Oct 31

Today’s News 31st October 2019

  • ECB Official: Can Use Portfolio To Combat Climate Change  
    ECB Official: Can Use Portfolio To Combat Climate Change  

    Central banks have been making all kinds of ridiculous climate change statements in the last several quarters. Some monetary authorities have even said, they could also expand balance sheets to purchase climate-related financial investments. 

    Sabine Lautenschläger, Member of the Executive Board and Governing Council of the European Central Bank (ECB), was quoted by Bloomberg on Wednesday in Düsseldorf, Germany, as saying the ECB is prepared to use its balance sheet to support the fight against climate change. 

    Bloomberg quoted Lautenschläge as saying: 

    • Sustainability criteria are already taken into account in our portfolios that are not held for monetary policy purposes: Lautenschlaeger

    • The ECB needs to address all citizens, not just an expert audience – without ever becoming political

    We’ve suggested in the past, that this is just a giant ruse to sneak through MMT and helicopter money under the virtue-signaling guise of fighting climate change. 

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    Central banks, who’ve spent a decade expanding balance sheets, have plowed trillions of dollars into financial assets across the world.

    The flawed policy lifted financial asset prices but only benefited a few who held stock, bonds, real estate, etc… Everyone else, which is a majority of the global population are considered non-asset holders, didn’t participate in the decades-long orgy of cheap money, thus created a massive wealth gap that can no longer be ignored. 

    As a result of the wealth gap, protectionism and nationalism are sweeping across the world. 

    Political uncertainty across the world is at the highest levels ever. 

    Millions of people are currently protesting from Asia, the Middle East, and South America, calling for change after a decade of flawed monetary policy by global central banks. 

    The only solution offered by financial elites is to create an economic narrative of how global warming will doom the world. Then to calm fears, offer a solution, that answer is MMT and helicopter money.

    If you think balance sheets among central banks are large in today’s standards, just wait until the next global recession strikes, which could be as soon as next year, then central banks will use the narrative of climate change to expand balance sheets at record paces.

    But printing money this time will be okay because it’ll save the world from climate change. 


    Tyler Durden

    Thu, 10/31/2019 – 02:45

    Tags
    Environment

  • Corbyn Plots A Marxist Revolution – Could He Win The Election By Accident?
    Corbyn Plots A Marxist Revolution – Could He Win The Election By Accident?

    Via Strategic Macro blog,

    I don’t think Corbyn can win outright. However, with the constituency system of 650 MPs and votes split often three or four ways in each constituency, he could get in via a coalition with the SNP or LibDems. He is currently only 41 MPs behind the Tories. With a Lab/ LibDem/ SNP coalition he only really needs 270-280 seats vs 247 now:

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    You Guv 9th September voting intentions:

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    I think a lot of it will resolve to what the Brexit Party does to the Tory vote in Tory marginals vs how many votes Labour lose to the Brexit Party in the northern heartlands. Its unlikely the Brexit Party will win any seats outright.

    Farage does not believe the Tory Party will exit the EU by itself, or at least will only exit via the Withdrawal Agreement which leaves the UK closely tied to EU rules, taxes and regulations. If Farage does campaign against them, he risks splitting the leave vote in Tory marginals. This would boost both the Lib Dems and Labour numbers in Parliament. Its unlikely the Brexit Party could cause many Labour marginals to become Tory seats.

    Corbyn’s conference speech

    The speech can be taken as a trial balloon for the manifesto in the coming election.

    I would summarise it as planning to take capital away from successful people, who would invest it and giving it to unsuccessful people, who will spend it.

    In the short term ‘free money for all’ policies boost the economy via upfront spending, but medium term it will be a disaster, as centralised state socialism always is.

    My understanding of Marxism is as follows; the proletariat rise up and overthrow the ‘bourgeois’ capital owners and bring about a revolutionary socialist system. Marx predicted this is most likely to happen when the capitalist economy is in crisis. In other words; socialism is born out of capitalist failure and crisis.

    I think its fair to say capitalism has been in the Third Turning since 2008 (in fact I think the Third Turning was 1997-2016), The Unravelling, whereby policy has aimed to continue the prior framework (credit super cycle supporting final demand in the face of large imbalances, global platform company labour arbitrage, concentration of assets and profits and falling wage shares to GDP).

    Strauss-Howe predict that in the Fourth Turning reformist leaders emerge (which I see as happening since 2016), who break down the prior institutional framework and implement a new one, during which time there is a chaotic environment. Clearly our reformists are Boris Johnson and Jeremy Corbyn.

    Viewed from this perspective, of Marxist theory in a time of struggle and reform, Corbyn’s speech tells you he sees himself as that revolutionary socialist leader and he intends to lead that revolution now.

    Below are a summary of his key speech policies:

    Economic control:

    He described the economy as ‘a tool in the hands of policy makers’

    • So command and control and a return to centrally agreed ‘five year industrial plans’

    • He is unable to understand that the ‘capital and labour’ economic framework from 150 years ago has been displaced by a complex, high skilled service and innovation driven economy. 75% of our economic output is now non-industrial. 

    • His understanding of economics and business is defined by the prism of worker vs capital zero sum conflict  

    He will scrap the Trade Union laws and nationalise rail, national electricity grid, water and mail.

    • The Trade Unions will just push for extortionate wage increases, which is a tax on consumers, is inflationary and pushes up the IRR hurdle on new private investments

    • In terms of nationalising certain complex, large, low RoE utility sectors; Im not so against it, if they are well run (which they wont be by the party bosses). We have had coordination and investment problems with rail and the national grid needs investment for electrical transportation in the coming years  

    Pharmaceutical IP theft:

    ‘Using compulsory licensing to secure generic versions of patented medicines. We’ll tell the drugs companies that if they want public research funding then they’ll have to make their drugs affordable for all. And we will create a new publicly owned generic drugs manufacturer to supply cheaper medicines to our NHS’

    • He seems to have missed the part where the drug company gambled billions in developing the new drug and going forwards will make sure they don’t do any valuable R&D within the UK in order to protect their product IP and patents but will probably still use government money for early stage, primary scientific research

    • Hs also doesnt understand the difference between biotechnology drugs which involve an organic chemistry process (that is usually secret) and pharmaceutical drugs that are made in a traditional factory and can be more easily generically made

    Government sponsored education programmes:

    ‘Free education for everyone throughout life as a right not a privilege. No more university tuition fees. Free childcare and a new Sure Start programme. Free vocational and technical education. And free training for adults.’

    • It has to be paid for by taxes, so why does he think he can spend this money better via centralisation than the tax payers organising their own education and training? 

    • Child care has already been regulated to the point of unaffordability. Pre-school nursery costs on average £12k a year, the highest cost in the world, vs around £5k per child school place.

