May 27

Today’s News 27th May 2018

  • Brazilian Military Deployed To Break Up Trucking Strike As State Of Emergency Worsens

    A nationwide trucking strike in Brazil entered day six on Saturday, as blocked roads have prevented critical food and supplies from reaching their destinations.

    The protests, triggered by a 50% spike in fuel prices over the last year, have resulted in the declaration of a state of emergency across most major cities as shelves run bare and fuel supplies dwindle. Airports have reported running out of fuel, hospitals are running out of supplies, and public transport and trash collection have been reduced or halted across the country. Some food prices have also spiked as supplies dwindle. As we noted on Friday, a lack of livestock feed threatens a billion chickens and 20 million pigs who may starve to death.

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    Brazilian export group ABPA said that over 150 poultry and pork processing plants had indefinitely suspended production, while Brazil’s sugar industry – the world’s largest – is slowly halting cane harvest operations as their machines run out of fuel.

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    Despite a Thursday agreement with the truckers and the Friday deployment of the military to physically unblock roads, the government has only reported a few blockades being lifted on major highways. 

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    In an attempt to end the dispute, oil company Petrobas cut the price of diesel by 10% for two weeks – however all that did was scare investors. The truckers were not impressed, considering that they’ve been subject to fuel price increases of around 50% over the last year.

    Petrobras shares plunged after the announcement and are down at least 20 percent this week, leading losses in the Ibovespa index, which has lost 4.3 percent in the period. That pushed the stock market’s monthly drop to 7.7 percent, one of the worst performers among major global benchmarks. –Bloomberg

    The main entity representing truckers, ABCAM, said they haven’t changed their stance – and that they will call off protests only after federal diesel taxes are scrapped. 

    truckers say they want a definitive solution, saying they will end the protest only when a decision to eliminate federal diesel taxes is published in the official gazette.

    Local TV showed footage of federal forces being deployed over the night to some critical areas to help police remove trucks from highways.

    There were no reports of violence, but main roads remained blocked in the morning, including a key transport ring around Sao Paulo, the country’s largest city. –Yahoo

    Brazil’s auto production, which constitutes around 25% of industrial output, also ground to a halt on Friday. Authorities say that even after the strike ends, it will take several days to replenish vital supplies. 

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  • The Dummies Guide To The Russia Collusion Hoax: Who, What, Where, When, & Why

    Authored by Roger Kimball via Spectator USA,

    For your eyes only: A short history of Democrat-spy collusion

    How highly placed members of one administration mobilised the intelligence services to undermine their successors…

    Who, what, where, when, why? The desiderata school teachers drill into their charges trying to master effective writing skills apply also in the effort to understand that byzantine drama known to the world as the Trump-Russia-collusion investigation.

    Let’s start with “when.” When did it start? We know that the FBI opened its official investigation on 31 July 2016. An obscure, low-level volunteer to the Trump campaign called Carter Page was front and centre then. He’d been the FBI’s radar for a long time. Years before, it was known, the Russians had made some overtures to him but 1) they concluded that he was an “idiot” not worth recruiting and 2) he had actually aided the FBI in prosecuting at least two Russian spies.

    But we now know that the Trump-Russia investigation began before Carter Page. In December 2017, The New York Times excitedly reported in an article called “How the Russia Inquiry Began” that, contrary to their reporting during the previous year, it wasn’t Carter Page who precipitated the inquiry. It was someone called George Papadopoulous, an even more obscure and lower-level factotum than Carter Page. Back in May 2016, the twenty-something Papadopoulous had gotten outside a number of drinks with one Alexander Downer, an Australian diplomat in London and had let slip that “the Russians” had compromising information about Hillary Clinton. When Wikileaks began releasing emails hacked from the Democratic National Committee in June and July, news of the conversation between Downer and Papadopoulos was communicated to the FBI. Thus, according to the Times, the investigation was born.

    There were, however, a couple of tiny details that the Times omitted. One was that Downer, an avid Clinton supporter, had arranged for a $25 million donation from the Australian government to the Clinton Foundation. Twenty-five million of the crispest, Kemo Sabe. They also neglected say exactly how Papadopoulos met Alexander Downer.

    As it turns out, George Papadopoulos made several new friends in London. There was Joseph Mifsud, a Maltese professor living in London who has ties to British intelligence. It was Mifsud – who has since disappeared – who told Papadopoulos in March 2016 that the Kremlin had “dirt” on Hillary Clinton.

    Then there is Stefan Halper, an American-born Cambridge prof and Hillary supporter. Out of the blue, Halper reached out to Papadopoulos in September 2016. He invited him to meet in London and then offered Papadopoulos $3,000 to write a paper on an unrelated topic. He also pumped him about “Russian hacking.” “George, you know about hacking the emails from Russia, right?” Halper is said to have asked him. He also made sure Papadopoulos met for drinks with his assistant, a woman called Azra Turk, who flirted with him over the Chardonnay while pumping him about Russia.

    Halper also contacted Carter Page and Sam Clovis, Trump’s campaign co-chair. Is Stefan Halper, the “spy” on the Trump campaign, at the origin of the Trump-Russia meme?

    Not really. The real fons et origo is John Brennan, Director of the CIA under Obama. As Trump’s victories in the primaries piled up, Brennan convened a “working group” at CIA headquarters that included Peter Strzok, the disgraced FBI agent, and James Clapper, then Director of National Intelligence, in order to stymie Trump’s campaign.

    So much of this story still dwells in the tenebrous realm of redaction. But little by little the truth is emerging, a mosaic whose story is gradually taking shape as one piece after the next completes now this face, now another.

    There are details yet to come, but here is the bottom line, the irreducible minimum…

    A cabal of CIA and FBI operatives, including the Director of the CIA, John Brennan, along with other members of the intelligence “community,” prominently including James Clapper, Director of National Intelligence, and various members of the Obama administration, colluded to undermine Donald Trump’s campaign.

    Like almost everyone else, they assumed that Hillary Clinton was a shoo-in, so they were careless about covering their tracks.

    If Hillary had won, the department of Justice would have been her Department of Justice, John Brennan would still be head of the CIA, and the public would never have known about the spies, the set-ups, the skulduggery.

    But Hillary did not win. For the last 16 months, we’ve watched as that exiled cabal shifted its efforts from stopping Trump from winning to a desperate effort to destroy his Presidency. Thanks to the patient work of Devin Nunes, Chairman of the House Intelligence Committee, and a handful of GOP Senators, that effort is now disintegrating.

    What is being exposed is the biggest political scandal in the history of the United States: the effort by highly placed – exactly how highly placed we still do not know – members of one administration to mobilise the intelligence services and police power of the state to spy upon and destroy first the candidacy and then, when that didn’t work, the administration of a political rival.

    It is banana republic behaviour, but it looks now as if those responsible for this effort to undermine American democracy and repeal the results of a free, open, and democratic election will be exposed. Let’s hope that they are also held to account.

