- Is There A Future For Russian Aircraft Carriers?
Is There A Future For Russian Aircraft Carriers?
Those following the news from Russia have probably heard that Russia’s only aircraft carrier, the Admiral Kuznetsov (official name: Admiral of the Fleet of the Soviet Union Kuznetsov), was put into dry dock for major repairs and retrofits. Things did not go well.
First, the dry dock sank (it was Russia’s biggest) and then a huge crane came crashing down on the deck. And just to make it even worse, a fire broke out on the ship killing 2 and injuring more. With each setback, many observers questioned the wisdom of pouring huge sums of money into additional repairs when just the scheduled ones would cost a lot of money and take a lot of time.
Actually, the damage from the fire was not as bad as expected. The damage from the crane was, well, manageable. But the loss of the only huge floating dry dock is a real issue: the Kuznetsov cannot be repaired elsewhere and these docks cost a fortune.
But that is not the real problem.
The real problem is that there are major doubts amongst Russian specialists as to whether Russia needs ANY aircraft carriers at all.
How did we get here?
A quick look into the past
During the Soviet era, US aircraft carriers were (correctly) seen as an instrument of imperial aggression. Since the USSR was supposed to be peaceful (which, compared to the USA she was, compared to Lichtenstein, maybe less so) why would she need aircraft carriers? Furthermore, it is illegal to transit from the Black Sea to the Mediterranean through the Bosphorus with an aircraft carrier and yet the only shipyard in the USSR which could built such a huge ship was in Nikolaev, on the Black Sea. Finally, the Soviets were acutely aware of how vulnerable US aircraft carriers are to missile attacks, so why built such an expensive target, especially considering that the Soviet Union had no AWACS (only comparatively slow, small and much less capable early warning helicopters) and no equivalents to the F-14/F-18 (only the frankly disappointing and short range Yak-38s which would be very easy prey for US aircraft).
Eventually, the Soviets did solve these issues, somewhat. First, they created a new class of warships, the “heavy aircraft carrying cruiser”: under the flight deck, these Soviet aircraft carriers also held powerful anti-ship missiles (however, this was done at the cost of capacity under the deck: a smaller wing and smaller stores). Now, they could legally exit the Black Sea. Next, they designed a very different main mission for their “heavy aircraft carrying cruiser”: to extend the range of Russian air defenses, especially around so called “bastion” areas where Russian SSBNs used to patrol (near the Russian shores, say the Sea of Okhotsk or the northern Seas). So while the Soviet heavy aircraft carrying cruiser were protecting Russian subs, they themselves were protected by shore based naval aviation assets. Finally, they created special naval variants for their formidable MiG-29s and Su-27s. As for the AWACS problem, they did nothing about it at all (besides some plans on paper). The collapse of the USSR only made things worse.
The Soviets also had plans for a bigger, nuclear, aircraft carriers, and on paper they looked credible, but they never made it into production. These supposed “super carriers” would also come with a truly “super” price…
So how good was/is the Kuznetsov?
Well, we will probably never find out. What is certain, however, is that she is no match for the powerful U.S. carriers, even their old ones, and that the USA has always been so far ahead of the USSR or Russia in terms of carriers and carrier aviation that catching up was never a viable option, especially not when so many truly urgent programs needed major funding. Did the Kuznetsov extend the range of Russian air defenses? Yes, but this begs the question of identity of the “likely adversary”. Not the USA: attacking Russian SSBNs would mean total war, and the U.S. would be obliterated in a few short hours (as would Russia). I don’t see any scenario in which US ASuW/ASW assets would be looking for Russian SSBNs anywhere near the Russian coasts anyway, this would be suicidal. What about smaller countries? This is were the rationalizations become really silly. One Russian (pretend) specialist even suggested the following scenario: the Muslim Brotherhood in Egypt takes power, thousands of Russian tourists are arrested and the Islamists demand that Russia give full sovereignty over to all Muslim regions of Russia, if not: then hundreds of Russians will get their throats slit on Egyptian TV. Can you guess how an aircraft carrier would help in this situation?
Well, according to this nutcase, the Russian carrier would position itself off the Egyptian coast, then the Russians would send their (pretty small!) air-wing to “suppress Egyptian air defenses” and then the entire Pskov Airborne Division would be somehow (how?!?!?!) be airlifted to Egypt to deal with the Ikhwan and free the Russian hostages.
It makes me wonder what this specialist was smoking!
Not only does it appear that the Egyptians are currently in negotiations with Moscow to acquire 24+ brand new Su-35s (which can eat the Russian airborne aircraft for breakfast and remain hungry for more), but even without these advanced multi-role & air superiority fighters the rest of the Egyptian air defenses would be a formidable threat for the relatively old and small (approx.: 18x Su-33; 6x MiG-29K; 4x Ka-31; 2x Ka-27) Russian airwing. As for airlifting the entire 76th Guards Air Assault Division – Russia simply does not have the kind of transport capabilities to allow it to do that (not to mention that Airborne/Air Assault divisions are NOT trained to wage a major counterinsurgency war by themselves, in a large and distant country). Theories like these smack more of some Russian version of a Hollywood film than of the plans of the General Staff of Russia.
Back to the real world now
Frankly, the Kuznetsov was a pretty decent ship, especially considering its rather controversial design and the appalling lack of maintenance. She did play an important role in Syria, not thanks to her airwing, but to her powerful radars. But now, I think that it is time to let the Kuznetsov sail into history: pouring more money in this clearly antiquated ship makes no sense whatsoever.
What about new, modern, aircraft carriers?
The short answer is: how can I declare that the USN has no rational use left for its aircraft carriers and also say that the Russian case is different and that Russia does need one or perhaps several such carriers? The USN is still several decades ahead of modern Russia in carrier operations, and (relatively) poor and (comparatively) backward Russia (in naval terms) is going to do better? I don’t think so.
Then, there is one argument which, in my opinion, is completely overlooked: while it is probably true that a future naval version of the Su-57s (Su-57K?) would be more than a match for any US aircraft, including the flying brick also knows as F-35, Russia STILL has nothing close to the aging but still very effective carrier-capable USN Northrop Grumman E-2 Hawkeye. Yes, Russians have excellent radars and excellent airframes, but it is one thing to have the basic capabilities and quite another to effectively integrate them. As always, for Russia, there is the issue of cost. Would it make sense to finance an entire line of extremely costly aircraft for one (or even a few) aircraft carriers?
We need to keep in mind that while Russia leads the world in missile technology (including anti-shipping missiles!), there are many countries nowadays who have rather powerful anti-ship missiles too, and not all are so friendly to Russia (some may be at present, but might change their stance in the future). Unless Russia makes a major move to dramatically beef-up her current capabilities to protect a high-value and very vulnerable target like a hypothetical future aircraft carrier, she will face the exact same risks as all other countries with aircraft carriers currently do.
A quick look into the future
Hypersonic and long range missiles have changed the face of naval warfare forever and they have made aircraft carriers pretty much obsolete: if even during the Cold War the top of the line U.S. carriers were “sitting ducks”, imagine what any carrier is today? The old saying, “shooting fish in a barrel” comes to mind. Furthermore, what Russia needs most today are, in my opinion, more multi-role cruise missile and attack submarines SSN/SSGN (like the Yasen), more diesel-electric attack submarines SSK (like the Petropavlovsk-Kamchatsky), more advanced patrol boats/frigates (like the Admiral Kasatonov), more small missile ships/corvettes (like the Karakurt), more large assault ships (like the Petr Morgunov) and many, many, more.
As for aircraft carriers, they are not needed any more to extend the (already formidable) Russian air defenses and in the power-projection role (operations far from Russia), the Russian Navy does not have the capabilities to protect any carrier far away from home shores.
Which leaves only three possible roles:
1) “Showing the flag”, i.e. make port calls to show that Russia is as “strong” and “advanced” as the US Navy. Two problems with that: i) the USN is decades ahead of Russia in carrier operations and 2) there are MUCH cheaper way to show your muscle (the Tu-160 does a great job of that).
2) “Retaining the carrier know-how”. But for what purpose? What naval strategy? What mission? Russia is the nation that made aircraft carriers obsolete – why should she ignore her own force planning triumphs?
3) Prestige and $$$ allocation to select individuals and organizations within and next to the Russian Navy. Since Russia does not have a money-printing-press or criminally bloated budgets, she simply cannot afford the capital outlay either for the Russian Navy, or for the nation of Russia, just to fill the pockets of some interested parties.
Conclusion:
If I have missed something, please correct me. I don’t see any role for carriers in the future Russian Navy. That is not to say that I am sure that they won’t be built (there are constant rumors about future Russian “super” carriers, no less!), but if they are built, I believe that it will be for all the wrong reasons.
The plight of the Kuznetsov might be blessing for Russia. She was a good ship (all in all), but now she should be viewed as an object lesson to (hopefully) kill any plans to build more carriers for the Russian Navy.
Tyler Durden
Thu, 12/26/2019 – 23:55 - The 20 Best-Performing Stocks Of The Decade
The 20 Best-Performing Stocks Of The Decade
Hindsight is 20/20. It can be incredibly difficult to pick the “next big stock” in the moment, but, as Visual Capitalist’s Jenna Ross notes, looking back gives us clarity on where we could have reaped the highest rewards. While some of the decade’s chart-toppers – like Netflix and Amazon – are household names, other stocks may come as a surprise.
Today’s visualization reveals the best-performing stocks over the last 10 years, and shows how much an initial $100 investment would be worth today.
The Shortlist
To compile the list, MarketWatch reviewed the current S&P 500 constituents and excluded any stocks that have traded in their present form for less than 10 years. The remaining companies were sorted based on their total return, with reinvested dividends, from December 31, 2009 to December 5, 2019.
So, which stocks come out on top? Here’s a full list of the top 20, organized by ranking:
Note: The final value of a $100 investment is based on the total return, with reinvested dividends, from December 31, 2009 – December 5, 2019.
In comparison, $100 in the S&P 500 index overall would have amounted to $344 over the same time period. Let’s take a closer look at these strong performers.
Household Names
Streaming giant Netflix takes the #1 spot. The company earned a staggering 3,767% return over the last ten years, meaning an initial $100 investment would now be worth almost $4,000. However, it remains to be seen whether Netflix’s first mover advantage will remain strong with new competitors entering the space.
One such rival, Amazon, takes its spot at #10 in the best-performing stocks of the decade. From its humble roots as an online bookseller, the company has transformed into an ecommerce leader. CEO Jeff Bezos credits Amazon’s admirable success to three key customer-centric factors: listen, invent, and personalize.
At #12 on the list, Constellation Brands—owner of several alcohol brands such as Corona—is also no stranger to invention. The company is protecting itself against cannabidiol (CBD) disruption with a $5 billion dollar investment in Canopy Growth, and future plans to create its own CBD-infused beverages.
Other well-known names on the top 20 list include discount department store chain Ross Stores (#15) and the credit card company Mastercard (#17), with the latter benefiting from an oligopoly in the industry.
Flying Under the Radar
Apart from the names you’d expect to see, there are also some lesser-known companies that made the list.
Well established among institutional investors and broker-dealers, MarketAxess Holdings takes the #2 spot. The fintech company operates a global electronic bond trading platform, vastly improving the process for investors who traditionally traded bonds “over-the-counter”.
In third place, healthcare technology company Abiomed develops medical devices that provide circulatory support. The company’s Impella® device—the world’s smallest heart pump— has been used to treat over 50,000 U.S. patients.
Fourth place company Transdigm Group gains its stronghold by developing specialized products for the aerospace industry. It has a strong acquisition strategy as well, having acquired over 60 businesses since its formation in 1993.
A Sector View
If we organize the top 20 by sector, information technology stocks appear in the list most frequently with five companies, followed by consumer discretionary (4 companies), and industrials and healthcare (3 companies each).
Sectors with less representation in the top 20 are communication services (2 companies), as well as consumer staples, financials, and real estate (1 company each).
The Bottom Line
While these stocks have performed extremely well over the last decade, they are not necessarily the best portfolio additions today. Some companies may have become overvalued, or be facing new competition in their industry—as is the case with Netflix. It’s best to consider all current information when building a portfolio.
However, the top 20 stocks do demonstrate the power of a buy-and-hold strategy. If you’re lucky enough to identify a winner early on, it’s possible to simply sit back and let your dollars grow.