    • Scrapping tuition fees would cost about £20bn a year, or 1% of GDP. 

    Wealth redistribution:

    He will give the workforce a 10% stake in large companies, paying a dividend of up to £500 a year to every employee. He will increase the minimum wage by almost 20%.

    • Large companies by definition have been the most successful ones and are essential for productivity/ volume of GDP, but here he wants to increase their cost of capital through basically a form of a shared ownership tax and rising the wages of the least productive workers

    He wants to tax the top 5% and big companies.

    • While big companies drive GDP volume, its often small, entrepreneurial ones that come up with the breakthroughs that drive productivity growth

    • All higher taxes will do is increase the before tax IRR hurdle on a project and reduce investment

    • The Tories would cut taxes in an effort to bring in investment and jobs, which in turn see taxes through payrolls and sales taxes

    5 year central plans:

    UK industrial output is about £500bn a year, or 25% of GDP. He announced he would spend an unbelievable 25% of GDP, or 5% of annual GDP if spread over 5 years, on two large scale sets of new spending programmes. Corbyn is a Unions & QUANGO workers wet dream.

    He will spend £250bn (£50bn a year/ 10% of UK annual industrial output if spread over 5 years) on energy, transport and broadband infrastructure.

    • In comparison parliament found a need for just £3-5bn of telecoms subsidy in rural areas. The private sector can deliver fast charging stations. The Tories are spending single digit billions on other areas of transportation plus the white elephant of HS2. 

    • Its not clear at all what the £250bn would be spent on, why the private sector cant and whether it would pay for itself. 

    He will spend £250bn on ‘capital for businesses and co-ops’

    • No details, but could be the nationalisation programme or some other government/ union/ company forced union.

    With £500bn without doubt you can solve some problems, but if that is low RoE or negative RoE and crowds out private sector investment it will just lead to less economic growth in the long run. Its also likely to be a massive union boondoggle and very beneficial to party and union connected businesses.

    It might also be a bigger fiscal boost for German goods producers than anything the German government will agree to.

    Who will pay for this?

    We already have a near record trade deficit and need to rebalance that via a careful strategy of higher wages, higher savings, higher investment, more domestic production and more exports and less imports. I have argued the case before for a private sector, investment led, economic boom after Brexit.

    UK Current Account as a percent of GDP:

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    UK Capital flows, Qtly in £bns:

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    Corbyn simply sees the problems and plans to spend enormous amounts of money, but he cant know where the money will come from to pay for it. The external sector has been willing to finance UK deficits for some time as the economy rebounded and grew and while the UK represented a liberal safehaven. For a while it will also probably finance Corbyn given his policies are pro-cyclical and will offer higher returns/ yields for a period. However, longer term, given the high tax, stagflationary policies, it seems very unlikely the external sector will pay; so crowding out the domestic private sector is the only possible alternative. This is the stuff FX crisis are made of, but only a few years down the line.

    The first five years could see a significant boost to GDP, maybe longer, but later on the negative effects will show more prominence, probably when there is a recession.

    Two details were outlined however, those were that he will build large scale solar plants, battery hubs and wind farms and he will also ramp public house building. All of this is great for well connected, high-wage, unionised companies and QUANGOs.

    Internationalism:

    He will withdraw from US/ NATO military interventions in favour of diplomacy.

    • In effect he will weaken the ability of organisations like the UN and the ICC to enforce basic human rights onto rogue states and allow China’s sphere of influence to grow. That is the opposite of his stated foreign policy intention.

    Brexit:

    His fence sitting policy on Brexit it to; negotiate a better deal, put it to referendum and carry out the referendum result. Its a Remain party, but as an ardent Brexiteer he is calculating the referendum result will be to leave with whatever deal he has negotiated.

    He would then be relatively free to implement his policies; he has no intention of reducing taxes or regulation (and therefore maintain the level playing field requirements) and having left the EU would not be as bound by EU state subsidy rules in his nationalisation and ‘investment’ programme.

    Corbyn was never meant to be leader, after a career as a campaigner, he lucked into the role due to failure by mainstream career politicians. In the last several years he has been forced to become an expedient politician. His reformist agenda is also popular with the party grassroots.

    Question is can he now luck into No. 10?


    Tyler Durden

    Thu, 10/31/2019 – 02:00

    Tags
    Politics
    Business Finance

  • Global Carmageddon Continues: Pirelli And VW Warn About "Worsening Market Scenario"
    Global Carmageddon Continues: Pirelli And VW Warn About “Worsening Market Scenario”

    The automotive industry has been mired in recession for the better part of the last 18 months and still shows no signs of stopping. On Tuesday, comments from both VW’s CEO and from tire maker Pirelli, who cut its guidance for 2020, continue to exemplify an industry where the very worst of a recession may still be yet to come.

    VW’s CEO said in an interview with Bloomberg early this week that he was cautious about “all regions except South America”, including major car markets like North America, Europe and China. 

    “We know what needs to be done – get our act together on vehicle launches and be very cautious on costs and expenses,” he commented. He also stated that he wasn’t surprised that PSA and Fiat Chrysler are in merger talks, given speculation about industry consolidation.

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    Volkswagen is expected to present a new five-year plan to its board in mid-November.

    The shift to electric vehicles, more stringent emissions standards and a slowing global economy all continue to weigh on many auto manufacturers. 

    Tire maker Pirelli also warned about its operating profit margin and cash flow on Tuesday, saying it would delay the presentation of a new business plan while it works out scenarios for what it sees as a “worsening market scenario”, according to Reuters. 

    The company forecasted full year margin on adjusted EBIT of between 17% and 17.5%, much lower than already-lowered expectations of 18% to 19%. The company’s adjusted EBIT fell to 685 million euros for the nine months ended September 30, 2019. Pirelli also lowered its full year cash flow expectations to between 330 and 350 million euros, down from expectations of between 350 million and 380 million euros. 

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    The company said that greater fixed costs and lowered production to reduce inventories both stung its guidance.  

    The company is set to present its industrial plans to 2022 in the first quarter of next year. This presentation was previously supposed to occur on December 11 of this year. Pirelli said the setback was due to the market being “more challenging compared with the forecasts of recent months”.

    Chief Executive Marco Tronchetti Porvera said: “In this context, to protect our profitability we have to act deeper to reduce the cost of our products.”


    Tyler Durden

    Thu, 10/31/2019 – 01:00

    Tags
    Business Finance

  • America's History Of Controlling The OPCW To Promote Regime Change
    America’s History Of Controlling The OPCW To Promote Regime Change

    Authored by Caitlin Johnstone via Medium.com,

    You wouldn’t know it from today’s news headlines, but there’s a major scandal unfolding with potentially far-reaching consequences for the entire international community.

