- Paul Craig Roberts On The Real Likelihood Of Nuclear War
Via SputnikNews' John Harrison,
Dr. Paul Craig Roberts, who served as an Assistant Secretary of the Treasury for Economic Policy in the Reagan administration, shares his view that there is a real likelihood of a nuclear war breaking out. Below are the main points covered in this radio programme.
(click image for link to full interview)
"Firstly there is the Wolfowitz doctrine, which basically makes it clear that the United States should prevent the rise of any state that could present sufficient power to threaten American unilateral action. Russia has risen and has displayed such power….This is the reason for the constant demonisation of Russia’s leader. We have the number one candidate for the democratic Nomination Hillary Clinton, who now compares the President of Russia with Hitler….So what has happened is that every American president during my lifetime, especially Nixon and Reagan worked to create trust between the two major nuclear powers. But beginning with Clinton, the trust that had been achieved was progressively destroyed."
"When you destroy trust between nuclear powers you recreate the possibility of nuclear war, either by intent, or miscalculation. So this is a reckless and irresponsible act on the part of Washington….The information war that is going on now is to prepare the American population and NATO countries allies for military conflict with Russia. This is part of the preparation of that. We now have high level people in the US government and military who go to Congress and say that Russia is an existential threat. This is rubbish!…You have to remember that before the wars started in Afghanistan, Iraq, Syria, it was the constant demonisation of the leaders of the governments, against Gaddafi, Hussein. When you see these kinds of demonisation it fits a pattern."
"A hot war can come from a new cold war. Another factor is the American military industrial complex, with a turnover of a trillion dollars annually. Their entire revenues come from serving the war capability of US government. They have a huge interest in having a major enemy. They tried to make terrorists that enemy, but that is not serious enough, so this complex has great interest in recreating the Russian threat. From the neo conservative standpoint, they actually regard any country with an independent foreign policy to be a threat to the United States. So that part of the equation means that they can move the cold war into a hot war, it only takes a small amount of miscalculation. I don’t see how the Russian government can believe one word coming out of Washington."
"Some neocons say: what’s the good of nuclear weapons if you can’t use them? They have a theory that the US has sufficient superiority to win a strike against Russia. If the US cannot win against a few thousand Taliban, it will not be able to win a possible conventional war against the Red Army, it will go nuclear rather lose…. A nuclear war cannot be won."
"The neoconservatives now have no competition, there is nobody out there apart from Washington wishing to take over the world… As long as the American vassal states that compromise the NATO accept it, they magnify the chance of a new massive war… Republican candidates are competing with each other to see who can treat Russia the most aggressively."
- Visualizing Why Manufacturing Jobs Aren't Coming Back
The market for industrial robot installations has been on a skyward trend since 2009, and it is not expected to slow down any time soon. According to the World Robotics 2015 report, the market for industrial robots was approximated at $32 billion in 2014, and in the coming years it is expected to continue to grow at a compound annual growth rate (CAGR) of at least 15%.
As VisualCapitalist's Jeff Desjardin notes, that means between 2015 and 2018, it’s anticipated that 1.3 million industrial robots will be installed worldwide. This will bring the stock of operational robots up to just over 2.3 million, mostly working in the automotive and electronics sectors.
For how long can the global robot population continue to grow?
Courtesy of: Visual CapitalistROBOT DENSITY
Perhaps the most interesting way to peek into the future of industrial robot installations is to look at potential sales in China.
Currently, the world’s most populous nation has a density of robots that is about half of the world average, equal to just 36 robots for every 10,000 manufacturing workers in China.
However, this is changing fast. It’s been the largest market for robots since 2013, and in 2014 the country bought 57,100 robots – the highest quantity ever recorded in a year. By 2018, one in every three robots in operation around the world will be in China.
What will happen if China’s density approaches that of other robot industrial centers?
Highly automated countries such as Germany, Japan, and South Korea all have robot densities that are multiples higher. South Korea, for example, has 478 industrial robots for every 10,000 workers – a ratio that is 13x higher than China’s.
With this kind of potential for growth, it’s clear that this is only the start of the robot story.
- The World's Most Famous Economic Hitman Confesses – They're Coming For Your Democracy
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Allen Dulles, the CIA director under presidents Eisenhower and Kennedy, the younger brother of Secretary of State John Foster Dulles, and the architect of a secretive national security apparatus that functioned as essentially an autonomous branch of government. Talbot offers a portrait of a black-and-white Cold War-era world full of spy games and nuclear brinkmanship, in which everyone is either a good guy or a bad guy. Dulles—who deceived American elected leaders and overthrew foreign ones, who backed ex-Nazis and thwarted left-leaning democrats—falls firmly in the latter camp.
But what I was really trying to do was a biography on the American power elite from World War II up to the 60s. That was the key period when the national security state was constructed in this country, and where it begins to overshadow American democracy. It’s almost like Game of Thrones to me, where you have the dynastic struggles between these power groups within the American system for control of the country and the world…
Absolutely. The surveillance state that Snowden and others have exposed is very much a legacy of the Dulles past. I think Dulles would have been delighted by how technology and other developments have allowed the American security state to go much further than he went. He had to build a team of cutthroats and assassins on the ground to go around eliminating the people he wanted to eliminate, who he felt were in the way of American interests. He called them communists. We call them terrorists today. And of course the most controversial part of my book, I’m sure, will be the end, where I say there was blowback from that. Because that killing machine in some way was brought back home.
– From the post: How America’s Modern Shadow Government Can Be Traced Back to One Very Evil Man – Allen Dulles
Most readers will be familiar with John Perkins and his best-selling novel Confessions of an Economic Hitman. What you may not know, is he’s currently making the rounds warning us that all the corporatist mercenary tactics employed against third-world nations to financially benefit U.S. conglomerates are now being turned inward on American communities.
He discussed some of this in a recent interview with Yes. Here are a few excerpts:
Twelve years ago, John Perkins published his book, Confessions of an Economic Hit Man, and it rapidly rose up The New York Times’ best-seller list. In it, Perkins describes his career convincing heads of state to adopt economic policies that impoverished their countries and undermined democratic institutions. These policies helped to enrich tiny, local elite groups while padding the pockets of U.S.-based transnational corporations.
If economic pressure and threats didn’t work, Perkins says, the jackals were called to either overthrow or assassinate the noncompliant heads of state. That is, indeed, what happened to Allende, with the backing of the CIA.
Perkins has just reissued his book with major updates. The basic premise of the book remains the same, but the update shows how the economic hit man approach has evolved in the last 12 years. Among other things, U.S. cities are now on the target list. The combination of debt, enforced austerity, underinvestment, privatization, and the undermining of democratically elected governments is now happening here.
Sarah van Gelder: What’s changed in our world since you wrote the first Confessions of an Economic Hit Man?
John Perkins: Things have just gotten so much worse in the last 12 years since the first Confessions was written. Economic hit men and jackals have expanded tremendously, including the United States and Europe.
Back in my day we were pretty much limited to what we called the third world, or economically developing countries, but now it’s everywhere.
van Gelder: So how has this switched from us being the beneficiaries of this hit-man economy, perhaps in the past, to us now being more of the victims of it?
Perkins: It’s been interesting because, in the past, the economic hit man economy was being propagated in order to make America wealthier and presumably to make people here better off, but as this whole process has expanded in the U.S. and Europe, what we’ve seen is a tremendous growth in the very wealthy at the expense of everybody else.
On a global basis we now know that 62 individuals have as many assets as half the world’s population.
van Gelder: Is this the same kind of dynamic about debt that leads to emergency managers who then turn over the reins of the economy to private enterprises? The same thing that you are seeing in third-world countries?
Perkins: Yes, when I was an economic hit man, one of the things that we did, we raised these huge loans for these countries, but the money never actually went to the countries, it went to our own corporations to build infrastructure in those countries. And when the countries could not pay off their debt, we insisted that they privatize their water systems, their sewage systems, their electric systems.
van Gelder: I want to ask you about the Trans-Pacific Partnership, and other trade deals. Is there any way that we can beat these things back so they don’t continue supercharging the corporate sphere at the expense of local democracies?
Perkins: They’re devastating; they give sovereignty to corporations over governments. It’s ridiculous.
I was just in Central America and what we talk about in the U.S. as being an immigration problem is really a trade agreement problem.
They’re not allowed to impose tariffs under the trade agreements—NAFTA and CAFTA—but the U.S. is allowed to subsidize its farmers. Those governments can’t afford to subsidize their farmers. So our farmers can undercut theirs, and that’s destroyed the economies, and a number of other things, and that’s why we’ve got immigration problems.
van Gelder: Can you talk about the violence that people are fleeing in Central America, and how that links back to the role the U.S. has had there?
Perkins: Three or four years ago the CIA orchestrated a coup against the democratically elected president of Honduras, President Zelaya, because he stood up to Dole and Chiquita and some other big, global, basically U.S.-based corporations.
He wanted to raise the minimum wage to a reasonable level, and he wanted some land reform that would make sure that his own people were able to make money off their own land, rather than having big international corporations do it.
The big corporations couldn’t stand for this. He wasn’t assassinated but he was overthrown in a coup and sent to another country, and replaced by a terribly brutal dictator, and today Honduras is one of the most violent, homicidal countries in the hemisphere.
It’s frightening what we’ve done. And when that happens to a president, it sends a message to every other president throughout the hemisphere, and in fact throughout the world: Don’t mess with us. Don’t mess with the big corporations. Either cooperate and get rich in the process, and have all your friends and family get rich in the process, or go get overthrown or assassinated. It’s a very strong message.
That is how a once proud nation gets transformed into a rancid, oligarch-controlled Banana Republic.
- Hugh Hendry: "If China Devalues By 20% The World Is Over, Everything Hits A Wall"
Once upon a time Hugh Hendry was one of the world’s most prominent financial skeptics, arguing with anyone who would listen that the status quo is doomed and that central planning will never work.
Most famously, back in 2010 during a BBC round table discussion with Jeffrey Sachs and Gillian Tett when discussing Europe’s crashing experiment with the single currency, he said that we should “purge this system of its rottenness. Let’s take on a recession. It’s going to be tough, people are gonna lose their jobs. They are going to lose their jobs anyway. We can spread this over 20 years, or we can get rid of it over 3 years” before concluding “I recommend you panic.”
Ultimately everyone did panic, which led to the single biggest episode of global QE and negative rates ever seen, resulting in ever louder speculation even among the most “serious” people that central bankers are now powerless.
But perhaps most notably, Hendry was one of the biggest China bears, certain that the country’s massive overcapacity, insolvency and bad debt problems will result in disaster (back then China only had about 200% debt/GDP, it has since risen to over 350%). His Chinese skepticism led to his fund generating a 40% profit by late 2011.
And then after a poor two year performance spell, Hendry had a historic burnout and threw in the towel on bearishness, infamously saying he can no longer “look at himself in the mirror“:
“I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year… Crashing is the least of my concerns. I can deal with that, but I cannot risk my reputation because we are in this virtuous loop where the market is trending.”
He proceeded to buy momentum stocks and 3D printer companies.
Fast forward to the present, when countless hedge funds – key among them Kyle Bass’ Hayman Capital and Mark Hart’s Corriente – have become China megabears, expecting the country’s financial collapse and trading it by shorting the Yuan expecting a massive Yuan devaluation.