  • The Story Behind $17 Billion Booty Found In 300-Year-Old "Holy Grail Of Shipwrecks"

    Details have finally emerged surround a 2015 discovery of a 300-year-old Spanish galleon which went down after a battle with British ships off the coast of Cartagena, Columbia – considered the “holy grail of shipwrecks.” 

    Using an unmanned underwater vehicle called the REMUS 6000 – funded by the Dalio Foundation and operated by Woods Hole Oceanographic Institution (WHOI), researchers discovered the 62-gun, three-masted San José containing chests of gold, silver and emeralds minted in Peru – estimated to be worth up to $17 billion. 

    “The REMUS 6000 was the ideal tool for the job, since it’s capable of conducting long-duration missions over wide areas,” said WHOI engineer and expedition leader Mike Purcell.

    To confirm the identity of the San José, REMUS, celebrated for its ability to conduct long-duration missions over wide areas, descended near the suspected wreck, found about 2,000 feet underwater, capturing photos of a key distinguishing feature of the San José: bronze cannons engraved with dolphins, the WHOI said in its release. WHOI said it obtained authorization by Maritime Archaeology Consultants Switzerland AG and the government in Bogotá to release new details. –Marketwatch

    Discovered on Nov. 27, 2015, a raging debate ensued over the legal ownership of the Caribbean bounty. Because of this, details of the discovery was shrouded in secrecy until this week. Spain defended their ownership in the vessel, arguing that it is a warship with a State flag that carries sovereign immunity under the UN Convention on the Rights of the Sea – to which Columbia is not a party. 

    Spain also argues that the shipwreck is a maritime tomb to 570 Spanish nationals.

     

    Columbia, however, says that the San José belongs to them because it’s on their seabed. They plan to build a museum and conservation laboratory to preserve and publicly display the wreck’s contents, including cannons, ceramics, and other artifacts.

    The Colombian government has a long-standing disagreement with US-based salvage company Sea Search Armada (SSA) over who has the rightful claim over the treasure. A group now owned by SSA claims it located the wreck back in 1981. 

    According to the BBC, the SSA has been claiming billions for breach of contract from Colombia, but four years ago a US court decided that the galleon was the property of the Colombian state. Further, the wreck is reported to fall within the UN’s definition of an underwater cultural heritage site. Nonetheless, a CNN report suggests that the SSA may demand half of the value of the ship’s sunken treasure. –Gizmodo

    Upon its discovery, Columbian President Juan Manuel Santos tweeted “Great news! We have found the San Jose Galleon!” followerd by a press conference in which he said that the find “constitutes one of the greatest—if not the biggest, as some say—discoveries of submerged patrimony in the history of mankind.”

    The rescue operation to raise the booty, announced in March, will cost around $71 million USD. 

  • Tommy Robinson Arrested Outside UK Court, Jailed For 13 Months As Judge Orders Orwellian Media Blackout

    UK activist and English Defence Leage founder Tommy Robinson was arrested on Friday outside of Leeds Crown Court for reporting on a pedophile grooming trial. Within six hours of his arrest, Robinson was handed a 13 month prison term for violating a prior suspended sentence for a similar offense, while media outlets were banned from covering the incident by the court – with several removing reports which had already been published. 

    Footage shows Robinson, 35, being arrested while livestreaming to his Facebook page outside the courthouse. He can be heard shouting to a friend “Please, George, get me a solicitor, I’m on a suspended sentence, you see.”

    “A big police van with about seven police officers pulled up and arrested [Robinson] and told him to stop live streaming,” Robinson’s producer told RT (before their article (archived) was scrubbed from the internet). “They said it was incitement and a breach of the peace.

    “No peace has been breached – there were two other people there and he’s been perfectly quiet talking into his phone. [The police] said nothing about the court proceedings. It’s very strange.” 

    Disturbingly, the judge who sentenced Robinson, Geoffrey Marson QC, ordered an Orwellian media blackout – which resulted in several publications deleting their articles from the web covering Robinson’s arrest.  

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    Robinson was admonished last year by Judge Heather Norton for filming outside a gang rape case in Canterbury, who slapped him with a three month suspended sentence on the condition that he cease his coverage of the trials. 

    you should be under no illusions that if you commit any further offence of any kind, and that would include, I would have thought a further contempt of court by similar actions, then that sentence of three months would be activated -Judge Heather Norton

    “This is not about free speech, not about the freedom of the press, nor about legitimate journalism, and not about political correctness,” the judge told Robinson at the time.

    #FreeTommy

    In response to Robinson’s arrest, a large group of protesters gathered outside Downing Street – while the hashtag #FreeTommy has been used to coordinate a response, express outrage and share information about the situation. 

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    Robinson’s arrest has also sparked a free speech debate over social media, with  supporters and detractors alike standing up for the controversial activist’s right (or lack thereof) to express his opinion.

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    Pedophile grooming gangs

    A group of 29 defendants are being tried  for historical sex offences against children, split into three trials. Robinson was arrested at the second trial, while the first is ongoing.

    For more on the grooming gangs which have abused over 700 women and girls, click here.

    Meanwhile, enraged Britons have been harassing the defendants as they make their way to court in the ongoing trials. 

    Here is the full list of defendants via The Sun. 

    First Trial

    Amere Singh Dhaliwal, 34, from Huddersfield, West Yorks., is accused of 54 charges, including 21 charges of rape and 14 charges of trafficking with a view of sexual exploitation. Dhaliwal is accused of charges against eleven different girls from 2004 to 2011.

    Irfan Ahmed, 32, from Huddersfield, West Yorks., was charged with nine offences including making an indecent image of a child.

    Zahid Hassan, 28, from Huddersfield, West Yorks., was charged with 20 offences including six charges of raping a girl aged 13 or under.

    Mohammed Kammer, 32, from Huddersfield, West Yorks., was charged with two offences including rape of a girl under 15.

    Mohammed Aslam, 29, from Huddersfield, West Yorks., was charged with two offences including rape of a girl under 15.

    Abdul Rehman, 30, from Sheffield, South Yorks., was charged with seven offences including raping a girl under 15.

    Raj Singh Barsran, 32, from Huddersfield, West Yorks., was charged with three offences including sexual touching of a girl over 13.

    Nahman Mohammed, 31 from Huddersfield, West Yorks., was charged with three counts including trafficking a person for sexual exploitation.

    Zubair Ahmed, 30, from Huddersfield, West Yorks., was charged with two offences including raping a girl under the age 15.

    Hamzha Saleem, 37, from Old traddford, Gtr Mancs., was charged with three counts including human trafficking.

    Second Trial (Robinson’s arrest)

    Mansoor Akhtar, 25, from Huddersfield, West Yorks., was charged with three offences including attempted rape of a girl under the age of 13.

    Mohammed Asaf Akram, 31, from Huddersfield, West Yorks., was charged with 14 offences including four charges of raping a girl of thirteen or under and one charge of threatening to kill.

    Wiqas Mahmud, 36 from Huddersfield, West Yorks.., was charged with three offences of rape of a girl under 15.

    Nasarat Hussain, 28, from Huddersfield, West Yorks., was charged with five offences including rape of a girl under 15.