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    The political/media class has been dead silent about the fact that there are now two whistleblowers whose revelations have cast serious doubts on a chemical weapons watchdog group that is widely regarded as authoritative, despite the fact that this same political/media class has been crowing all month about how important whistleblowers are and how they need to be protected ever since a CIA spook exposed some dirt on the Trump administration.

    When the Courage Foundation and WikiLeaks published the findings of an interdisciplinary panel which received an extensive presentation from a whistleblower from the Organization for the Prohibition of Chemical Weapons (OPCW) investigation of an alleged 2018 chlorine gas attack in Douma, Syria, it was left unclear (perhaps intentionally) whether this was the same whistleblower who leaked a dissenting Engineering Assessment to the Working Group on Syria, Propaganda and Media this past May or a different one. Subsequent comments from British journalist Jonathan Steele assert that there are indeed two separate whistleblowers from within the OPCW’s Douma investigation, both of whom claim that their investigative findings differed widely from the final OPCW Douma report and were suppressed from the public by the organization.

    The official final report aligned with the mainstream narrative promulgated by America’s political/media class that the Syrian government killed dozens of civilians in Douma using cylinders of chlorine gas dropped from the air, while the two whistleblowers found that this is unlikely to have been the case. The official report did not explicitly assign blame to Assad, but it said its findings were in alignment with a chlorine gas attack and included a ballistics report which strongly implied an air strike (opposition fighters in Syria have no air force). The whistleblowers dispute both of these conclusions.

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    At the very least we can conclude from these revelations that the OPCW hid information from the public that an international watchdog organization has no business hiding about an event which led to an act of war in the form of an airstrike by the US, UK and France. We may also conclude that skepticism of their entire body of work around the world is perfectly legitimate until some very serious questions are answered. Right now no attempt is being made by the organization to bring about the kind of transparency which would help restore trust, with multiple journalists now reporting that the OPCW is refusing to answer their questions.

    It is also not at all unreasonable to question whether the OPCW could have been influenced in some way by the United States behind the scenes, given how its now-dubious final report aligns so nicely with the narratives promoted by the CIA and US State Department, and given how we know for a fact that the US has aggressively manipulated the OPCW before in order to advance its regime change agendas.

    In June of 2002, as the United States was preparing to invade Iraq, Mother Jones published an article titled “A Coup in The Hague” about the US government’s campaign to oust the OPCW’s very first Director General, José Bustani. If you’ve been following the recent OPCW revelations you will recall that Bustani was one of the panelists at the Courage Foundation whistleblower presentation in Brussels on October 15, after which he wrote the following:

    “The convincing evidence of irregular behavior in the OPCW investigation of the alleged Douma chemical attack confirms doubts and suspicions I already had. I could make no sense of what I was reading in the international press. Even official reports of investigations seemed incoherent at best. The picture is certainly clearer now, although very disturbing.”

    Mother Jones (which used to be a decent outlet for the record) breaks down how the US government was able to successfully bully the OPCW into ousting the very popular Bustani from his position as Director General in April 2002 by threatening to withdraw funding from the organization. This was done because Bustani was having an uncomfortable amount of success bringing the Saddam Hussein government to the negotiating table, and his efforts were perceived as a threat to the war agenda.

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    “Indeed, US officials have offered little reason for its opposition to Bustani, saying only that they questioned his ‘management style’ and differed with several of Bustani’s decisions,” Mother Jones reports.

    “Despite this, Washington waged an unusually public and vocal campaign to unseat Bustani, who had been unanimously reelected to lead the 145-nation body in May, 2000. Finally, at a ‘special session’ called after the US had threatened to cut off all funding for the organization, Bustani was sent packing.”

    This happened despite broad international support for Bustani, including from then-Secretary of State Colin Powell who’d written to the renowned Brazilian diplomat praising his work in February 2001. According to the report’s author Hannah Wallace, the US was able to oust a unanimously re-elected Director General due to the disproportionate amount of financial influence America had over the OPCW.

    “[I]n March of 2002, Bustani survived a US-led motion calling for a vote of no confidence in his leadership,” Wallace writes. “Having failed in that effort, Washington increased the pressure, threatening to cut off funding for the organization — a significant threat given that the US underwrites 22 percent of the total budget. A little more than a month later, Bustani was out.”

    “Bustani suggests US officials were particularly displeased with his attempts to persuade Iraq to sign the chemical weapons treaty, which would have provided for routine and unannounced inspections of Iraqi weapons plants,” Wallace reported. “Of course, the Bush White House has recently cited Iraq’s refusal to allow such inspections as one justification for a new attack on Saddam Hussein’s regime.”

    “Of course, had Iraq [joined the OPCW], a door would be opened towards the return of inspectors to Bagdad and consequently a viable, peaceful solution to the impasse,” Bustani told Mother Jones. “Is that what Washington wants these days?”

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    Bustani told Mother Jones that he was already seeing a shift in the OPCW into alignment with US interests. Again, this was back in 2002.

    “The new OPCW, after my ousting, is already undergoing radical structural changes, along the lines of the US recipe, which will strike a definitive blow to the post of the Director General, making it once and for all a mere figurehead of a sham international regime,” he said.

    “Bustani traces the shift to the influence of several hawkish officials in the Bush State Department, particularly Undersecretary of State for Arms Control and International Security, John Bolton,” Wallace wrote.

    Indeed, we’ve learned since that Bolton took it much further than that. Bustani reported to The Intercept last year that Bolton literally threatened to harm his children if he didn’t resign from his position as Director General.

    “You have 24 hours to leave the organization, and if you don’t comply with this decision by Washington, we have ways to retaliate against you,” Bolton reportedly told him, adding after a pause, “We know where your kids live. You have two sons in New York.”

    The Intercept reports that Bolton’s office did not deny Bustani’s claim when asked for comment.

    It is worth noting here that John Bolton was serving in the Trump administration as National Security Advisor throughout the entire time of the OPCW’s Douma investigation. Bolton held that position from April 9, 2018 to September 10, 2019. The OPCW’s Fact-Finding mission didn’t arrive in Syria until April 14 2018 and didn’t begin its investigation in Douma until several days after that, with its final report being released in March of 2019.

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    It is perfectly reasonable, given all this, to suspect that the US government may have exerted some influence over the OPCW’s Douma investigation. If they were depraved enough to not only threaten to withdraw funding from a chemical weapons watchdog in order to attain their warmongering agendas but actually threaten a diplomat’s family, they’re certainly depraved enough to manipulate an investigation into an alleged chemical weapons attack. This would explain the highly suspicious omissions and discrepancies in its report.

