- Learning The Real Lessons Of Yalta To Prevent World War III
Authored by Martin Sieff via The Strategic Culture Foundation,
Politically aware Americans, especially self-proclaimed “tough” neo-liberals and neo-conservatives have had a hate obsession with the Crimea for 73 years since proclaiming the myth of an “evil” sell-out of Eastern Europe that supposedly took place at the Yalta summit conference in February 1945 between Josef Stalin, Winston Churchill and a dying US President Franklin Roosevelt.
Instead, as is often the case in the age of George Orwell’s “big lie” in modern America and Britain, the opposite was the case. The Yalta conference was a triumph of realpolitik that kept the global peace between the superpowers almost three quarters of a century so far.
It is, therefore enormously ironic that the peace of the world should now be threatened over US and UK outrage in particular over Russia asserting its legal and sovereign rights after a blatant breach of agreements and sovereignty by the Ukrainian vessels in Kerch Strait separating Crimea from mainland Russia.
The kneejerk US and UK reactions, based on mindlessly swallowing generations of dangerous mythmaking by both Republicans and Democrats in the United States and by the revered demigod Winston Churchill in Britain is that at Yalta Roosevelt cynically – and possibly in full senility – “sold out” all the countries of Eastern Europe to Stalin and thereby threatened the survival of the West.
This myth was created by Churchill in Volume 6 of his enormous war memoirs, “The Second World War”. (Most of it was in fact written for him by an enormous team of British historians and bureaucratic researchers. This did not stop Churchill from happily accepting the Nobel Prize for Literature on the entirely false grounds that he had written all of it.)
Churchill blamed Roosevelt for selling out Eastern Europe at Yalta in his discussions with Stalin. By then FDR was long since dead and so were Harry Hopkins, his de facto national security adviser at Yalta and Major General Edwin “Pa” Watson, his closest personal aide.
The next US president, Harry Truman made no secret in later years of his deep, abiding jealousy for President Roosevelt and was happy to scapegoat his dead predecessor for the outcome of Yalta..
Truman’s successor, President Dwight Eisenhower as Supreme Allied Commander actually worked sympathetically and closely with the Soviet Union to prevent any clash between the Western and Soviet armies knowing that only the Nazis could benefit from such a disaster.
But by 1952, running for president himself, Eisenhower did not dare to acknowledge his own key role in accepting Soviet control of half of Europe, so it made perfect sense for him to slander the late FDR as well.
In fact, Yalta was a triumph for FDR in everything that really mattered: The division of Europe agreed to there by the “Big Three” was based on realities of power and could therefore be upheld and maintained for many decades and it was. By contrast, the hyped, gargantuan Versailles Peace Conference in 1919 led to the rise of Adolf Hitler within 14 years and another, even worse world war only 20 years later.
Versailles was a catastrophe. Yalta, where it really mattered, was a lasting triumph.
Because of the great Soviet victory in June 1944 in the Battle of Belorussia, it was inevitable that all of Central Europe from Stettin in the Baltic to the borders of Greece would fall under Soviet control before the Anglo-American armies driving in on the Third Reich from the West could get there. That was why the American Republican criticisms of the dying Franklin Roosevelt for “selling out” Central Europe at the 1945 Yalta conference were so unfair. There was nothing in practical terms FDR could have done otherwise.
And in any case, FDR did not make the key concessions to Stalin on Central Europe at all. It was Churchill, the British statesman who has become the icon-hero of American internationalist conservatives, who made them.
Churchill, at his meeting in Moscow with Stalin in October 1944 initialed the famous agreement on the back of a napkin that acknowledged the Soviet dominant role in all of the Balkans, except for Greece. Roosevelt was outraged when he learned about it. By then, Churchill knew that Poland, Hungary and most of the rest of Central Europe would fall to the Soviet armies too. The Battle of Belorussia had ensured that.
As US senators and pundits vie with each other now to push US President Donald Trump towards a potentially enormously dangerous confrontation with Russia over the Kerch Straits clash, it is more important than ever to recover and teach the true lessons of Yalta.
In February 1945 a dying but clear-headed Franklin Roosevelt opted for continued respect and dialogue with the Soviet Union to prevent world wars and preserve the peace of the world. His wisdom lasted almost 70 years.
Yalta was never a naïve sellout and Roosevelt gave away nothing. After he died Winston Churchill and the US Republicans successfully slandered his good name for their own glory and lying gain.
To restore US-Russian trust, dialogue and respect, it is vital Americans are educated at last to the true story.
- US Defense Contractor Posts Job Offering For "Classified Contingency Operations" In Ukraine
The geopolitical analysis site SouthFront has unearthed from the pages of LinkedIn an incredible public job offering by a US defense contractor which reveals potentially sensitive information. The job posting mentions “classified Contingency Operations” in Ukraine and was posted a mere 15 days ago — just prior to last Sunday’s incident between the Russian and Ukrainian navies in the Kerch Strait.
Writes SouthFront, the US-based defense contractor company “Mission Essential” accidentally revealed a US military specialist deployment in the combat zones in Ukraine via a Job Advertisement on LinkedIn.
Crucially, it’s yet further evidence which disproves the years-long claims by Washington that the United States is not directly involved militarily in the Ukraine conflict. The public posting suggests US special forces operations are indeed active and ongoing as tensions with Russia soar.
Screenshot provided should the advert time out or is “accidentally” taken down. Here is the link for the original job posting.