It is here that Hugh Hendry has once again proven contrarian, even if it means agreeing with the dominant textbook meme of the day, namely that China can contain its economic hard landing, and in his most recent interview with RealVision’s Raoul Pal, he cautions against a Chinese devaluation saying that “tomorrow we wake up, I mean, I would jump out the hotel window if this was the scenario, but we wake up and China has devalued 20%. The world is over. The world is over.”
What makes this interview doubly ironic is not just that Hendry is wildly contradicting everything he himself believed in a few short years ago, but disagrees with his interview host himself – recall that one month ago, we showed an excerpt from a Raoul Pal interview in which he previewed “the Big Reset” and laid out how the Kondratieff Winter would unwind, one in which China would play a prominent part.
Whether Hendry is right or wrong remains to be seen: for now he has the powerful People’s Bank of China at his back which has been especially active recently especially after the PBOC stated recently it intends to crush all hedge funds who have shorted the Yuan even if it means slamming Chinese trade and the economy once again (as a reminder, one of the biggest reasons why China needs a weaker Yuan is not just the stronger dollar to which it is pegged but because its exports have been crashing against all of its trading partners making the need for a weak currency paramount).
For now, as we showed just ten days ago, those short the Yuan have swung to wildly profitable to losing money as both the USD has slid and the Yuan has spiked, although both of these trades appear to be reversing now.
Needless to say, Hendry disagrees with the China contrarians and believes that the way to fix the Chinese economy is through a stronger currency, even if there is no logical way how that could possibly work when China’s debt load is 350% of GDP while its NPLs are over 10% and rising.
So, borrowing form a favorite Keynesian trope, one where when the countrfactual to his prevailling – if incorrect – view of the world finally emerges, Hendry is convinced that a 20% devaluation would lead to global devastation; the same way if Paulson did not get Congress to sign off on his three page term sheet that would lead to the “apocalypse.” Only unlike Paulson who only hinted at a Mad Max world, for Hendry the alternative to him being right is a very explicit doomsday scenario, as he explains in the following excerpt from his RealVision interview:
Tomorrow we wake up and China has devalued 20%, the world is over. The world is over. Euro breaks up. The world is over. The euro breaks up. Everything hits a wall. There’s no euro in that scenario. The US economy, I mean everything hits a wall! Everything hits a wall!
The dollar strength that you imagined is devastation because you just eliminated dollars. They’re a scarce commodity. You’ve wiped them out. And China is a pariah state.
It’s a ‘Mad Max’ movie, right. OK, China gets to be the king in ‘Mad Max’ world. How appealing is that? There is no world after the tomorrow where China devalues by 20%. There is no world. Yeah, it’s looney tunes to believe that, people say, ‘oh wow, they needed to catch a break.’
Their share of world trade has never been higher. They’re facing no pressure, immense terms of trade improvement, and you would destroy world trade. World trade is down 25%. You would probably have passport restrictions, the world is over.
And while it is clear on which side of the Yuan Hugh is currently positioned (Hendry’s Eclectica is down 2.1% through March 18 and -5.9% YTD) either directly or synthetically, we can’t wait to see who is right in the end: China and its central bank (as well as Hugh Hendry) or reason and common sense (as well as some of the smartest hedge funds in the world).
The RealVisionTV interview excerpt is below:
To view the full interview, subscribe to Real Vision Television, which offers Zero Hedge readers a 7-day free trial.
- From Marxist To Markets: Why Robber Barons Are "Safer Foes" Than Meddling Bureaucrats
Authored by Chris Campbell, via LFB.org,
“Of all tyrannies,” C.S. Lewis once wrote, “a tyranny sincerely exercised for the good of its victims may be the most oppressive.
“It would be better to live under robber barons than under omnipotent moral busybodies.
“The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.”
There’s a sculpture on display in front of the Federal Trade Commission building in D.C.
It was erected when Roosevelt was in office, depicting a man holding back a wild horse. It is called “Man Controlling Trade.”
It, of course, implies that we need institutional protection from the overwhelmingly wild force of grocery lists and car salesmen.
But, we know what you’re thinking. This metaphor is full of plotholes.
For one: “Since trade is not really a wild horse,” Sheldon Richman points out in Reason, “but rather a peaceful and mutually beneficial activity between people, the Roosevelt administration’s propaganda purpose is clear.
“A more honest title would be ‘Government Controlling People.’ But that would have sounded a little authoritarian even in New Deal America, hence the wild horse metaphor.”
The idea that government is necessary to “tame the beast” is not an unpopular one. But, Richmond goes on, “What’s looked over — intentionally or not — is that the alternative to a government-regulated economy is not an unregulated one.
“The term ‘free market’ does not mean free of regulation. It means free of government interference, that is, legal plunder and other official aggressive force.”
Rather than having a centralized decision-maker, individuals can (and should) voluntarily participate and create regulatory environments on their own. These voluntary decisions are what make up and regulate the market — not arbitrary and outdated restrictions and barriers.
And, though a free market will have its bad players, they will be in the minority. The incentive to cheat and defraud, without a centralized power structure, will be lower and far less disastrous. And, better yet, the threat of violence won’t be baked into the cake.
Rather, rules will be created by consent and not by agenda-driven third-parties with goons with guns and big cages.
“Bureaucrats,” Richmond writes, “who necessarily have limited knowledge and perverse incentives, regulate by threat of physical force. In contrast, market forces operate peacefully through millions of cooperating participants, each with intimate knowledge of her own personal circumstances and looking out for her own well-being.”
People, naturally, tend to value order and peace to chaos. And free markets, in the pursuit of self-interest, provide a way for humans to interact, create order and foment peace. But, Richmond goes on, those who forget that “liberty is the mother not the daughter of order, will be tempted to favor state-imposed order. How ironic since the state is the greatest creator of disorder of all.”
Today, to drive this point home, we turn to Mr. Thomas Sowell.
Sowell’s here to rap about his transformation from Marxism to the Markets. And show us why a robber baron is a much safer foe than a meddling bureaucrat… or worse, someone who sincerely believes they’re helping.
Read on…
From Marxist to the Market
(by Thomas Sowell, via Capitalism Magazine)
How and why had I changed from a young leftist to someone with my present views, which are essentially in favor of free markets and traditional values?
In a sense, it was not so much a change in underlying philosophy, as in my vision of how human beings operate.
Back in the days when I was a Marxist, my primary concern was that ordinary people deserved better, and that elites were walking all over them.
That is still my primary concern, but the passing decades have taught me that political elites and cultural elites are doing far more damage than the market elites could ever get away with doing.
For one thing, the elites of the marketplace have to compete against one another.
If General Motors doesn’t make the kind of car you want, you can always turn to Ford, Chrysler, Honda, Toyota, and others. But if the Environmental Protection Agency goes off the deep end, there is no alternative agency doing the same thing that you can turn to.
Even when a particular corporation seems to have a monopoly of its product, as the Aluminum Company of America once did, it must compete with substitute products.
If Alcoa had jacked up the price of aluminum to exploit its monopoly position, many things that were made of aluminum would have begun to be made of steel, plastic and numerous other materials.
The net result of market forces was that, half a century after it became a monopoly, Alcoa was charging less for aluminum than it did at the beginning. That was not because the people who ran the company were nice. It was because market competition left them no viable alternative.
How you look at the free market depends on how you look at human beings. If everyone were sweetness and light, socialism would be the way to go.
Within the traditional family, for example, resources are often lavished on children, who don’t earn a dime of their own. It is domestic socialism, and even the most hard-bitten capitalists practice it.
Maybe some day we will discover creatures in some other galaxy who can operate a whole society that way. But the history of human beings shows that a nation with millions of people cannot operate like one big family.
The rhetoric of socialism may be inspiring, but its actual record is dismal.
Countries which for centuries exported food have suddenly found themselves forced to import food to stave off starvation, after agriculture was socialized. This has happened all over the world, among people of every race.
Anyone who saw the contrast between East Berlin and West Berlin, back in the days when half the city was controlled by the Communists, can have no doubts as to which system produces more economic benefits for ordinary people.
Even though the people in both parts of the city were of the same race, culture and history, those living under the Communists were painfully poorer, in addition to having less freedom.
Much the same story could be told in Africa, where Ghana relied on
socialistic programs and the Ivory Coast relied more on the marketplace, after both countries became independent back in the 1960s. Ghana started off with all the advantages.Its per capita income was double that of the Ivory Coast. But, after a couple of decades under different economic systems, the bottom 20% of people in the Ivory Coast had higher incomes than 60% of the people in Ghana.
Economic inefficiency is by no means the worst aspect of socialistic government. Trying to reduce economic inequality by increasing political inequality, which is essentially what Marxism is all about, has cost the lives of millions of innocent people under Stalin, Mao, Pol Pot, and others.
Politicians cannot be trusted with a monopoly of power over other people’s lives. Thousands of years of history have demonstrated this again and again.
While my desires for a better life for ordinary people have not changed from the days of my youthful Marxism, experience has taught the bitter lesson that the way to get there is the opposite of what I once thought.
- Belgian Media Explains What To Do During A Nuclear Disaster
Electrabel is disgusted with the media. Why? Because in the aftermath of the Brussels attacks, the electric utility thinks journalists have made too much of the alleged threat to the country’s nuclear infrastructure.
Hours after four attackers detonated explosives-laden belts and luggage in the Brussels airport and metro, reports began to surface that the Tihange and Doel nuclear power plants were being evacuated.
That would have been alarming enough on its own, but last month it emerged that when Belgian authorities raided a home in Auvelais last November in connection with the Paris attacks, investigators recovered hours of surveillance footage apparently recorded by terrorists at the home of a top nuclear official. There’s now some speculation that the Bakraoui brothers (two of the four Brussels bombers) were involved in covertly monitoring the official’s home.
Obviously, that suggests that the cell was (and probably still is) interested in either sabotaging a nuclear facility and/or obtaining radioactive material for the purposes of developing a dirty bomb. That’s not an attempt to sow panic, it’s simply the conclusion one comes to when told that terrorists were in possession of video tapes depicting the day-to-day routine of nuclear officials and their families.
Electrabel would later say the Tihange had actually not been “evacuated” per se. Rather, non essential personnel were told they could go home.
#Tihange nuclear powerplant – people who are not strictly necessary on site can leave #security measures
— Electrabel (@Electrabel) March 22, 2016
On Saturday, the utility became even more exasperated when Derniere Heure reported that a Tihange security guard had been shot in Charleroi and his access badge stolen. That report, Electrabel insists, is “false.”
Electrabel roept op de grootste voorzichtigheid met betrekking tot artikels die zaterdagochtend verschenen zijn https://t.co/2ux75SPlse
— Electrabel (@Electrabel) March 26, 2016
Translation: “Electrabel calls the greatest caution with regard to articles that have appeared Saturday morning.”
“Electrabel deplores that its sites are being used regularly this week to illustrate articles without any link to the company or its 5,000 workers,” a statement reads. Hopefully the company doesn’t expect this “deplorable” state of affairs to improve any time soon because if you know anything about the history of Tihange and Doel (see here and here for more), you know why Belgians are worried.
“It’s like talcum powder,” Matthew Bunn, a specialist in nuclear security at Harvard’s John F. Kennedy School of Government, told The New York Times, regarding byproducts of isotopes like Cesium-137. “If you made a dirty bomb out of it, it’s going to provoke fear, you would have to evacuate and you have to spend a lot of money cleaning it up; the economic destruction cost could be very high.”