    It is a well-established fact that the US government has long sought regime change in Syria, not just in 2012 with Timber Sycamore and the official position of “Assad must go”, but even before the violence began in 2011. I’ve compiled multiple primary source pieces of evidence in an article you can read by clicking here that the US government and its allies have been planning to orchestrate an uprising in Syria exactly as it occurred with the goal of toppling Assad, and a former Qatari Prime Minister revealed on television in 2017 that the US and its allies were involved in that conflict from the very moment it first started.

    So to recap, we know that the US government has manipulated the OPCW in order to advance regime change agendas in the past, and we know that the US government has long had a regime change agenda against Syria. Many questions will need to be answered before we can rule out the possibility that these two facts converged in an ugly way upon the OPCW’s Douma investigation.

    *  *  *

    Thanks for reading! The best way to get around the internet censors and make sure you see the stuff I publish is to subscribe to the mailing list for my website, which will get you an email notification for everything I publish. My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, liking me on Facebook, following my antics on Twitter, checking out my podcast on either Youtube, soundcloud, Apple podcasts or Spotify, following me on Steemit, throwing some money into my hat on Patreon or Paypal, purchasing some of my sweet merchandise, buying my new book Rogue Nation: Psychonautical Adventures With Caitlin Johnstone, or my previous book Woke: A Field Guide for Utopia Preppers. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. Everyone, racist platforms excluded, has my permission to republish or use any part of this work (or anything else I’ve written) in any way they like free of charge.

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    Tyler Durden

    Wed, 10/30/2019 – 23:50

    Tags
    Politics

  • A Conflicted Kimbal Musk Was Facing SolarCity Margin Calls Before Tesla's Bailout, Deposition Shows
    A Conflicted Kimbal Musk Was Facing SolarCity Margin Calls Before Tesla’s Bailout, Deposition Shows

    More and more details to Tesla’s bailout of SolarCity are becoming clear. And the more details we get, the uglier things look. 

    The latest addition to the story was yesterday, when one well known Tesla skeptic took the time to lay out, in wonderful detail, the financial pressure that SolarCity’s tanking stock price was putting on the company’s directors – specifically, Elon’s brother Kimbal Musk – who faced multiple margin calls prior to the merger. 

    Using Kimbal Musk’s recently released deposition from the SolarCity lawsuit, the short seller known only as @TeslaCharts on Twitter, reconstructed the days leading up to Elon Musk pitching the SolarCity acquisition to the Tesla board. They detail a panicked Kimbal Musk, cursing about Tesla and blowing out his SpaceX shares to cover his SolarCity margin call – all while maintaining that he had zero conflict of interest in Tesla’s eventual bailout of SolarCity.

    @TeslaCharts starts by layout out the context, reminding readers that Kimbal Musk was a large shareholder in SolarCity, as well as a board member of both Tesla and SpaceX at the time. 

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    He then makes note of Kimbal’s reasoning for not recusing himself regarding matters involving SolarCity. The only person who didn’t seem to think Kimbal had a conflict of interest was Kimbal himself. 

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    He continues down this line of logic, noting that despite owning 141,541 shares of SolarCity, Kimbal still did not think he had a conflict of interest because he was representing “the best interests of the shareholders of Tesla”.

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    From there, @TeslaCharts starts to lay out a timeline. First, October 20, 2015, when Kimbal is facing a margin call due to SolarCity for the first time. 

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    He then also lays out that many members of the Tesla and SolarCity boards are also on the Board of Directors of Kimbal’s company, the Kitchen. 

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    In fact, when Kimbal is seeking financing for his own company, SolarCity’s CEO tells him that he can’t participate because he is also facing his own margin calls. SolarCity is “seeing its ass”, CEO Lyndon Rive tells Kimbal. Of course, “seeing its ass” doesn’t appear in any SolarCity public filings around that time – this was information just for Kimbal. 

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    Then Kimbal winds up in a back and forth with the questioning attorney about the definition of a margin call, which he clearly doesn’t understand. The deposition shows that Kimbal used his Tesla line of credit to cover his SolarCity line – symbolic, of sorts, isn’t it?

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    Kimbal then faces a margin call on October 29, 2015 and uses his Tesla stock to again cover it. 

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    Kimbal is then rebuffed by Elon after he hits Elon up for a loan to try and bail himself out of his margin call. “You know that I don’t actually have cash, right?” Elon says to his brother. 

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    So Kimbal shifts his attention to potentially selling some of his SpaceX stock to cover the call. It is also noted that Elon Musk had a LTV of just 5% for his SpaceX shares at Goldman.

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    By February 8, 2016, all hell is breaking loose. SolarCity’s stock is still falling and Kimbal is forced to offer some SpaceX stock at $110. 

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    On February 9, 2016, there’s a clear sense of urgency when SolarCity dips to $18 per share. Kimbal yanks the offer on his SpaceX stock from $110 to $95 over the course of just one day. 

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    Kimbal then, frustrated, e-mails the CFO of his company, the Kitchen. “Motherfucker,” he says after describing Tesla’s 50% fall. 

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    So the next day, his brother Elon goes online and pulls forward the date for Model 3 reservations, announcing that more information on the unveil would be coming soon. Tesla stock moves higher and “margin loan pressure undoubtedly eases,” @TeslaCharts says.

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    And just two weeks later, Elon calls a meeting to pitch the idea of acquiring SolarCity. To nobody’s surprise, the Board doesn’t even discuss Kimbal Musk’s potential conflict of interest. 

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    The thread ends with @TeslaCharts saying what everyone else is thinking:

    “The only thing surprising about this giant self-dealing Ponzi scheme is just how egregious it all is.”

    The thread, in its entirety, can be read here. @TeslaCharts also appeared on a podcast on Sunday to lay out his thoughts both on Tesla’s recent quarterly results, and on the company’s claims about its “Version 3.0” of its solar roof tiles. 

    Recall, we noted yesterday that despite the company’s “headline” Q3 numbers, its U.S. sales actually plunged 39% in the quarter. 


    Tyler Durden

    Wed, 10/30/2019 – 23:30

    Tags
    Business Finance

  • Chinese PMIs Unexpectedly Slide Further Into Contraction, Just Shy Of Post-Crisis Lows
    Chinese PMIs Unexpectedly Slide Further Into Contraction, Just Shy Of Post-Crisis Lows

    If there was some hope that that today’s Fed rate cut would mark the bottom of the global economic slowdown and serve as the basis for even a modest recovery – after all, even Powell admitted that after this, nothing less than a full blown economic shitstorm would force the Fed to cut more – then Beijing promptly crapped all over any such optimism, when it reported that its latest official PMIs for the month of October not only missed by a mile, but were two of the worst prints since the financial crisis.

    Early on Thursday, China’s National Bureau of Statistics reported that in October, China’s manufacturing PMI slumped deeper into contraction, dropping from 49.8 to 49.3, not only below the 49.8 consensus estimate, but also below the lowest sellside estimate (the range was 49.5-50.5). Worse, the Non-manufacturing PMI, which many had ignored for months because it was so deeply into expansionary territory, tumbled sharply, and after its biggest drop in almost a year, dipped to 52.8 from 53.6, and is now just shy of the lowest print since the financial crisis.