Tyler Durden
Thu, 12/26/2019 – 23:30 - Beware, The Long Now
Beware, The Long Now
Authored by Ben Hunt via EpsilonTheory.com,
The Long Now is everything we pull into the present from our future selves and our children.
The Long Now is driven by the constant stimulus applied to our economy and the constant fear applied to our politics.
The Long Now is personal.
The Long Now is political.
The Long Now is micro.
Today’s note is on the macro structure of the Long Now.
Today’s note is on the untethering of fundamental linkages between the economic policies that organize our social lives as investors and citizens.
SNIP!
Today’s note is on how we survive the Long Now. Because it won’t be easy.
That’s George Clooney in Gravity, right before he ends up like this.
The spacewalking astronaut, risking the abyss with only a slim tether to life, is a powerful trope. Gravity was an entire movie about that frisson of fear we get from these images, although for my money it doesn’t get better than Frank Poole’s murder by HAL in 2001: A Space Odyssey, with the looong shot of the body tumbling uncontrollably through space. Because it’s not just the aloneness and abandonment that sparks our hard-wired emotional response here, but the out-of-controllness of being truly untethered.
We’ve got happy-ending movies that use this trope (The Martian), Russian movies that use this trope (Spacewalker), and even haunted-house-in-space movies that use this trope (Event Horizon). So you’ll forgive me if I’m going to use this imagery, too, because it’s the best story-telling device I know to instill in you the fear and loathing I feel when I think through the consequences of the Long Now.
SNIP! is the Long Now’s destruction of the meaning of words that define our social connections.
Words like “war”.
This is a picture of the Predator drone firing a Hellfire missile.
It’s probably going to kill someone that we want dead, and almost certainly going to kill some other people that we don’t mind being dead … collateral damage and all that. As they say on Succession, you can’t make a Tomlette without breaking a few Greggs. This is war, and we fire these missiles all over the world, on the daily, both in countries we have officially invaded, like Afghanistan, and in countries we haven’t, like Pakistan and Yemen.
But we have redefined war to NOT mean things like drone and cruise missile attacks, to NOT mean things like “observer” or “training” missions. We have redefined war to ONLY mean American troops being shot at.
So politicians can speak the words “End the war in Country XYZ!” without actually meaning it. Because what they mean is preventing any American troops from being shot at. But the actual war of drones and missiles and killing … that continues. And it will continue forever in the Long Now.
Words like “capitalism”.
This is a picture of the billionaire CEO of a government-supported too-big-to-fail megabank, telling his 60 Minutes interviewer that he has no control over his compensation, as that’s determined by the CEO’s board of directors. Interestingly enough, this is also a picture of the billionaire Chairman of that board.
And it’s not just the billionaire CEO bank manager. It’s his centimillionaire lieutenant bank managers. It’s the dozens of decamillionaire sub-lieutenant bank managers. All of them made generationally rich from stock-based compensation in a company where the government guarantees their success. None of them entrepreneurs. None of them risk-takers with their own skin in the game. All of them … lifer managers of a too-big-to-fail bank.
But, hey, the stock is up! They’ve done a good job! What’s the problem, Ben?
That’s exactly the problem. The problem is that we have redefined capitalism to mean “the stock is up”. We have redefined capitalism to NOT mean Smith’s invisible hand or Schumpeter’s creative destruction or productivity-enhancing and risk-taking investments in the real economy. We have redefined capitalism to ONLY mean financial asset price inflation in the here and now. By any means necessary. So that’s what we get. From the Fed, from the White House, from corporate management … that’s what we get in the Long Now … an endless series of policies and decisions in service to capitalism-as-financialization, where capital markets are maintained as a political utility.
George Orwell, who called the Long Now an “endless present, where the Party is always right”, understood how the most powerful weapon of a totalitarian society is to control its language, so that War IS Peace, Freedom IS Slavery, and Ignorance IS Strength.
Why? Because control over the meaning of words is control over how we THINK. When we no longer remember what words mean, when we are TOLD over and over again a NEW meaning … we start to doubt ourselves. We start to doubt our own autonomy of mind. And that’s when they win.
Iakov Guminer, Arithmetic of an alternative plan (1931)
In the end the Party would announce that two and two made five, and you would have to believe it. It was inevitable that they should make that claim sooner or later: the logic of their position demanded it. Not merely the validity of experience, but the very existence of external reality, was tacitly denied by their philosophy. The heresy of heresies was common sense.
And what was terrifying was not that they would kill you for thinking otherwise, but that they might be right.
— George Orwell, 1984
The Long Now is the Fiat World of reality by declaration, where we are TOLD that inflation does not exist, where we are TOLD that wealth inequality and meager productivity and negative savings rates just “happen”, where we are TOLD that we must vote for ridiculous candidates to be a good Republican or a good Democrat, where we are TOLD that we must buy ridiculous securities to be a good investor, and where we are TOLD that we must borrow ridiculous sums to be a good parent or a good citizen.
And the most terrifying thing is that you start to think they might be right.
Hey, maybe the whole Ukraine thing really is Trump “fighting corruption” and maybe the whole Saudi thing really is Trump “bringing the troops home”. Maybe the really important thing about Jeffrey Epstein is whether or not he committed suicide. Maybe we should really try some “democratic socialism” in 2020 … how bad could it be?
Self-doubt is a biologically terrifying condition for a social animal like humans, and that’s why you see more and more of us becoming rhinoceroses. That’s why you see more and more well-meaning citizens willingly give over their autonomy of mind to the MAGA Train or the Bernie Bros … some sort of social Answer with a capital A … so that the torture of self-doubt can end.
That’s why, in the end, Winston loved Big Brother.
And make no mistake, the Answer is always totalitarian. Not merely authoritarian, but totalitarian. It brooks no dissent, in ANY aspect of your life. The Answer is a general closed-form solution, something we are hard-wired to want, but something that is impossible to find in a social system. Yes, this is the Three-Body Problem.
Unfortunately, I believe that the totalitarian Long Now is going to get a lot worse before it gets any better. I believe that we are going to doubt ourselves in new and profound ways over the next decade. I believe that our common sense will become even more the heresy of heresies.
Why?
Because the Long Now has redefined the meaning of “taxes”.
Because the tether between taxation and spending – the most important macroeconomic policy relationship for our lives as both investors and citizens – has been severed.
Oh, I know that this snip-of-no-return doesn’t feel bad. Yet. In fact, it probably feels pretty darn good to you right now.
Funny how fallin’ feels like flyin’ For a little while
That’s from a song in the movie Crazy Heart, and that’s where we are right now. So yeah, you’re going to be told that 2 + 2 = 5, that it’s no big deal to cut the cord between taxes and spending, that in truth it’s good for you. And yeah, you’re going to start to think that they might be right.
The redefinition of taxation and the severing of the Tether of Meaning between taxes and spending isn’t something that I think WILL happen. This is something that I know HAS happened. We’ve had a steady fraying of this cord for about two decades now, ever since Al Gore’s idea of a Social Security “lockbox” (where those taxes could ONLY be used for Social Security spending and paying down the existing debt) was met with derision rather than acclaim by both parties. Yes, both parties. By steady fraying I mean over both Republican and Democrat administrations. The political beneficiaries of the fraying are different when it’s Republicans doing the snipping or Democrats doing the snipping, but the INTENT – to eliminate the tether between taxation and spending – is the same whether you’re George Bush or Barack Obama. Or Donald Trump. Destroying the relationship between taxation and spending is not a partisan thing. It’s a power thing. It’s a Management thing.
I mean, there are still people who believe that the money they pay in Social Security taxes is their money, that they’ve purchased some sort of old age income insurance plan with their money, like an annuity where their money is invested somewhere to support that income down the road.
But that’s a lie.
In truth there is ZERO relationship between social security taxes and social security benefits today, other than sharing the words “social security”. In truth they are two entirely separate government programs, the former a regressive tax on workers that goes into the big pot of the annual budget and the latter a wealth transfer program to old people that comes out of that budget.
SNIP!
So for twenty years Republicans and Democrats have gone back and forth to steer taxation and spending to their political advantage, with divided government being the only thing to keep the tether intact. But divided government vanished with Donald Trump’s election, and as a result we got the 2017 Tax Cuts and (LOL) Jobs Act, which I think was the final cut.
What did the TCJA do? It lowered taxes by trillions without reducing spending by a dime.
The TCJA levered up the United States of America.
Management levered up our country and used the proceeds to provide a windfall gain for corporations and the rich. You know … “returning capital to job creators”. In exactly the same way that Management might lever up a company and use the proceeds for a big stock buyback. You know … “returning capital to shareholders”.
Both of these narratives – “returning capital to job creators” and “returning capital to shareholders” – had a truth to them, an important truth. I believed in the important truth of both of these narratives for most of my adult life! And yes, I’m using the past tense.
Because in the Long Now, the meaning of both narratives has been perverted beyond all recognition.
Both are now part and parcel of the Trickle-Down Lie, that the crumbs that fall off massa’s table are crumbs that you wouldn’t get otherwise, so let’s celebrate all those extra crumbs. Yay, crumbs!
And yes, there’s an Epsilon Theory note or three for that.
Pecking Order
The pecking order is a social system designed to preserve economic inequality: inequality of food for chickens, inequality of wealth for humans. We are trained and told by Team Elite that the pecking order is not a real and brutal thing in the human species, but this is a lie. It is an intentional lie, formed by two powerful Narratives: trickle-down monetary policy and massive student debt financing.
This Is Water
Time to add a fourth shift in the Zeitgeist: capitalist productivity, now 200+ years old, is becoming capitalist financialization. Wall Street gets something to sell, management gets stock-based comp, the Fed gets a (very) grateful Wall Street, and the White House gets re-election.
What do YOU get out of financialization? You get to hold up a card that says “Yay, capitalism!”.
Yeah, It’s Still Water
One day we will recognize the defining Zeitgeist of the Obama/Trump years as an unparalleled transfer of wealth to the managerial class.
But if we’re no longer even pretending that taxes are necessary to support spending …
If we agree that neither the Republicans nor the Democrats care about fiscal policy except as it advances their myopic political goals …
Then what are taxes FOR?
Yep, this is our George-Clooney-realizes-he-is-about-to-be-flung-into-outer-space moment.
-
In the Long Now, taxes are for … justice.
-
In the Long Now, taxes are for … equity.
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In the Long Now, taxes are for … retribution.
And what do those words mean?
Whatever Management says they mean.
Donald Trump has a vision of how to use taxes for HIS conception of justice, equity and retribution, a vision that – well, how about that! – advances his political power.
The primary beneficiaries of the TCJA are large public companies, particularly the multinationals that dominate the S&P 500. For example, in each of the past two years, Amazon has availed itself of the deductions and deferrals and lower corporate rates created by the TCJA to be a “net-negative US Federal cash taxpayer”. In English, that means that in each of the past two years, the US Treasury has written checks of more than $100 million to Amazon out of YOUR tax dollars. I know you think I’m making this up, but check out Amazon’s 10-K. It’s all there.
And before you @ me, I am NOT saying that Amazon doesn’t pay taxes. What I am saying is that I really don’t care how much Amazon pays in taxes to freakin’ Ireland. What I am saying is that Amazon is cashing checks from the US government instead of writing checks. As the kids would say, let that sink in.
How does this advance Trump’s political power? Because the windfall tax benefits that the TCJA created for large public companies like Amazon and Apple and Microsoft translate directly into higher stock prices. Because in Trump’s own words, “the stock market is my report card”. Because Trump realizes that you can politically argue to death whether the real economy is doing better or worse, but you can’t argue with a new high for the Dow Jones.
What does it mean to transform capital markets into a political utility, and use the tax code to do it?
This.
Similarly, Bernie Sanders and Elizabeth Warren and No Malarkey Joe and Mayor Pete and all the rest have a vision of how to use taxes for THEIR conception of justice, equity and retribution, a vision that – well, how about that! – advances their political power.
None of the “wealth tax” proposals you hear from the Left are being proposed to pay for anything in a budgetary sense. They are explicitly proposed so that the rich pay their “fair share”. In fact, when candidates make the mistake of expressing their wealth tax idea in a fiscal sense – as Elizabeth Warren did when she linked it to “paying for” Medicare-for-all – the narrative immediately shifts from “fairness” to “making the numbers add up” (Spoiler Alert: they don’t and they never will), and these candidates immediately take a hit in the polls.