Yes, “it’s going to provoke fear,” much like running a story about how to survive a nuclear terrorist attack when the public is already at wit’s end. But better safe than sorry we suppose and on that note, we present the following rather amusing piece from Belgian media which outlines how best to survive a nuclear disaster. Among the things you should do: grab the money and the iodine tablets. Among the things you should not do: help other people – until you’re sure you’re safe that is.
From HLN.be (translated)
It is clear from this morning that there is no link between the murdered guard and nuclear terror investigation. But the message has a lot of people have put thinking. What should you do if terrorists indeed endorse a nuclear power plant?
The government and the managers of nuclear sites work hard to keep safe nuclear plants and if there is an emergency, the operator will be as fast as possible to bring the situation under control at a technical level. The government will also make every effort to protect the population and the environment. But also as an individual you can protect yourself. The most important nuclear risk in our country are Doel and Tihange. The Study Centre for Nuclear Energy in Mol-Dessel and the National Institute for Radio Elements in Fleurus are risk zones.
To avoid exposure to radioactive material and to prevent exposure and contamination, hiding your best at a nuclear incident. Get to a central area of a building, close windows and doors and turn off ventilation. If possible, collect the most necessary (identity card, money …). Also make sure first that you are safe. If possible, you can help other people, but bring your own safety is not compromised.
If you’ve got to safety, it is important not unnecessarily to call the emergency services, so not inhibited urgent care. Also make sure there is enough food and drink, warm clothes, blankets, flashlight … make sure that you can at any time following the reports about the disaster.
In a nuclear accident could release radioactive iodine. It can enter the body through the respiratory tract or contaminated food. The thyroid iodine stores until she is satisfied with it and allows that way for irradiation from within. Through this ongoing radiation increases the risk of cancer and other diseases significantly. By saturating the thyroid with non-radioactive iodine in the tablets, you can prevent your body absorbs radioactive iodine. Iodine tablets do not offer protection against other radioactive substances are absorbed by the body. Against these substances can protect your best to take shelter in time. Take the tablets only when the government recommends it. The tablets provide protection for 24 hours.
- I DiD NoT HaVe SeX WiTH THaT…
- Another Volcker Moment? Guessing The Future Without Say's Law
Submitted by Alasdair Macleod via GoldMoney.com,
Some reflections to read over the Easter holidays
With Japanese and Eurozone interest rates becoming increasingly negative, and the Fed backing off from at least some of the planned increases in the Fed funds rate this year, economists are reassessing the interest rate outlook.
Economists lack consensus, with some expecting yet more easing, based on the apparent collapse in cross-border trade last year. The fact that the Bank of Japan and the European Central Bank see fit to pursue increasingly aggressive monetary reflation is taken as evidence of underlying difficulties faced in these key economies. And lingering doubts about the sustainability of China’s credit bubble point to a high risk of a credit-induced slump in the world’s growth engine.
Other economists, citing official US data and relying on the Fed’s statements, point out that unemployment levels have more than satisfied the Fed’s target, and that core inflation has picked up to the point where the Fed would be fully justified to increase interest rates over the course of this year, or risk overheating in 2017.
These two opposite camps conflict in their forecasts, but where they fundamentally differ is in expectations of future economic growth. Far from displaying the highest levels of macroeconomic discipline, their diversity of opinion should alert us that their forecasts may lack sound theoretical foundation. The purpose of reasoned theory is to reduce uncertainty, not promote it. And the explanation for most of the failures behind modern macroeconomic thinking is the substitution of market-based economics by economic planning.
The fact that today’s macroeconomics dismisses the laws of the markets, commonly referred to by economists as Say’s law, explains all. Subsequent errors confirm. The many errors are a vast subject, but they boil down to that one fateful step, and that is denying the universal truth of Say’s law.
Say’s law is about the division of labour. People earn money and make profits from deploying their individual skills in the production of goods and services for the benefit of others. Despite the best attempts of Marxism and Keynesianism along with all the other isms, attempts to override this reality have always failed. The failure is not adequately reflected in government statistics, which have evolved to the point where they actually conceal it. So when an economist talks of economic growth being above or below trend, he is talking about a measure that has no place in sound economic reasoning, and that is gross domestic product.
GDP
Gross domestic product in its current form is a relatively recent invention, dating from the 1930s. It was a gift to state-sponsored economists, needing a statistical justification for perfecting their theories of management of the economy. At last, here was a means of measuring the effects of economic policy, and therefore to adjust its future implementation based on evidence. The inconvenience of having to pander to markets had been dealt its final blow. Or so it was thought.
GDP comes in various guises, but for our purposes, we can define it as the total monetary value of recorded and eligible transactions between two points in time. It tells you nothing more. It does not tell you anything about the reasons for those transactions. It tells you nothing about the future. Economists, politicians and laymen who talk of economic growth miss this point entirely. What GDP does tell you, and only tells you, is how much money has been spent on new products included in the statistics. And, assuming there is no change in the allocation of total spending between qualifying and non-qualifying items, the limitation is simply the total earnings and profits of individuals and businesses applied to the purchase of those products. This is not to be confused with economic progress, which is an entirely different thing.
So ingrained is the belief that growth in GDP is a desirable objective, that it is akin to heresy to point out its utter meaninglessness. Assume for a moment that the GDP statistic captures all economic activity in a community, conventionally a nation state. Let us also assume that the quantity of money and credit is fixed, neither expanding nor contracting. And let us also assume that the trade balance is always zero. Therefore, all money earned, or made through profits, is spent or saved. Savings are deferred consumption, and through financial intermediaries, invested by businesses in capital goods and working capital. Logically therefore, the following must all be true:
- All consumption is funded by income, whether it comes from salaries, entrepreneurial profits, income and profits on savings, or government benefits and subsidies.
- All government spending must be financed by taxes or domestic savings. In other words, if the government increases its spending it must be at the expense of the non-government sectors. Therefore, an increase in government spending does not increase GDP.
- Imports are paid for by exports.
- Prices are free to reflect changes in demand for money, and changes in demand between different goods and services.
It is now be obvious that GDP cannot change from one period to the next. An economy under these conditions is free to evolve, respond to consumer and investment demands, to progress, all with zero “growth”. Therefore, growth in GDP can only be an increase in the quantity of money deployed, and it cannot be anything else.
This was broadly the situation when gold was money. Broadly, because there was also the cyclical effect of bank credit, which was formalised by the UK’s Bank Charter Act of 1844. At least it evened out over the cycle, and despite the ups and downs of bank credit, the British, European and American economies progressed, as consumers were offered and acquired improved goods throughout the industrial revolution, at least until the disruption of the First World War. This empirical example, which is fully explained by sound economic theory, confirms that the substantial leaps in economic progress at that time could not be quantified by GDP.
This is not to say that disruption in the rate of economic progress does not cause changes in GDP in a fiat currency environment. But the relationship between changes in GDP and true progress is not predictable and is wholly unsuited as an economic indicator.
Having established that GDP is simply a measure of the quantity of money spent on goods and services specified in the statistic, and nothing more, the basic goal of modern economists in a world of unlimited fiat currency is exposed as meaningless. This mistake is a source of considerable error, not only among policy-makers, but commentators as well.
The Fed has accepted this by default, because it does not target GDP. Instead, it operates a dual mandate of price inflation and unemployment, as proxy indications for advance warning of when monetary stimulus should be moderated. And here again, the use of these statistics is no substitute for a proper understanding of price formation and the forces that drive employment. So we shall look at these in turn.
Inflation
This term is abused to the point where it is commonly assumed to mean a rise in prices. Rising prices may or may not be a symptom of inflation, which was originally defined by economists as a monetary phenomenon. To point out this confusion is important, because an expansion in the quantity of money and credit in fiat currencies is only one of three main factors that affect the overall price level:
- When the quantity of money and credit is increased and that increase is applied to the components of GDP or the consumer price index, it represents the application of new money, which in time devalues the previously existing money employed for the purposes of these statistics. It generates extra demand, which fades and reverses as the purchasing power of the currency falls to accommodate the increased quantity of money introduced. Further increases in the quantity of money are required to negate the tendency for demand to return to the previous level after the effect of the initial increase in the quantity of money wears off.
- When money and credit is withdrawn from activities not included in the GDP or CPI statistics, and then applied to goods and services which are included, the effect is to create a temporary increase in recorded demand as in the first case above. This time, the effect of expansion and subsequent contraction of demand can be detected in GDP and CPI statistics, while the effect of the withdrawal of money applied to non-GDP items is ignored.
- By far the most important factor driving prices is changes in the overall preference individuals have for holding a reserve of money. It is this factor which can either enhance a fiat money’s purchasing power, or lead to its total collapse, and is independent from changes in the quantity of money and credit in circulation. Changes in preference override the first two cases in a fiat money economy, and should be regarded as the most risk to currency stability.
In all three cases, the change in prices comes from the money side of transactions and not that of goods. This is the exact opposite of the common belief that money is an unchanging constant behind all transactions, having a valid objective-exchange value, and that inflation is rising prices of goods. We have collectively taken the past attributes of gold as money, and applied them without modification to modern fiat currencies. It is illogical to regard the declining purchasing power of a fiat currency as only a long-term effect.
The Fed’s open market committee is targeting an inflation rate of 2%, by which the members mean that they will attempt to achieve an outcome, through monetary policy, whereby prices expressed in dollars will rise by that amount. The correct description of their objective is they seek to reduce the dollar’s purchasing power in a controlled fashion. In pursuing this objective, they rely on the quantity theory of money, which was devised when gold was money, and is applied without modification for current fiat monies. In other words, ignoring inter-temporal factors, they assume there is sufficient correlation between changes in the quantity of money and credit, and the overall price level for the purposes of monetary policy. The relationship was broadly true in the days when gold was money, because its common role as money extended beyond national boundaries. Any tendency for changes in preference for or against it, varying its purchasing power in any one location, were therefore restricted by arbitrage.
This cannot be true of a fiat currency, whose value as money is contained by national boundaries. In this case, changes in the relative preference expressed by consumers between money and goods are potentially the most important variable affecting the purchasing power of money, as described above.
Attempts to manage the decline in a currency’s purchasing power are sure to fail, if only because it is not consumer preferences that are being targeted. If central bankers have missed this point, so have all the economists and commentators employed by the investment banks and by the media.
Central bankers and economists fail to appreciate how changes in the general price level arise from the money side. The use of a statistic, such as the consumer price index, for inflation targeting is deceiving, misleading policy makers into believing that they can override Say’s law.
Unemployment
So far, we have addressed fallacies behind the concept of GDP, the real objective of monetary policy, and also inflation statistics, which are one of the two proxies for GDP targeting the Fed uses. That leaves unemployment. Unemployment is an unnatural condition, because in accordance with the indisputable theory of the division of labour, people work to acquire from others their needs and wants. This is why without government intervention the unemployment problem tends to resolve itself.
In the US, even a cursory analysis of the composition of unemployment statistics and the application of seasonal adjustments show them to be wholly unfit for purpose. But to complain about the veracity of unemployment statistics is to miss the more important point, that it is the contribution of the labour force to economic progress that really matters. When intelligent, skilled individuals are working as waiters and barmen, we can say the economy is in transition, because an increase in employment of this nature is probably temporary. When it has a sense of permanency about it and people are not retraining for newly-demanded skills, the economy is not evolving as it should, and progress is being blocked.