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    It gets even worse: whereas the contraction for large cap companies was modest, at just 49.9, down from 50.8, mid cap companies were worse, at 49.0, while small caps were dismal, at a paltry 47.9, down from 48.8.

    Broken down by components, almost every index posted a decline, with the exception of the worst one, employment, which posted a modest increase:

    • Production  50.8, down from 52.3
    • New Orders 49.6, down from 50.5
    • Employment 47.3, up from 47.0

    The above means that not only is the trade war with the US continuing to take its toll on China, but as long as Beijing refuses to spark a massive credit injection spree, which rebooted the global economy after the financial crisis, after the European sovereign debt crisis, and again after the Shanghai Accord…

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    … then the Fed’s hopes that its “insurance cuts” will amount to anything, will soon be drowned in the chaos of another global recession, but not before the Fed first cuts rates back to zero first, and then negative.
     


    Tyler Durden

    Wed, 10/30/2019 – 23:13

    Tags
    Business Finance

  • The Militarization Of Everything
    The Militarization Of Everything

    Authored by William Astore via TomDispatch.com,

    Killing Me Softly with Militarism – The Decay of Democracy in America

    When Americans think of militarism, they may imagine jackbooted soldiers goose-stepping through the streets as flag-waving crowds exult; or, like our president, they may think of enormous parades featuring troops and missiles and tanks, with warplanes soaring overhead. Or nationalist dictators wearing military uniforms encrusted with medals, ribbons, and badges like so many barnacles on a sinking ship of state. (Was Donald Trump only joking recently when he said he’d like to award himself a Medal of Honor?) And what they may also think is: that’s not us. That’s not America. After all, Lady Liberty used to welcome newcomers with a torch, not an AR-15. We don’t wall ourselves in while bombing others in distant parts of the world, right?

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    But militarism is more than thuggish dictators, predatory weaponry, and steely-eyed troops. There are softer forms of it that are no less significant than the “hard” ones. In fact, in a self-avowed democracy like the United States, such softer forms are often more effective because they seem so much less insidious, so much less dangerous. Even in the heartland of Trump’s famed base, most Americans continue to reject nakedly bellicose displays like phalanxes of tanks rolling down Pennsylvania Avenue. 

    But who can object to celebrating “hometown heroes” in uniform, as happens regularly at sports events of every sort in twenty-first-century America? Or polite and smiling military recruiters in schools? Or gung-ho war movies like the latest version of Midway, timed for Veterans Day weekend 2019 and marking America’s 1942 naval victory over Japan, when we were not only the good guys but the underdogs?

    What do I mean by softer forms of militarism? I’m a football fan, so one recent Sunday afternoon found me watching an NFL game on CBS. People deplore violence in such games, and rightly so, given the number of injuries among the players, notably concussions that debilitate lives. But what about violent commercials during the game? In that one afternoon, I noted repetitive commercials for SEAL Team, SWAT, and FBI, all CBS shows from this quietly militarized American moment of ours. In other words, I was exposed to lots of guns, explosions, fisticuffs, and the like, but more than anything I was given glimpses of hard men (and a woman or two) in uniform who have the very answers we need and, like the Pentagon-supplied police in Ferguson, Missouri, in 2014, are armed to the teeth. (“Models with guns,” my wife calls them.) 

    Got a situation in Nowhere-stan? Send in the Navy SEALs. Got a murderer on the loose? Send in the SWAT team. With their superior weaponry and can-do spirit, Special Forces of every sort are sure to win the day (except, of course, when they don’t, as in America’s current series of never-ending wars in distant lands).

    And it hardly ends with those three shows. Consider, for example, this century’s update of Magnum P.I., a CBS show featuring a kickass private investigator. In the original Magnum P.I. that I watched as a teenager, Tom Selleck played the character with an easy charm. Magnum’s military background in Vietnam was acknowledged but not hyped. Unsurprisingly, today’s Magnum is proudly billed as an ex-Navy SEAL.

    Cop and military shows are nothing new on American TV, but never have I seen so many of them, new and old, and so well-armed. On CBS alone you can add to the mix Hawaii Five-O (yet more models with guns updated and up-armed from my youthful years), the three NCIS (Naval Criminal Investigative Service) shows, and Blue Bloods (ironically starring a more grizzled and less charming Tom Selleck) — and who knows what I haven’t noticed? While today’s cop/military shows feature far more diversity with respect to gender, ethnicity, and race compared to hoary classics like Dragnet, they also feature far more gunplay and other forms of bloody violence.

    Look, as a veteran, I have nothing against realistic shows on the military. Coming from a family of first responders — I count four firefighters and two police officers in my immediate family — I loved shows like Adam-12 and Emergency! in my youth. What I’m against is the strange militarization of everything, including, for instance, the idea, distinctly of our moment, that first responders need their very own version of the American flag to mark their service. Perhaps you’ve seen those thin blue line flags, sometimes augmented with a red line for firefighters. As a military veteran, my gut tells me that there should only be one American flag and it should be good enough for all Americans. Think of the proliferation of flags as another soft type of up-armoring (this time of patriotism). 

    Speaking of which, whatever happened to Dragnet’s Sergeant Joe Friday, on the beat, serving his fellow citizens, and pursuing law enforcement as a calling? He didn’t need a thin blue line battle flag. And in the rare times when he wielded a gun, it was .38 Special. Today’s version of Joe looks a lot more like G.I. Joe, decked out in body armor and carrying an assault rifle as he exits a tank-like vehicle, maybe even a surplus MRAP from America’s failed imperial wars.

    Militarism in the USA

    Besides TV shows, movies, and commercials, there are many signs of the increasing embrace of militarized values and attitudes in this country. The result: the acceptance of a military in places where it shouldn’t be, one that’s over-celebrated, over-hyped, and given far too much money and cultural authority, while becoming virtually immune to serious criticism.

    Let me offer just nine signs of this that would have been so much less conceivable when I was a young boy watching reruns of Dragnet:

    1. Roughly two-thirds of the federal government’s discretionary budget for 2020 will, unbelievably enough, be devoted to the Pentagon and related military functions, with each year’s “defense” budget coming ever closer to a trillion dollars. Such colossal sums are rarely debated in Congress; indeed, they enjoy wide bipartisan support.

    2. The U.S. military remains the most trusted institution in our society, so say 74% of Americans surveyed in a Gallup poll. No other institution even comes close, certainly not the presidency (37%) or Congress (which recently rose to a monumental 25% on an impeachment high). Yet that same military has produced disasters or quagmires in Afghanistan, Iraq, Libya, Syria, Somalia, and elsewhere. Various “surges” have repeatedly failed. The Pentagon itself can’t even pass an audit. Why so much trust?