Bernie gets it. He doesn’t even pretend to make this about budgets. He realizes that the political popularity of the wealth tax has nothing to do with making the rich pay for a government program, and everything to do with making the rich pay for their sins. And yes, Bernie believes that great wealth is a sin. He believes that great wealth should not be allowed, not because it’s a source of unaccountable political power (my beef with great wealth), but because he believes it is fundamentally unfair. So do a lot of voters, maybe more than care about the Dow Jones.
SNIP!
Feeling out of control yet? Wait, there’s more!
If the meaning of spending is no longer constrained by taxation …
Then what is spending FOR?
In the Long Now, spending is ALSO for justice and equity and retribution … ALSO in whatever mode or measure fits the regime goals of whatever Management is in power at the time.
I think that whoever is elected in 2020, we will see a $2 trillion spending plan enacted in 2021.
If it’s a second term for Trump, it will be the 2021 Make America Great Again Act, and we will call them “Infrastructure Bonds”.
If it’s a first term for a Democrat, it will be the 2021 Take Back America Act or something like that (I suppose if it’s President Biden we can hope for the 2021 No Malarkey Act, although I’m rooting for the 2021 OK, Boomer Act), and we will call them “Green Bonds”.
In either case, I expect that the Fed will monetize at least half of the bond issuance. At least half.
In either case, I expect that the primary corporate beneficiaries of the spending will be exactly the same. Exactly the same.
And so here we are.
I believe there are no limits to the retributive and malicious use of taxation as a political weapon.
I believe there are no limits to the retributive and malicious use of spending as a political reward.
Sometimes those political weapons and rewards will be used by the rich and the old against the non-rich and the non-old, as we saw with the TJCA and Trump. Sometimes it will the other way around, as we will see the day after a Democrat takes the White House, whenever that might be.
What’s to be done? Well, I suppose this is the point where I should tell you what I would do if I were given magic genie powers to change the world from the top down. And then you’d argue with me about my proposals and tell me what you would do if given magic genie powers.
How about we not do that? I don’t have magic genie powers. And neither do you.
It’s not that the severing of taxes from spending WILL happen. It’s not that the NEXT administration is going to make the cut. It’s ALREADY happened. It’s been happening for twenty years! This ship has sailed, and now there’s not a damn thing that you or I can do to turn it around. All we can do now is survive the voyage.
When I started this note, I said I wanted to instill an emotion of fear and loathing in you from the realization that the meaning of taxes had become untethered from the meaning of government spending. That phrase – fear and loathing – is of course a catchphrase for Hunter S. Thompson, who used it in the titles of his best-known works … Fear and Loathing in Las Vegas, Fear and Loathing on the Campaign Trail, etc. Thompson had lots of catchphrases, lots of mottos, lots of great quotes. My all-time favorite, though, is this:
When the going gets weird, the weird turn pro.
I love it because there are so many plausible interpretations, and it just sounds so cool to take a tired inspirational quote about what to do when the going gets tough, blah blah blah … and turn it on its ear. Or foot, or whatever body part you think Thompson would have approved. Here’s what it means to ME.
“The going gets weird” = an economic and political environment that no one alive has experienced.
I think that the smiley-face totalitarian genie (and yes, I wrote ‘totalitarian’, not ‘authoritarian’) is going to be let out of the bottle as the meaning of taxes becomes justice, equity and retribution.
I think that the not-so-smiley-face inflation genie is going to be let out of the bottle as the meaning of spending in the real economy becomes untethered from any concern of paying for it.
To paraphrase Richard Nixon paraphrasing Milton Friedman, we’re all MMTers now. “Modern Monetary Theory” is here, firmly ensconced in BOTH political parties in the Long Now
We’re All MMTers Now
If Trump is reelected in 2020, I think he pushes forward a $2 TRILLION bond issuance that is fully or partially monetized by the Fed. They’ll be called Infrastructure Bonds. If a Democrat is elected in 2020, I think she or he pushes forward a $2 TRILLION bond issuance that is fully or partially monetized by the Fed. They’ll be called Green Bonds. We’re all MMT’ers now.
Modern Monetary Theory or: How I Learned to Stop Worrying and Love the National Debt
Modern Monetary Theory is neither modern nor a theory. It’s a post hoc rationalization of politically expedient policy that makes us feel better about all the bad stuff we’ve done with money and debt in service to Team Elite. And all the bad stuff we’re going to do in the future.
A recession isn’t weird. Deflation isn’t weird. Authoritarian isn’t weird. I don’t think ANY of those things is coming down the pike, and you don’t need my help (or anyone else’s) if any of them does.
But smiley-face totalitarian stagflation where capital markets have been transformed into a propped-up-at-all-costs political utility?
Now THAT’S weird. And that’s what I think IS coming down the pike. And we’re all going to need all the help we can get. Which gets us to the second half of Hunter S. Thompson’s quote.
“The weird turn pro” = an all-in engagement for those who see the societal transformation; a recognition that the fundamental rules of the social game have changed, and a willingness to confront the implications of that change in every aspect of your life without surrendering to an Answer.
How do we confront the Long Now?
Personal courage
Leaders who act as stewards of the future, not managers of the Now.
Professional courage
Investors who take more risk with what’s Real, and less with what’s not.
Social courage
Citizens who take back their vote, and who refuse to play the Fool.
You know, in one of my twitter fights with Angry-Billionaires-and-their-Renfields™, I was called “a bizarre combo of Zerohedge and self-help guru”. It was meant as an insult, of course, but for me … man, I wear it like a badge. Because I DO believe, in Zerohedge-esque fashion, that “the system” is designed by and for a Team Elite that, in the immortal words of The Outlaw Josey Wales, pisses down our backs and tells us it’s raining. And I DO believe, in self-help guru-esque fashion, that the only effective resistance to the Nudging State and the Nudging Oligarchy is through a bottom-up grassroots social movement that is driven by one thing and one thing only: each individual’s courage and determination to maintain their autonomy of mind … the courage and determination to believe that 2 + 2 = 4.
The revolution will not be televised. The revolution will not be in the streets.
The revolution will be in our hearts.
It’s the hardest thing you’ll ever do, precisely because no one will be watching.
But you won’t be alone.
In 2020, we’re going to host an international conference to come together on this, an Epsilon Theory Forum. It’s intended to be the anti-Davos … a meet-up for those who still have a soul, who care about something bigger than the celebration and perpetuation of Team Elite. And I can promise you this … there won’t be a single billionaire on a panel at the ET Forum. But there will be plenty of real people … people with ideas and experiences that aren’t contingent on how many zeros they have after their name.
Clear eyes, full hearts, can’t lose.
Make / Protect / Teach.
As wise as serpents, and as harmless as doves.
We’ve got a lot of slogans. In 2020 you’ll have a chance to take action. You’ll have a chance to talk this through with like-minded truth-seekers, to figure out TOGETHER what a bottom-up grassroots social movement devoted to preserving each and every one of our autonomies of mind can do. It may be too late to prevent the SNIP! that severs the tether between taxation and spending, but it is high time to create new tethers, new personal bonds of association, loyalty and mutual support. Yep, it’s a Pack. And that’s how we survive the Long Now. Together.
Tyler Durden
Thu, 12/26/2019 – 23:05 -
- Bipartisan Group Of NYC Lawmakers Pushing For "Gentrification Tax"
Bipartisan Group Of NYC Lawmakers Pushing For "Gentrification Tax"
It’s almost as if New York politicians are deliberately trying to crash NYC’s housing market.
On Christmas Day, the New York Post reported that a bipartisan group of NYC lawmakers is pushing Albany to change state laws and close a loophole that extends tax breaks to homebuyers in gentrifying neighborhoods.
The “gentrification tax” law would require homebuyers to pay taxes at the market rate, rather than at the much-lower assessed value.
Presently, homebuyers across the five boroughs who buy multimillion dollar brownstones and other existing homes often pay less in taxes than those who buy more moderately priced homes.
Republican Staten Island City Council member Joe Borelli is spearheading the movement to end the tax loophole. He told the Post that New Yorkers are “just getting fed up” with the unfair treatment.
“My proposal would end the practice of charging more tax on $500k home on Staten Isl etc. than a $2m home in Park Slope,” Borelli tweeted on Thursday. “This can be done Jan. 1.”
Borelli also blamed Mayor de Blasio for creating the ‘yuppie tax’ loophole.
The Post calls it a gentrification tax or a ‘yuppie tax,’ but most NYers know it as the ‘de Blasio loophole.’
My proposal would end the practice of charging more tax on a $500k home on Staten Isl etc. than a $2m home in Park Slope. This can be done jan 1. https://t.co/SDCB4zFjLp
— Joe Borelli (@JoeBorelliNYC) December 26, 2019
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Borelli’s coalition also includes Park Slope Democrat Brad Lander and Bay Ridge Democrat Justin Brannan, two other members of the city council, which is controlled by Democrats.
The NY Post breaks down the impact of the gentrification tax thusly: A buyer who snapped up a Clinton Hill brownstone for $3 million in 2017 only pays taxes on a fraction of the buying price, leaving the building’s new owner with a tax bill of just $4,297 a year.
Joe Borelli
Meanwhile, the owner of a $500,000 Bergen Beach bungalow pays a nearly identical amount, even though the bungalow is worth roughly one-sixth of the brownstone.
The change to opaque state tax laws advocated by Borelli would raise the brownstone owner’s annual tax bill by $1,600, while the owner of the bungalow would see no increase.
Of course, the changes would come with drawbacks: Back in April, New York State passed a revised ‘mansion tax’. First passed in 1989 by New York Gov. Mario Cuomo, New York’s original mansion tax was a 1% tax on statewide sales of homes of $1 million or more. Under the original tax, if a house, co-op, or condo sold for $1.25 million, the buyer would have paid a tax of $12,500, in addition to whatever other taxes they would pay.
For fiscal year 2020, the statewide mansion tax will remain at 1% for property purchased for $1 million or more. For properties in NYC, however, the ‘progressive’ mansion tax will rise incrementally with purchase prices of $2 million or more, capping out at a total of 3.9% for properties sold at $25 million or above. Homes sold for $1 million+ outside of NYC but within New York state won’t be affected by the progressive taxes.
Homebuyers in New York state (including NYC) will also need to factor in the Republican tax plan’s rejection of the SALT deductions.
Borelli sent the proposed resolution to City Council Speaker Corey Johnson and state Assembly Speaker Carl Heastie earlier this month. Johnson spokeswoman Jennifer Fermino said the speaker is waiting for a preliminary report from a city property tax reform commission that he and Mayor de Blasio commissioned back in 2018.
With the new mansion tax, it’s hardly surprising that Manhattan home sales plunged in Q3. Will we see more housing market pain in Q4 and the new year? Investors don’t need a magic 8-ball to figure that one out.
Tyler Durden
Thu, 12/26/2019 – 22:40 - Bond Worries And Gold
Bond Worries And Gold
Authored by Alasdair Macleod via GoldMoney.com,
There is evidence that US Treasury bond yields may continue to rise, exposing the debt trap in which the US government finds itself. Market participants don’t realise it yet, but the dollar-based monetary system is spinning out of control. This will become obvious as the crisis stage of the credit cycle, which we now appear to be entering, becomes evident.
The outlook for monetary inflation is dire. Not only will governments fund themselves through QE, but central banks will be forced to inflate even more to pay for government deficits significantly greater than currently forecast. And when markets stop taking government statistics on inflation as the Gospel Truth, the interest cost of government funding will rise and rise, reflecting an increasing rate of time preference for fiat currencies which will be losing their purchasing power at an accelerating rate.
In a world where all fiat currencies will face enormous challenges, using yardsticks such as trade weighted indices will be misleading. The best gauges of the slide in fiat currencies will be commodities, particularly commodity monies, gold and silver.
Introduction
The chart above, of the US 10-year Treasury yield is shows that its yield bottomed at the end of August, when it had more than halved from the levels of October 2018. What, if anything, does it mean? Some would argue that it is good to see a positive yield curve again, implying the recession, or the risk of one, has gone away. But if US Treasury yields have bottomed out, then in the fullness of time they will continue to rise. Chartists might even claim it is setting up for a bullish golden cross, like the one earlier in the chart on 17 November 2016, which marked the beginning of a significant rise in bond yields.
That would be a worry, since equity markets have flown to places where bond yields don’t exist. But there are more solid concerns about the course of bond yields, other than charting ephemera. Despite the massive expansion of money and credit since the Lehman crisis, there is a shortage of liquidity, because the Fed is having to inject half a trillion dollars into the banking system to keep overnight levels suppressed at the Fed Funds Rate target.