* * *
Similar to the Atlantic Council’s latest report on the independence of Eastern European countries, as well as the meeting between US Secretary of State Mike Pompeo and Ukrainian Foreign Minister Pavlo Klimkin, the posting came just days before the escalation in the Sea of Azov.
“Mission Essential” is a government contractor based in the Washington D.C. suburb of Herndon, VA primarily serving intelligence and military clients, and is also considered a leading provider of translation and interpretation services for the US government.
The preemptive job advert was posted on November 16th and seeks:
…linguist candidates who speak Ukrainian to provide foreign language interpretation and translation services to support classified Contingency Operations in support of the U.S. Military in Ukraine.
The formal place of work is Mykolayiv, Ukraine. The port city is also significant, because that is where the US “logistical” naval facility is currently under construction.
The advert also requires candidates to be able to fit in the local culture and customs, in addition to “the ability to deal inconspicuously with local populace if necessary.” Which simply means that the interpreter needs to be able to hide the fact that he is not a Ukrainian citizen, at least partly.
Unsurprisingly, the individual needs to be able to serve in a combat zone “if necessary,” in addition to being able to “live, work, and travel in harsh environments, to include living and working in temporary facilities as mission dictates.”
From the Virginia-based defense contractor’s website. Considering repeated claims by the US leadership that Washington is not involved in the Ukraine conflict, the vacancy posting is an operational security failure by Mission Essential. Most other vacancies posted by the company are for analysts and various linguistical and project management positions, almost predominantly in different military facilities in the US.
It is quite possible that these specialists would assist US military personnel deployed in or near the “combat zones” in Ukraine – i.e. Eastern Ukraine, and as it was expected since as early as November 16th – the Sea of Azov.
This is another piece that reinforces the notion that the “provocation by Russia” in the Sea of Azov could somehow have been premeditated.
However, it also appears that, Ukrainian President Petro Poroshenko’s plans have appeared to, at least partially, backfire. “Partially,” because he managed to institute martial law and make another step in his attempts to postpone elections in 2019, thus “democratically” holding on to power and not allowing the Ukrainian citizens to vote and most likely elect his rival and favored presidential candidate Yulia Tymoshenko.
- Trump: The Last President?
Authored by John Wilder via Wilder, Wealthy, And Wise blog,
“President Camacho: ‘Number one: We’ve got this guy Not Sure. Number two: He’s got a higher IQ than any man alive, and Number three: He’s going to fix everything.’” – Idiocracy
You never want to make the call too early. By the way, in this book, the name of the Last President was Pence. Oooh, goosebumps.
Donald Trump may be the last President of the United States.
There will certainly be people that will follow him that will use the title, but their allegiance won’t be to the electorate as a whole – their allegiance will be only to the Left.
As we see in California now, the entire mechanism of state government has switched to a uniform Leftist government – the California Republican Party is as potent a political force as a group of twelve year old My Little Pony fans at an MMA event.
The Governor isn’t the Governor of California, especially when he won in a 57% to 43% victory.
The Governor is the Governor of the Left, and will represent the Left, not the electorate in general. The swing vote, which has moderated elections nationally is absent in California. The swing vote means that the most uninterested people have the levers of power. That category of people simply does not exist in California.
Party leader? Sure. Governor? Well, in name only. In reality, the recently elected Governor is the Democratic Party leader.
Recently, we’ve had contests at the national level for President – the swing voter makes a difference. Could McCain have won in 2008? No, not really, mainly because no one liked him. Could Romney have won in 2012? Maybe, but it would have been like electing your middle school principal as President. The fact that Trump did win in 2016 was relatively surprising to me.
Trump’s victory did expose part of the genius of the founding fathers. Despite the popular vote being in favor of Clinton, Trump concentrated on and won the Electoral College. The Electoral College isn’t a genius move because Trump won – the Electoral College was a guarantee of the essential promise of the Constitution to the States that the small states wouldn’t get dragged around like a St. Bernard’s chew toy (small states hate slobber), but it also provided a trap against voter fraud and a mechanism for nearly instant legitimacy of the elected President. In order to cheat on a national election, you’d have to cheat in state after state after state. Cheating in New York City or even statewide in Texas alone won’t do elect a fraudulent President.
And while it’s common it’s not unheard of: Trump is the fifth President to be elected by winning the Electoral College without winning the popular vote.
But on election night 2018, Bill Kristol tweeted:
‘I’ve always disliked the phrase “demography is destiny,” as it seems to minimize the capacity for deliberation and self-government, for reflection and choice. But looking at tonight’s results in detail, one has to say that today, in America, demography sure seems to be destiny.’
I rarely agree with anything that Kristol has to say, so I think he might have been on Ambien when he tweeted that. But he’s right. And Bill Kristol being right makes me certain he was on Ambien.
The Right faces a serious headwind in future elections. A few data points:
- Before the Immigration Reform and Control Act of 1986, California was reliability Republican. After that law passed? California dived quickly into the Leftist camp – the primary driver being the rise of first generation citizens being allowed to vote – a group that strongly skews Leftist, by 3 to 1 or more. When I was a kid, California was a shining economic model of progress. Now it’s a poster-child for income inequality and poverty. So California’s got that going for it.
- Florida has one major group that will impact future elections – newly-minted predominantly (5 to 1 Leftist) ex-felon voters approved by a Florida constitutional amendment just approved this election. 5 million ex-felon voters, which using extremely conservative math nets the Left 400,000 more votes. Donald Trump won by 110,000 or so votes. Additionally, we’ve seen that Florida is a mess after a close vote. With lots of “ballots I just found in the pocket of my other coat,” if you know what I mean. Wink, wink.