    3. A state of permanent war is considered America’s new normal. Wars are now automatically treated as multi-generational with little concern for how permawar might degrade our democracy. Anti-war protesters are rare enough to be lone voices crying in the wilderness. 

    4. America’s generals continue to be treated, without the slightest irony, as “the adults in the room.” Sages like former Secretary of Defense James Mattis (cited glowingly in the recent debate among 12 Democratic presidential hopefuls) will save America from unskilled and tempestuous politicians like one Donald J. Trump. In the 2016 presidential race, it seemed that neither candidate could run without being endorsed by a screaming general (Michael Flynn for Trump; John Allen for Clinton).

    5. The media routinely embraces retired U.S. military officers and uses them as talking heads to explain and promote military action to the American people. Simultaneously, when the military goes to war, civilian journalists are “embedded” within those forces and so are dependent on them in every way. The result tends to be a cheerleading media that supports the military in the name of patriotism — as well as higher ratings and corporate profits.

    6. America’s foreign aid is increasingly military aid. Consider, for instance, the current controversy over the aid to Ukraine that President Trump blocked before his infamous phone call, which was, of course, partially about weaponry. This should serve to remind us that the United States has become the world’s foremost merchant of death, selling far more weapons globally than any other country. Again, there is no real debate here about the morality of profiting from such massive sales, whether abroad ($55.4 billion in arms sales for this fiscal year alone, says the Defense Security Cooperation Agency) or at home (a staggering 150 million new guns produced in the USA since 1986, the vast majority remaining in American hands).

    7. In that context, consider the militarization of the weaponry in those very hands, from .50 caliber sniper rifles to various military-style assault rifles. Roughly 15 million AR-15s are currently owned by ordinary Americans. We’re talking about a gun designed for battlefield-style rapid shooting and maximum damage against humans. In the 1970s, when I was a teenager, the hunters in my family had bolt-action rifles for deer hunting, shotguns for birds, and pistols for home defense and plinking. No one had a military-style assault rifle because no one needed one or even wanted one. Now, worried suburbanites buy them, thinking they’re getting their “man card” back by toting such a weapon of mass destruction.

    8. Paradoxically, even as Americans slaughter each other and themselves in large numbers via mass shootings and suicides (nearly 40,000 gun deaths in 2017 alone), they largely ignore Washington’s overseas wars and the continued bombing of numerous countries. But ignorance is not bliss. By tacitly giving the military a blank check, issued in the name of securing the homeland, Americans embrace that military, however loosely, and its misuse of violence across significant parts of the planet. Should it be any surprise that a country that kills so wantonly overseas over such a prolonged period would also experience mass shootings and other forms of violence at home?

    9. Even as Americans “support our troops” and celebrate them as “heroes,” the military itself has taken on a new “warrior ethos” that would once — in the age of a draft army — have been contrary to this country’s citizen-soldier tradition, especially as articulated and exhibited by the “greatest generation” during World War II.

    What these nine items add up to is a paradigm shift as well as a change in the zeitgeist. The U.S. military is no longer a tool that a democracy funds and uses reluctantly.  It’s become an alleged force for good, a virtuous entity, a band of brothers (and sisters), America’s foremost missionaries overseas and most lovable and admired heroes at home. This embrace of the military is precisely what I would call soft militarism. Jackbooted troops may not be marching in our streets, but they increasingly seem to be marching unopposed through — and occupying — our minds.

    The Decay of Democracy

    As Americans embrace the military, less violent policy options are downplayed or disregarded. Consider the State Department, America’s diplomatic corps, now a tiny, increasingly defunded branch of the Pentagon led by Mike Pompeo (celebrated by Donald Trump as a tremendous leader because he did well at West Point). Consider President Trump as well, who’s been labeled an isolationist, and his stunning inability to truly withdraw troops or end wars. In Syria, U.S. troops were recently redeployed, not withdrawn, not from the region anyway, even as more troops are being sent to Saudi Arabia. In Afghanistan, Trump sent a few thousand more troops in 2017, his own modest version of a mini-surge and they’re still there, even as peace negotiations with the Taliban have been abandoned. That decision, in turn, led to a new surge (a “near record high”) in U.S. bombing in that country in September, naturally in the name of advancing peace. The result: yet higher levels of civilian deaths.

    How did the U.S. increasingly come to reject diplomacy and democracy for militarism and proto-autocracy? Partly, I think, because of the absence of a military draft. Precisely because military service is voluntary, it can be valorized. It can be elevated as a calling that’s uniquely heroic and sacrificial. Even though most troops are drawn from the working class and volunteer for diverse reasons, their motivations and their imperfections can be ignored as politicians praise them to the rooftops. Related to this is the Rambo-like cult of the warrior and warrior ethos, now celebrated as something desirable in America. Such an ethos fits seamlessly with America’s generational wars. Unlike conflicted draftees, warriors exist solely to wage war. They are less likely to have the questioning attitude of the citizen-soldier. 

    Don’t get me wrong: reviving the draft isn’t the solution; reviving democracy is. We need the active involvement of informed citizens, especially resistance to endless wars and budget-busting spending on American weapons of mass destruction. The true cost of our previously soft (now possibly hardening) militarism isn’t seen only in this country’s quickening march toward a militarized authoritarianism. It can also be measured in the dead and wounded from our wars, including the dead, wounded, and displaced in distant lands. It can be seen as well in the rise of increasingly well-armed, self-avowed nationalists domestically who promise solutions via walls and weapons and “good guys” with guns. (“Shoot them in the legs,” Trump is alleged to have said about immigrants crossing America’s southern border illegally.)

    Democracy shouldn’t be about celebrating overlords in uniform. A now-widely accepted belief is that America is more divided, more partisan than ever, approaching perhaps a new civil war, as echoed in the rhetoric of our current president. Small wonder that inflammatory rhetoric is thriving and the list of this country’s enemies lengthening when Americans themselves have so softly yet fervently embraced militarism.

    With apologies to the great Roberta Flack, America is killing itself softly with war songs.


    Tyler Durden

    Wed, 10/30/2019 – 23:10

    Tags
    War Conflict
    Politics

  • China's Bond Market Faces Turmoil Amid Maturity Deluge
    China’s Bond Market Faces Turmoil Amid Maturity Deluge

    While the US bond market has had its share of harrowing slumps and vomit-inducing short squeezes in the past year as consensus shifted from one of “the neutral rate is far away” to “here comes NIRP”, China’s bonds have been a bastion of stability, trading in a tight range between 3% and 3.50% for the past year.

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    That may be about to change.