Informed opinion suggests that there is indeed a liquidity crisis. The banking system in New York has become strained through banks loaded with US Government debt and providing repos to hedge funds who have shorted euros and yen to buy T-bills and short-dated government coupon debt. The shortage has occurred because the largest banks, designated globally systemically important banks (GSIBs) must demonstrate excess reserves to cover obligations thirty days out. The strains for this Basel III requirement are expected to increase at the next quarter-end, i.e. 31 December.
These strains first became evident in the repo market, which blew up three months ago, on the day Deutsche Bank completed the sale of its prime brokerage to BNP. We don’t know if these events were related, but as any investigating detective will tell you, pure coincidence must be dismissed until proven otherwise. In any event, the problems in the repo market have continued, so having noted that perhaps the Deutsche Bank sale did not go as planned, we must go with the GSIB excess reserves explanation.
Looked at in this light, the persistent rise in UST bond yields is threatening. Unless the Fed simply floods the markets with liquidity, they seem set to rise further. If the Fed does not, the GSIBs have two courses of action, and they may be forced to take both. First, they could be forced to sell down their US Treasuries in order to create intraday liquidity needs by releasing some of their required reserves to be categorised as excess. Second, they can refuse to roll hedge fund repos, forcing hedge funds to sell US Treasuries and T-bills and then sell their dollars to close their shorts in euros and yen. The withdrawal of liquidity could wipe out one or more major relative value (RV) funds, invoking the ghost of Long-Term Capital Management, which ran into trouble in 1998.
All this is now known, so it would be surprising if the Fed fails to act to contain a year-end crisis. But its actions are limited to providing liquidity for the banks. It will be up to the banks if they decide to use that liquidity to continue to accommodate the RV funds.
Foreign buyers hold the dollar key
Let us assume for a moment that we get through the year end without mishap. We will not have dealt with the underlying problem, which is who is going to buy the $1–1½ trillion of US government debt to be issued in 2020. In the past it has been principally foreigners, banks and RV hedge funds as described above. On a net basis the US saver has not been involved for a very long time, except passively through managed pension funds.
According to US Treasury TIC data, in the year to October major foreign holders added $580.5bn to their holdings of Treasury bills, T-Bonds and Notes. The balance will have come directly and indirectly from domestic credit expansion, including the banks and the RV hedge funds. But from August, foreign investors have been net sellers to the tune of $77.4bn. Until then, every successive month had seen an increase, so it appears foreign demand is stalling, which could have fed into the repo crisis as the GSIB banks in New York and RV funds ended up with too much US Government paper.
Foreign dollar demand is almost certainly affected by the sharp slowdown in global trade. This has happened for two reasons: President Trump’s tariff war against China and others has stalled international trade and at the same time, having been expanding for the last nine years, the credit cycle is due to run out of steam. Together they are recessionary headwinds, probably synergistic, which reduce the level of dollars in in the correspondent banking system foreigners need to hold for liquidity.
China is the second largest holder of US government paper and has been reducing her position in recent months. As to her future reserve policies, commercial considerations are being complicated by politics. She understands that America is desperate for global investment flows to finance US Government debt, and that China’s infrastructure plans would compete for them which explains America’s hidden agenda over Hong Kong. China bungled her management of that situation, and apparently is now exploring the use of Macau as an investment channel for foreign inward investment.
It is probably too late, the damage to investing in China having been done. But it is hard to see why China should just roll over on this issue and continue to buy US government bonds. More likely US Government debt will now be viewed as a source of funds to replace lost inward investment through Hong Kong.
We can now see a best and worst case for the dollar and US Treasury funding. The best case is stagnating demand from abroad, which throws the onus onto domestic investment, which, in the absence of an increase in savers, will be through QE and the inflation of bank credit.
The worst case will see not only stagnant foreign demand, but active selling down of current positions, due to slumping economies and China in particular selling actively. American investors seem generally complacent about this possibility, arguing that foreigners will always need dollars, and more so in a credit crisis. While there is some force in this argument, it ignores the fact that foreign ownership of dollars and dollar investment is already very high at roughly $23 trillion of which over $4 trillion is in deposit accounts, while US ownership of foreign currency liquidity is a relatively trivial figure.
Bearing all this in mind, we must assume that at a minimum US banks and hedge funds between them will be funding all the budget deficit and may even have to absorb existing stock from foreigners. But surely, one imagines a critic asking, in the absence of a change in the savings ratio, a budget deficit is a matter of an accounting identity and will give rise to a similarly sized balance of payments deficit, and so long as dollars accumulate in foreign hands, they must form the capital inflows that finance the budget deficit. Therefore, dollars will continue to accumulate in foreign hands, and they must be invested.
The accounting identity argument is correct, but there is more than one way to skin a rabbit. Dollars received by foreigners can always be sold in the foreign exchanges instead of being reinvested, which given the relative lack of foreign currency liquidity in the hands of domestic Americans, could have a dramatic effect on the exchange rates.
Alternatively, the gap can be closed by the inflation of money through quantitative easing and the expansion of bank credit. In effect, the existing stock of dollar deposits is diluted to bridge the shortfall between a budget deficit and the lack of inward capital flows recorded in the balance of payments.
In this context, the chart below of the dollar’s trade-weighted index appears to show the dollar is struggling to advance and may be losing the bullish momentum that developed shortly after President Trump was elected.
If, as the chart suggests, the dollar could be heading lower, it would fit in with a diminution of foreign capital inflows. But the major component of this index is the euro, so it is not an accurate representation of the dollar’s weighting with respect to trade imbalances, which are the normal source of capital flows. But in the case of the euro, it has already been sold down by RV hedge funds to strip out the interest differential by selling euros short and buying dollars. According to Hedgeweek.com, six months ago this form of hedge fund arbitrage stood at $865.6bn, a truly significant sum, most of which will have accumulated since 2018 Q1, when the dollar’s bull phase commenced.
Not all of it would have involved selling down the euro, because in the past the Japanese yen has been the short leg of choice in an interest rate arbitrage. It is clear that the repo crisis tells us that by financing this speculation the US GSIBs have expanded their balance sheets too much and will need a substantial increase in their excess reserves to continue to finance this trade, thereby avoiding a crash in both the US bond market and the dollar. While this problem has surfaced at this year-end, it will be a continuing problem thereafter.
This brings us back to our first chart, of the 10-year T-bond yield. The reasons why it may have bottomed and will rise further are becoming clear. If a rising bond yield is accompanied by a falling dollar it will be because markets recognise an acute funding crisis is upon the US government, reminiscent of the 1970s in sterling markets.
A falling dollar will be the signal, so we must watch the trade-weighted index and, more importantly, the gold price.
The gold price particularly acts as the canary in a coal mine, and in that context Comex open interest is hitting record levels, which without the price rising indicates a suppression operation is already in place. It is therefore reasonable to suggest the combination of the lack of excess reserves in the GSIBs and the suppression of gold is circumstantial evidence that a financial crisis is already on its way.
Markets will take control from central banks
When the funding difficulties of the US Government become more obvious, investment strategists are bound to rethink the course of interest rates in other fiat currencies, which face similar pressures from increasing budget deficits. Being aware that monetary policies are not working as intended, central banks have already encouraged their governments to deploy additional fiscal stimulus. Even before welfare costs rise and tax income falls due to a developing global recession, it appears that government borrowing world-wide is set to accelerate.
With the credit cycle on the turn, one thing is for sure, and that is what central banks call the business cycle will follow. The mistake made by all mainstream commentators and economists is to not appreciate that the problem is one of the central banks’ own making, and that once the credit cycle is set in motion it cannot be simply stopped by reducing official interest rates. We saw this proved ten years ago, when the Fed and other central banks had to inflate the quantity of money by however much base money was required and by taking failing institutions into public ownership. In the UK the only significant bank which successfully resisted needing a government bail-out was Barclays, and executive directors at the time are still having to answer for their actions in the courts. It seems that not only is failure rewarded, but a major bank not failing has become a criminal act.
The fact that some central banks have unsuccessfully imposed negative rates has not yet led to a realisation that attempting to control the cycle in this way simply does not work. The periodic credit and systemic crises are increasingly destabilising and the dynamics behind the next one indicate it will be on a scale significantly greater than the Lehman crisis eleven years ago. The banking scene is set for a reversion from incautious greed to abject fear, fear of lending to anyone and to any other bank. And the weakest banks are to be found in the Eurozone. Even in the EU’s strongest economy, the two largest private banks, Deutsche Bank and Commerzbank, by their share prices are signalling a slidetowards bankruptcy.
At some stage, and it could only be a matter of weeks or even days, the global outlook will cause all GSIB banks to become considerably more cautious, withdrawing lending facilities from smaller banks, financial speculators (hedge funds), and businesses alike. Lending to the last category ceases in two ways. In capital markets banks begin to cut their high levels of exposure to sub-investment grade bonds and syndications, and they withdraw working capital facilities for medium and small businesses. The crisis phase of the credit cycle is then irreversible.
The credit-induced recession will be proportional to the scale of the preceding credit expansion. It feeds through to an escalation of government borrowing in all welfare-dependent nations, because of the fall in tax receipts and the increase in welfare costs.
If US bond yields rise, they will do so either because foreigners are selling the dollar, or because domestic prices, reflecting a fall in the dollar’s purchasing power, begin to rise at a faster pace. It is already an open secret that official price inflation figures bear no relation to reality and only financial markets are wedded to the CPI myth. In fact, not only are government statistics inaccurate, but all statistics are reported in funny money. When US dollar markets wake up, the same will be true of markets in other currencies, and the greater the level of interest rate distortion the more severe the crisis is likely to be.
How it plays out in different nations and their currencies is not so much down to the scale of government borrowing in deteriorating circumstances, but whether savers respond to the financing demands of their governments. For this reason, monetary inflation rates will be offset by a tendency for Japanese and Chinese savers to increase their bank deposits rather than spend. In the Eurozone and Britain, this is less the case. Increasing monetary inflation will end up fuelling rising eurobond and sterling bond yields more rapidly than their equivalents in Japan and probably China.
Commodities and commodity money
The point has been already made in this article that measuring the dynamics behind a credit crisis is distorted by government statistics not fit for the purpose and by the elastic nature of fiat currency. Furthermore, monetary planners, portfolio managers and the commentariat inhabit a Keynesian fantasy land and only understand rising prices to be directly related to increased demand, and falling prices to falling demand. Presumably, this explains why they associate a CPI rising at two per cent with a healthy economy.
The key to understanding the error is that money is only objective in its value for the purpose of individual transactions. But give money a temporal context and it becomes clear that money’s purchasing power varies as well as the cost of anything.
If it is expected that the rate at which a currency loses purchasing power is about to increase, then commodity prices measured in that currency will rise without any improvement in demand. Demand can even fall, and prices rise, if the purchasing power of the currency declines sufficiently. This condition can be temporarily overcome by an investors’ panic when they sell assets, such as bonds and equities, in order to escape falling prices, but once that initial effect has quickly worn off, the relationship between money and goods will adjust to the public’s general desire to hold money as opposed to goods.
We have a contemporary example. At the time of the Lehman crisis the price of gold declined from $1,000 in March 2008 to $700 the following October, before rising to $1,920 three years later. But this time is likely to be different, because the rate of monetary inflation before the Lehman crisis varied little in the preceding few years, compared with subsequently. Following Lehman, all major central banks expanded money quantities very rapidly, so the next crisis comes against a background of already inflated currencies before a further acceleration in supply. Depending how the next credit crisis evolves, there may not be a dip in the gold price at all.
Instead, gold and other commodity prices, precious or otherwise, will be bought and sold against a background of rapidly debasing currencies. We know this, because renewed monetary expansion in the form of quantitative easing is taking place even before any crisis materialises. And when we hear luminaries such as Christine Lagarde at the ECB talking about QE to finance eco-friendly infrastructure developments directly, we know that central bankers and their governments now view monetary inflation much as it was in the Weimar Republic: an infinite source of funds.
Despite attempts by the bullion banks to suppress the evidence from the gold price of what is likely to turn out to be the early stages of a widespread fiat currency collapse, if matters progress on the lines described in this article, gold, silver and other commodities will rise priced in fiat. Initially it is likely to reflect the fact that such assets are under-owned. But then another effect is likely to take over, as the public begins to realise what is going on and start dumping fiat currencies for gold, silver and even bitcoin.