    Sajid Hussain, 32, from Huddersfield, West Yorks., was charged with five offences including rape of a girl under 15.

    Mohammed Irfraz, 28, from Huddersfield, West Yorks.., was charged with eight offences including false imprisonment.

    Faisal Nadeem, 30 from Huddersfield, West Yorks., was charged with three counts including raping a woman 16 or over.

    Mohammed Azeem, 31, from Bradford, West Yorks., was charged with three offences including rape of a girl under 15.

    Zulquarnian Dogar, 29, from Huddersfield, West Yorks., was charged with two offences including sexual touching of a female aged 13 or over.

    Manzoor Hassan, 37, from Huddersfield, West Yorks., was charged with four offences including inciting the sexual exploitation of a child aged between 13-17.

    Third trial set to last for six weeks.

    Niaz Ahmed, 53, from Huddersfield, West Yorks., was charged with three offences including sexual assault on a female.

    Mohammed Imran Ibrar, 32, from Huddersfield, West Yorks., was charged with four offences including arranging the commission of a child sex offence.

    Asif Bashir, 32, from Huddersfield, West Yorks., was charged with five offences, including three counts of raping a woman 16 or over.

    Everton la Bastide, 50, from Huddersfield, West Yorks., was charged with two offences including sexual touching a girl of 13 or over.

    Saqib Raheel, 30, from Dudley was charged with two offences including trafficking for sexual exploitation.

    Usman Khalid, 29, from Huddersfield, West Yorks., was charged with three offences including assaulting a girl under 13.

    Aleem Javaid, 27, from Huddersfield, West Yorks., was charged with two offences including supply of a class B drug.

    Mrs Naveeda Habib, 38, from Huddersfield, West Yorks., was charged on one count of neglect of a child.

    Mrs Shahnaz Malik, 55 from Huddersfield, West Yorks., was charged with one count of neglecting a child.

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  • Californians Are Willing To Repeal The Gas Tax, But…

    Authored by Jazz Shaw via HotAir.com,

    A massive new gas tax passed by the California state legislature appeared to finally be a bridge too far for most residents of the state.

    A movement began to repeal the tax by referendum and a petition to do so quickly amassed far more than the needed number of signatures. Now, a new poll indicates that support for the repeal measure has reached majority numbers. But there’s more going on here than just the removal of a set of taxes and fees.

    As a new poll found a majority of California voters want to repeal increases to the state’s gas tax and vehicle fees, Gov. Jerry Brown has begun campaigning to preserve them, arguing the sacrifice is needed to fix long-neglected roads and bridges and improve mass transit.

    Repeal of the higher taxes and fees was supported by 51% of registered voters in the state, according to a new USC Dornsife/Los Angeles Times statewide poll.

    The survey found 38% of registered voters supported keeping the higher taxes, 9% hadn’t heard enough to say either way and 2% said they wouldn’t vote on the measure.

    The tax package looks like it’s about to be taken off life support, but Republicans in the state hope that the referendum delivers for them in another way. With some marginal House seats being considered in play this November, campaigning on support for the repeal measure should, in theory, boost GOP voter turnout, possibly turning back some of the “blue wave” that Democrats are looking for.

    It’s also left the Governor in the unenviable position of having to defend taxing his constituents more. He fumbled the first attempt at that when he resorted to name calling in an apparent fit of pique. At one news conference, he was quoted as saying,

    “The test of America’s strength is whether we defeat this stupid repeal measure, which is nothing more than a Republican stunt to get a few of their losers returned to Congress.”

    “Stupid repeal measure?” Does the governor read the news anymore? He just called more than half the people in his state “stupid.” Let’s see how well that plays five months from now.

    Some of my hopes for California were dashed, however, when another set of poll numbers came out. For a time, I’d actually begun to think that Californians were waking up and realizing that the Democrats they keep electing were taxing them to death and perhaps a new course needed to be followed. Sadly, while they oppose the gas tax, those same voters seem to be fine with jacking up taxes on the businesses who employ them.

    A majority of California voters back a potential 2020 ballot measure that would increase property taxes on businesses, according to a new USC Dornsife/Los Angeles Times poll.

    Of the 691 registered voters surveyed, 54% said they supported a measure that would ease property tax protections established by the landmark 1978 ballot measure Proposition 13. Under the proposed 2020 initiative, local governments and schools could tax larger commercial and industrial properties based on their market values rather than the values based on when the properties were purchased, resulting in as much as $10 billion annually in new revenue.

    The economy in California works out fabulously for celebrities and the mega-wealthy. But for most rank and file workers, it’s virtually impossible to afford a house anywhere in the state that’s even marginally habitable. Businesses and workers are already fleeing the state in the more expensive areas, yet residents still seem to be fine with the idea of taxing “somebody else” as long as their gas prices don’t go up further.

    There’s an old saying credited to Russel B. Long, which goes, “Don’t tax you, don’t tax me, tax that fellow behind the tree!” There’s some wisdom there which Californians should look into.

  • Top Restructuring Banker: "We're All Feeling Like Where We Were Back In 2007"

    There is a group of bankers for whom “better” means “worse” for everyone else: we are talking, of course, about restructuring bankers who advising companies with massive debt veering toward bankruptcy, or once in it, how to exit from the clutches of Chapter 11, and who – like the IMF, whose chief Christine Lagarde recently said “When The World Goes Downhill, We Thrive” – flourish during financial chaos and mass defaults.

    Which is to say that the past decade has not been exactly friendly to the world’s restructuring bankers, who with the exception of two bursts of activity, the oil collapse-driven E&P bust in 2015 and the bursting of the retail “bricks and mortar” bubble in 2017, have been generally far less busy than usual, largely as a result of abnormally low rates which have allowed most companies to survive as “zombies”, thriving on the ultra low interest expense.

    However, as Moody’s warned yesterday, and as the IMF cautioned a year ago, this period of artificial peace and stability is ending, as rates rise and as a avalanche of junk bond debt defaults. And judging by their recent public comments, restructuring bankers have rarely been more exited about the future.

    Take Ken Moelis, who last month was pressed about his rosy outlook for his firm’s restructuring business, describing “meaningful activity” for the bank’s restructuring group.

    “Your comments were surprisingly positive,” said JPMorgan’s Ken Worthington, quoted by Business Insider. “Is this sort of steady state for you in a lousy environment? Can things only get better from here?”

    Moelis’ response: “Look, it could get worse. I guess nobody could default. But I think between 1% and 0% defaults and 1% and 5% defaults, I would bet we hit 5% before we hit 0%.”

    He is right, because as we showed yesterday in this chart from Credit Suisse, after languishing around 1%-2% for years, default rates have jumped the most in 5 years, and are now “ticking higher”

    Moelis wasn’t alone in his pessimism: in March, JPMorgan investment-banking head Daniel Pinto said that a 40% correction, triggered by inflation and rising interest rates, could be looming on the horizon.