    The reason: a wall of bond maturities is about to flood across China’s sovereign-bond market, which in the past three months has already been reeling from a global sell-off and rising inflation.

    According to Bloomberg, more than 2 trillion yuan ($283 billion) of local-government notes will mature in 2020, a record and 58% more than this year’s level. This means fresh debt to refinance upcoming maturities will start hitting the market soon, with a the southern province of Guangdong expected to sell notes as early as November.

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    This is happening as China’s 10-year yield rose 3 basis points to 3.31%. the highest since late May, while the cost on 12-month interest rate swaps jumped 5 basis points to 2.92%. The yield on China Development Bank’s 3-year bonds due January 2022 rose 10 basis points to 3.25%.

    Despite trading in a narrow range, China’s government bonds have been sliding for nearly two months, starting around the time a “growth shock” hit US rates and sparked the infamous quantastrophe, with the 10-year yield hitting the highest since May as selling momentum accelerated. Naturally, a flood of new supply will only exacerbate the weakness, especially as real, inflation-adjusted yields are barely above zero, a rarity for emerging markets.

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    “The large amount of supply that will be rolled over will weigh on China’s sovereign bonds,” Ken Cheung, chief Asia FX strategist at Mizuho Bank, told Bloomberg. The risk only grows when one considers the recent surge in food inflation as a result of “pig Ebola”, coupled with lower expectations of central bank stimulus.

    To avoid a panic issuance scramble, Deputy Finance Minister Xu Hongcai said in September that China will grant part of a special bonds quota in advance to ensure that the funds raised can be used early in the year, Bloomberg reported, noting that so-called “special bonds have mostly been used for infrastructure spending, and the national limit could be raised from 2.15 trillion yuan.”

    Earlier, in June, the State Council expanded the sectors that funds raised via the special bonds can be put toward. For 2020, they will include transport, energy, agriculture and forestry, vocational education and medical care. Overall fixed-asset investment has slowed this year amid pressure from the U.S. trade war.

    Of course, there is only so much selling that the PBOC can take before it has to intervene, which is why so many China watchers have been stumped by the central bank’s lack of willingness to intervene so far.

    Beijing’s decision to avoid conducting aggressive stimulus measures – even as China’s growth engine sputters, and the economy grows at the slowest pace since the early 1990s – has spooked bond investors. The central bank has held off from adding liquidity this week, instead allowing large short-term cash injections to mature. That’s effectively drained 500 billion yuan from the financial system. Meanwhile, China’s credit impulse which previously pulled the entire world out of a recessionary ditch, has barely pushed off the cycle lows.

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    Some analysts said the central bank could instead use a targeted tool to inject one-year cash, which it refrained from doing Wednesday. That said, there is also a limit how aggressive the PBOC can get: soaring consumer prices, fueled by the surging cost of pork, are seen capping how much liquidity Beijing can provide without further stoking inflation.

    Which means that very soon, the PBOC will be forced to choose: risk runaway bond yields, tumbling risk prices and an even faster slowdown in the economy, or stimulate the economy, and watch as the yuan tumbles as inflation surges even more. The only question is whether this terminal dilemma will come before or after the US is faced with a roughly similar choice.


    Tyler Durden

    Wed, 10/30/2019 – 22:50

    Tags
    Business Finance

  • Is 'Real' AI Possible?
    Is ‘Real’ AI Possible?

    Authored by Onar Am via LibertyNation.com,

    When the modern computer was first created in the 1960s, people soon started imagining a future with intelligent machines. Some of these visions were dystopic, like Skynet in the Terminator movies. Today, almost everyone takes it for granted that artificial intelligence (AI) on par with human cognition is just around the corner, but is it realistic? Surprisingly, there are good reasons to be pessimistic about the prospects of smart machines.

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    Materialism And Reductionism

    The basis of AI optimism is the widespread conviction in materialism and reductionism. Materialism is the belief that everything is made from dead matter, that consciousness is an illusion, and that the human mind is the product of a machine – the brain. Reductionism is the belief that everything can be understood by chopping it up into its parts and only studying their properties as if it were machinery. It has been the backbone of many scientific and technological achievements.

    Its success has led people to believe that it also applies to consciousness and intelligence. All we need to do is to write a clever program and run it on a sufficiently powerful computer and voila: It will be as bright as us.

    The Limits Of Reductionism

    Despite the utility of reductionism, it is a philosophical error to assume that everything is reducible. Consider the following analogy: 99.99% of the universe is an empty vacuum. Everywhere in the cosmos, we see only vast swaths of nothingness, punctuated by an odd galaxy. From our own Milky Way, we know that even galaxies are mostly empty. If you used this to conclude that the universe was void of content, you would almost be correct. Almost. But that speck of matter in the cosmos turns out to be immensely significant. We are made of it, and we live in a place where we are surrounded by vast amounts of it. Matter matters to us.

    Thus, we cannot reduce the world to emptiness. We need to account for that exceptional state that we call matter. Similarly, almost all matter in the known universe is dead and unconscious, but we also by extraordinary coincidence happen to be alive and conscious. We know this from our direct experience, and no amount of peering into the dead material world can undo that fact. Consciousness is real and may not be reducible to material causes.

    Evolution

    In addition to our direct experience of consciousness, evolutionary theory provides compelling evidence that it is not merely an illusion. Anything that evolves through natural selection must be both heritable and objectively measurable. There is no way for consciousness to be selected for and evolve unless it does something.

    So what is the biological function of consciousness? We don’t know for sure, but it likely plays a crucial role in intelligence. This can be demonstrated with a task that is simple for us: object recognition. At an early age, we recognize a panoply of objects with ease, which even the most powerful supercomputers are incapable of today.

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    The task is so trivial to us that scientists thought it would be easy for computers too. It turned out to be nearly impossible. Although computers can beat humans in highly specialized computationally intensive tasks such as chess, they are nowhere near the ability of even a toddler in categorizing and recognizing objects. The key ingredient seems to be consciousness, which enables powerful intelligence at a mere glance.

    Computers will continue to get smarter in specialized domains, but they will never gain awareness because it is not an algorithm. Thus, they will have to emulate human intelligence without the power of consciousness. Don’t be surprised if AI continues to fall short of expectations.


    Tyler Durden

    Wed, 10/30/2019 – 22:30

  • Hong Kong Plunges Into Recession After Months Of Violent Protests Take Toll
    Hong Kong Plunges Into Recession After Months Of Violent Protests Take Toll

    Hong Kong has finally entered a recession after more than half a year of violent anti-government protests, the city’s Financial Secretary wrote in a blog post over the weekend, reported Reuters.

    “The blow to our economy is comprehensive,” Paul Chan wrote, adding that upcoming economic data later this week will trigger a technical recession.