- Texas is moving Left. Yes, Cruz beat Beto, but those demographics that Kristol talked about appear here strongly, and I wrote about it before (The Fall of Texas and the Coming One Party State). Texas doesn’t turn Left in 2020 unless the economy really, really tanks. Probably 2024. Certainly 2028. 2032? Expect posters to Stalin©.
- The economy. It ran on 0% interest rates for years. Now that the Fed is attempting to raise rates? At some point the party is over and the economy will hit a recession – probably before 2020. If Trump is lucky? A recession in 2019 would be good. Like right away. Presidents don’t do well running for re-election in the middle of a recession. It’s like trying to lick a flagpole at -40°F (-40°C) – it’s embarrassing to be there and requires the fire department to save you. Ask Jimmy Carter.
- The process of drawing legislative voting districts to benefit your party is as old as the Republic. It even has a name, gerrymandering, named after Elbridge Gerry, governor of Massachusetts when they said the strange congressional district he created looked like a salamander. Gerry+salamander=gerrymander. Or maybe it was his wife, whose nickname was “Lizard Lips.” Republicans have 33 governorships, so they’re getting pretty good at drawing districts that would make Gerry proud. But the Left is using judges to undo the creative districting, which makes it rougher to gain a majority in the House of Representatives.
Many of these changes are permanent and spread to other states. Folks leaving California because it’s too much like California move to wonderful places such as where my brother John Wilder lives. (There’s a longer version of why my brother’s name is John Wilder, but let’s just assume our parents weren’t very imaginative. We at least have different middle names.)
What happens when they move there? Well, being normal Californians, the first thing they do is get on the Homeowners’ Association boards, because people from California really like telling other people what to do. My brother attended a meeting of his board one night. Sage McUnicorn, who had recently moved from California, motioned that the new trash company collect recyclables every week.
My Brother John: “Don’t they charge extra for that?”
Sage O’Smurf: “Namaste, yes, but it is good for the planet. It will help us protect Mother Earth. It’s only a few hundred dollars a year. Don’t we all love the Earth that much?”
My Brother John: “You’re saying that you want to charge every person in this neighborhood extra money to pick up newspapers and plastics that the trash company just dumps in a landfill? (That’s what the trash company was doing then. – JW) How is it responsible to force another person to pay for your views?”
Sage MacRainbow: “The oracles tell us that is how it is done. Never pay for your own convictions. That could get expensive!”
My brother’s argument actually swayed the HOA. They didn’t end up with a recyclable fee. But the point remains: Californians who leave California because it is, well, California, want to move to new places to make them just like California when they get there. It’s like when zombie bites you, but you get a lecture, too.
I took this picture in California in February of 2016. I hear now the water is recycled right out of the toilet to the water fountains. I guess that’s why I only drank wine when I was out there.
Trump in 2020 has headwinds against him. In 2024, however, all of the demographic changes have continued another four years. Texas may be as permanently left as California has become, and Florida may have joined it, if Florida can figure out how a pocket calculator works by then. Without Florida? Re-election looks grim even in 2020.
If every future election has a foregone conclusion, that leaves the President as a single party leader of the Left. And in Washington D.C. the Left has been consistently more disciplined on voting, though they do tend to form circular firing squads on policy. Given the thin Senate majority now, another decade of demographic change might allow truly uniform and consolidated power as all legislative bodies are captured along with the Presidency. And at that point the United States is a de facto single party state, with a minority party that is just for show. A list of single party states that look like this includes such human rights wonders and great vacation spots as Turkey, South Africa, Venezuela and Zimbabwe. I mean, who wouldn’t love to live in those places?
Frankly, my favorite government is grid lock. The government is best that can’t figure out what it wants to do because it’s fighting with itself, because it then manages through sheer incompetence to leave you alone. Maybe that could be my slogan in 2024 – “Wilder, for the ineffective and confused government you deserve!”
Next Monday . . . we’ll look more how this sets up a Civil War. But smile. We have Netflix® now, right?
- "I Begged Them To Kill Me": Muslim Woman Describes Degrading, Electroshock Torture In Chinese Internment Camp
A Uighur Muslim woman claims she was tortured and abused at a Chinese internment camp where hundreds of thousands of religious minorities are being kept, according to the Independent.
29-year-old Mihrigul Tursun told reporters during a Washington press conference that she was subjected to a degrading four-day interrogation which included no sleep, having her head shaved, electrocution and “an intrusive medical examination,” after her second arrest in China in 2017. Tursun claims that the abuse got worse when she was arrested a third time.
“I thought that I would rather die than go through this torture and begged them to kill me,” Tursun told journalists at a National Press Club meeting.
China has come under fire in recent months over their treatment of Muslims known as Uighurs – of which as many as two million have been incarcerated in “reeducation camps” in the country’s far west to reprogram them for what the government has called “ethnic unity.”
Chinese authorities routinely deny any ethnic or religious repression in Xinjiang. They say strict security measures – likened by critics to near martial law conditions, with police checkpoints, the detention centers, and mass DNA collection – are needed to combat the influence of extremist groups.
After initial blanket denials of the detention facilities, officials have said that some citizens guilty of “minor offences” were sent to vocational centers to improve employment opportunities. –Reuters
Raised in China, Tursun moved to Egypt to study English at a university where she met her husband. Together they had triplets. In 2015, she traveled back to China to visit family and was immediately detained and separated from her infant children. After her release three months later, Tursun found that one of her children had died and the other two had health issues. She claims the children had been operated on.