    These are not isolated cases where a gloomy Cassandra has escaped from the asylum: already the biggest money managers are positioning for a major economic downturn according to recent research from Bank of America. And while nobody can predict the timing of the next collapse, Wall Street’s top restructuring bankers have one message: it’s coming, and it’s not too far off.

    However, the most dire warning to date came from Bill Derrough, the former head of restructuring at Jefferies and the current co-head of recap and restructuring at Moelis: “I do think we’re all feeling like where we were back in 2007,” he told Business Insider: “There was sort of a smell in the air; there were some crazy deals getting done. You just knew it was a matter of time.”

    What he is referring to is not just the overall level of exuberance, but the lunacy taking place in the bond market, where CLOs are being created at a record pace, where CCC-rated junk bonds can’t be sold fast enough, and where the a yield-starved generation of investors who have never seen a fair and efficient market without Fed backstops, means that the coming bond-driven crash wil be spectacular.

    “Even if there is not a recession or credit correction, with the sheer volume of issuance there are going to be defaults that take place,” said Neil Augustine, cohead of the restructuring practice at Greenhill & Co.

    The dynamic is familiar: since 2009, the level of global nonfinancial junk-rated companies has soared by 58% representing $3.7 trillion in outstanding debt, the highest ever, with 40%, or $2 trillion, rated B1 or lower. Putting this in contest, since 2009, US corporate debt has increased by 49%, hitting a record total of $8.8 trillion, much of that debt used to fund stock repurchases.  As a percentage of GDP, corporate debt is at a level which on ever prior occasion, a financial crisis has followed.

    The recent glut of debt is almost entirely attributable to the artificially low interest-rate environment imposed by the Federal Reserve and its central bank peers following the crisis. Many companies took advantage and refinanced their debt before 2015 when a large swath was set to mature, kicking the can several years down the road. 

    But going forward “there’s going to be refinancing at significantly higher rates,” said Steve Zelin, head of the restructuring in the Americas at PJT Partners.

    And as the IMF first warned last April, refinancing at higher rates will further shrink the margin of error for troubled companies, as they’ll have to dedicate additional cash flow to cover more expensive interest payments.

    “When you have highly leveraged companies and even a modest rise in interest rates, that can result in an increase in restructuring activity,” said Irwin Gold, executive chairman at Houlihan Lokey and cofounder of the firm’s restructuring group.

    So with a perfect debt storm coming our way, many restructuring firms have been quietly hiring new employees to be ready when, not if, the economy takes a turn for the worse.

    “The restructuring business is a good business during normal times and an excellent business during a recessionary environment,” Augustine said. “Ultimately, when a recession or credit correction does happen, there will be a massive amount of work to do on the restructuring side.” Here are some additional details on recent banker moves from Business Insider:

    Greenhill hired Augustine from Rothschild in March to cohead its restructuring practice. The firm also hired George Mack from Barclays last summer to cohead restructuring. The duo, along with Greenhill vet and fellow cohead Eric Mendelsohn, are building out the firm’s team from a six-person operation to 25 bankers.

    Evercore Partners in May hired Gregory Berube, formerly the head of Americas restructuring at Goldman Sachs, as a senior managing director. The firm also poached Roopesh Shah, formerly the chief of Goldman Sachs’ restructuring business, to join its restructuring business in early 2017.

    “It feels awfully toppy, so people are looking around and saying, ‘If I need to build a business, we need to go out and hire some talent,'” one headhunter with restructuring expertise told Business Insider.

    “In our world, people are just anticipating that it’s coming. People are trying to position their teams to be ready for it,” Derrough said. “That was the lesson from last cycle: Better to invest early and have a cohesive team that can do the work right away and maybe be a little bit overstaffed early, so that you can execute for your clients when the music ultimately stops.”

    Of course, if the IMF is right (for once), Derrough and his peers will soon see a windfall unlike anything before: last April, the International Monetary Fund predicted that some 20%, or $3.9 trillion, of the total global corporate debt is in danger of defaulting once rates rise.

    Although if and when that day comes, perhaps a better question is whether companies will be doing debt-for-equity swaps, or fast forward straight to debt-for-lead-gold-and canned food…

  • As Russia's Gold Hoard Soars, Putin Warns "US Sanctions Hurt Trust In Dollar As Reserve Currency"

    Despite his absence from Vladimir Putin’s annual economic showcase – which included such US allied luminaries as Japanese Prime Minister Shinzo Abe, French President Emmanuel Macron, China’s Vice President Wang Qishan and IMF chief Christine Lagarde – the conversation kept coming back to President Trump.

    Led by an unusually outspoken Putin, Macron – who seemed more enamored with Putin than the rest, agreed with the Russian president’s concerns over the erosion of trust and the specter of a global crisis brought on by Washington’s disruptions.

    “The free market and fair competition are being squeezed by confiscations, restrictions, sanctions,” Putin said.

    “There are various terms but the meaning is the same — they’ve become an official part of the trade policy of certain countries.”

    The “spiral” of U.S. penalties is targeting “an ever larger number of countries and companies,” undermining “the current world order,” he said.

    Macron replied: “I fully share your point of view.”

    Such warnings only confirm Mr Putin’s world view. Without mentioning the US, he complained that the multilateral economic world order was being “crushed” by a proliferation of exceptions, restrictions and sanctions.

    The “darkest cloud” on the economic horizon is the “determination of some to actually rock the system,” Lagarde said, prompting Wang, a new point-man for Chinese foreign policy, to agree.

    “Politicizing economic and trade issues, and brandishing economic sanctions, are bound to damage the trust of others,” he said.

    Putin also expressed frustration at having little contact with Trump and faulted the investigation into whether there was collusion between Trump’s campaign and Russia and whether Russia tried to interfere with the 2016 U.S. election.

    “We are hostages to this internal strife in the United States,” Putin said. “I hope that it will end some day and the objective need for the development of Russian-American relationships will prevail.”

    As Bloomberg reports, the panel had its prickly moments. After Putin suggested that Europe depended on the U.S. for its security, and told Macron there was “no need to worry” because Russia would help, the French president shot back:

    “I’m not afraid, because France has an army that knows how to protect itself.”

    However, the most ominous and direct messages were from Putin himself about changes to the unipolar order.

    In his opening statement at the plenary session, Putin says the global economic order is being undermined and that breaking the rules is becoming the rule of the game.

    Coming a day after Russia’s Finance Minister Anton Siluanov said at the St. Petersburg International Economic Forum that settlements in US currency could be dropped by Russia in favor of the euro. 

    “As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position,” said Siluanov, who is also Russia’s first deputy prime minister.

    “If our European partners declare their position unequivocally, we could definitely see a way to use the European common currency for financial settlements, such as payments for goods and services, which today are often subject to restrictions,” Siluanov added, dangling the bait in front of Merkel and Macron.

    The global economy is facing a threat of a spiraling protectionist measures that can lead to a devastating crisis, Vladimir Putin warned. Nations must find a way to prevent this and establish rules on how the economy should work.

    The Russian president spoke out against the growing trend of using unilateral restrictions to achieve economic advantage, as he addressed guests of the St. Petersburg International Economic Forum (SPIEF) on Friday.