Ninety years ago, it was called a crack-up boom, the last dash out of currency for anything not printed by the government. It will happen differently this time, because it always does. But now that inflationary financing is not only required to balance governments’ books but to finance the expansion of their spending, happen it will.
Tyler Durden
Thu, 12/26/2019 – 22:15 - Meet The Quants That Are Taking Over The NFL
Meet The Quants That Are Taking Over The NFL
The NFL’s “Big Data Bowl” caught on in a big way.
Last year, 125 people got together to participate in trying to figure out new insights about the game from poring over mountains of NFL data. This year, 2,038 teams made 32,000 submissions to the event, according to the Wall Street Journal.
And like baseball, which caught analytics fever some years back around the time that Moneyball was released, the NFL now seems set for its own analytics boom.
The numbers are already starting to shift the game, too. More teams are going for it on fourth down and teams are throwing more out of the shotgun, among other decisions being dictated by “rudimentary math”.
At the same time, some GM’s still mock “eggheads and their spreadsheets”, leading to a bit of friendly competition between those who rely on analytics and those who don’t.
To some degree, it seems like a foregone conclusion: this is already the third year that the NFL is using its Next Gen Stats, which collects “granular data about movements on the field that is enabling analyses that were never before possible.”
And because data research is so new, there’s still many inefficiencies that can be taken advantage of when discovered by quants.
Momin Ghaffar, manager of strategic research and development for the Jacksonville Jaguars said: “There’s a lot of low-hanging fruit to be had.”
Ghaffar’s career path has followed the trend: first as manager of analytics for the San Antonio Spurs before defecting to the Jaguars after submitting a paper on analytics to the team.
At last year’s competition, he was one of 11 people hired by NFL teams or other companies looking for analysts.
Prior to Next Gen stats, each game had about 160 rows of data, with each representing one play. Now, tracking data makes 10 observations per second, per player. So instead of 160 rows, there’s about 600,000.
Lopez said: “There’s some knowledge in those 600,000 rows. And teams are trying to figure that out.”
Charlie Gelman, whose work at last year’s Big Data Bowl landed him with a job with the Ravens said: “That’s why I wanted to get into football originally, much more than any other sport. Right now, there’s a huge rush of people trying to get in.”
He was only a sophomore at Duke when he submitted his paper. He also started doing analytics for Duke’s wrestling team and football team.
“Football is huge, but there’s still so few analytics in it,” he said.
The Philadelphia Eagles have the league’s most progressive front office when it comes to analytics, and it helped lead the team to a Super Bowl two years ago against the Patriots. This year, the Ravens have been the most effective with going for it on fourth down, a key centerpiece in the Eagles’ aggressive Super Bowl strategy.
There’s no doubt about it: tracking data can exponentially expand insights for teams. For this year’s “Big Data Bowl”, participants are asked to calculate how many yards a running back should get on any given play. Participants had to create models based on complex factors like position of all players on the field, their speed and other attributes.
Nate Sterken, who previously worked in data science for the federal government and President Obama’s reelection campaign in 2012, is now working on models on how to identify every route a receiver ran on every play so he could analyze which combinations worked best together. And come 2020, he’ll be working for the Cleveland Browns.
Tyler Durden
Thu, 12/26/2019 – 21:50 - Christian Post Editor Quits Over Publication's Defense Of President Trump
Christian Post Editor Quits Over Publication's Defense Of President Trump
Authored by Jennie Taer via SaraACarter.com,
Christian Post Politics Editor Napp Nazworth said he resigned from the publication after it published an editorial in defense of President Donald Trump.
Christian Post editor Napp Nazworth resigned after the publication of a pro-Trump editorial. He says aligning with President Trump would “destroy the reputation of The Christian Post… We’d reached an impasse. I really had no other choice but to leave.” https://t.co/SQkrAE1jKF pic.twitter.com/qzPIVVXUQJ
— CNN (@CNN) December 26, 2019
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In an interview with CNN Thursday, Nazworth said his issue was with the Post ‘aligning with the interests of President Trump.’ That was the straw that broke the camel’s back for Nazworth.
Nazworth resigned on Monday. He announced his decision in a Twitter thread.
“Announcement: Today, rather abruptly, I was forced to make the difficult choice to leave The Christian Post. They decided to publish an editorial that positions them on Team Trump. I can’t be an editor for a publication with that editorial voice….” Nazworth wrote.
I’m saddened by what happened for many reasons. I’ve been with CP for over 8.5 years, made many friendships, and had lots of exciting opportunities along the way. …
— Napp Nazworth (@NappNazworth) December 24, 2019
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When the editors had disagreements, we would work through them, letting those discussions and debates inform and improve our coverage. Now, CP has chosen to go in a different direction. Like so many other media companies, they’ve chosen to silo themselves. …
— Napp Nazworth (@NappNazworth) December 24, 2019
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… it’s bad for Democracy, and bad for the Gospel. It means there will be one more place where readers can go for bias confirmation, but one less place where readers can go to exercise their brains on diversity of thought. {end}
— Napp Nazworth (@NappNazworth) December 24, 2019
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The controversy began when the former Editor-in-Chief of Christianity Today Mark Galli penned an op-ed arguing for President Trump’s removal from office as the U.S. House of Representatives deliberated and later voted to impeach him.
“The president of the United States attempted to use his political power to coerce a foreign leader to harass and discredit one of the president’s political opponents. That is not only a violation of the Constitution; more importantly, it is profoundly immoral,” Galli wrote.
Galli further argued that the President’s removal is consistent with evangelical teachings and principles.
“That he should be removed, we believe, is not a matter of partisan loyalties but loyalty to the Creator of the Ten Commandments.”
The Christian Post later responded with a scathing piece titled “Christianity Today and the problem with ‘Christian elitism.’” Those elites included Galli, as the piece notes.
“Mr. Galli asks evangelicals supporting Trump to consider how continued support for the president will impede and compromise evangelical witness for Jesus to an unbelieving world. One might well ask Mr. Galli how his obvious elitist disdain and corrosive condescension for fellow Christians with whom he disagrees, as ignorant, uneducated, “aliens in our midst” might well damage evangelical witness to an unbelieving world. Unbelievers might well conclude, “These Christian preach love for neighbor, but they certainly don’t seem to practice what they preach!”” editors John Grano and Richard Land wrote.
That defense of President Trump was enough for Nazworth.
Tyler Durden
Thu, 12/26/2019 – 21:25 - Indian IPOs Plunge To Four-Year Low Amid "Great Slowdown"
Indian IPOs Plunge To Four-Year Low Amid "Great Slowdown"
Several months ago, we reported how the global IPO market went bust in 2019. Now a new report via Reuters provides more insight into the trend, more specifically, taking a look at the IPO bust in India.
Indian IPOs plunged to a four year low by value in 2019 as the global and domestic economy continues to slow.
Refinitiv data shows funds raised by Indian IPOs fell to $2.8 billion this year, the lowest since about 2016. IPO proceeds soared in 2017 to $11.7 billion and $5.5 billion in 2018 during a synchronized recovery across the world.
Financial, industrial, and consumer staple sectors led IPOs in 2018 and 2019, but the amount raised compared to last year is significantly less.
With a synchronized downturn across the world and an Indian economy in crisis, investors have been pulling back on speculative IPOs:
“2019 has been the worst year from an IPO market perspective,” said Sandip Khetan, a partner at consultancy EY.
“Because of different types of disruptions, such as corporate failures and bankruptcies, things have slowed down considerably,” he said.
Over the weekend, Arvind Subramanian, the former chief economic adviser to the Narendra Modi government, told NDTV that “this is not an ordinary slowdown… it is India’s great slowdown.”
India’s GDP has fallen for seven consecutive quarters, dropping to 4.5% in 2Q19; it stood at 8% in 1Q18.
Industrial production growth is at the weakest level in a decade.
Business confidence has also plunged to decade lows.
“…they (key indicators) are either in negative growth or barely positive growth territory… the comparison is to the real sector of the economy… growth, investment, export, and import… which matter for jobs. It is also a matter of how much revenue the government has to spend on social programs,” Subramanian said during the interview, adding, “The real sector economy is slowing… jobs, you know, people’s incomes, people’s wages and of course government revenues”.
Indian investors are ditching speculative IPOs as the global and domestic economy continues to falter. So far, there are no “green shoots” in India — likely continued deceleration into early 2020.
Tyler Durden
Thu, 12/26/2019 – 21:00 - "We're Heading For Very, Very Bad Places": Dave Collum's 'Pandemonium' Podcast
"We're Heading For Very, Very Bad Places": Dave Collum's 'Pandemonium' Podcast
The only thing nearly as enlightening (and time-consuming) as reading David Collum’s epic Year In Review is listening to him and Chris Martenson discuss its highlights. So strap in, grab some eggnog, and listen to this year’s recap:
We are so close to a financial crisis now that we may be way, way past the fail-safe.
We’ve got all these unfunded liabilities that we have to pay or face the consequences of — and they are fantastically enormous.
The pensions are all underfunded — at the top of a financial asset price bubble, mind you.
Social Security is a disaster. And we’re promising so much medical help for everyone that is now profoundly expensive.
There are so many things out there that are unmoored. The Fed is unmoored. The digital world is taking us to this digital gulag, in my opinion — I don’t think I’m being hyperbolic.
I think we’re heading for very, very bad places.
Click the play button below to listen to Chris’ interview with David Collum (84m:24s).
Tyler Durden
Thu, 12/26/2019 – 20:35 - China Turns To Shocking Solution To Curb Pig Ebola
China Turns To Shocking Solution To Curb Pig Ebola
China is the world’s top producer and consumer of pork. So when 50% of its pig herd was wiped out in 2019 from African Swine Fever (ASF), it caused pork prices in the back half of the year to hyperinflate. The immediate response by the government was to consolidate pig farms and release pork from its strategic reserves. Other measures included sourcing pork from South American countries, like Brazil and Argentina, along with reestablishing trade with the US in the last several weeks.
Now the Chinese government is working to limit the spread of ASF through a high-voltage electricity experiment installed in pig barns, reported South China Morning Post (SCMP).
The new device will be installed at a medium-sized hog farm in Chengdu, in one of China’s top pig producing regions.
The goal of the test is to see whether an electric field around a barn can limit the transmission of deadly viruses.
Professor Liu Binjiang, a government scientist in northeastern China, is responsible for the “electro culture” program that has already been a huge success for increasing crop yields and reducing plant viruses.
Binjiang and his team are creating a static electric field of 50 kilovolts around a barn that holds thousands of pigs.
He believes the high-voltage discharges will break down chemicals, reduce biological aerosol by 50-90%, kill germs, and stop the spread of viruses that are transmitted through the air.
“The air quality [for the pigs] should improve when the device is powered up,” Binjiang said. “Electricity is one of the many ways to improve living conditions for farm animals. We have a long to-do list.”
Binjiang claims that high-voltage electricity was used to create an electric field around a barn in the Hubei province, one of the hardest-hit ASF areas; he claims that none of the pigs died from the virus.
“It had been deployed to enhance animal welfare and prevent airborne diseases such as foot and mouth, but the lack of African swine fever cases was a surprise. It led the team to hypothesize that the electric field had caused a change in the environment that prevented the virus thriving,” SCMP noted.
Electrifying pig farms to create force fields that scrub the air of deadly viruses could be the next big breakthrough China needs to restrict the spread of ASF.
Tyler Durden
Thu, 12/26/2019 – 20:10 - Doug Casey: "This Is Going To Be One For The Record Books"
Doug Casey: "This Is Going To Be One For The Record Books"
Just because society experiences turmoil doesn’t mean your personal life has to. And a depression doesn’t have to be depressing. Most of the real wealth in the world will still exist – it will just change ownership.
What is a depression?
We’re now at the tail end of a very long, but in many ways a very weak and artificial, economic expansion. At the same time we’ve had one of the strongest securities bull markets in history. Both are the result of trillions of new dollars created over the last decade. Right now very few people are willing to consider the possibility of tough times—let alone The Greater Depression.
But, perverse though it may seem, this is the very best time to think about it. The U.S. economy is a house of cards, built on quicksand, with a tsunami on the way. I urge everyone to read up on the topic. For now, I’ll only briefly touch on the nature of depressions. There are at least three good definitions of the term:
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A period of time when most people’s standard of living drops significantly.
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A period of time when distortions and misallocations of capital are liquidated.
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A period of time when the business cycle climaxes.