Tursun was arrested around two years later for a second time – while several months later she was detained for a third time where she spent three months in a cramped prison cell along with around 60 other women. The group had to take turns sleeping, and toilets were situated in front of security cameras. She says that the women were forced to sing propaganda songs praising China’s Communist Party.
Ms Tursun said she and other inmates were forced to take unknown medication, including pills that made them faint, and a white liquid that caused bleeding in some women and loss of menstruation in others. She said nine women from her cell died during her three months there.
One day, Ms Tursun recalled, she was led into a room and placed in a high chair, and her legs and arms were locked in place.
“The authorities put a helmet-like thing on my head, and each time I was electrocuted, my whole body would shake violently and I would feel the pain in my veins,” she said in a statement read by a translator.
“I don’t remember the rest. White foam came out of my mouth, and I began to lose consciousness,” Ms Tursun said. “The last word I heard them saying is that you being an Uighur is a crime.” –Independent
She was later released in order to take her children to Egypt, but says that she was ordered to return to China. Instead, she phoned US authorities from Cairo and was allowed to settle in Virginia in September.
Tursun joined over 270 scholars from 26 countries last week in a published statement condemning China’s “mass human rights abuses and deliberate attacks on indigenous cultures.”
China has hit back against the criticism, stating last month that 15 foreign ambassadors who wrote a letter expressing their concerns over the incarcerations “should not interfere in the internal affairs of other countries.” Meanwhile, reports have emerged that over half a million Han Chinese citizens have moved into the homes of Highur Muslim families in order to report on whether they “display Islamic or unpatriotic beliefs,” according to the Independent.
The informants, who describe themselves as “relatives” of the families they are staying with, are said to have received specific instructions on how to get them to let their guard down, including offering them cigarettes and alcohol.
China has claimed the Uighur Muslims are grateful to be detained in mass internment camps, saying it makes their lives more “colourful”. –Independent
Beijing added that it’s simply trying to bring Muslims into the “modern, civilized” world.
In September, the Trump administration weighed sanctions against Chinese senior officials and companies in order to punish Beijing’s detention of ethnic Uighurs and other minority Muslims. Beijing, in response, said it would retaliate “in proportion” if Washington levies the sanctions.
China’s ambassador to the United States, Cui Tiankai, said late last month that while the United States was using missiles and drones to kill terrorists, “we are trying to re-educate most of them, trying to turn them into normal persons (who) can go back to normal life.“
“Can you imagine (if) some American officials in charge of the fight against ISIS would be sanctioned?,” Cui said – adding that “if such actions are taken, we have to retaliate.”
- "Never Seen Anything Like It" – Scientists Baffled By Strange Seismic Waves Rocking The Globe
Authored by Mac Slavo via SHTFplan.com,
On November 11, mysterious seismic waves caused a rumble in the Indian Ocean that reverberated around the globe. Low-frequency waves shook the entire Earth for about 20 minutes that day, but scientists now believe they know what caused that strange phenomenon.
Researches have declared that they don’t think any large earthquake was responsible for the worldwide rumblings. Instead, they feel that an eruption of an underwater volcano was to blame. Well, according to scientists, it was “almost certainly” an underwater volcano, anyway…
The rumble, which was described as a monotone ring, was picked up by seismographs almost 11,000 miles (18,000 km) from Mayotte and were spotted by happenstance. A New Zealand based Earthquake enthusiast who goes by the handle @matarikipax noticed unusual seismology readings from the United States Geological Survey. The agency publishes all of its recordings for free online, allowing anyone across the globe to trawl through its data. “This is a most odd and unusual seismic signal. Recorded at Kilima Mbogo, Kenya,” @matarikipax wrote on Twitter on November 11. “The signal can be seen all around the world.”
This is a most odd and unusual seismic signal.
Recorded at Kilima Mbogo, Kenya …#earthquakehttps://t.co/GIHQWSXShd pic.twitter.com/FTSpNVTJ9B— ******* Pax (@matarikipax) November 11, 2018
https://platform.twitter.com/widgets.js
According to The Daily Mail, a low-rumbling that could not be felt above ground was detected on November 11 and narrowed down the origin to a region just off the coast of the island of Mayotte. One scientist who has studied the charts told MailOnline that the trembling was almost certainly caused by a low-level underwater volcanic eruption off the northeast of Mayotte.
Anthony Lomax, an independent seismology consultant, said that “There has been ongoing low-level seismic activity there since May,” he told MailOnline.
“‘Inflation/deflation and collapse of volcano calderas and movement of magma under a volcano can produce a wide variety of seismic signals, including long period and repetitive waves like those observed November 11.”
University of Plymouth Geology Graduate and founder of the United Kingdom Earthquake Bulletin, Jamie Gurney, said he had “no idea if a similar global signal of this nature has ever been observed.”
Scientists are working to understand what spurred the mysterious waves on that day. So far, many suspect they’re related to an ongoing seismic swarm in the region that began last May.
- JPMorgan Spots A Rare And "Even Worse Omen" For The Market
When it comes to timing the next recession – or the next Fed policy mistake – there are few signals that pundits rely more on than the shape of the yield curve, which, as we have covered extensively in the past year, has bear flattened dramatically since 2015 as the Fed has hiked rates, with the 2s10s now just a tiny 20bps away from inverting at which point the countdownto both a recession and a bear market begins.