    “The system of multilateral cooperation, which took years to build, is no longer allowed to evolve. It is being broken in a very crude way. Breaking the rules is becoming the new rule,” he said.

    Putin sharply criticized the sanctions, saying they signal “not just erosion but the dismantling of a system of multilateral cooperation that took decades to build.”

    Putin called for a change of course, for free trade to be defended, and for rules-based regulation of the global economy, which would alleviate the chaos resulting from the rapid technological transformations arising from the development of digital technology.

    “The disregard for existing norms and a loss of trust may combine with the unpredictability and turbulence of the colossal change. These factors may lead to a systemic crisis, which the world has not seen yet,” he said.

    Simply put, Putin concluded:

    “US sanctions hurt trust in the US dollar as the world’s reserve currency.”

    All of which appears to confirm many conspiracy-theorist’s reasoning for why Russia is stockpiling gold faster than any other nation on earth…

    Feels good, ha Vlad?

     

     

     

     

  • These Are The Cheapest Crash Hedges Right Now

    With the “smart” money exiting the stock market in droves, yield curves collapsing, extreme speculative positioning in bonds, and a dramatically diverging economic reality from market market narratives, the possibility of a crash – Fed triggered or not – is rising.

    What do ‘they’ know?

    And with everyone on the same side of another boat…

     

    So the question is – what’s the cheapest way to hedge against a crash scenario?

    Bank of America’s Jason Galazidis has some answers…

    Ranked by the average, the screen below shows that the hedges which are most underpricing historical drawdowns are:

    Gold calls, US HY Credit hedges and EUR 10y receivers

    And so – once again – the precious metal regains ‘most-favored-nation’ status as the world’s emerging markets collapse and economic reality washes ashore on the banks of the river-of-excess-debt…

    Since the middle of January, gold implied vol has been notably, systemically lower than stocks…

    And European equity vol has started to normalize back to its premium to US equity vol…

     

    Cross asset risk is once more in benign territory relative to history as vols and credit spreads are all in their 1st 11y quartile…

     

    Additionally, 12M cross-asset-class correlation has continued its climb since the Feb-18 equity-led sell-off, now reaching 5y highs…

    Historically there have been 3 distinct cross asset correlation regimes since 1995. Interestingly, we see a broadly upward trend since Oct-03, well before the Lehman bankruptcy in Sep-08. This is related to the liquidity driven crush in asset risk-premia that helped drive investment leverage higher.  Long-term correlation established a new regime since 3Q13, similar to the ’03 to ‘08 correlation environment.

    And these are the two-month-forward historical stress peaks, compared to current levels, if that systemic crash should occur…

    The chart illustrates why it is useful to consider the relative pricing of options across asset classes to hedge against tail events: option markets often underestimate the severity of market shocks, and to different degrees. In 2008, currency and equity vols were the most optimistic ahead of the Lehman crisis and the most surprised after (rose to the highest levels).

  • Ron Paul: On War, Gold, & My Years In Congress

    Via The Mises Institute,

    JEFF DEIST: What makes you optimistic, what makes you pessimistic about what you see in the US?

    RON PAUL: Well, if I look at the big picture including a long span of time, I would say conditions aren’t that bad, even though I often talk about all the bad things I anticipate and how it could get worse in terms of the economy and foreign policy.

    When you think about it, I was born in 1935, in the middle of the Depression. I remember my early life. I remember when I was 3 years old and 5 years old and the Depression lasted through World War II and the conditions were such as I remember very clearly, but it wasn’t a big deal for me even though we lived in close quarters and we didn’t have a lot of shoes and were just skimping by.

    So, we went through a Depression and World War II. Those were pretty tough times and since that time — since the war issue’s always been a big issue with me — I remember the tragedies of World War II. We had relatives in Germany, so it always caught my attention. Then we had the Korean War. I could remember my mother saying, “another war this soon?” We just got over one, so she was negative on that and then we had the Vietnam War and I knew that I probably would be drafted and that was one of the reasons that helped me move toward medicine.

    So, those were pretty bad times. Think of the people that were dying over those first 30 or 40 years. Things weren’t great economically either. In America, we were not even allowed to own gold.

    Those were conditions that existed that changed for the better to some degree. Philosophically, I think, we’re still on the wrong track overall, although some things have improved. Once again, we’re able to own gold. The United States government and I pushed it along when I was in Congress to mint gold coins again and talk about monetary policy.

    Philosophically, we are making progress in some areas, though, and I give a lot of credit to the institutions that do this, like the Mises Institute and FEE. And of course, I want to participate in changing foreign policy and we keep working on that through the Ron Paul Institute.

    But, on the downside of all this, I see we’re on a disastrous course even though the official economic indicators look great and wonderful. Everybody’s practically euphoric and Trump is a good cheerleader. But, there is a lot of weakness behind the numbers, and we’re engaging in self-deception and unsupported hopefulness that things will be all good, there will be no inflation or high unemployment, and there’ll be no major war. I think when I look at the seeds that have been sown, the future looks rather bleak in many ways, even compared to what it was like as we finished World War II and Vietnam.

    We’re in a mess partly because our major universities are still very Marxist-oriented and they’re very anti-liberty and therefore, I think for people who care about liberty, we have a big job ahead of us.

    JD: You talk about this in your book, Swords into Ploughshares. Is there a particular moment or recollection from your childhood during the Great Depression, or World War II, that started you on the path to being liberty-minded?

    RP: Not at that young age. I think I had a natural instinct — and I claim everybody has a natural instinct — to be an individual. I think we express that when we are 2 years old and when we are 4 years old, when we’re teenagers and it’s always a struggle of being independent-minded and minding our own business and taking care of ourselves. And then, we have that beaten out of us. Of course, discipline is very necessary and good. But it depends on where it’s coming from. If it’s coming from some wise parenting, I think this is very, very good.

    But, there was never one moment I started down that path of being liberty-minded. I think, more or less, it was an evolution. Back then I’d read newspapers and listened to the radio, listened to my dad talking about the war issues and going to school and it was a mixed bag. And then, I guess the serious introduction came probably in the early 1960s. I got interested in reading Austrian economics. I read almost everything that Ayn Rand ever wrote and that’s when I found Leonard Read and got to know him. It seems like when Goldwater was running — that would have been ’64 — I had already been thinking about it. If you read everything Goldwater was talking about back then, he would throw out some names. So, somewhere along the way, I came across the name Hayek because he was known because of The Road to Serfdom. So, I was inquisitive enough to look into it.

    By the way, when I talk to college students today, I say the most important thing you can leave this place with is being inquisitive, checking out, finding out, and ask the question and seek the truth and do your best to be truthful to yourself and then come up with these answers. I am fascinated, that on the campaign trail in the last 10–15 years, where people would listen and come up to me and they would say, “I get it. It’s just common sense.” They’d put the whole picture together and they seemed to have sort of a moment where a light bulb goes on.

    JD: Part of this evolution affected your decision to be a doctor, didn’t it? Deciding you wanted to help people. You saw a world full of hurt.