Unemployment, being an unnatural condition, is fundamentally a problem created by the state. The state sets employment legislation, favouring the employee, with the consequence that employers are deterred from taking on staff they would otherwise freely employ. Many states tax employment, raising the cost of it above its use-value. France’s experience is a good example, where high employment taxes and restrictive regulation has resulted in permanently high unemployment rates. Central banks seek to counter these disadvantages by reducing the purchasing power of the currency, in an effort to encourage employers to employ, which has become the basic justification for monetary intervention. It amounts to beating everyone with a stick, then offering a monetary carrot while continuing to weald the stick.
If the state stopped interfering with the labour market, unemployment would not be anything other than a short-term problem. Even if the state only desisted from further intervention, unemployment would tend to fall, because of the need and desire for people to work. It is natural for the unemployment rate to drift lower over time, so the fact that unemployment statistics, imperfect though they are, have reached the Fed’s target after eight years of zero interest rates, should not be a surprise.
Conclusion
The likelihood that some economists will be right about the future course of interest rates should not be taken as evidence of their grasp of economic theory. However, we can conclude that the recent fall in the dollar’s purchasing power, expressed in energy and commodity prices, has reduced the likelihood of negative interest rates. If the dollar’s purchasing power falls much further, the market will expect higher interest rates, so this then becomes the likely outcome.
The question will then arise as to whether or not the Fed will dare to raise interest rates sufficiently to stabilise the dollar's purchasing power. If the Fed delays, it could find itself facing a difficult choice. The level of interest rates required to stabilise the dollar’s purchasing power would not be consistent with maintaining the record levels of debt in both government and private sectors. Thirty-six years on it could be another Volker moment. It would surely be a mistake to think that Fed officials are unaware of this danger, and would recommend early action to avoid this outcome.
Alternatively, if the dollar’s purchasing power begins to rise over the rest of this year, the Fed can defer interest rate rises, and perhaps introduce negative rates. It would be the most desired outcome for the Fed, being a continuation of indefinite economic suppression with a lower likelihood of financial crisis.
It is changes in the dollar’s purchasing power that really matter, and forecasting interest rates based on GDP, consumer prices, or employment levels not only relies on bad, incomplete and misleading statistics, it has no basis in sound economic theory. It’s the course of markets, encapsulated in Say’s law, that should guide economists and commentators alike.
- Nassim Taleb: "I Prefer Sanders To Trump But Absolutely No Hillary"
It seems for Nassim "Black Swan" Taleb, less is more. After perfectly summarizing the circus that is the American Presidential election camapaign in 17 words last week, he appears to have gone one step further with a two-word summation: "No SHillary."
Last week's epic Facebook rant…
"The *establishment* composed of journos, BS-Vending talking heads with well-formulated verbs, bureaucrato-cronies, lobbyists-in training, New Yorker-reading semi-intellectuals, image-conscious empty suits, Washington rent-seekers and other "well thinking" members of the vocal elites are not getting the point about what is happening and the sterility of their arguments."
To which he appended the following 17 perfectly succinct words:
"People are not voting for Trump (or Sanders). People are just voting, finally, to destroy the establishment."
And today, taking to Twitter, he offered some sane support to Donald Trump:
Reading Trump all I see is protect your downside (unknown) risks. What's behind the bluster is Fat Tony compatible. pic.twitter.com/6OyroXQ8qc
— NassimNicholasTaleb (@nntaleb) March 26, 2016
But followed that up with:
"I far prefer Bernie Sanders to Trump but absolutely no Hillary."
To which he appended, so succinctly:
"No SHillary"
Which seems to sum it all up perfectly.
- Europe Is Paying A Heavy Price For Complacency As Existential Crisis Deepens
Europe faces an existential crisis. Current European leadership and European leading elites have manoeuvred Europe into a situation that will spin out of control and result in a vicious circle of violence. History teaches that ethnic minorities can bring about unrest in the long run. The imams in Europe, very often in the payroll of Saudi Arabia or another Gulf country, take care that their fellow Muslims retain their religious integrity and keep themselves away from the infidels. Meanwhile European authorities struggle with a violent group criminals who converted to radical Islam and became even more dangerous. The Dutch jihadist reintegration approach helped, criminal and jihadist El Bakraoui to evade the Belgian justice system, before he blew himself up in Brussels. To understand what happening on the old continent, let us bring up the tree main topics, and then elaborate on them.
- The US, NATO, Brussels, Turkey and Saudi Arabia are in alliance to use terrorism in the proxy war against Syria, Russia and China. This policy has come home to roost. It is not Russia, as Hillary Clinton once said, but Turkey and Europe regret their policy in Syria1).
- Leaders from the Gulf countries support European Muslim communities with finance; in many cases Europe-based imams do not even speak any of the European languages. Surprising as it is, European leaders encourage Saudi Arabia, Qatar or Kuwait to meddle with European internal affairs by letting them to have a say in religious matters. Turkey’s government refers to the Turks that immigrate to Europe as the Turkish diaspora. Recep Erdogan, Turkey’s president, promotes Turkish nationalism among Turkish Muslims in Germany.
- Authorities fear the revenge of the populous against Muslim minorities. European ruling elites are terrified at the onslaught on minorities by uncontrolled mobs. There have been numerous attacks on mosques and refugee homes.
1. The Syrian proxy war comes to the street of the European capitals.
In 2012,two years before the tragic events in Ukraine unfolded, a document of the Department of Defence obtained by “Judicial Watch” describes the situation in Syria as a proxy war with Russia, China and Iran on one side, and Western countries, the Gulf States and Turkey on the other2). Not only did the “Friends of the Syrian” alliance provide the Jihadists with arms, but NATO also supplied the Patriots air defence system to protect the supply routes into Syria. Christians in Europe already warned from the very beginning for the consequences of the war in Syria for the Christians there. A conservative Christian European newspaper wrote in 2013: “The decision of Qatar, Saudi Arabia, the United Arab Emirates, the United States and some European countries to provide the Syrian opposition with more weapons will also have significant implications for Christians in Syria.” 3)
The European governments were ambivalent in their attitude and approach to Europeans that traveled to Syria in support of the different jihadist groups.
Peter van Uhm, Commander of the Royal Netherlands Army until 2008, said in 2011: “I have nothing else than respect for the Dutch who go to fight in Syria”4) The primary concern voiced by Frans Timmerman, Vice-President of The European Commission, was that these young fighters could die in Syria.5) From the very beginning, National Security agencies in Europe were aware of the enormous risk these Jihadists posed to society. Not only did the “respected” European Jihadists spread terror among the poor Syrian and Iraqi population, but they were also a threat to Europeans if they returned to their country of origin.The Brussels suicide attacks are a direct consequence of this lenient European approach to the Jihadists. In 2013, a major Dutch newspaper wrote: “Jihad fighters who have come back from the Syrian Civil War are still not prosecuted in the Netherlands.” “According to various sources in the Dutch Muslim communities, Jihadists from Belgium also chose the ‘Netherlands-route, because of the milder approach of the Dutch authorities to such fighters.”6) While this is not yet clear for the international mainstream media, Ibrahim El Bakraoui, the jihadist that blew himself in Brussels, wanted to be deported by the Turkish authorities to the Netherlands instead of Belgium, to avoid prosecution in Belgium. The Dutch authorities helped El Bakraoui to evade the Belgian justice system.
Between 2012 and 2016 European Jihadists paraded in the social media in graphic images, holding cut-off heads while Dutch authorities try to socialize these very same terrorists. According to the Dutch National Television: “The Dutch Jihadists who have returned from Syria so far are not immediately arrested and prosecuted, but get help and support to reintegrate and rebuild their livelihoods. With this approach the authorities hope to prevent the cities to which the fighters have come from being further radicalized.” “The Dutch authorities have taken a range of administrative steps like assistance, helping the Jihad combatants in finding a job and education, and providing them with community activities for the youth. The idea is not to let the returnees alienate themselves from society; it is believed that repressive measures might further radicalize them.“7) While the major of Amsterdam keeps on talking with returned jihadist, the city witnessed its first beheading. This month a young Moroccan boy was beheaded and his head was put on display at a busy street in Amsterdam. 8)
This approach can only be understood if we assume that European governments warrant the behavior of their citizens in Syria and Iraq. The Dutch authorities are fully aware that the Jihadists from the Netherlands not only fought against the Assad army, they also knew that Dutch terrorist blew themselves up at a market in Baghdad somewhere in 2013. European authorities turn a blind eye to their fellow citizens who committed war crimes in Syria and Iraq.
2. Europeans allow foreign governments to meddle in its affairs
Europe is not only confronted with a violent and cruel enemy that shows little respect for life, but it has also created an environment on the continent where Muslim extremism could blend into Muslim communities. A big part of the European Muslim community supports the Jihad in Syria. It is remarkable that Salah Abdeslam, one of Europe’s most wanted terrorists, could live in Brussels without anybody informing the authorities about him. While European authorities try to integrate minorities into the European society, governments in Muslim countries try to undo this effort.
Countries like Turkey, Saudi-Arabia and Qatar blatantly interfere in European domestic affairs. By financing mosques, Muslim foundations and providing the European Muslim community with imams, these countries try to exert their political and religious influence deep into the European heartland. Their political and religious message undermines the integration of the European Muslim community into the European society.
According to the UK-based website Independent, the Belgium King personally was involved in the policy that leads to current situation in Brussel : “Keen to secure oil contracts, Belgium’s King Baudouin made an offer to Saudi King Faisal, who had visited Brussels in 1967: Belgium would set up a mosque in the capital, and hire Gulf-trained clerics. The 1967 deal gave the Saudis a 99-year, rent-free lease. The pavilion was refashioned by the Saudis, opening in 1978 as the Great Mosque of Brussels, as well as the seat of the Islamic and Cultural Centre of Belgium (ICC).” 9)
Moderate Moroccans were handed over to the Saudi Salafists by the European elites. Since 1967, not much has changed. During the opening of a mosque in 2014 in the Dutch port city of Rotterdam, its mayor criticized the mosque for appointing an imam from Qatar instead of one from the Netherlands. Also, the German media reported the involvement of Saudi Arabia in a similar situation: “The Berlin Al-Nur organization is considered as an offshoot of the Lebanese part of the Muslim Brotherhood, which campaigns for an Islamic character of the states in the Middle East.”
The Al-Nur mosque is influenced by Salafists and is a venue for people of different nationalities with different political and ideological environment. Close relations exist to Saudi Arabia. A Saudi sponsor enabled the purchase of the mosque building and supported the community financially.” Turkey’s government tries to prevent the Turkish population from integrating into the European community. Turkish nationalism is not limited to “Blut und Boden” (blood and soil) but it also includes religion. Erdogan likes to address the Turkish people abroad as the “Turkish diaspora”. While the Europeans are told to become “multi-cultural European,” immigrants get the opposite instruction from the rulers
Also the Turkey’s government tries to prevent the Turkish population from integrating into the European society. Turkish nationalism is not limited to “Blut und Boden” (blood and soil) but it also includes religion. Erdogan likes to address the Turkish people abroad as the “Turkish diaspora”. While the Europeans are told to become “multi-cultural European”, immigrants get the opposite instruction from Turkey and the Arabic rulers. The Europeans decry France and German nationalism while at the same time extreme Turkish nationalism in Europe is encouraged by Erdogan, the de facto ruler of Turkey.10)
3. European residents will take matters into their own hands.
The slaughtering of Theo van Gogh by a radical Muslim in 2004, the eradication of the Charlie Hebdo publishers, are a message to Europe intelligentsia: “do not interfere with our religion.” Especially the murder of Theo van Gogh resembles the Salman Rushdie case. Theo van Gogh was killed for his artistic criticism of the role of woman in Islam. European left oriented intelligentsia are still grappling with the fact that precisely they became the targets while they are most sympathetic towards marginalised Arabic groups. In Europe, no publisher is willing to publish a genuine Islam critic without the consultation of an Islam expert. The publishing of a seemingly innocent book can turn out to become a deadly endeavour. We think it is a matter of time before the next generation of young academics and artist is willing to confront Islam as they have done with Christianity.