However, at a time of unprecedented central bank meddling and manipulation in all rates (and equity) markets, many believe that the longer-dated curve is no longer indicative of anything but noise, especially since the long-end is directly being bought by central banks (or sold by Chinese reserve managers depending on how much Trump’s trade war escalates) thus distorting any “signal” value it may have. In its place, a more accurate “signal” has emerged in the short-end of the curve, as manifested by the Overnight Index Swap, or OIS, futures market.
It was here that back in April JPMorgan observed something very notable: the forward curve for the 1-month US OIS rate, a proxy for the Fed policy rate, had inverted after the two-year forward point for the first time this cycle. This implied some expectation was priced in of a reduction in the Fed policy rate after Q1 2020; that or the market starting to actually price in – and not just contemplating – the next Fed policy error, i.e., hiking right into the next recession.
This is a big deal: as JPM’s Nikolaos Panigirtzoglou wrote, an inversion at the front end of the US curve is a significant market development, not least because it occurs rather rarely, and has happened only three times over the past two decades: in 2005, 2000 and 1998 – all periods in time preceding major market busts.
While redundant, JPM explained that “such inversion is also generally perceived as a bad omen for risky markets” and highlighted that the two potential explanations are either markets pricing in a Fed policy mistake, or pricing in end-of-cycle dynamics.
Fast forward to today, when 8 months later, Panigirtzoglou writes in his latest Flows and Liquidity commentary that since then, not only has this inversion worsened, but it has shifted forward, and since the middle of November, the forward curve is inverted between the 1-year and the 2-year forward points.
This shift forward in Fed policy reversal expectations is in line with historical experience. As JPM wrote back in April, the 3y-2y forward rate spread had historically led the 2y-1y one, and this has now occurred since mid-November.
What does this mean in practical terms? Simple: the latest curve inversion implies that markets are now pricing in a peak in the Fed policy rate in end-2019 rather than during 2020 previously. JPMorgan shows this in Figure 2, which depicts the forward curve of the 1-month dollar OIS curve currently vs. its snapshot at the beginning of October before the equity market correction.
Not only has the market-implied path of policy rate expectations shifted downward in the aftermath of the equity market correction, but the whole curve has shifted forward. And this week’s comments by the Fed Chairman appear to have reinforced these policy reversal expectations with the 2y-1y forward rate spread inverting further to below -3 basis points.
Of course, as we discussed extensively in April, such pronounced shifts forward in Fed policy rate reversal expectations has also traditionally been associated with end-phases of the US monetary policy cycle. In the 2000 monetary policy cycle, the 3y-2y forward rate spread of the 1-month OIS rate turned negative in February 2000. And as JPMorgan adds, the 2y-1y forward rate spread turned negative four months later in June 2000. The Fed delivered the last hike in May 2000.
In other words, from a timing point of view, the last hike of the Fed at the time almost coincided with the inversion of the 2y-1y rate forward spread. Incidentally that also marked the bursting of the dot com bubble, as the US equity market had started declining at roughly the same time in June 2000. The subsequent equity market correction induced the Fed to start cutting rates in 2001.
Fast forward to the next rate hike cycle, when in the 2006 monetary policy cycle, the 3y-2y rate forward spread of the 1-month OIS rate turned negative rather early in August 2005. The 2y-1y forward spread turned negative ten months after in June 2006. Similar to the 2000 cycle, the last hike of the Fed at the time in June 2006 coincided with the inversion of the 2y-1y forward rate spread. There was one material diference to the 2000 cycle: the equity market had started declining much later in October 2007 when the Fed started cutting rates.
Rather concerningly, here JPM notes that although it is still early to draw conclusions, the lags from the 3y-2y inversion to the 2y-1y inversion and the September peak in the US equity market appear more consistent with the 2000 rather than the 2006 cycle.
Now as readers may recall, when the 3y-2y forward spread inversion first emerged last April, JPM argued that an inversion at the front end of the US curve “was a bad omen for risky markets.“
So, perhaps not unexpectedly, the ensuing 2y-1y inversion and shift forward in Fed policy rate reversal expectations is, according to JPMorgan, “worsening this bad omen.“
Why? Because in even more bad news for the BTFD crew, the lesson from the previous US monetary policy cycles is that a sustained recovery in equity and risky markets has tended to occur only after the inversion disappears and the front end of the US curve, in particular the 2y-1y forward rate spread, resteepens.
Negative implications for the stock market aside, as we briefly mentioned above JPM previously argued back in April that this yield curve inversion could be consistent with two potential fundamental explanations: markets have been either pricing in a Fed policy mistake or end-of-cycle dynamics. As Panigirtzoglou explains, while it is difficult to distinguish between the two – especially as a Fed policy mistake be definition naturally shorten the cycle – there should be some distinction in terms of investor flow patterns.
- Pricing in a Fed policy mistake should induce investors to focus on earlier growth weakness and should, therefore, be accompanied by weak equity fund flows, weak cyclical sector flows, greater flows in long-dated bond funds vs. short-dated ones on potentially earlier reversal of US monetary policy, and weak flows in interest rate-sensitive sectors such as housing.
- Pricing in end-of-cycle dynamics should be accompanied by overheating and inflation concerns, i.e. greater flows into inflation-protected vs nominal bond funds, greater flows in short-dated vs. long-dated bond funds on later reversal of monetary policy and greater flows into cyclical sectors and equity funds, in general, as the best equity and cyclical sector returns are typically seen at the end of the cycle.
How to distinguish between the two hypotheses? JPM has an idea:
There should be less distinction in terms of credit flows as credit should respond to higher uncertainty and volatility and underperform under both Fed policy mistake and end-of-cycle dynamics. So the weakness seen in credit flows this year, especially in HY bond funds, is in our opinion less useful in helping to distinguish between the two hypotheses.