Using the first definition, any natural disaster can cause a depression. So can living above your means for long enough. But the worst kind of depression has not just economic effects, but economic causes. That’s where definitions 2 and 3 come in.
What can cause distortions in the way the market operates, causing people to do things they’d otherwise consider unreasonable or uneconomic? Only government action, i.e., coercion. This takes the form of regulation, taxes, and currency inflation.
Always under noble pretexts, government is constantly directly and indirectly inducing people to buy and sell things they otherwise wouldn’t, to do things they’d prefer not to, and to invest in things that make no sense.
These misallocations of capital subtly reduce a society’s general standard of living, but the serious trouble happens when such misallocations build up to an unsustainable degree and reality forces them into liquidation. The result is bankrupted companies, defaulted debt, and unemployed workers.
The business cycle is caused mainly by currency inflation, which is accomplished today by the monetization of government debt through the banking system; essentially, when the government runs a deficit, the Federal Reserve buys its debt, and credits the government’s account at a commercial bank with dollars. Using the printing press to create new money is largely passé in today’s electronic world.
Either way, inflation sends false signals to businessmen (especially those who get the money early on, as it filters through the economy), making them overestimate demand for their products. That causes them to hire more workers and make capital investments—often with borrowed money. This is called “stimulating the economy.”
Inflating the currency can actually drive down interest rates for a while, because the price of money (interest) is lowered by the increased supply of money. This causes people to save less and borrow more, just as Americans have been doing for years. A lot of that newly created money goes into the stock market, driving it higher.
It all looks pretty good, until retail prices start rising as a delayed consequence of the increased money supply, and interest rates skyrocket to reflect the depreciation of the currency.
That’s when businesses start failing. Stocks fall. Bond prices collapse. Large numbers of workers lose employment.
Rather than let the market adjust itself, government typically starts the process all over again with a new and larger “stimulus package.” The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression.
This is why I predict the Greater Depression will be … well … greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.
* * *
A financial depression far greater than any crisis America has seen could soon strike. For some it could completely wipe out their savings… and for others it could be the fortune-building opportunity of a lifetime. Legendary speculator Doug and the International Man team just released a new report with all the details on how it could all unfold, and what you can do about it. It’s not something you’re likely to hear about in the mainstream financial media, or anywhere else. Click here to download it now.
Tyler Durden
Thu, 12/26/2019 – 19:45 -
- Huawei Benefited From Billions Of Dollars In State Support During Its Rise To Global Dominance
Huawei Benefited From Billions Of Dollars In State Support During Its Rise To Global Dominance
The Wall Street Journal continued its string of reports on the Chinese government’s shadowy campaign to support mission-critical companies in the private sector on Christmas Day by exposing for the first time to totality of government support for Huawei.
Billions of dollars in credit facilities backed by state-controlled “policy banks”, coupled with pro-business tax breaks, allowed Huawei to cement its position as the world’s leading telecoms giant, according to WSJ.
Huawei’s grants, credit facilities, tax breaks and other forms of financial assistance details for the first time how Huawei had access to as much as $75 billion in state support as it grew from a little-known vendor of phone switches to the world’s largest telecom-equipment company—helping Huawei offer generous financing terms and undercut rivals’ prices by some 30%, analysts and customers say.
Around the world, Huawei is vying to build next-generation 5G telecom networks, much to Washington’s chagrin. In a well-documented campaign, the US has struggled to convince it allies to exclude Huawei equipment from their 5G infrastructure, claiming that Huawei parts would compromise security and allow the Chinese government to tap into civilian and military communications.
But thanks in part to all of this government support, Huawei is able to offer telecoms equipment at world-beating prices. Its biggest competitors, Nokia and Ericsson, can’t even come close.
This government support also undermines Huawei’s claims that it operates independent of Beijing, and that it would under no circumstances cooperate with state intelligence against its customers.
Nevermind that multiple investigations have uncovered evidence that Huawei builds backdoors into its equipment to allow easy access by Chinese intelligence forces.
It’s important to remember that Huawei’s commercial interests align with those of the Chinese government in more ways than one.
“While Huawei has commercial interests, those commercial interests are strongly supported by the state,” said Michael Wessel, a member of a U.S. congressional panel that reviews U.S.-China relations, in an interview. The U.S. has raised concerns that use of Huawei’s equipment could pose a security risk, should Beijing request network data from the company. Huawei says it would never hand such data to the government.
According to WSJ’s investigation, the biggest source of state support for Huawei, about $46 billion, comes from loans, credit lines and other support from state lenders. Huawei saved about $25 billion in taxes between 2008 and 2018 due to state incentives for Chinese tech firms. It also benefited from $2 billion in land discounts, and another $1.6 billion in government grants.
In a statement, Huawei said it benefited from “small and non-material” grants to support its research, but otherwise denied WSJ’s claims that the Chinese state played a critical role in Huawei’s development.
In its research, WSJ used public records in China including company statements and land registration documents. The paper said it “verified” its analysis with subsidy analysts, including a professor at Wichita State University, and Good Jobs First, a Washington DC-based organization that analyzes tax incentives.
Setting the money aside for a moment, it’s important to remember that state support can’t always be quantified. In 1999, China’s central government arranged an unusual rescue from allegations of tax fraud.
The grants Huawei received from the Chinese government between 2008 and 2018 were 17x larger than similar subsidies received by Nokia, the world’s second-largest telecoms equipment maker, while Ericsson received no subsidies during that period.
Back in 2010, the European Commission ruled that Chinese modem exporters, including Huawei, benefited from unfair subsidies, according to a confidential report leaked to WSJ.
But that investigation was cut short after the unnamed “complainant” dropped their claims against China.
In addition to providing cheap loans to Huawei which lower operating costs compared with foreign rivals, Beijing-backed banks also extend cheap credit to Huawei’s customers.
Financial support helped the company undercut rivals. In 2010, the European Commission found that Chinese modem exporters including Huawei had benefited from subsidies, according to a confidential report reviewed by the Journal. The commission cut short its probe after the complainant prompting it reached a “cooperation agreement” with the company. Huawei denied receiving such subsidies.
Besides subsidies, Huawei since 1998 has received an estimated $16 billion in loans, export credits, and other forms of financing from Chinese banks for itself or its customers, the Journal found.
China’s state-controlled banking system underpins cheap loans that lower costs for Huawei and its customers to buy its products on credit. State lending facilities for Huawei were among the largest in history.
Two of China’s biggest banks extended more than $30 billion in credit to Huawei customers over the last 20 years.
Mega-lenders China Development Bank and Export-Import Bank of China in the last two decades made available more than $30 billion in credit lines for Huawei’s customers. World Bank and official data indicate these banks were lending to the company’s clients in developing economies at some 3% in at least Huawei’s first decade abroad, around half of China’s five-year benchmark rate in since 2004.
A Huawei spokesman told WSJ that this customer credit facility was rarely more than 10% subscribed. He added that lenders, who were mostly non-Chinese banks, accounted for only 10% of Huawei’s ongoing financing needs as of the end of last year. Most of Huawei’s working capital comes from its own cash flows.
“If you’re going to buy a house, and if you are able to say you got backing of a half-million-dollar line of credit, that’s going to make you a much stronger bidder,” said Fred Hochberg, former chairman of U.S. Export-Import Bank. “What Huawei did, cleverly, is to make sure that, when they made a bid, it came with financing terms” that surpassed those of competitors.
Of course, China’s whole state capitalist model is based on the idea that government policy and corporate achievement are inseparable. This is made clear in a statement from China’s foreign ministry, which told WSJ that “like many others in China,” Huawei is a private company whose achievements “are inseparable from a good policy environment.”
WSJ found an example of how China’s export-import financing for Huawei customers has influenced foreign governments’ decision to pick Huawei over other telecoms providers.
In summer 2009, Huawei pitched to Pakistan a surveillance system for its capital, Islamabad. Pakistan’s prime minister accepted, but Islamabad lacked funds and its procurement rules required competitive bidding, Pakistan court filings say.
The Chinese offered a solution. China Ex-Im would lend Pakistan $124.7 million for the project and waive most of the 3% annual interest on the 20-year loan. There was a condition, Pakistan Supreme Court filings show: Pakistan could choose only Huawei. Pakistan’s government decided to proceed without competitive bidding.
“On the recommendation of Ex-Im Bank, the prime minister of Pakistan selected Huawei,” then-interior minister Ahsan Iqbal told Pakistan officials.
A Chinese embassy report showed Beijing’s then-ambassador to Islamabad officiating at the project’s inauguration in 2016 alongside Pakistan’s interior minister, standing before an array of glowing security monitors.
“The Chinese government funded it and Huawei built it,” the embassy said.
And there are probably dozens of other examples like this one. Ultimately, Huawei’s expansion explains only part of China’s growing influence across the emerging world. Their two missions are deeply intertwined.
Tyler Durden
Thu, 12/26/2019 – 19:25 - Rachel Maddow Called Out By WaPo Columnist For Shamelessly Peddling Fake News
Rachel Maddow Called Out By WaPo Columnist For Shamelessly Peddling Fake News
Conspiracy theorist and MSNBC host Rachel Maddow has been called out by Washington Post columnist Erik Wemple for breathlessly peddling the Steele Dossier – becoming a “clearinghouse” for the largely debunked opposition research funded by the Hillary Clinton campaign and the DNC in 2016 (and fed to the MSM six weeks before the 2016 US election by the former British spy who wrote it).
Wemple has been writing about the media’s coverage of the Steele dossier since it was significantly undercut earlier this month by Michael Horowitz, the DOJ Inspector General. Thursday’s feature details how Maddow spewed Russophobic propaganda to the American public based on Steele’s fabricated claims.
Horowitz absolutely shredded the dossier, writing in his report on FBI FISA abuse that “The FBI concluded, among other things, that although consistent with known efforts by Russia to interfere in the 2016 U.S. elections, much of the material in the Steele election reports, including allegations about Donald Trump and members of the Trump campaign relied upon in the Carter Page FISA applications, could not be corroborated; that certain allegations were inaccurate or inconsistent with information gathered by the Crossfire Hurricane team; and that the limited information that was corroborated related to time, location and title information, much of which was publicly available.”
Maddow began using the dossier to smear Trump in March of 2017 – when both CNN and the New Yorker falsely claimed that US authorities had loosely confirmed ‘some of the details’ from the dossier. An emboldened Maddow claimed that while the “baseline” dossier claim that Trump colluded with Russia to win the 2016 election had yet to be proven, “all the supporting details are checking out, even the really outrageous ones. A lot of them are starting to bear out under scrutiny. It seems like a new one each passing day.”
Based on the conclusions reached by both the FBI and DOJ Inspector General Michael Horowitz, Maddow was peddling conspiracy theories.
“When small bits of news arose in favor of the dossier, the franchise MSNBC host pumped air into them,” writes Wemple. “At least some of her many fans surely came away from her broadcasts thinking the dossier was a serious piece of investigative research, not the flimflam, quick-twitch game of telephone outlined in the Horowitz report.”
“She seemed to be rooting for the document.“
In April, Maddow ignored that the Mueller report debunked the dossier’s key allegation a literal conspiracy theory – namely that the Trump campaign coordinated with Russia to influence the 2016 US election. Instead, the MSNBC host grasped at straws – trying to suggest various claims in the dossier were corroborated.
Several days after the Mueller report emerged, Maddow addressed not the dissonance between Mueller and the dossier, but a point of possible corroboration. In perhaps its most famous allegation, the dossier claimed that Trump had rented a suite at the Ritz Carlton in Moscow and “employed” prostitutes to perform a perverted ritual for him. It suggested that there were tapes of the show, the better to amass kompromat against Trump.
A footnote in the Mueller report, noted Maddow, bore a possible connection to this part of the dossier. It turned out that Russian businessman Giorgi Rtskhiladze had sent a text message to Cohen on Oct. 30, 2016, saying, “Stopped flow of tapes from Russia but not sure if there’s anything else. Just so you know…” Those tapes were “compromising,” Rtskhiladze told the special counsel. However, he also said “he was told the tapes were fake, but he did not communicate that to Cohen.”
Seizing on the revelations, Maddow commented: “[According] to Mueller, Cohen then told Trump about that before the election. So that means Trump knew that somewhere in the former Soviet Union, a business buddy of his had taken action to make sure tapes, supposedly from Trump’s trip to Russia, those tapes weren’t getting out. Don’t worry, all taken care of. I took care of that for you, right?” she said. –Washington Post
Maddow pumped the brakes on the dossier following the Mueller report. When Horowitz published his report’s comprehensive dressdown of the dossier, there was no mea culpa from Maddow – instead, she said “The inspector general debunks that there was any anti-Trump political bias motivating these decisions. They debunked the idea that the Christopher Steele dossier of opposition research against Trump was the basis for opening the FBI’s Russia investigation. It absolutely was not, and ‘Oh, by the way, no, there was no spying on the Trump campaign.”