The danger for European states are not only the terror attacks but also the consequences of these attacks. After every terror attack, the number of incidents against mosques increases. The European ruling elite is terrified of their own people. They are extremely sensitive to everything that can incite violence against the Muslim minorities. Two days before the Brussels attacks, Geert Wilders stood trial for chanting “We want fewer Moroccans”. But even Geert Wilders’s party (PVV), is afraid of the populace at large. The party has strong connections with the Israel lobby; it demands of its followers a 100% loyalty to Israel11). The Jewish community is at risk to become itself the victim of angry European mobs. The party does not accept members to such an extent that an attempt by one of its leaders to create a youth movement resulted in him being expelled12).
Groups, like HoGeSa (Hooligans gegen Salafisten, Hooligans against Salafists) are ready to take the “burden” of revenge for the attacks on their shoulders, seeing that the German state structures are not able anymore to ensure the security of their nation. This can result in a carnage of Muslims in German cities, especially if one of the victims of a terror attack would be a far-right group member.
HoGeSa was losing its popularity among radicals because of internal disputes, but it could be quickly revived amid terror attacks13). This group has already proven that it does not renounce violence, during the Cologne rally in October 2014 and during the Essen demonstration last September, they show up with baseball bats.14). In Germany violent threats are now mainly limited to refugee camps, but this can change overnight. If Germans lose their faith in the ruling establishment (as it is happening slowly with a growing popularity of the AfD party), groups like HoGeSa, or Hoolizei, might gain traction. The harbinger of the threat of violent uprising against Muslims haunts Germany. In Connewitz, near Leipzig, an Arab restaurant was demolished. According to Mail online “The mayor of a German city has spoken of ‘terror on the streets’ of his city after far-right thugs ran riot in scenes reminiscent of the anti-Semitic Kristallnacht attacks in 1938. Burkhard Jung, mayor of Leipzig, has condemned the ‘naked violence that took place’ after doner kebab fast food restaurants- were destroyed, cars were set- ablaze- and shop windows- were smashed- by around 250 hooligans of LEGIDA the local branch of PEGIDA, an anti-migrant, anti-EU organization.”These hooligan groups are not widely supported: the highest attendance of the HoGeSa demonstration was recorded in Cologne in 2014, when about 4000 people took to the streets. The Pegida movement (Patriotic Europeans Against the Islamisation of the West), though not radical, is able to attract even more than 20 thousand people.
The 2011 proxy war against Russia, China and Syria backfires. The first people have been killed in the streets of Brussels and Paris. Amsterdam and Berlin will follow suit while in Leipzig we saw the first signs of a pogrom. We feel Mogherini, a member of the European ruling elite, and fully responsible for the mess, has all reason to break down in tears.
- Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves
Much like BoJ governor Haruhiko Kuroda, Paul Krugman thinks that the key for Japan when it comes to overcoming decades of deflation is a positive outlook.
“Japan needs to reach a point where everyone believes that it has pulled out of deflation. And then if that can be believed, then it may be able to stay out of trouble thereafter,” he told an audience in Tokyo last September.
That rather ridiculous pronouncement is reminiscent of something Kuroda said last summer: “I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’ Yes, what we need is a positive attitude and conviction.”
In other words, Krugman and Kuroda believe that Japan can wish its way out of deflation. Krugman’s comments in Tokyo came around 10 months after he visited Japan in 2014. On that trip, he’s said to have helped convince PM Shinzo Abe to delay a planned sales tax hike. “That nailed Abe’s decision — Krugman was Krugman, he was so powerful,” Japanese economist Etsuro Honda said, recounting a meeting between the economist and the premier.
Well, 16 months has passed since that fateful visit and virtually nothing has changed in Japan. In fact, the Japanese have since taken a further plunge down the Keynesian rabbit hole by taking interest rates negative and not only is inflation still languishing at essentially zero, stocks are some 20% off their highs and this month the yen actually hit its highest levels since Kuroda announced the second round of QE two Octobers ago.
With the entire enterprise now falling apart, and with JGBs yo-yoing around like penny stocks as traders try to game BoJ POMO, Krugman was back in Tokyo this week to attend a panel discussion on the global economy with Abe and senior Japanese policy makers. There, the good professor called for Abe to scrap the sales tax hike and introduce more fiscal stimulus. NIRP, he said, is probably “a good idea.”
Excerpts from Krugman’s speech can be found below.
We are now in the world of pervasive economic weakness. In many ways, we are all Japan now. This complicates policy for everyone including Japan.
We are seeing the difficulty in achieving goals through even very bold and unconventional monetary policy. Kuroda-san here, we will clearly need to speak about that. Monetary policy needs help from fiscal and possibly other policies but certainly on the fiscal side, and certainly does not need to be struggling against fiscal policy moving in the opposite direction. That is not just a Japanese issue but very much a global issue at this point.
Despite everything, despite everything that Mr. Kuroda is doing, the rise in the yen, which is a very unfortunate development from Japan’s point of view, is driven by the weakness of other major economies.
Monetary policy has been, in most places, the only game in town. It’s their line because fiscal policy has been politically paralyzed. Here, less so, but still in fact, of the three arrows by far the largest, so far has been monetary. Mr. Kuroda has done most of the lifting here. We are seeing the limits of monetary policy. We are seeing that it becomes difficult when you try the unconventional methods, we can argue this but it seems to be having diminishing effect. Negative interest rates, it is remarkable that that turns out to be possible. I do think it was the right move to make but it is very hard to push it further. The effects are proving to be limited. If we look elsewhere, if we look in Europe, despite another very able essential banker, the ECB seems to be losing traction. Here, as you know better than I, inflation expectation seems to be fading. Wage growth is not what it should be. We are seeing that the policy that has been the principle lever for trying to deal with this global weakness is not as effective as we had hoped and not as effective perhaps as it seems to be recently.
Everything we have seen for the past seven years suggests that fiscal policy remains effective, especially effective in these circumstances. It has been very difficult to apply it, a few years of bad debt, political conflict, the Europe is divided among counties, the United States is divided between parties, but fiscal policy is effective and the global environment right now is one where economies really, really need fiscal support. The idea that one should be prioritizing long-run budget issue over fiscal support now seems to me to be extremely misguided. Obviously I am talking about the consumption tax here. Two points are following on all of that. You notice that I did not say anything about structural reform. That is not because I am against it but because structural reform seems largely beside the point on this crucial issue of boosting demand. Some kind of structural reform might spur private investment, which is good but that is rarely what is emphasized. Some other kinds of reform, the Abenomics, by expanding the future labor force helps to offset the demographic headwinds that the economies face. So all of that is good but I do worry that sometimes the talk of structural reform becomes an excuse not to deal with the primary immediate issue of sufficient demand, of fighting deflation or low-flation, inadequate inflation, which has got to rely on monetary policy. But as I said, that has limits and on fiscal policy which needs to be more focused on that immediate need than it has been.
Ok, so there’s a whole lot of words to make one overarching point: the exceptional measures central bankers have undertaken in pursuit of boosting inflation and recovering demand lost to the global financial crisis aren’t working.
As usual, Krugman doesn’t understand why anyone is worried about long-term sustainability when there’s so much room to be completely irresponsible in the myopic pursuit of short-lived surges in aggregate demand and inflation. Fiscal stimulus – i.e. helicopter money, i.e. pay people to dig holes and then pay other people to fill them up again – is what’s needed, Krugman figures.
When it came time for the Q&A, Abe gingerly told Krugman that Japan is getting slightly concerned about its debt burden, which, when measured in yen, has so many zeros that it barely fits on a 32” monitor. “About two years ago, I had a pleasure meeting with you, Professor Krugman. At that time, Japan was able to be going out of the deflation then we have set for ourselves the 2% inflation goal,” Abe began. “We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that.,” he continued. And then we got this: “We worry about the accumulated debt. That is a source of another concern. What to do about it?”
Yes, “what to do about it,” Professor Krugman? Predictably, Krugman’s answer was “spend more”:
The case for spending now is quite strong despite the debt. It is true for multiple reasons. Fiscal stimulus is very important as an aid to monetary policy in breaking out of deflation. the concerns about the debt, I don’t want to wave away entirely but one thing we have learned from Japan but also from other advanced countries is that stable advanced nations that borrow in their own currencies have a very long road for them to have a fiscal crisis. People have been betting against JGBs since about 2000. All of them have suffered financial disaster. The robustness of the market is very strong. It is even hard to tell a story. If someone says Japan would be like Greece, tell me how that happens. You have your own currency. The worst that could happen would be that the yen would depreciate which would be a good thing from your point of view. I do not think that is a thing to be worried about.
Whatever you say Professor. But sooner or later this madness has to end. Japan has been kicking the can for decades and demographic shifts would seem to suggest that the tax base will shrink while dependency on the state will rise. Meanwhile, the economy is stuck in what certainly appears to be a perpetual, never-ending recession while the country’s gargantuan debt pile presages a spectacular implosion sometime in the not so distant future.
When Japan descends into failed state status two years from now, we wonder if Krugman will still be the revered figure he is today among Japanese policy makers. We also wonder whether, once everyone “ceases to believe they can fly,” it will be Kuroda or Abe who gets the blame for turning one of the world’s most “advanced” economies into a banana republic.
- I Love The Smell Of Napalm In The Market
Authored by Sean Corrigan, originally posted at TrueSinews.com,
That usually perceptive and always interesting observer of the financial Zeitgeist, Bloomberg’s estimable Mark Gilbert, recently penned an article entitled: “Milton Friedman’s ‘Helicopter Money’ Is Looking Less Crazy.” In response, I mailed him the comments which follow (with light editing) here.
After running through the standard complaints of the serial interventionists about how ineffective monetary policy has become (read: how we ordinary people keep frustrating their Olympian schemes), Mark concluded his piece:-
‘Zero or negative interest rates are failing to stir consumer prices, while the Fed’s attempt to normalize monetary policy looks likely to backfire embarrassingly. Because the money-machine isn’t doing what the rule book suggests it should, the engines of economic growth continue to splutter and misfire. So the argument that might in the end have the most appeal for Friedman is the one that, intellectually at least, appears to be the weakest: If everything else is failing, why not try helicopter money? ‘
Why not, indeed? Well, here is a by no means exhaustive list of several reasons for not crossing yet another bridge too far in the mindless pursuit of a specific annual rate of change in a smoothed, filtered, hedonised, sampling of a wholly arbitrary collection of consumer goods and services, to the exclusion of all other goals, the repudiation of the lessons of past experience, and the complete abnegation of common sense.