    RP: I had an exceptionally good male teacher that taught biology and I got fascinated with that and got an A. So, when I went to college, I sort of leaned in the direction of science. I already felt comfortable with biology and the chemistry teachers and physics teachers weren’t as good. So I majored in biology, so that sort of set the stage, but even up until my third year in college, I was uncertain. But by the time I was finished in college, I had made a decision that’s what I wanted to do and fortunately, I was able to do that. I considered myself very fortunate that I was able, over my lifetime, to be able to do medicine, to a large degree and stuck with that a lot more than people realize as well as getting involved in the issues. People say, “when did you get involved in politics?” I say I never did. “When did you decide to go into politics?” I never did. But, I wanted to talk about the issues that were important to me and the vehicle was politics because I wasn’t an economics professor. I wasn’t writing great books and things like that, I was more inspired to try to convince other people of a different way of doing things. And I think I picked up some of the wisdom on how to do that from Leonard Read because he had some special ideas on how you converted people. Yet, I ended up talking, and being impressed and amazed that I could get 5,000 or 10,000 people out on a college campus, but being a member of Congress was what I used that one thing to do and that is to change people’s minds.

    JD: I know you’ve written about it, but talk briefly about your involuntary time, of a sort, in the Air Force during the 1960s.

    RP: Right. I always assumed I would be drafted. I thought being a doctor was a better way to go, because I just dreaded the thought of people just shooting at each other and killing each other. In October of ’62, I was almost finished with my second year of residency, and during the crisis, I got a draft notice. Fortunately I was able to finish out the year, but I went into the Air Force in January of ’63 and was stationed at Kelly in San Antonio and that’s how we originally got to Texas. But, back then, there were a few people resisting the draft. There was a doctor that was in the news and I sort of looked at that and I paid attention, but I didn’t say, “that’s what I ought to be doing.” But resistance to the war grew, and as time went on I sort of admired what boxer Mohammad Ali did, to give up his career in a way for three years, because he was arrested and prosecuted for resisting the draft. That, to me, was very impressive. I was disturbed by that, but I expected it. That’s what governments do to you.

    I was disturbed that my medical training was going to be messed up. But, I was pretty stoic about it and I liked the idea of flying. I remember going through flight medical school. It was not a big education, it was 3 months schooling, but I remember it was in the early 60s, they were just talking about the space program. I said, in my mind, I wonder if I ever could be the first doctor that could go into space. That technology fascinated me and of course, that wasn’t to be, but I just made a decision that I would make the best of it. During the Air Force period, I had a lot more time to read and that’s when the Randians were very active and it was at that time, I subscribed to The Objectivist Newsletter and remember specifically reading “Gold and Economic Freedom” by Alan Greenspan, which I kept a copy of all those years. That’s the activity I was involved with. I’m not a Randian, and I’m not an Objectivist. I have my critique of that, but it was sort of inspiring reading.

    Even today, I don’t read hardly any novels, but I read hers because they were sort of inspirational and yet, she forced me to sort things out because she was so negative on Christianity and generosity, at least she came across that way with her attack on altruism and compared it to communism and that didn’t make sense to me. I had to figure that out, that there was a difference, that they weren’t identical.

    But, so I had more time off while in the Air Force and enjoyed it. I learned how to fly an airplane and got my pilot’s license, but had to travel around the world frequently as part of my duty. I went to the Far East on a couple trips and I went to the Middle East and every place from Spain, Italy, Turkey, Ethiopia, Pakistan, the whole works. Iran, I was in, I don’t think I was in Iraq. In Iran, I had been there in Tehran, but that was back when we owned it, with the Shah.

    I referenced those trips over the years because they became so significant in my activity in foreign policy. I especially remember how we weren’t allowed to go into Afghanistan. We were in Pakistan and we went up to Peshawar, which was not too far from the Khyber Pass, which was historic and remains historic. It was right on the border and it turned out that was the area where that whole Bin Laden episode happened. And I can visualize that place very, very well as I was driving with the military people up in a truck, to visit the border. I can remember the captain that was with us in the truck, who had been there before and he said, “Ron, do you see that place up there?” It was a place of totally bare and rocky mountains. He said, “there are thousands of people that live up there. They are tribal and they’ve been there for a long, long time and they’ve never been conquered.” And he gave me a little history lesson and so, once we started thinking about this, in the foreign policy, I was able to visualize.

    So, my military experience turned out to have some value.

    JD: After the Air Force you were back in South Texas. You now have several kids. You’re reading Austrian economics, getting more and more involved in your thinking. In the early 70s, you go to the University of Houston and see Ludwig von Mises, only a year or two before he died.

    RP: I think it was his last lecture tour. We saw a little clip in the paper — very, very small — in the Houston Chronicle and it said he would be a speaker at the University of Houston. There was only one other person I knew in the whole town that knew who Mises was and that was Dr. Henry May and so, I called him, I said, “Henry, Mises is coming to town. Why don’t we go up and hear him?” And it was a major decision for us because we had to drive about 50 or 60 miles and find where he was giving this lecture. At the same time, we both had office hours, so we had to get coverage, for somebody to come in and take care of our patients because it would take us the afternoon to do this. So, we went up and his lecture was on socialism. I sort of read the book and knew a little bit about it. It was just the experience of hearing him lecture. He had a German accent with a lot of lisping, whistling. He spoke English, of course, but there was a strong accent, but it still was an experience. The venue, it was a room, probably a classroom that might have held 40 to 50 students, maybe more and they had to bring extra chairs in and that room was packed. We got there a little late and we stood at the door so we could at least see him for the experience. I don’t know whether you ever heard the other part of the story.

    JD: Dr. Michael Keller.

    RP: Do you know the story?

    JD: Our friend, Dr. Keller, was responsible for having the event there as a young member of UH student council.

    RP: One time we were talking many, many years later, to Keller and I told him this story. He said, “Guess what? I was the one that got Mises to come.” It was probably decades later that we crossed paths and that’s how one person, doing something — like bringing Mises in — can make changes and I found that fascinating.

    JD: So, when you ultimately decided to run for Congress, the first time around in the Houston area, I wonder if people understand how beneficial it was that you were known as a medical doctor and an OB — it was a political asset for you in running for Congress.

    RP: Yes, it was, as a matter of fact. We used it in our advertisements and our media person did an ad which was just, the lights coming on at my house. It was dark and I go out and get in the car and drive off and they show me going off and then me coming back home in the middle of the night. I got up and went and delivered a baby. Matter of fact, [Congressman and medical doctor] Michael Burgess was a medical student back then and after we got to know each other he said, “I saw your ads. That’s when I went into OBGYN. The ads were so impressive.” It had nothing to do with anything foreign policy or gold standard or anything else. It was just that I was an OB doctor and it was image making. When he told me that story, I said, “It’s too bad you just went into OB. I thought you’d become a libertarian.” But, he probably wouldn’t mind me saying that.

    JD: Carol was a little astonished when you won? It changed your life, not always in great ways, in terms of family.