So which pattern do this year’s flows fit? Back in April, when the 3y-2y first inverted, JPM had argued that there was more flow support for the Fed policy mistake hypothesis. Updating that flow analysis with more recent data reinforces that conclusion. This is shown in the five flow metrics below:
1) The trajectory of equity fund flows has been rather weak and erratic since last February with no signs of change in the most recent months.
2) Flows into cyclical vs. defensive equity sectors. Since the yield curve inversion first emerged last April, inflows into US sector ETFs have favored more defensive sectors such as Staples, Healthcare and traditional Telecoms, while outflows have focused on cyclical sectors such as Financials, Industrials and Consumer Discretionary.
3) Relative flows in inflation protected vs. nominal bond funds. The chart below splits overall US government bond ETF flows into nominal and inflation-linked bonds. Nominal bond funds have had steady inflows since the start of the year, while flows into inflation-linked government bond ETFs have been negative since July.
4) Relative flows in short-dated vs. long-dated bond funds. The duration impulse of flows into US bond ETFs has decreased this year, with inflows going mostly into shorter-term and floating-rate rather than longer-term bond ETFs. And if anything, this trend has intensified in the most recent months.
5) Interest rate-sensitive sector funds such as REITS have seen significant outflows in the US relative to a flattish pattern globally.
In other words, according to JPM, flow metrics 1, 2, 3 and 5 look more consistent with the Fed policy mistake hypothesis, while the flow metric 4 looks more consistent with the end-of-cycle hypothesis.
JPM’s’s conclusion, incidentally, is the same as what it said back in April, namely that “while we recognize it is difficult to distinguish between the two hypotheses, there still appears to be more flow support for the Fed policy mistake hypothesis“
In other words, between the market’s ongoing preoccupation with the US-China trade war, and traders suddenly pricing in either a policy mistake as the Fed continues to hike into an economic slowdown and eventually recession, or the end of the hiking cycle, it would explain the violent market selloff of the past two months, and the associated spike in volatility, as forward-looking investors and traders simply look to cash in their chips as suddenly the market is signalling that the trading environment observed just before the tech and credit bubbles burst, is once again imminent.
- From Killing Kennedy To Kremlin Collusion – Deep State Forced Out Of The Shadows
Authored by Robert Gore via Straight Line Logic blog,
The Deadliest Operation
Choose your battles wisely…
One month to the day after President Kennedy’s assassination, the Washington Post published an article by former president Harry Truman.
I think it has become necessary to take another look at the purpose and operations of our Central Intelligence Agency—CIA. At least, I would like to submit here the original reason why I thought it necessary to organize this Agency during my Administration, what I expected it to do and how it was to operate as an arm of the President.
Truman had envisioned the CIA as an impartial information and intelligence collector from “every available source.”
But their collective information reached the President all too frequently in conflicting conclusions. At times, the intelligence reports tended to be slanted to conform to established positions of a given department. This becomes confusing and what’s worse, such intelligence is of little use to a President in reaching the right decisions.
Therefore, I decided to set up a special organization charged with the collection of all intelligence reports from every available source, and to have those reports reach me as President without department “treatment” or interpretations.
I wanted and needed the information in its “natural raw” state and in as comprehensive a volume as it was practical for me to make full use of it. But the most important thing about this move was to guard against the chance of intelligence being used to influence or to lead the President into unwise decisions—and I thought it was necessary that the President do his own thinking and evaluating.
Truman found, to his dismay, that the CIA had ranged far afield.
For some time I have been disturbed by the way CIA has been diverted from its original assignment. It has become an operational and at times a policy-making arm of the Government. This has led to trouble and may have compounded our difficulties in several explosive areas.
I never had any thought that when I set up the CIA that it would be injected into peacetime cloak and dagger operations. Some of the complications and embarrassment I think we have experienced are in part attributable to the fact that this quiet intelligence arm of the President has been so removed from its intended role that it is being interpreted as a symbol of sinister and mysterious foreign intrigue—and a subject for cold war enemy propaganda.
The article appeared in the Washington Post’s morning edition, but not the evening edition.
Truman reveals two naive assumptions. He thought a government agency could be apolitical and objective. Further, he believed the CIA’s role could be limited to information gathering and analysis, eschewing “cloak and dagger operations.” The timing and tone of the letter may have been hints that Truman thought the CIA was involved in Kennedy’s assassination. If he did, he also realized an ex-president couldn’t state his suspicions without troublesome consequences.
Even the man who signed the CIA into law had to stay in the shadows, the CIA’s preferred operating venue. The CIA had become the exact opposite of what Truman envisioned and what its enabling legislation specified. Within a few years after its inauguration in 1947, it was neck-deep in global cloak and dagger and pushing agenda-driven, slanted information and outright disinformation not just within the government, but through the media to the American people.
The CIA lies with astonishing proficiency. It has made an art form of “plausible deniability.” Like glimpsing an octopus in murky waters, you know it’s there, but it shoots enough black ink to obscure its movements. Murk and black ink make it impossible for anyone on the outside to determine exactly what it does or has done. Insiders, even the director, are often kept in the dark.
For those on the trail of CIA and the other intelligence agencies’ lies and skullduggery, the agencies give ground glacially and only when they have to. What concessions they make often embody multiple layers of back-up lies. It can take years for an official admission—the CIA didn’t officially confess its involvement in the 1953 coup that deposed Iranian leader Mohammad Mosaddeq until 2013—and even then details are usually not forthcoming. Many of the so-called exposés of the intelligence agencies are in effect spook-written for propaganda or damage control.