Firstly, given that every professional in financial markets would be horrified to suffer a mandatory dilution of their equity holdings, how do you imagine they and everyone else would react if they got similarly diluted in this manner in terms of that much more important element of their property, their money?
Also, assuming that it were to be done and that when done it did indeed give rise to an isolated if intense round of buying and consequent price readjustment—as its quack, would-be perpetrators so fervently hope—do you really imagine it would also magically dissolve all the locked-in impediments to the natural adjustment between supply and demand from which we suffer and which are what actually prevent people from making a better living for themselves, or from founding and running more flourishing businesses right now?
How, too, could you guarantee that the damage done to the inevitable losers from such as crass act of redistribution would not be so extensive—and possibly so non-linear and self-aggravating—as not just to mitigate, but perhaps to entirely negate, the winnings of their luckier fellows?
Looking at the sorry record of all the ongoing attempts at pushing the rate of change of the CPI index back to the mystical 2% p.a. level, can you also assure us that this phantasmagorical target will indeed be hit this time and that you will not just fuel another wasteful round of property buying, financial market speculation, crude manipulation of corporate balance sheets, public sector profligacy, or currency upheaval?
Next, once you had undertaken such a far-reaching and—dare I say—Jacobin act of disruption, how could you ensure that trust in money would henceforth be regained so that it could resume its vital function both as medium of exchange and as unit of account? This is a key proviso because, without either, you must be aware that there can be no real hope of encouraging any sustainable economic growth after the initial inflationary impulse subsides.
In light of all the above and given that the helicopter flight would be a nakedly political undertaking—and hence a thoroughly capricious act of will to power—how would you re-establish the sort of confidence in the continuity of law, of practice, and in the institutional framework that is also sine qua non for putting capital, whether corporate or individual, at risk over the longer horizons required for genuine material progress to be made?
Respectfully, you can’t. So your helicopters are going to be launched by Admiral Simplificateur-Terrible from the decks of USS Pandora and will return after their mission to land at Fort Regime Uncertainty, accomplishing little which is positive and much which is actively deleterious in the meanwhile.
‘Less crazy’? Less crazy-seeming than heretofore, given the craziness already under way, perhaps. But less crazy, per se? No!
- This Is What's Happening To People Who Live Near The Worst Gas Leak In US History
Submitted by Carey Wedler via TheAntiMedia.org,
On February 18, SoCalGas and the national media declared the “worst methane gas leak in U.S. history” permanently sealed, but just over a month later, hundreds of Porter Ranch residents who evacuated — and are now returning home — are suffering the same symptoms they suffered when the gas leak was active. They are experiencing nausea, dizziness, fatigue, headaches, nosebleeds, and many, including children, are also experiencing a new ailment: irritated skin rashes across their bodies.
Neither SoCalGas, which owns the Aliso Canyon facility, the Los Angeles County Department of Public Health, nor any other government agency has provided a concrete explanation for these continued symptoms. In fact, one of Los Angeles County’s top medical officials recently told local physicians to refrain from performing tests to determine what is causing the symptoms. Late last week, preliminary lab tests from an independent UCLA study found evidence of benzene, a carcinogen, in at least two Porter Ranch homes. Benzene was reported to have been released in the 100 metric tons of methane that spewed into the Los Angeles basin for four months — a fact SoCalGas previously attempted to downplay and withhold.
Reemergence of Symptoms
On March 4, Los Angeles City Councilmember Mitchell Englander issued a press release reporting the Department of Public Health had received at least 150 complaints of reemerging symptoms, including nosebleeds, dizziness headaches, nausea, and skin rashes. Now, the Health Department says it has received 300 complaints since residents began moving home after SoCalGas told them it was safe to do so.
Many residents have said the rashes, which can be extensive, are new and did not occur during the initial, months-long gas leak from October to February. During that time, thousands of families were evacuated and the Department of Public Health received 700 health complaints. Others reported experiencing skin irritation before they relocated, though it appears to be more widespread now.
Residents who left Porter Ranch for temporary housing accommodations and recently moved home told Anti-Media about their symptoms (many still have not moved home, fearful it is still unsafe). Helen Ritenour, a Porter Ranch resident who left the area in December, said that within two days of returning to their home, she and her family began feeling sick.
“The main symptoms are headaches, difficulty breathing, watery eyes, coughing and general fatigue. It feels like I’m in a thick fog of sorts that’s oppressive,” she said. She and her husband were not eager to return home, still concerned about toxins in the area and the health of their newborn baby. But amid long delays receiving reimbursements from SoCalGas — and unable to charge more expenses on their credit card — they moved back to Porter Ranch. Ritenour told Anti-Media that like many other families, she and her husband have had to pay out-of-pocket for relocation services — and have experienced long delays receiving reimbursement checks.
Gabriel Khanlian, a resident who serves as the Chief Technology Officer for Save Porter Ranch, a group formed in 2014 to fight the massive, aging, and leaking facility before the blowout even happened, also said he and his family have suffered symptoms since moving home.
“My daughter Tatiana keeps getting large rashes, red welts and bumps all over her body. Her skin is dry and her behavior has changed significantly and she is very cranky. She has a loss of appetite and is sleeping a lot more,” he said. “My sons, Jayden and Mason, have been getting bloody noses, headaches, upset stomachs, burning eyes, runny nose, dry skin.”
He described other troubles they’ve had, noting his sons are experiencing “anxiety, fear, frustration, anger, and stress from not having the ability to play. Their personalities have changed majorly.”
He said his wife, who experienced symptoms during the initial methane gas leak, is now experiencing them more severely than before.
Kyoko Habino, a Porter Ranch resident and co-founder of Save Porter Ranch, said:
“When I go home to pick up stuff or do a few things, within a few minutes, I start having a dull headache and coughing and having palpitations. Nosebleeds follow later on often. My partner has had headaches, fatigue, and a burning sensation in his chest at the same time I have. Our cat has had a nosebleed and vomited. When I am away from home, the headache goes away instantly. The cough and nosebleed stay for a while, and are gone after.”
Walter Arwood, a Porter Ranch resident, experienced nausea, among other symptoms:
“I am rolling over sick right now. My stomach has been so upset, I have gotten all the headaches back, my husband has had three nose bleeds in two days, and now a visiting relative was out of breath just walking up the stairs at my home. How is it safe?”
Arwood was evacuated during the methane gas leak and recently returned home. “Since we have moved back the symptoms have immediately returned,” he said. “Itchy skin is the only new thing. We have all of our air purifiers on and the scrubber running and still it is happening.”
Residents in surrounding areas, including Chatsworth and Granada Hills, have also reported a reemergence of symptoms.
Sandy Crawford, a resident of Granada Hills, told CBS News in February — after the methane gas leak was sealed — that within a few hours of returning home, her youngest son had trouble breathing and suffered a nosebleed. Crawford moved her sons back to their hotel, and after trying again to move home and experiencing the same results, she returned to the hotel for a second time. She told Anti-Media they recently tried sleeping at home for a few nights and did not feel symptoms, but she remains afraid they could return. As a result, she is staying at the hotel.
“Avoid performing any toxicological tests”
Though these symptoms are pronounced, neither SoCalGas nor the Department of Public Health has offered a definitive explanation of what is causing them. In fact, Dr. Cyrus Rangan, Director of the Bureau of Toxicology and Environmental Assessment at the Los Angeles County Department of Public Health, recently issued a “Health Update” to “primary care, urgent care, internal medicine, and emergency medicine providers” in the area cautioning them against conducting tests on patients with symptoms.
The advisory, dated Tuesday, March 8, requested that healthcare professionals “look for alternate etiologies other than air contamination,” and “avoid performing any toxicological tests,” claiming “these are not recommended and are unlikely to provide useful data for clinical evaluation of patients.”
Rangan said in the notice that if no “alternative etiology” is found, doctors should consult with him. While it is an indisputable act of due diligence to recommend doctors check for other potential causes of symptoms, it is unclear why a top public health official would discourage doctors from performing tests to better understand illnesses among their patients.
“It’s not to steer the community away from thinking it’s not an environmental issue,” Rangan insisted to the Los Angeles Daily News, adding that, as the local paper summarized, “even when the gas was leaking he did not recommend that doctors perform toxicological tests because there is no test that can determine if a person was exposed to natural gas.”
However, residents are concerned not just with methane, but with other contaminants found in it, from mercaptans to benzene to other toxic emissions (mercaptans are odorants added to natural gas to make it detectable, and are believed to have caused symptoms when the gas leak was active). Many found Rangan’s explanation to be insufficient and an attempt to ask doctors to “look the other way.”
Further, his request that doctors refrain from conducting tests appears to contradict his own supplementary declaration provided for a hearing held last Friday to extend relocation benefits to residents, many of whom feel they were rushed out of temporary housing, evidently, before it was safe to return home.
In that statement, Rangan referred to the continued illnesses as “perplexing,” proceeding to offer potential explanations not previously disclosed to Anti-Media when he spoke with us:
“It could be that there are persistent levels of contaminants still present in the community, or there could be other exposures in areas of the community that were missed in the external environmental monitoring, or perhaps gases may have saturated the soil at the Aliso Canyon facility or other substrates and are being released now that the source has been sealed.”
In spite of Rangan’s multiple hypotheses, however, he has offered no definitive explanation, nor does it appear the Department of Public Health has seriously looked for one (meaning it could be helpful for physicians to run tests on their patients). Asked to investigate a persistent oily residue coating the outside of residents’ homes and the playground of at least one park, representatives sent from Public Health reported they found “no evidence of any oily residue and no health concern for residents or visitors.”
When residents complained to Councilman Englander, representatives from his office confirmed the playsets were coated in oil and SoCalGas agreed clean the park. Three other parks were also shut down amid concerns about the residue, which Rangan insists is safe, aside from causing skin irritation. Mandi Bane, a lab assistant in Rangan’s office, told Anti-Media they have no intentions to test the soil in the community.
Because of incidents like this — such as Dr. Rangan downplaying concerns about long-term side effects from mercaptans, though there is little research to support his assurances — some residents increasingly doubt Public Health’s commitment to helping the community. Many have complained they reported symptoms and received little more than packaged statements in response. Some received no response.
Rangan’s office did conduct door-to-door surveys of residents two weeks ago to gather information on what could be causing the symptoms, an effort reported to be joined by state officials. Bane told Anti-Media they recorded over 200 reports and it would take time to process them before they could comment.
Rangan’s office also requested outside assistance to conduct indoor air sampling, after it was “determined that such a protocol is beyond the expertise of the Department of Public Health.”
Rangan first solicited the help of the EPA to conduct indoor air testing for contaminants, but it was expected to take until May to develop a protocol. Last week, however, Dr. Michael Jerrett, a professor and chairman of UCLA’s Fielding School of Public Health, shared preliminary test results from a small sample of homes with Public Health. The independent study raised concerns about the presence of benzene, a known carcinogen, as well as hexane, in two homes. As a result of these findings, UCLA has partnered with Public Health and Dr. Jerrett and his team will begin sampling 120 homes in the coming days to conduct further analysis. According to a press release from the Department of Public Health posted Saturday:
“As a continuation of Professor Jerrett’s independent study, an indoor dust swab sampling was completed in seven homes. Benzene and hexane were found in two of the homes. Benzene and hexane, at certain levels, have known toxic effects on humans, but it is unknown whether the levels found are high enough to be of health concern. Professor Jerrett is sharing these findings with the community and will continue to conduct independent scientific analyses.”