    RP: Well, she wasn’t astonished. I was probably more astonished. It’s when I told her I was going to run. She said, it was risky, dangerous because you might win. I said no, I can’t possibly because I wasn’t involved in that. I was trying to get rid of Santa Claus and you don’t win doing that. She said, yeah, but you’re going to tell them the truth and they’re going to like that and they’re going to vote you in. So, yes, we had some adjustments to do. And that was one reason why after I had four terms, I came back to medicine for 12 years.

    JD: One of the great things that came out of your first stint in Congress was your minority report, with Lewis Lehrman on The Case for Gold. You were part of the Minority Commission appointed by Ronald Reagan. Reagan is someone you saw through maybe more than a lot of conservatives did.

    RP: Oh, yeah. Reagan was a nice guy and I think he believed in some good things, but he also was able to rationalize a lot of things. Deficit spending, big government, militarism. I didn’t like what he did in Libya, bombing Libya.

    Also, he really had less to do with the gold commission than it sounds because it was passed under Carter the year before Reagan was in. So when Reagan was elected and it came up, it looked like they were just going to ignore it. We had to make sure that they did it and my involvement came about, interestingly, because I had talked about gold.

    The most important outcome of that whole thing was that we legalized private ownership of gold again for the first time since the 1930s. The legislation was brought up under the IMF bill in 1983 and Jesse Helms and I sort of worked it together. But he was ahead of me on having it done. I think he was getting ready to do it in the Senate and they came to me and I was able to introduce it in the House.

    The bill’s passage was a significant event, but that was a reflection of what was going on in ’79 and ’80. I mean, we went from gold not being owned by Americans and fixed at $35 an ounce at Bretton Woods, which was a disaster. It collapsed and then we had a decade of massive inflation and 15 percent interest rates then 21 percent and people were very, very concerned about the dollar and so, the purpose was to study the role of gold in the monetary system, domestic and international.

    We had our first meeting and it was held in secret and [Donald] Regan was the chairman. He was Treasurer and he said, “we have to keep this secret because we don’t want to mess up the gold markets and all.” And guess who came to our rescue? Several people did, but [syndicated columnist and journalist] Bob Novak did. Novak was a gold guy and he started writing about it and he got enough people to pester them and then they turned the commission’s documents over. Few people in Washington wanted an open discussion.

    JD: A lot of people may not know the story about President Reagan calling you to vote for funding for a bomber program. Tough call for a young congressman.

    RP: Yeah, I was in the House restaurant and I think Carol was with me because usually when we had someone come from home, a guest, we’d go there. So, they came over and said, the president’s on the phone. I went to take the call and matter of fact, over the years, he did that I think twice, but this was the one on the B-1 bomber, that was controversial and he asked me — I was very, very polite and he was very polite — and I said, well I’m sorry, Mr. President because you know, I campaigned against that and I said I don’t think I can break my word. He said, okay, I understand. There wasn’t any badgering or anything like that, but then I went back and I told Carol.

    JD: That’s a great story. He was a little more gentlemanly than Tom DeLay.

    RP: DeLay was something else. He’s being rehabilitated.

    JD: Yes. Do you have any thoughts on running against Phil Gramm in 1984 for US Senate in Texas?

    RP: I was looking for a graceful way out of Congress and the Senate run was it because I did have a lot of supporters then and I didn’t want to insult them by just quitting. It was very, very clear that the establishment Republicans didn’t want me and they ganged up real fast to support Gramm. I don’t know of any other way that I could have done it, but it was sort of my desire to get home because in spite of all the stories you hear about Congressmen, back then I was probably making $40,000 or $50,000 a year and I had kids in school and it was not financially easy to go back and forth and have a couple homes and get kids through college. I decided that if I was going to go back to Congress, I had certain rules that I had. I was not going to have any kids still in school and I wouldn’t owe any money. I’d have my house and all my properties paid off and then I could be more relaxed in going back and not have to worry about the finances.

    JD: So, when you decide to run again in 1996, people might not know how arrayed against you the GOP was. Then Governor George W. Bush of Texas and his man, Karl Rove, were not fans, and actually Newt Gingrich as speaker had the Democrats switch parties to run against you. So they didn’t want you back.

    RP: They worked very, very hard. Matter of fact, that race is probably the most fascinating that I was involved in. It’s been written up in detail because when I decided I was going to run, I went and talked to the Republican delegation and I said, “I want to run.” I want to get another Republican seat for Texas because Greg Laughlan was the sitting Democrat in the 14th district where I lived.

    I said I could get the seat. But, what shocked me is I didn’t know how quickly I could change it to a Republican seat a month later. With the backing of the Republican establishment, Laughlan became a Republican. He was on the Ways and Means Committee and the GOP promised him a million dollars and Newt Gingrich came on and he supported him. He got 56 — maybe, a large number, I think it was around 56 — other members of Congress to cough up and donate to his campaign and both Bushes, Senior and Junior, supported him. They didn’t want me in Congress.

    But, it all backfired. We were tipped off at times when they were trying to bring somebody in to tell local voters to vote for Laughlan. I think it was somebody from the Reagan administration that they sent in. I can’t think of his name right now but he had been in the cabinet. We would know that he was coming in and then we had our press release ready the day before he arrived. The thing that we could use on this was, “why are they sending people from Washington to tell people in Texas how to vote?” And that was a powerful message.

    And also, I knew for sure that the reason that race was so interesting was that they would use the drug issue. I was very clear about the War on Drugs and how could anybody be against the War on Drugs in a Bible Belt conservative Republican district in Texas? You can’t be elected like that.

    So lo and behold, the Republican Party spent a million dollars or more, which was a lot of money then, and they did the most vicious ugly ads against me claiming that I’m giving drugs to kids and children, drug dealers and all this trash. And it didn’t work. I think most people didn’t believe it could possibly be true because they knew me more as a doctor taking care of and delivering babies. In fact, we answered it with an ad showing me delivering a baby. So, we had to combat this image. I ended up winning the primary.

    But then the Democrats did the same thing, used the drug issue and I finally concluded that I thought I was absolutely alone, but I think the people are way ahead of Congress because there probably were a lot of families that had been touched by somebody because they smoked a marijuana cigarette and got thrown in prison. It was horrible. It still is bad and we’re seeing this today. I think the people either didn’t believe it or they weren’t going to hold it against me or they think the drug war was bad and I think time has proven that that was a good assessment, even though now we have an administration that’s trying to go backward.

    JD: Well, when you come back to Congress, your second stint from 1997 until 2012, was marked by really two things that stick out. One is that you were strongly against the Iraq and Afghanistan wars and you were involved in promoting noninterventionism. The other thing is that you were involved in monetary policy going back and forth with first Alan Greenspan and later Ben Bernanke. Give us your overriding thoughts about your second go in Congress.

    RP: It was quite a bit different than the first time I ran. There was more attention and especially from 2008 on, from the presidential election in ’08 and ’12. It was just astounding and it was the issues that I liked to talk about, such as civil liberty issues.