The intelligence agencies monitor virtually everything we do. They have tentacles reaching into every aspect of contemporary society, exercising control in pervasive but mostly unknown ways. Yet, every so often some idiot writes an op-ed or bloviates on TV, bemoaning the lack of trust the majority of Americans have in “their” government and wondering why. The wonder is that anyone still trusts the government.
The intelligence agency fog both obscures and corrodes. An ever increasing number of Americans believe that a shadowy Deep State pulls the strings. Most major stories since World War II—Korea, Vietnam, Kennedy’s assassination, foreign coups, the 1960s student unrest, civil rights agitation, and civic disorder, Watergate, Iran-Contra, 9/11, domestic surveillance, and many more—have intelligence angles. However, determining what those angles are plunges you into the miasma perpetuated by the agencies and their media accomplices.
The intelligence agencies and captive media’s secrecy, disinformation, and lies make it futile to mount a straightforward attack against them. It’s like attacking a citadel surrounded by swamps and bogs that afford no footing, making advance impossible. Their deadliest operation has been against the truth. In a political forum, how does one challenge an adversary who controls most of the information necessary to discredit, and ultimately reform or eliminate that adversary?
You don’t fight where your opponent wants you to fight. What the intelligence apparatus fears most is a battle of ideas. Intelligence, the military, and the reserve currency are essential component of the US’s confederated global empire. During the 2016 campaign, Donald Trump questioned a few empire totems and incurred the intelligence leadership’s wrath, demonstrating how sensitive and vulnerable they are on this front. The transparent flimsiness of their Russiagate concoction further illustrates the befuddlement. Questions are out in the open and are usually based on facts within the public domain. They move the battle from the murk to the light, unfamiliar and unwelcome terrain.
The US government, like Oceania, switches enemies as necessary. That validates military and intelligence; lasting peace would be intolerable. After World War II the enemy was the USSR and communism, which persisted until the Soviet collapse in 1991. The 9/11 tragedy offered up a new enemy, Islamic terrorism.
Seventeen years later, after a disastrous run of US interventions in the Middle East and Northern Africa and the rout of Sunni jihadists in Syria by the combined forces of the Syrian government, Russia, Iran, and Hezbollah, it’s clear that Islamic terrorism is no longer a threat that stirs the paranoia necessary to feed big military and intelligence budgets. For all the money they’ve spent, intelligence has done a terrible job of either anticipating terrorist strikes or defeating them in counterinsurgency warfare
So switch the enemy again, now it’s Russia and China. The best insight the intelligence community could offer about those two is that they’ve grown stronger by doing the opposite of the US. For the most part they’ve stayed in their own neighborhoods. They accept that they’re constituents, albeit important ones, of a multipolar global order. Although they’ll use big sticks to protect their interests, carrots like the Belt and Road Initiative further their influence much better than the US’s bullets and bombs.
If the intelligence complex truly cared about the country, they might go public with the observation that the empire is going broke. However, raising awareness of this dire threat—as opposed to standard intelligence bogeymen—might prompt reexamination of intelligence and military budgets and the foreign policy that supports them. Insolvency will strangle the US’s exorbitantly expensive interventionism. It will be the first real curb on the intelligence complex since World War II, but don’t except any proactive measures beforehand from those charged with foreseeing the future.
Conspiracy theories, a term popularized by the CIA to denigrate Warren Commission skeptics, are often proved correct. However, trying to determine the truth behind intelligence agency conspiracies is a time and energy-consuming task, usually producing much frustration and little illumination. Instead, as Caitlin Johnstone recently observed, we’re better off fighting on moral and philosophical grounds the intelligence complex and the rest of the government’s depredations that are in plain sight.
Attack the intellectual foundations of empire and you attack the whole rickety edifice, including intelligence, that supports it. Tell the truth and you threaten those who deal in lies. Champion sanity and logic and you challenge the insane irrationality of the powers that be. They are daunting tasks, but less daunting than trying to excavate and clean the intelligence sewer.
- From Fake News To Fake Shoes – How Payless Pranked So-Called 'Influencers'
Payless tricked a group of fashionistas into buying their low-cost shoes for Madison Avenue prices.
The company opened a fake store at a former Armani location in Santa Monica, California under the bogus label “Palessi,” and invited discriminating high-end shoppers to a fake launch party. VIP shoppers paid as much as $645 for shoes which normally sell between $19.00 and $39.99 at Payless, according to NBC San Diego.
Payless posted a video of what happened on Facebook, with some unwitting influencers commenting on the “high-quality material” of the “elegant, sophisticated” bargain shoes. –NBC San Diego
Customers bought $3,000 in merchandise over a few hours before Payless admitted to the prank, gave people their money back, and let them keep the shoes. “Shut up! Are you serious?” exclaimed one shopper.
The retailer “wanted to push the social experiment genre to new extremes, while simultaneously using it to make a cultural statement,” said Doug Cameron, DCX Growth Accelerator’s chief creative officer.
“Payless customers share a pragmatist point of view, and we thought it would be provocative to use this ideology to challenge today’s image-conscious fashion influencer culture.” –AdWeek
Payless CMO Sarah Couch said that the campaign was designed to illustrate that their brand can keep up with the big boys (and girls) at a time when retailers are feeling more competitive heat than ever.
“The campaign plays off of the enormous discrepancy and aims to remind consumers we are still a relevant place to shop for affordable fashion,” said Couch.