As the Daily News explained, Jerrett’s results showed “higher and more variable concentrations of particulate matter in the outdoor air at locations close to the leak site compared to those farther away, according to the Health Department. Particulate matter is described as tiny pieces of solids or liquids in the air, such as dust, dirt, soot, or drops which can irritate the skin, eyes, nose, throat, respiratory, and cardiovascular systems.”
SoCalGas, however, has failed to provide a conclusive explanation for residents’ illnesses. At a protest on Friday, March 4, which culminated outside the company’s Community Resource Center located in Porter Ranch’s main shopping center, SoCalGas spokeswoman Lisa Alexander spoke to Anti-Media about the reemergence of symptoms. She left the onus of responsibility on the Department of Public Health.
“You know, we recognize that people are saying that they have symptoms, and we hear that, we see the news stories, we’ve been in touch with Department of Public Health to inquire about that,” she said, adding that Public Health expected symptoms to decrease as the blowout’s emissions dissipated — and with them, the mercaptans.
“Is there one house that has been tested that shows a harmful level at this time?”
SoCalGas, at the request of County Supervisor Michael Antonovich, agreed to conduct indoor air testing on a ‘random’ sample of 70 homes in Porter Ranch last week. Residents’ increasing distrust of the utility was further intensified when some residents reported they had received calls from the gas company to perform indoor testing on their homes, but were asked if they had legal counsel. If they said yes, multiple residents reported, they were told they were not eligible for the ‘random’ testing.
Nevertheless, SoCalGas shared these test results at a relocation hearing last Friday to assert air quality had returned to normal. SoCalGas’ attorney James Dragna also reportedly cited the Department of Public Health as an authority on the matter.
Matt Pakucko, president of Save Porter Ranch, spoke to local CBS radio station KNX shortly after the hearing:
“This is such propaganda by SoCalGas,” he said. “They used their indoor testing that they just performed over the last week as their main facts on the ground. But they have said themselves weeks ago, months ago, that the mercaptan and the methane — the only things they test for — would be long gone. So they went and tested what they knew would be long gone… I can’t believe the judge bought it.”
Judge Emilie H. Elias reportedly asked, “Is there one house that has been tested that shows a harmful level at this time?” However, Dr. Jerrett’s results, which showed two homes with potentially hazardous levels of benzene, were not presented.
Jerrett’s preliminary findings were shared with the county just before the hearing, and county attorney Deborah Fox expressed a desire to submit them to the court for an appeal this week.
Though the media reported the judge’s ruling as a tepid victory for residents, who will receive one more week of paid relocation services, county attorney Deborah Fox had originally sought two months. She then sought a 30-day injunction, ultimately settling for a single week extension.
Pakucko said of the ruling:
“Any sane person would say [the testing should be complete before a decision is made] … there are people reporting health issues, the cause of which has not yet been discovered.”
Save Porter Ranch and much of the community are campaigning to have the entire, 3,600-acre Aliso Canyon facility shut down.
SoCalGas had previously been ordered to extend relocation services as residents began reporting symptoms again after the gas leak, a decision the company fought. Residents have also complained they have not yet been reimbursed for the months they were relocated, citing long waits, convoluted customer service, and financial strain caused by SoCalGas’ reimbursement process.
On Tuesday, County Supervisor Michael Antonovich announced the court had suspended its Friday ruling, presumably in light of the county’s submission of Jerrett’s results. Los Angeles Times reporter Abby Sewell tweeted an update that residents now have until March 29 — an extra four days — pending further legal proceedings.
As the legal battle continues, the difficulties of obtaining comprehensive, reliable air tests remain complicated by the fact that humans can smell mercaptans at lower levels than equipment can detect them. Pakucko told Anti-Media residents have consistently been reporting the smell of mercaptans, though SoCalGas spokeswoman Melissa Bailey assured Anti-Media via email there were no current leaks.
Neither SoCalGas nor the regulatory South Coast Air Quality Management District (SCQAMD) offered an explanation to Anti-Media regarding elevations in methane emissions since the gas leak was sealed. They are not consistently high, but nevertheless contradict assurances from the gas company that air quality has returned to “normal.” For example, from March 17 to March 22, methane levels in the community exceeded 3 ppm (parts per million); SCAQMD, itself, says “Results greater than 3 ppm suggest some additional sources of methane.” A March 13 sampling of air at the site of the repaired well, SS-25, found methane levels at 46 ppm; according to SCAQMD, “results greater than 10 ppm suggest a considerable additional amount of methane is present.” Though SCAQMD cautions the levels of methane have been dropping since the methane gas leak was sealed in February, 46 ppm is still 43 ppm above ‘normal.’
Further, a recently published government survey, initiated after the Aliso Canyon blowout, found 229 leaks in natural gas storage fields across California. Though the leaks were deemed minor, 66 were found at Aliso Canyon.
As Porter Ranch residents continue to deal with the fallout from the months-long environmental disaster, communities around the country face similar battles. From the increasing number of communities plagued with unsafe levels of lead (among other chemicals) in their water and soil, to the radioactive leaks in New York, Florida, and elsewhere across the country, Americans face an increasingly apparent, non-partisan struggle against aging, dangerous infrastructure — and the apathetic, often negligent authorities and corporate hegemons responsible for maintaining it.
In Porter Ranch, SoCalGas and public officials have, at least, begun to acknowledge something is still amiss in the community. As Pakucko told Anti-Media:
“They’ve stopped saying everything’s fine. I’ve got two words for ‘everything’s fine’: Flint, Michigan.”
- Anonymous Threatens To Expose Ted Cruz Prostitution Scandal
There were many shots fired yesterday as the “wife feud” between Donald (and Melania) Trump and Ted (and Heidi) Cruz hit new lows, dragging none other than the National Enquirer tabloid into it and escalating the #CruzSexScandal into one of the most talked about topics on social media.
To be sure, Trump washed his hands of the affair saying “I have nothing to do with the National Enquirer and unlike Lyin’ Ted Cruz I do not surround myself with political hacks and henchman and then pretend total innocence. Ted Cruz’s problem with the National Enquirer is his and his alone, and while they were right about O.J. Simpson, John Edwards, and many others, I certainly hope they are not right about Lyin’ Ted Cruz.”
Cruz was adamant, repeating that the Enquirer article linking him to five women is “garbage, complete and utter lies” and that “it’s tabloid smear, and it is a smear that has come from Donald Trump and his henchmen,” a perturbed Cruz told reporters at a press conference in Wisconsin.
On this one occasion, however, Trump may be telling the truth because the source of the original Cruz rumor is none other than Donald Trump’s old nemesis, the same hacker collective which recently released his social security and phone number, Anonymous.
As the following YouTube clip released on March 15, the Anonymous hacker group warned Ted Cruz last week to leave the race “or else.”
As part of its #OpCruz assault, the hacker collective threatened to release information on Cruz engaging with prostitutes if he did not leave the race. Some of the highlights from the clip:
Mr. Cruz, we are now demanding that you exit this race within 24 hours, or Anonymous will release all of the information we have found.
It’s time that we tell America what’s hiding behind the curtain.
Have you heard of the expression “candy wrappers”? Do you recall visiting prostitutes?
Mr. Cruz, we are now demanding you exit this race immediately or Anonymous will release all of the information that we have found. Your so-called underground acts that you think were done in the dark, will be brought out for all the public to see. It will be sent to every media outlet to publicize your disgusting behavior.
We assure you it will go viral on every social media platforms in a matter of minutes. Mr. Cruz your disgusting campaign ends now; your campaign to gain power with ulterior motives that include your wife will also be exposed.
There is nothing from your past that won’t haunt you.”
In other words, the Anonymous #OpCruz started long before Trump and the Enquirer got involved, and in fact was already active when the Cruz SuperPAC released the first naked photo of Melania Trump early last week.
Folks watching the #CruzSexScandal unfolding should remember about ten days ago #Anonymous started its #OpCruz.
— Tim Hogan (@TimInHonolulu) March 25, 2016
Judging by a twitter account linked to anonymous, it may well have been an Anonymous leak to the Enquirer that started it all, in which case all of Cruz’ accusations aimed at Trump (such as even this most bizarre one) are slanderous, although there is no way to know for sure.
Uh Oh!! @TedCruz I see your dirty little secret is coming out…. Hmmmmm… I think it was told to you #OpCruz pic.twitter.com/7ksenKySuu
— The Alchemist (@DarkNetXX) March 24, 2016
The question now is whether Anonymous will carry through with its threat, and release the factual backing of its accusations either directly or via media outlets, just as it did in its feud with Trump, or will it quietly back down.
#OpCruz Stay tuned… Information coming. #Trump2016 #OpCruz #OpCruz #OpCruz #OpCruz #OpCruz #OpCruz #OpCruz pic.twitter.com/Kc8fkTAHpz
— The Alchemist (@DarkNetXX) March 17, 2016
The latest tweets from the Anonymous-linked twitter account suggest that something big may be indeed imminent:
@amandacarpenter We know. #CruzSexScandal pic.twitter.com/vAe47T42yN
— RayBee Trumplican (@rebernas1) March 26, 2016
BREAKING #CruzSexScandal #TedCruzSexScandal https://t.co/PqxwvKupRw
— FandK (@fkandkk) March 25, 2016
- Bombshell: King Of Jordan Blames Turkey For Terror In Europe, Says Israel "Looks Other Way" On Al-Qaeda
When Vladimir Putin told the world that ISIS gets a significant portion of its funding by selling oil to Turkey, he had just finished meeting with Jordan’s King Abdullah.
The King is no stranger to confronting the jihadists. Last year, Abdullah threatened to fly combat missions against Islamic State himself following the release of a horrific video that depicted a Jordanian pilot being burned alive in a cage.
Here is the picture the King sent to the militants:
In January, Jordan agreed to share intelligence with Russia in the fight against ISIS and when the French began flying sorties against the extremists following the Paris attacks, their staging ground was an undisclosed Jordanian location.
In short, Jordan has at times appeared to be more genuine in its commitment to fighting extremism than say, the Saudis, whose determination to spread Wahhabism adds fuel to the ideological fire that drives the groups the kingdom claims to be fighting. “The global war — what I call the Third World War by other means — is one that is a generational one,” Abdullah told CNN in January. “Not only inside Islam, as we as Muslims gain the supremacy against the crazies, the outlaws, of our religion, but also reaching out to other religions that Islam is not what they have seen being perpetuated by 0.1% of our religion.”
On Friday, we learn that Abdullah met with US lawmakers in secret during the week of January 11 and disclosed that British SAS forces as well as Jordanian soldiers had been on the ground fighting ISIS in Libya since at least the beginning of the year. “Jordanian slang is similar to Libyan slang,” Abdullah said, explaining how his men have been able to assist the British in cleaning up the mess NATO made in Libya which, you’re reminded, became a lawless wasteland in the wake of the uprising that toppled Muammar Gaddafi in 2011.
But the revelation that British SpecOps were fighting in Libya wasn’t the most interesting thing to emerge from the meeting which purportedly included John McCain, Bob Corker, the chairman of the Senate foreign relations committee, and House Speaker Paul Ryan. Indeed, according to notes seen by The Guardian, Abdullah also implicated Erdogan in perpetuating Sunni extremism as well as purposefully sending terrorists to Europe. The King also suggested that Israel is allowing al-Nusra to operate on its borders because Netanyahu views the al-Qaeda affiliate as a counterweight to Hezbollah.