And while Wemple says these are legitimate points, Maddow’s track record on the dossier is abysmal.
The case for Maddow is that her dossier coverage stemmed from public documents, congressional proceedings and published reports from outlets with solid investigative histories. She included warnings about the unverified assertions and didn’t use the dossier as a source for wild claims. There is something fishy, furthermore, about that Mueller footnote regarding the “tapes.” In their recent book on the dossier, “Crime in Progress,” the Fusion GPS co-founders wrote that Steele believes the document is 70-percent accurate.
The case against Maddow is far stronger. When small bits of news arose in favor of the dossier, the franchise MSNBC host pumped air into them. At least some of her many fans surely came away from her broadcasts thinking the dossier was a serious piece of investigative research, not the flimflam, quick-twitch game of telephone outlined in the Horowitz report. She seemed to be rooting for the document. –Washington Post
One of Russia’s overall goals, according to ex-KGB agent Yuri Bezmenov, is to weaken the West by dividing America. With MSM hosts like Maddow peddling disinformation to an outrage-hungry audience that still hasn’t accepted the results of the 2016 election, they hardly have to try.
Tyler Durden
Thu, 12/26/2019 – 19:00 - Boeing Executive In Charge Of 737 MAX Legal Response Has Been Fired
Boeing Executive In Charge Of 737 MAX Legal Response Has Been Fired
Boeing shareholders just can’t catch a break.
Barely three days after now-former Boeing CEO Dennis Muilenburg’s termination at the hands of the company’s board of directors, another top-ranking company official has
retiredbeen pushed out.According to a press release published shortly after American markets closed on Thursday, Boeing revealed that the company’s top legal official, former federal judge J Michael Luttig, has decided to “retire” after just over six months in a position that was created by Muilenburg specifically for Luttig.
Judge J Michael Luttig
Here’s more from the press release:
The Boeing Company announced today that J. Michael Luttig, 65, valued Counselor and Senior Advisor to the Boeing Board of Directors, has informed the Board of his long-considered retirement at year end.
Luttig, who served as Boeing’s General Counsel from 2006 until assuming his current responsibilities in May 2019, has been managing legal matters associated with the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents, and advising the Board on strategic matters.
Boeing interim President and CEO Greg Smith praised Luttig in a quote included with Boeing’s press release.
“Judge Luttig is one of the finest legal minds in the Nation and he has expertly and tirelessly guided our company as General Counsel, Counselor, and Senior Advisor,” said Interim Boeing President and CEO Greg Smith. “We are deeply indebted to Judge Luttig for his extraordinary service to Boeing over these nearly 14 years, especially through this past, challenging year for our company,” said Smith. “The Board and I will always be grateful for the Judge’s remarkable service to The Boeing Company – and I will personally always be grateful for his friendship.”
According to the Seattle Times, during his brief tenure at Boeing, Luttig assembled a deeply connected defense team of outside lawyers to represent Boeing executives and employees in a criminal investigation launched by federal authorities after the second 737 MAX crash, which occurred just minutes after a Ethiopian Airlines flight 302 took off from Addis Ababa Bole International Airport on March 10, 2019.
Luttig’s appointment signaled that Boeing was planning to aggressively combat any criminal charges or civil lawsuits tied to the two 737 crashes, which killed 346 people, including all of the passengers and crew.
Luttig was named to the newly created position in May, as the Chicago-based company faced an onslaught of lawsuits and a federal criminal investigation arising from the crashes. Until then, Luttig had served as Boeing’s general counsel since 2006.
His duties regarding the 737 MAX will now fall to Brett Gerry, who replaced Luttig as general counsel.
Luttig’s appointment to the new position last spring reflected the complex and costly fallout stemming from the crashes, coming on the heels of statements indicating Boeing planned to take an aggressive stance in responding to lawsuits and any potential criminal allegations
The Department of Justice, aided by the Department of Transportation’s Inspector General and the FBI, is investigating the design and certification process for the MAX to try and determine whether the FAA’s decision to certify the 737 MAX 8 amounted to criminal negligence.
It’s possible that Luttig’s departure is simply a natural consequence of Muilenburg’s ouster. It’s also possible that his departure is tied to recent revelations that Boeing withheld critical internal text messages from the FAA.
Still, given Luttig’s crucial role within Boeing’s legal department, something about the timing of Luttig’s departure doesn’t sit right. And with Boeing shares on track to finish the year above the 2019 lows reached in March, we imagine shareholders will soon be asking themselves: ‘what does this guy know that I don’t?’
Tyler Durden
Thu, 12/26/2019 – 18:45 - How Today's Central Bankers Threaten Civilization
How Today's Central Bankers Threaten Civilization
Authored by Claudio Grass via The Mises Institute,
When I was asked to write an article about the impact of negative interest rates and negative yielding bonds, I thought it was a chance to look at the topic from a broader perspective. There have been lots of articles speculating about the possible implications and focusing on their impact in the short run, but it’s not very often that an analysis looks a bit further into the future, trying to connect money and its effect on society itself.
Qui Bono?
Let us begin with a basic question, that lies at the heart of this issue: Who profits from a loan that is guaranteed to pay back less than the amount borrowed? Obviously, it is the borrower and not the lender, which in our case is the government and those closely connected to it. Negative rates and negative-yielding bonds by definition favor the debtors and punish the savers. In addition, these policies are an affront to basic economic principles and to common sense too. They contradict all logical ideas about how money works and they have no basis and no precedent in any organic economic system. Thus, now, in addition to the hidden tax that is inflation, we also have another mechanism that redistributes wealth from the average citizen to those at the top of the pyramid.
Thus, this very concept of a central authority being able to bend and twist the rules, even when the result is illogical, has implications that extend way beyond daily economic activities. In fact, it ultimately divides society into two classes, those who profit from this arbitrary and unilateral rewriting of the rules and those who are forced to pay the price even though they never agreed to it. In fact, they weren’t even asked.
A System of Collective Corruption
Of course, we can also look at it from the collective perspective of the so-called social contract of Rousseau and argue that this system of overt (taxation) and covert (monetary policy) redistribution is legitimate, or even benign. You might still believe that the state will take care of you in the future, and thus you are willing to sacrifice a part of your wealth and savings today to make sure that happens. In that case, it is useful to remember that the current central banking system is not that old. It’s only been around for about hundred years, or two long-term debt cycles combined. The first cycle ended when President Nixon officially tried to demonetize gold in 1971, empowering a centralized system whereby a few decide who receives the currency first and at what interest rate, allowing them to create bubbles in certain asset classes, protect different key industries and to use it to finance wars and enrich politicians and those close to them.
So far, total credit on a global scale stands around $240 trillion. It’s hard to conceive of such a number, but if you consider that 1 trillion seconds are equal to 31,709 years, you might begin to wrap your head around just how leveraged the system has become. We should never forget that debt is always consumption brought forward. That being said, debts need to be paid back or forgiven — there is no other outcome. In addition, the amount of debt that a system can take on is limited, and when a credit-based system can’t grow any further, the logical outcome is the collapse of the whole system. As Ludwig von Mises described this a long time ago,
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
This is the reason why central banks started trying to avoid this systemic collapse by taking interest rates below zero and allowing the big players to take on debt for free and to reduce their debt burden at the same time. This, of course, is something that we already witnessed extensively during the past decade and it is just a matter of time until more central banks, including the Federal Reserve, use the same fraudulent tactic to let some air out of the balloon, and to deleverage the debtor at the cost of the saver. However, it is very questionable whether this can be successfully managed, especially since demographics have been a problem for decades in the West, making growth a problem too. Governments enforced a mass-immigration policy to fight this aging population trend, yet its execution has been disastrous; instead of rejuvenating nations and spurring productivity, it has ended up crushing the national welfare systems.
It is thus clear that the current path that governments and central bankers have selected is utterly unsustainable and that their attempts at short-term “patches” have little hope of stopping the inevitable implosion, which has already been decades in the making. Pretending otherwise is as futile as it is naïve. As Ayn Rand put it,
We can ignore reality, but we cannot ignore the consequences of ignoring reality.
The “De-Civilization” Effect
Negative interest rates are a great example of these short-term patches, only in this case, they are not just useless as a cure for our economic ills, but they actually do more harm than good.
The outcome of this policy is that time becomes worthless. As one’s hard-earned money, set aside for a rainy day or for one’s children’s education, instead of appreciating, as logic would dictate, diminishes day by day, it does not make sense any longer to produce and to save. The basic motivation for each individual to get up in the morning and to work hard to achieve a higher living standard is removed, and time, therefore, turns into a dimension without any value. If people can’t save any longer, by government decree, then there is no other way than to consume. And with all traditionally safe investment options gone, they are only left with the option of speculating in rigged financial markets, and the massive risk that comes with it, especially now, when we’re nearing the end of a long-term debt cycle.
The individual is thus turned more and more into a state dependent, as the basis for a free life is financial independence and the ability have savings on the side that keep you self-reliant. The fundament of a successful system requires individuals that live a decent life, knowing that they must first produce before they can consume.
The masses are trained and forced to consume and spend money they don’t have to buy things they don’t need. Our monetary system in combination with this kind of public policy causes mass overconsumption, the destruction of wealth, capital consumption, and the destruction and exploitation of nature.
People significantly add value to society if they are able to save, as this allows them to invest at a later stage, once they have accumulated as much as needed, and thereby aid others in their own efforts to succeed and to reach financial independence. Parents can help their children and investors can help budding new companies that bring innovative ideas that benefit the economy and society as a whole. As this virtuous cycle continues, based on productivity, long-term thinking, and responsible financial management, “the rising tide lift all boats”.
To the contrary, when this natural process is forcibly disrupted and reversed, the effects are deleterious and far-reaching: mass overconsumption, the destruction of wealth, and the exploitation of nature and the environment are all symptoms of this institutional and massive push towards short-term thinking and of being forced to focus just on today, at the expense of tomorrow.
Wider Implications
Thus, what is at stake is not only the world economy, but the accelerating decline of Western culture, which, based on liberalism (personal freedom and private property rights) and Christianity (personal responsibility), laid the foundation for a decentralized Europe that allowed for competition of goods and services but especially the competition of ideas. This dangerous decline is nothing new, either, as it began after World War I, when Europe turned towards a more centralized approach, with all sorts of collectivist ideas causing all kinds of schisms that we still see today in modern societies. Today, we see a rapid acceleration of this decline, as our economic system can barely remain standing, and as our politics and our societies devolve even faster into tribal or more precisely into political identity groups, fighting each other over meaningless feuds. All the while they are distracted from the real threat, the one that governments and central banks pose to their future and to their children’s future.
As long as people are afraid of liberty and falsely delegate their self-responsibility to a central authority, hope is dim. It’s time to think independently about whether today’s centralized system really makes sense, if it is sustainable, and for how much longer. If the answers to these questions scare you, it is pointless to expect solutions to come from above. It is then time to act directly and responsibly, with a solid plan, hard physical assets privately owned, and a long-term strategy that does not depend on the whims and caprices of those in charge.
Tyler Durden
Thu, 12/26/2019 – 18:25 - 'Love Trump, Hate The Wall': Texas Landowners Stymie Border Barrier Plans
'Love Trump, Hate The Wall': Texas Landowners Stymie Border Barrier Plans
The biggest obstacles to the construction of President Trump’s border wall aren’t blue-state politicians like California Gov. Gavin Newsom. Rather, Texas landowners who have refused to fork over their border plots are creating the biggest problems for the Trump Administration, according to the New York Times.
Richard Drawe, the owner of a border plot in Progreso, Texas, told the NYT that he decided to capitulate and accept the government’s offer for his land rather than engage in a drawn-out legal battle.
Two days after signing over his land to the federal government, Drawe paused with his wife and mother on a levee that his family had owned for nearly a century.
A border wall that he reluctantly agreed to put on his land will soon divide this Texan family from the whole scene: the levee, a lake, an onion field and all of those birds.