    I remember that I was totally shocked when I arrived at the University of Michigan, it was after a debate we had in Detroit, and there was a group of young people who had waited because I was late. But, we came over and that’s where they started shouting “end the Fed” and that’s where I remembered them doing that. I didn’t tell people. I didn’t have cards, hold cards up or say let’s end the Fed. It was spontaneous, so I knew something was going on, where people wanted to hear this message.

    The other big issue was the NDAA [National Defense Authorization Act]. College kids started talking about that or bringing it up to me even before I was hitting hard about it. The main concern was the authority to arrest Americans and hold Americans without due process which has continued.

    Those were the issues I like to talk about and of course, one of my biggest events — might have been the biggest one — was at the Berkeley campus. Things were going along and we got more attention on the Federal Reserve and people, even today, I think have a much healthier attitude about the Federal Reserve. I remember at the time seeing a poll conducted by a television station asking whose fault the recession was. I think that 66 percent agreed it was the Fed’s fault and I thought, “wow.” And this wasn’t on your website or my website. This was on the CNBC website. And I thought, well, something interesting is going on. They’re not going to get away with what they’ve gotten away with for a long time because we’re going to have another crisis and the media will say it’s the Fed’s fault.

    JD: You knew Alan Greenspan a little bit and he understood gold and he understood Austrian economics. He’s a brilliant man.

    RP: We had a little bit of fun at times and I had visited with him after some hearings about Murray Rothbard and different things because he knew Murray from the Rand group. I think the most fascinating little incident was because I remember his article in The Objectivist Newsletter and he was coming to one of our hearings and we were able to go and have a one-on-one, sit down and get a picture and say a few words. And not everybody did it, but I was interested in it. That’s generally not my thing, but for Greenspan, I thought, I might as well take advantage of this. I had the original green pamphlet, which was The Objectivist Newsletter and it was in 1966 and it was when Greenspan had his article first published. I said, “do you recognize this?” He knew what it was. “What I’d like you to do is sign this article for me.” So, he got his pen out and he signed this. I said, do  you want to put a disclaimer on it? And he said, “I just read that recently and I still support all those views.” What am I going to make of all that?

    I’ve tried to get him on the Liberty Report, can’t get him on. I thought I could have some fun.

    JD: Maybe if you pay his $200,000 speaking fee.

    RP: Yes, probably.

    JD: I recall you also had a breakfast with Ben Bernanke when he was Fed Chair. How did that go? Was that polite or was it frosty?

    RP: It was polite and boring, in a way.

    JD: He wasn’t the ideologue that Greenspan was.

    RP: It might have been me not being aggressive enough or something. But, I’d have a much easier conversation with Volcker. Volcker, I got to know a lot better than I knew Bernanke and in the early 80s, there was a thing called the Monetary Control Act and there was a major part of it which was opening up the door for the Fed to monetize anything they want, especially foreign bonds. So, I complained about it and complained about it in my little way at the conference and Volcker invited me over. He said, “I’d like you to come over and have breakfast and we’ll talk about it some more.” But, it was sort of an academic thing, the way it was. It wasn’t like, “I’m going to straighten you out.” That wasn’t his attitude. So, this had to have been in ’79, most likely or ’80.

    JD: Mr. Volcker should be on your show. He’s got a new biography.

    RP: I don’t know whether we’ve reached out to him. He was more sympathetic to gold than some. So, when we went in, it was a one-on-one breakfast and we went over and the aide I had was somebody by the name of Lew Rockwell. We walk in and we got there a couple minutes early and Volcker’s staff was in the room where we were supposed to meet. So, we were just chatting away there in friendly conversation and then Volcker walks in, you can’t miss him because I think he’s about six-and-a-half feet tall. So, he walks in and I thought, “well I have to shake his hand and say hello.” He didn’t even look at me. He didn’t come to me. He went straight to his staff and he said, “what’s the price of gold?” So, I thought, “gold is important to him” and I still think it’s every bit as important to Fed people now because it is the ultimate measurement of the dollar. They can rig it and monkey around with it and play games, but ultimately, the market will have its say. That’s the way that Bretton Woods broke down the market. But then, of course, we talked and had the meeting and he didn’t convert me, but it was very polite. But, what I really remember about that was, he was very interested in what the price of gold was that morning.

    JD: The other huge and unfortunate series of events that marked your second time in Congress were 9/11 and then our subsequent invasion of Iraq and Afghanistan. Looking back, talk about that terrible period with Bush and Rumsfeld and Cheney and Wolfowitz. The Republicans in Congress were horrible too.

    RP: We started this interview off with talking about how bad the Depression was and World War II, and Korea, and Vietnam. But then when you look at some trends today, some things are almost worse because of our aggressiveness. Back then, it was sort of dumb economic policy and Fed policy that gave us Depression and war. But, we had a declaration of war and it seemed like it was more acceptable, given the circumstances. But in the 21st century, things dramatically changed after 9/11, and the US has become far more aggressive. After all, 9/11 wasn’t the reason for the wars that followed. It was the excuse. Washington policymakers already knew what they wanted to do in the Middle East before 9/11 even happened.

    My first speech, my first effort at peace, was shortly after I went back into Congress. I think it was 1998. It was the Iraq Freedom Act or I forget what it was called, but it was just intervention and threats and sanctions, that kind of stuff. I was saying those measures will lead to war. But, nobody was even talking about it in ’98, but it kept ratcheting up and getting worse and worse and worse.

    It just was sort of unbelievable that’s what we were doing, and of course I wasn’t able to stop the war. I thought I was supposed to be there to help stop the wars, but they’re still going on.

    JD: We’re going to feel the effects of these for decades and decades with the young people who’ve been hurt and need VA care.

    RP: It’s horrible.

    JD: And for all of your troubles, if you recall, there was that article in National Review from David Frum which called you and some other people, Pat Buchanan, “unpatriotic conservatives.” I always thought that you were neither. I think even some libertarians think of you as a conservative, but really you’re not in any political sense of that word.

    RP: No, it’s a tricky word. Because some people could argue that if you technically want to follow the only oath that we take as members of Congress, that’s sort of conservative, to obey the oath and follow it. But “conservative” in the sense of being a warmonger, and supporting the war on drugs, and not having an understanding of civil liberties. That’s not a good kind of “conservative.” Also, conservatives today, they don’t admit it, but they’re big spenders, they’re huge spenders. So no, in that sense, we libertarians are not conservative. Besides, Mises and other libertarians never liked to be called conservatives. They wanted to be called liberals. That’s the trickiness of language. I generally steer clear of the labels.

    I like to divide things into two parts: authoritarianism and volunteerism. On the one side are people who think that your life ought to be done on voluntary terms, as long as you reject aggression. On the other side are the authoritarians and they think they know what’s best for others. They really do. People I knew in Washington are convinced that people are idiots and therefore they can’t be responsible for themselves.

    That’s why they don’t want ordinary people to own guns — and government should have all the guns. If you wanted to compare the number of people who die from government guns versus private guns — historically, government kills about 95 percent of the people. Maybe it’s worse than that, when you think of the 20th century.

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