall of non-OECD consumption from 1990 to 1996 was due to the dissolution of the Soviet Union. Since then consumption growth has been steady at about 835,000 barrels/day/annum. Chinese consumption growth was 240,000 barrels/day/annum up to 2002 and then steepened to 512,000 barrels/day/annum since. OECD consumption growth was strong up to 2007 and then demand contracted due to higher oil prices. From here it looks like OECD consumption has plateaued. China may have also plateaued. Non-OECD consumption is likely to continue rising with a large part of that being due to India.
Figure 5: World Oil Production from 1990 with a Projection to 2025
(Click to enlarge)
This projection is based on U.S. conventional production resuming long term decline and U.S. LTO production continuing to climb, driven by the Permian Basin. Russian production is in a long plateau. Canadian production continues its slow, capital-intensive climb. Other non-OPEC production continues its established decline of 0.25 million barrels/day/year. Iraqi production rises by 2.0 million barrels/day to 2025. It could be higher than that. Other OPEC production had risen by 3.0 million barrels/day from 2000 to 2005, in response to the lifting of production restrictions, and has been in a plateau since. The projection assumes a decline of 0.3 million barrels/day/year.
The projection shows a gap of about eight million barrels per day by 2025 relative to the established growth rate indicated by the dashed line. This could largely be filled if Permian Basin production ramps up faster than projected and Iraqi production growth ramps up faster than projected now that their civil war is over.
In summary, the market is likely to remain in balance and sustained price excursions are unlikely.
- Where European Populism Will Be Strongest In 2018
While the establishment may breathe a sigh of relief looking back at political developments and events in Europe – which was spared some of the supposedly “worst-case scenarios” including a Marine le Pen presidency, a Merkel loss and a Geert Wilders victory – in 2017, any victory laps will have to be indefinitely postponed because as Goldman writes in its “Top of Mind” peek at 2018, Europe’s nationalist and populist tide was just resting, and as Pascal Lamy, the former Chief of Staff to the President of the European Commission admitted earlier this year, “Euroskeptic politicians are largely following the pulse of domestic sentiment. The fact is that the public is less enthusiastic about Europe than it once was.“
Echoing the sentiment by the europhile, Goldman’s Allison Nathan writes that while the Euro area’s most immediate political risks—i.e., populist or euroskeptic parties winning key elections this year— did not materialize, these movements have continued to gain traction.
- In the Dutch elections in March, the far-right Party for Freedom performed worse than polls had once predicted, but still increased its share of the vote relative to the 2012 elections. It remains the second-largest party in parliament.
- In France, concerns about the prospect of Marine Le Pen winning the presidency gave way to optimism over Emmanuel Macron’s reform agenda; nonetheless, Le Pen posted the best-ever showing for her party in a presidential race.
- In Germany, Chancellor Angela Merkel’s CDU-CSU retained the largest number of seats in the Bundestag, but the far-right Alternative für Deutschland (AfD) entered it for the first time with 13% of the vote.
- And elsewhere in Europe, populist parties on various parts of the political spectrum performed well enough to participate in government coalitions; indeed, an anti-establishment candidate in the Czech Republic recently became prime minister
Some other observations and lessons from recent European events in the twilight days of 2017:
- The transition from campaigning to governing has proved difficult. Europe’s increasingly fragmented political landscape has made coalition-building challenging. In the Netherlands, it took over 200 days to form a government with only a single-seat majority. Similarly, German coalition talks with the Green party and the Liberal (FDP) party collapsed in November. But, after having planned to move into the opposition, the SPD—Merkel’s former coalition partner—decided at its congress last week to open talks with the CDU-CSU. Talks were set to begin this week.
- Other sources of uncertainty remain unresolved. Spain continues to grapple with the standoff between Madrid and Catalonia; regional elections in Catalonia on December 21 will influence the trajectory of the situation. Meanwhile, the UK and EU-27 seem likely to agree to move past the first phase of the Brexit talks (covering separation issues). But in a setback for UK Prime Minister Theresa May, UK lawmakers recently voted for an amendment to the Brexit bill that will guarantee Parliament a vote on the final deal agreed with the EU.
- The decline in political risk bolstered European assets, though fundamentals likely played a decisive role. The market-friendly outcome of the French elections dovetailed with a pick-up in European growth, supporting European equity markets. US inflows into European equities rose significantly but have since stabilized with the acceleration in growth and the decline in the risk premium likely behind us. Receding political risks also contributed to a stronger euro, which is up 12.5% against the dollar this year. Given the currency move, the SXXP is up roughly 7.5% in local terms and 20.6% in USD terms year-to-date.
Next, here’s what Goldman expects and will look for in 2018 and beyond:
- A continuation of the populist pull. The socioeconomic and cultural factors driving public opinion are unlikely to dissipate. Indeed, they may come into greater focus if growth moderates on a sequential basis starting in mid-2018.
- Constraints to further fiscal integration. Opposition to fiscal transfers within the Euro area makes incremental revisions to existing EU programs more likely than transformational change. Key to watch will be Macron’s credibility as a champion of integration, which will hinge on his ability to push through reforms in the face of political and economic constraints.
- Risks around Italian elections set to take place in March. Polls show the largest populist party, the 5 Star Movement (M5S), leading with roughly 27% of the vote. However, the new electoral law and M5S’s unwillingness to join a coalition suggest a centrist coalition is most likely. Such a government, while pro-EU/euro, would likely struggle to implement reforms.
- An eventual resolution of political issues in Germany and Spain. We believe Germany’s major parties will work to avoid new elections, given limited public appetite for a new vote and the risk of AfD gaining more seats in parliament. In Spain, economic and policy uncertainty could persist, but in our view, it is not likely to have lasting or systemic implications. Eventually, we expect a compromise that grants Catalonia greater autonomy within Spain.
- A bumpy road to Brexit. Expect the UK and EU to eventually agree to a two-year “status quo” transition plan.
And finally, here is a map showing where the forces of populism are expected to remain strong – and grow – across the continent.
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