Mr. Drawe, 69, doubts the wall will do much to stop illegal immigration, and though he supports the president who ordered it, he believes that the construction will “ruin” his life. But selling the land early on seemed better and cheaper than facing the government in court, only to have it take the land anyway, he reasoned. The wall, the lights and the roads will be built on about a dozen acres that his grandfather bought in the 1920s, and that will cut him off from the priceless views of the Rio Grande that he cherishes.
“We just finally gave up,” he said. “If they offered me a million dollars to build the wall, I would refuse it if I knew they wouldn’t build it. I don’t want the money. This is my life here.”
With the election less than a year away, President Trump is scrambling to fulfill his promise to build 450 miles of border wall by the end of next year.
The other challenges still facing Trump’s “big, beautiful” wall include an ongoing investigation into government contracts and a legal ruling blocking emergency access to Defense Department funds that Trump tried to re-allocate to the wall.
Source: BBC
The nationwide injunction has, for now, curtailed work on 175 miles of wall from Laredo to El Paso, and from Yuma to El Centro.
According to Customs and Border Protection, the administration has thus far only built 93 miles of the wall, nearly all of it on federal land where dilapidated barriers once stood. Mark Morgan, the acting commissioner of the CBP, insisted that the government will meet its goal for the wall.
“It’s hard right now to say whether we’re still going to meet that goal,” Mr. Morgan said of building the wall by 2021. “But I’m confident we’re going to be close.”
The US brought more than 300 cases against landowners for their property after President George W. Bush signed a bill to begin installing fencing along the border in 2006, according to a Texas nonprofit. Some 46 of those cases are still ongoing.
Years ago, the government reached a settlement to acquire the land of most of the other property owners, and some of the fencing is now being reinforced to transform it into a veritable wall. The Trump Administration picked up where Bush left off, filing 48 lawsuits to help it begin work on other parcels of property.
Even if landowners decide to put up a fight, their odds of success aren’t great, thanks to a little something called “Eminent Domain,” as one attorney who spoke to the NYT pointed out.
“They’re going to acquire the land for their wall, whether you negotiate with them upfront or they end up filing a lawsuit and taking it by a declaration of taking,” said Roy Brandys, an attorney specializing in eminent domain who represented Mr. Drawe.
For Drawe and his family, the worst part of the deal is that the government isn’t building the wall directly on the border; instead, the wall will be situated well within US territory, cutting Drawe and his family off from even more of their land, while also spoiling the family’s view of the Rio Grande.
If the wall goes up, it’ll be the new border, Drawe reckons, meaning cartel members will likely continue raining down packages of drugs and other contraband across his property.
Becky Jones, a property owner in California who has decided to fight the federal government, put it this way: “Forget deplorable Americans,” she said, “you’re disposable Americans if you happen to be on the south side of the wall.”
Tyler Durden
Thu, 12/26/2019 – 18:05 - Very Unusual Seismic Activity On West Coast Has Experts Extremely Concerned
Very Unusual Seismic Activity On West Coast Has Experts Extremely Concerned
Authored by Michael Snyder via TheMostImportantNews.com,
The west coast never stops shaking, but lately the shaking has gone to an entirely new level, and this has many people deeply concerned about what may be coming. Last summer, a series of alarming foreshocks immediately preceded the two historic quakes that shook the Ridgecrest area in southern California. But those quakes were nothing compared to “the Big One” that scientists assure us is way overdue. Someday an earthquake that is hundreds of times stronger will absolutely devastate the California coastline, and it may be arriving a lot sooner than many people think. Farther north, the Cascadia subduction zone is a ticking time bomb that could literally unleash an unprecedented disaster at any moment. What I am talking about is an event that will completely wipe out entire cities and that the region will never recover from. As I have detailed repeatedly, authorities have warned us that “everything west of Interstate 5 will be toast” when an absolutely massive seismic event along the Cascadia subduction zone sends a gigantic tsunami sweeping inland.
And without a doubt, that day is coming.
Because of the extreme damage that a major west coast seismic event would do to our economy and to our Internet infrastructure, all of our lives will dramatically change the moment it happens. So it is understandable why so many people are alarmed by the tremendous shaking that we have witnessed over the past few days. As Americans all over the country were celebrating Christmas, the state of California was shaken by 9 significant earthquakes, and farther north the city of Vancouver was rattled by a magnitude 6.3 quake…
A series of earthquakes on Christmas Eve and before dawn Christmas morning hit around California, and a much bigger 6.3 quake shook off Vancouver.
At least nine earthquakes in 24 hours reaching up to 3.2 magnitude shook California from the Los Angeles area north to Chico, the U.S. Geological Survey reports.
The other quakes in the swarm ranged from 2.5 to 3.0 magnitude and stretched the length of the state, according to the USGS.
The large earthquake that shook Vancouver was preceded by five other large earthquakes that hit the region on Monday…
There were no reports of damage or injuries after five earthquakes struck within seven hours off the northwest end of Vancouver Island on Monday.
The tremors began as minor quakes, but grew stronger as the morning turned to afternoon.
According to the CBC, those five large earthquakes ranged in size from magnitude 4.8 to magnitude 6.0…
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5.1 (8:44 a.m. PT).
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5.6 (11:13 a.m.).
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5.8 (11:49 a.m.).
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6.0 (12:56 p.m.).
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4.8 (3:38 p.m.).
Hopefully this earthquake swarm off the coast of Vancouver will turn out to be nothing.
But scientists tell us that an enormous rupture of the Cascadia subduction zone has the potential to produce a giant tsunami hundreds of feet tall, and the death and destruction such a tsunami would cause in Vancouver, Seattle, Tacoma, Portland and other coastal communities in the Northwest would be absolutely off the charts.
Meanwhile, we have also witnessed more than 30 significant earthquakes over last 30 days in the vicinity of Mt. Rainier, and anyone that is familiar with my work knows how concerned I am about the potential for a major eruption of that volcano.
Because there is always at least a little bit of shaking going on along the west coast, many residents have been lulled into a false sense of security. Yes, a major disaster has not happened in a long time, and as a result many believe that there is nothing to be concerned about. But someday a major event will strike very suddenly, and the devastation will be unimaginable. Just consider what Steve Quayle recently told Greg Hunter…
“The amount of damage, and I am going to choose my words carefully, is going to be precedent setting. It’s going to be the combination of volcanos going off that are inland from the subduction zone where the plates meet, coupled with tsunamis. . . . When this happens, you will lose eight million to twenty million people. When it happens, you will lose all productivity in the electronic field, obviously Silicon Valley, and all food production in all of California, Oregon and Washington. When it happens, you will have a State of Emergency unlike any other. How about the refugees? There will be 3.5 million refugees to take care of. When this happens, what happens to the underground aquifers, and where does everybody go for fresh water? There will be years of drought, years of famine and years of water, water where did it all go? It is a very dire situation painted by computer models. This is not a sensational thing. It is a reality based, scientific study with the application of what happens.”
Hopefully such an event will be delayed for as long as possible.
But each day it gets a little closer.
Before I get back to California, there is one more little tidbit from the Northwest that I wanted to share with you. On Friday, the city of Seattle experienced “its darkest day in recorded history”…
Seattle, the city known for its rainy weather and overcast, saw its darkest day in recorded history Friday due to several factors, including shorter days and dense cloud coverage.
Pyranometers are devices installed in buildings on campus at the University of Washington that help scientists gauge just how dark the days actually get in the city, the Seattle Times reported. Scientists there monitor how much solar radiation reaches the ground during a 24-hour span.
Could that be some sort of a harbinger?
I don’t know, but certainly a lot of really weird things have been happening in the U.S. lately.
Overall, there have been more than 1,200 earthquakes in the United States over the past week, and the majority of those quakes have happened in the state of California.
Prior to the earthquake swarm that we witnessed on Christmas Eve and Christmas Day, a series of moderate quakes rattled the Ridgecrest area on Thursday and Friday…
Five months after the biggest earthquake in two decades, a swarm of smaller quakes rattled a secretive Navy base in the Mojave Desert Thursday afternoon and before dawn on Friday, according to the US Geological Survey.
Five quakes magnitudes over 2.5 struck Naval Air Weapons Station China Lake between 3 p.m. Thursday and 3.30 a.m. Friday in Ridgecrest, CA, according to the Fresno Bee.
That is the exact same area where two large earthquakes made headlines all over the globe last July.
Could it be possible that another major event is on the way?
As I repeatedly stress, we live at a time when our planet is becoming increasingly unstable.
Maybe it won’t happen this week, and maybe it won’t happen this month, but scientists assure us that major seismic disasters are coming to the west coast.
It is simply a matter of time, and time may be running out a whole lot more rapidly than most people would dare to imagine.
Tyler Durden
Thu, 12/26/2019 – 17:45 -
- El Chapo's Son Gives Away Cars To Sinaloa Locals At Christmas Party
El Chapo's Son Gives Away Cars To Sinaloa Locals At Christmas Party
Ivan Archivaldo Guzmán, the son of jailed drug kingpin Joaquín “El Chapo” Guzmán, took a page right out of the infamous drug lord Pablo Escobar’s handbook of how to run a successful drug cartel, with generous giveaways at a lavish Christmas party for locals in his home state of Sinaloa, reported the Daily Mail.
Social media posts detailed the events of the party — including the gifts received by locals:
A Honda Civic was one of the cars given away at the holiday bash.
Three subcompact cars were spotted in another picture. In all, ten cars and SUVs were gifted to locals.
Several photos showed boxes of gifts lined up for locals to take home after the party.
One picture revealed how a live band was playing.
The Daily Mail said locals were thankful for the gifts and shouted, “Thank You Ivan Archivaldo Guzmán.”
A tag on one of the gift bags read: “May this season be full of happiness … [may] the light provide you faith and love. Iván Archivaldo wishes you a Merry Christmas and a Happy New Year.”
Iván is one of six sons of El Chapo, the founder of the Sinaloa Cartel. El Chapo was captured by Mexican authorities in 2016, then extradited to the US a year later. He now awaits trial in New York.
Tyler Durden
Thu, 12/26/2019 – 17:25 - DeVos, DOJ Slam Campuses Behaving As "Mini Police States"
DeVos, DOJ Slam Campuses Behaving As "Mini Police States"
Authored by Seth Segal via Campus Reform,
Mississippi community college is defending itself against allegations from the DOJ and Betsy DeVos that it positions itself as a “police state” and threatens the free speech rights of its students.
In September, the Foundation for Individual Rights in Education filed a lawsuit against Jones College after the school threatened to arrest student members of Young Americans for Liberty for their efforts to initiate a conversation about marijuana legalization on campus. The campus police stopped the YAL members from tabling to raise awareness about this issue. FIRE sued the school on behalf of YAL and student Michael Brown.
Now the Department of Justice is weighing in on the matter, releasing a statement insisting that “College campuses should not be mini police states.”
“The United States of America is not a police state,” said assistant attorney general for the Civil Rights Division Eric Dreiband, adding “Repressive speech codes are the indecent hallmark of despotic, totalitarian regimes. They have absolutely no place in our country.”
US secretary of education Betsy DeVos also weighed in on the free speech of students at Jones County Junior College saying that the situation is “yet another concerning example of students encountering limits on what, when, where, and how they learn.”
“This is happening far too often on our nation’s campuses. This Administration won’t let students be silenced. We stand with their right to speak and with their right to learn truth through the free exchange of ideas—particularly those with which they might disagree,” DeVos added.
Jones County Junior College told Campus Reform that it “has reviewed the statement of interest filed by the federal government on this matter,” and that “At this time a preliminary motion to dismiss certain claims against certain defendants is pending before the court.”
The school disputed the legitimacy of the allegations, telling Campus Reform that “the only alleged facts in the record come from the unproven statements contained in the plaintiffs’ complaint,” and complains that the DOJ’s statement “broadly accepts those allegations and the merits of plaintiffs’ claims. The College looks forward to the Court’s ruling on the motion to dismiss and to developing the facts of this case through the discovery process.”
The institution assured Campus Reform that its “goal has always been to ensure that all students have equal and safe access to an environment free from hate speech; racial, gender, national origin, religious affiliation; and disability discrimination.”
“The plaintiffs’ allegations require the College to actively defend itself, its employees, and the Trustees from the position that no harm was done to the plaintiff by the College. Our mission is to teach the ideals of a democratic society. We focus every effort to ensure our students have access to their future through advanced affordable education that stands not only on free inquiry but promotes learning, advances knowledge, and promotes economic growth for the American family,” the college added.
Tyler Durden
Thu, 12/26/2019 – 17:05
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