No word on whether the heels on those Payless shoes will suddenly fall off in the middle of a 10-block urban hike through Manhattan vs. the $600 option, but for their prices, one can afford a few backup pairs.
- Is Abegeddon Nigh? The Zombification Of Japan's Economy
Authored by Andrew Moran via LibertyNation.com,
Abenomics: Fool Me Once
Japan’s economy is a lifeless corpse. In the 1990s, Tokyo propped up zombie banks: institutions that are solvent in name only. In the aftermath of the Great Recession, Japan ensured these companies remained open. Today, Prime Minister Shinzo Abe is presiding over a zombie economy, and he thinks he has a solution to inject new life into the rotting carcass: another round of Abenomics!
After a string of natural disasters this past summer, the world’s third-largest economy contracted 0.3% in the third quarter. Overall, consumer spending declined 0.1%, exports fell 1.8%, capital spending slipped 0.2%, and prices for basic foods surged. A recent survey of economists suggest a rebound in the fourth quarter, but the federal government is not taking any chances, especially with a looming trade dispute with the U.S. on the horizon.
Economy Minister Toshimitsu Motegi told attendees at a recent Council on Economic and Fiscal Policy (CEFP) that the prime minister is demanding a stimulus program that would include aggressive infrastructure spending:
“The prime minister asked me to take firm measures to ensure that our economic recovery continues. He also said the public works spending program expected at the end of this year should be compiled with this point in mind.”
Fool me once, shame on you – but don’t expect it to work a second time.
Abenomics: A Failed Policy
Since coming into power in 2012, Abe has intervened into the national economy on multiple occasions. As part of efforts to spur growth, Abe has embraced Keynesian economics – a blend of government spending, tax hikes, and money printing – to achieve his objectives. The results have been disappointing.
Here is a list of policies Abe and his administration have implemented in the last six years:
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Increased sales taxes – another hike is expected next year.
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Mandated higher salaries and wages.
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Directed the Bank of Japan to purchase $1 trillion in bonds.
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Raised the national debt to 240% of gross domestic product.
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Introduced several social programs, including national childcare.
Some of these announcements jump-started the stock market, mainly because Japan Inc. went on a buying spree fueled by the BOJ’s credit expansion. The buzz quickly faded, though, prompting Tokyo to implement additional stimulus to relive the same high.
Fast forward to 2018: Japan’s economy is on life support. The BOJ has confirmed it will maintain an ultra-loose and accommodative monetary policy – low interest rates and more bond-buying. Unlike previous initiatives, a stampede of bears has rushed through the country. Analysts and economists are not optimistic that Japan can dig its way out.
Unemployment may be low, but all the elements critical to growth are not invigorating investor spirits. You only need to examine the Cabinet Office’s Coincident Index, a measurement of jobs, industrial output, and retail sales. It plunged 2.1 points in September to 114.60, an 18-month low.
Why It Never Works
Anytime the economy stumbles, leaders are quick to respond, whether it’s through the guise of a public-works project or a financial injection like a rebate check. It is rare to find leaders willing to weather the economic storm, as former President Warren G. Harding did following the First World War. They fear if they do not act, then the opposition will pounce, and the electorate will question, “Why isn’t he doing something?”
But it is a confidence trick.
Politicians and government-paid economists will mock the naysayers, telling them that their shovel-ready projects really did bump up the GDP or provide a short-term burst to the economy. This is what happened with former President Barack Obama’s disastrous Cars for Clunkers program: It was successful at first, but the longer it lingered on, the more its idiocy was exposed.
First, the GDP is a terrible statistic to gauge economic growth because it never measures the true value of goods and services that improve our standard of living.
Second, public spending already accounts for a large portion of GDP.
Third, the long-term health of the country’s economy is in doubt because officials only look to the next election cycle.
Typically, there are three ways to fund these extravagant pursuits for prosperity: tax, borrow, and print. In recent years, governments everywhere have adopted all three policies, and now trillions of dollars, euros, and yuan have entered the global economy. Debt is pervasive, deficits are the new norm, and tepid growth is inducing headaches at central banks worldwide.
Every state-led expenditure must be paid for somehow, which is why spending is a levy. This is money taken out of the private sector; the people cannot save, businesses invest less in capital, and the remaining capital is consumed. This is terrible news for the economy.
But it is necessary to dig the ditch because it provides jobs and stimulates the economy, says the statist economist. This is the seen benefit – voters see men with asphalt and shovels and getting paychecks. What about the unseen? Since this endeavor was funded by the theft of $1 billion from taxpayers, that’s $1 billion less for the private sector to hire workers, buy stuff, or invest in a new business. The unbuilt property, the unmade phone, or the unsold food – these things cannot happen because there was a diversion and misallocation of resources by bureaucrats.
The grafters cannot win elections if voters do not see the cutting-ribbon ceremonies!
Legendary economist Walter Williams said it best:
“The fact that Congress has no resources of its very own forces us to recognize that the only way Congress can give one American one dollar is to first — through intimidation, threats and coercion — confiscate that dollar from some other American through the tax code.”
Or, in this case, the National Diet doesn’t have a single yen of its own.
Is Abegeddon Nigh?
With a potential trade spat with President Donald Trump on the horizon, it is anticipated that the economy will tumble even further. Perhaps this is why Tokyo is so adamant in ratifying a trade agreement with Europe and finalizing the Trans-Pacific Partnership (TPP). No matter what happens, Abenomics will fail Japan once again and metastasize the land of sushi and Betamax into a zombie nation. Get ready: Abegeddon is nigh.
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