Below, find the bullet points from The Guardian presented with no further comment because frankly, nothing further need be said here.
The memo indicates that Abdullah also told US lawmakers:
- The Turkish president, Recep Tayyip Erdogan, “believes in a radical Islamic solution to the problems in the region” and the “fact that terrorists are going to Europe is part of Turkish policy, and Turkey keeps getting a slap on the hand, but they get off the hook”.
- Intelligence agencies want to keep terrorist websites “open so they can use them to track extremists” and Google had told the Jordanian monarch “they have 500 people working on this”.
- Israel “looks the other way” at the al-Qaida affiliate Jabhat al-Nusra on its border with Syria because “they regard them as an opposition to Hezbollah”.
- You Are (Still) Here
Buybacks blacked out, option expiration ramp over, and real investors fleeing… what happens next?
Dip, Jawbone, Rip… Repeat…
And close-up…
But this time it’s different, 150 days of almost perfect correlation and co-movement means nothing – right?
- Trump Aide "Spills The Beans" On Heidi Cruz As Media Goes Crazy Over #CruzSexScandal
The “wife” feud, which initially many though was merely a sideshow between Donal Trump and Ted Cruz, has taken a quick turn for the ugly and is escalating dramatically with every passing day, and now that even the National Enquirer has entered the fray, has rapidly devolved to nothing less than the surreal twilight zone.
For those who need a primer of what is rapidly becoming the biggest “issue” in the presidential race, here is a reminder, courtesy of our post from last night “Tough Guy Ted Warns “Sniveling Coward” Trump: “Leave My Wife Alone“:
- Phase 1: Cruz Reps “Cross The Line”, when a “SuperPAC” run by a Cruz supporter launched a Trump ad campaign showcasing a naked posing Melania Trump
- Phase 2: Trumps Warns Cruz: “Lyin’ Ted Cruz just used a picture of Melania from a G.Q. shoot in his ad. Be careful, Lyin’ Ted, or I will spill the beans on your wife!”
- Phase 3: Cruz firez back, warning Trump: Don’t Do The Same Thing To Me That [My Reps] Just Did To You (Or Else!).
- Phase 4: Trump Goes There, retweeting an image “comparing” Heidi Cruz and Melania Trump
- Phase 5: Cruz Goes Full Rambo, says ‘Donald, you’re a sniveling coward and leave Heidi alone.’
Or, as we summed up, “a Cruz fan uses naked images of Trump’s wife to disparage him to saintly ‘Utah-ans’; Trump pissed; Cruz warns Trump not to reciprocate; Trump shows ugly picture of Cruz’s wife; Cruz unleashes inner Hulk as Trump dares to do what Cruz reps did to him.”
That was just the last few days.
And then the tabloids jumped on board.
Overnight, Trump-linked National Enquirer, alleged that the Texas senator is “hiding five different mistresses.” According to its source, identified as a “Washington insider,” “private detectives are digging into at least five affairs Ted Cruz supposedly had,” and “the leaked details are an attempt to destroy what’s left of his White House campaign.” The supposed affairs are detailed in the Enquirer’s most recent print issue.
National Enquirer: Ted Cruz had 5 affairs – Idk if true (but they did break the Tiger Woods affairs). pic.twitter.com/Olof2tPJA8
— Secular Talk (@KyleKulinski) March 25, 2016
Though unconfirmed, the rumor sparked chatter across social media Friday with the hashtag #CruzSexScandal, with reactions, as expected, ranging from one end of the spectrum to the other.
Considering the source, we doubt there is much veracity to the alleged “Cruz sex scandal”, although the tabloid has had its share of “broken” news stores in the past.
As was to be expected, Cruz immediately denounced the article as “garbage, complete and utter lies” and accused his opponent Donald Trump of being the source of the story as Reuters reports.
“It’s tabloid smear, and it is a smear that has come from Donald Trump and his henchmen,” a clearly perturbed Cruz told reporters at a press conference in Wisconsin, as the battle for the Republican presidential nomination reached new levels of personal rancor.
Trump issued a statement saying he was not responsible for the article.
“I have nothing to do with the National Enquirer and unlike Lyin’ Ted Cruz I do not surround myself with political hacks and henchman and then pretend total innocence,” Trump said in the statement. “Ted Cruz’s problem with the National Enquirer is his and his alone, and while they were right about O.J. Simpson, John Edwards, and many others, I certainly hope they are not right about Lyin’ Ted Cruz.”
In other words, just as Cruz had “nothing” to do with the first naked photo of Melania that started off this latest scandal, so Trump had “nothing” to do with the Enquirer article.
Alas, the damage for Cruz may already have been done: the article exploded on Twitter overnight on Thursday. By Friday morning #CruzSexScandal was a worldwide trending topic on Twitter.
And while Trump has distanced himself from the Enquirer article, very much the same way Cruz distanced himself from the original attack ad, an aide to Donald Trump on Friday did fulfil the businessman’s threat to “spill the beans” on Republican presidential rival Ted Cruz’s wife, Heidi.
As The Hill first reported, Trump spokeswoman Katrina Pierson rattled off a list of attacks three days after Trump first made the threat.
“Spilling the beans is quite simple when it comes to Heidi Cruz,” Pierson said in an interview with MSNBC’s Steve Kornacki.
“She is a Bush operative; she worked for the architect of NAFTA, which has killed millions of jobs in this country; she was a member on the Council on Foreign Relations who — in Sen. Cruz’s own words, called a nest of snakes that seeks to undermine national sovereignty; and she’s been working for Goldman Sachs, the same global bank that Ted Cruz left off of his financial disclosure,” Pierson said.
“Her entire career has been spent working against everything Ted Cruz says that he stands for,” she added.
Cruz spokeswoman Alice Stewart responded to the remarks in a statement to The Hill, saying, “There’s no low the Trump campaign won’t go.”
Earlier in the MSNBC interview, Pierson said “this isn’t about Heidi Cruz, this is about Melania Trump. Melania Trump was the one that was attacked.”
Incidentally, she is right, even though that means that this most hypnotic scandal in the republican presidential primary race – and perhaps any US presidential race yet – is nowhere close to over as neither candidate can possibly concede defeat on a topic that is “near and dear” to the heart as one’s wife.
- Thunder CLOuds Arrive: 6 CLOs Hit Triggers, Fail Tests
Over the past several months, we’ve kept a close eye on post-crisis CLOs or, CLO 2.0s, as they’re affectionately known. In the interest of not recounting the story in its entirety here (i.e. for the sake of brevity), here’s a list of posts those interested should review:
- The Next Shoe Just Dropped: Equity NAVs Of 348 CLOs Slide Below Zero
- Canary, Meet Coal Mine: These Are The Tranches Where The CLO 2.0 Meltdown Begins
- Citi Can’t Believe How “Attractive” This Trade Is
- The Shoe Keeps Dropping: CLOs With Negative Equity Soar By 30% In February To Record 453
- Coal Mine Canary Or “Opportunity?” You Decide
Issuance fell off a cliff in the wake of the crisis, but eventually rebounded, and by 2014, issuance was running at a $124 billion per year clip (comparable to auto loan-backed ABS annual supply, for reference). Supply slipped to around $95 billion last year and then, well, then it all fell apart.
The percentage of CLO assets carrying a negative ratings outlook jumped five-fold in just three months to 12.6% according to Moody’s and as Morgan Stanley has been keen to document, the market is literally crumbling.
As of the end of February, the median US CLO 2.0 equity NAV stood at -1.99 with the number of CLO 2.0 deals’ equity tranches currently having NAV below zero soaring by 30% from 348 to 453.
Over the same period, the underlying asset deterioration continued, we went on to note. By February 29, the median CCC assets in US CLO had reached 4.30% from 3.90% in January. Needless to say, this trend will only continue as the debt-laden US O&G space continues to spiral into oblivion. “Among the 180 loan issuers with price drops larger than 5 points in February, we see 32 issuers in Oil & Gas,” Morgan Stanley warns, before adding that “851 CLO transactions have exposure to these 180 issuers, with a median exposure of 7.07% in the CLO 2.0 space across 654 deals.”
To determine how it will all play out, we can take a look at history. Let’s go to Morgan Stanley one more time:
From late 2007, CLO equity investors suffered from a sharp decline in loan prices followed by a rapid increase of asset downgrades. The number of US CLOs failing junior OC triggers climbed and led to an increasing number of deals missing payments to equity tranches. The proportion of deals cutting off payments to equity tranches peaked in 2Q 2009, right after the bottoming of loan prices and the peak of loan downgrades in 1Q 2009.
Got it. So the credits in the collateral pool suddenly all sour at once, the triggers are hit, and the subordinated tranches are a really bad place to be. Take a look at the red line here:
That’s missed payments to the equity tranches when the market blew up in the wake of the crisis (i.e. that’s CLO 1.0s). The question is how long before that dynamic plays out in 2.0s. As we noted late last month, Moody’s and S&P have delivered their first downgrades of post-crisis CLOs. Here’s a look at the tranches affected by Moody’s decision:
Now, we learn that Silver Spring and Silvermore, along with four other CLO 2.0s are failing their interest diversion tests. That is, they’ve hit their triggers and payments to the equity tranches are in jeopardy pending how things look next month. Here’s Deutsche Bank:
Looking at interest diversion tests, there hasn’t been any diversion of cash interest payments to the equity tranche of post-crisis CLOs so far, but it will come down to the status of these tests for the payment dates in April. Right now there are six CLOs failing their interest diversion tests. One of those, Jamestown IV, is just barely failing the test. Three other deals have coverage right above their respective interest diversion triggers, see Figure 20.
Apart from these deals most other CLOs still have a good buffer before tripping interest diversion tests. Out of the 589 post-crisis broadly syndicated CLOs that have interest diversion tests and are still in their reinvestment period we find twenty deals (including the three mentioned in Figure 20) that have a buffer of one point or less before tripping the test. Other deals have a larger buffer. Figure 21 shows how well the 589 deals are covered, in terms of passing the interest diversion test. We show the data normalized by the initial collateral balance. The graph shows each deals collateral test par value relative to the initial collateral balance plotted against their interest diversion trigger, normalized the same way. Finally, the red line shows where the trigger lies, so the distance from the red line to the blue dot representing each line represents the interest diversion test buffer.
Despite Deutsche’s attempt to strike an upbeat tone, what the above means is that the market is beginning to crack and if you get anything out of Morgan Stanley’s recent series of updates, it should be that it won’t be long before there’s (much) more trouble in OC trigger land.
Meanwhile, issuance was actually up this month, but we wouldn’t get too excited about the prospects for the leveraged loan market – supply was still some five times lower than last March.
So keep the faith we suppose and remember: Citi can’t imagine how CLO mezz could possibly be any more attractive.
Oh, and don’t forget that next month banks will reevaluate credit lines on RBL for the beleaguered O&G sector. We’ll leave it to readers to determine for themselves what that means for CLO 2.0s, but we will give you a hint. Match up the following table with the “Deal Name” column in Figure 20 shown above.
- Bitcoin Market Technical Analysis and Commentary – 2 26 2016 (Video)
By EconMatters
We delve into the technicals of the Bitcoin Market in this video.
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