    “The government will be announcing its advance estimates for the third quarter on Thursday. After seeing negative growth in the second quarter, the situation continued in the third quarter, meaning our economy has entered technical recession,” Chan wrote.

    “It seems it will be extremely difficult for us to reach full-year economic growth of 0 to 1%. I would not rule out the possibility that the full-year economic growth will be negative.”

    Protesters have frequently shut down popular shopping districts, something that we outlined last week, warning that the retail industry in Hong Kong is on the brink of collapse.

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    Tourism plunged 37% Y/Y in 3Q19, and the trend for 4Q19 is likely not to improve. The number of tourists for the first two weeks of October was down 50% on a Y/Y basis. 

    Rooms at the most high-end hotels, like Marco Polo Hongkong in Tsim Sha Tsui, are going for $72 per night, a 75% discount versus last year. 

    Anyone who wants to travel to Hong Kong this week, departing from New York City airports, can easily get roundtrip plane tickets for 50% off because air travel to Hong Kong remains depressed. 

    Local businesses are cutting back on their workforce as approximately 77% of all hotel workers have just been asked to go on leave without pay. 

    Chan said government officials had announced stimulative measures to support local small and medium-sized businesses as the recession is expected to deepen into 1H20.

    Hong Kong billionaire Li Ka-shing pledged to give local businesses $128 million in support following the protests that have presented the city with “unprecedented challenges.”

    In a series of charts below, the city’s economic decline suggests a crisis has arrived: 

    In a 12-month and 3-month change, Hong Kong retail sales have absolutely crashed over the last half-year. 

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    Hong Kong GDP is expected to print negative this Thursday for the first time since the financial crisis a decade ago.

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    Property prices in the city have stalled out in 2019.

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    The Hang Seng stock index is in a consolidation pattern. If economic deterioration continues, and or the recession worsens through 2020. Then it’s likely the stock index will break lower from the triangle. 

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    Hong Kong is the first domino to drop. More emerging growth countries will fall under economic stress as the global recession is imminent, if not already arrived. 

     


    Tyler Durden

    Wed, 10/30/2019 – 22:10

    Tags
    Business Finance

  • Jim Kunstler: "We May Not Have A 2020 Election"
    Jim Kunstler: “We May Not Have A 2020 Election”

    Via Greg Hunter’s USAWatchdog.com,

    Renowned author and journalist James Howard Kunstler thinks what has been happening for the last few years with the mainstream media’s coverage of President Trump borders on criminal activity. Kunstler explains, “What I am waiting for is if and when indictments come down from Mr. Barr and Mr. Durham…”

    “I am wondering whether the editors and publishers of the Washington Post and New York Times and the producers at CNN and MSNBC are going to be named as unindicted co-conspirators in this effort to gaslight the country and really stage a coup to remove the President and to nullify the 2016 election. I say this as someone who is not necessarily a Trump supporter. I didn’t vote for the guy. I am not a cheerleader for the guy, but basically I think the behavior of his antagonists has been much worse and much more dangerous for the nation and the American project as a long term matter. I really need to see some action to hold people responsible for the acts they have committed…

    I am not an attorney, and I have never worked for the Department of Justice, but it seems to me that by naming the publishers and editors of these companies as unindicted co-conspirators that allows you to avoid the appearance of trying to shut down the press because you are not going to put them in jail, but you are going  to put them in disrupt. That may prompt their boards of directors to fire a few people and maybe change the way they do business at these places.”

    Kunstler says things look unlike anything we have seen in the past because we are approaching a day of reckoning in our debt based monetary system. Kunstler says, “Yeah, I think you can see it happening now…”

    “What seems to be resolving is some movement to some sort of a crack up of the banking system. What we are really stuck in is a situation where we’ve got too many obligations we cannot meet and too many debts that will never be repaid. We have been trying to run the country for the past 15 or 20 years on debt because we can no longer provide the kind of industrial growth that we have been used to . . . and have this massive consumer spending industry. So, we have been borrowing from the future to pay our bills today, and we are running out of our ability to borrow more…

    I think we are going to lose the ability to support a lot of activities that we have been doing. It starts with energy and its relationship to banking and our ability to generate the kind of growth you need to keep rolling over debt. The reason debt will never be paid and obligations will never be met is we are not generating that sort of growth. Were just generating frauds and swindles. Frauds and swindles are fun while you are doing them and they seem to produce a lot of paper profits, but after a while, they prove to be false. Then you have to do something else. A great deal about our economy and our way of life is false and is going to fail. Then we are going to have to make other arrangements for daily life. . . .It will probably mean we will be organizing our stuff at much more of a local scale.”

    On the 2020 Presidential Election, Kunstler predicts, “When all is said and done, I am not convinced there is enough there to convict President Trump of anything…”

    “At the same time, there is probably going to be a lot of legal actions brought against the people who started this coup against him, and that’s going to be extremely disturbing to the Left.

    I think one of the possibilities is we may not have a 2020 election. In some way or another, the country may be so disorderly that we can’t hold an election. There may be so much strife that we cannot handle the legal questions around holding the election, and it may be suspended. I don’t know what that means, but I am very impressed of the disorder that we are already in. It’s more of a kind of mental disorder between the parties, but it could turn into a lot of kinetic disorder on the ground and a lot of institutional failure.”

    Join Greg Hunter as he goes One-on-One with author and journalist James Howard Kunstler.

    *  *  *

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    (You Tube has Demonetized this video – again. This means only long commercials play, if they play at all. (most skip long commercials) It must have some useful information in it, so, enjoy it!!)


    Tyler Durden

    Wed, 10/30/2019 – 21:50

  • Bill Ackman Says WeWork Is A "0", SoftBank Should Cut Its Losses And Walk Away
    Bill Ackman Says WeWork Is A “0”, SoftBank Should Cut Its Losses And Walk Away

    How’s this for trenchant financial analysis from Bill Ackman, one of the boldest bold-faced names in the hedge fund business: SoftBank might end up writing down the entirety of its WeWork investment (including the $6 billion it just shelled out to wrest control of the firm away from Adam Neumann and his family).

    Of course, that’s not exactly a cutting-edge call. WeWork’s unmatched fall from grace in August and September, which culminated with the shelving of its IPO and the collapse of a $6 billion JPM-led syndicated loan lifeline that was contingent on the offering, the company’s situation has gone from bad to worse. The company has been forced to put off a planned round of lease-signings and expansions, including possibly moving its headquarters to Manhattan’s Lord & Taylor Building, where the company holds an overpriced lease despite its former CEO owning a piece of the building. On the operations end, its business in China is bleeding capital, and the company has nearly $60 billion in long-term lease commitments, a number that is looking more daunting by the day.

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    But Ackman’s call arrives at a special time during the WeWork media dogpile. Ackman is only just  recovering from a series of wrong-headed calls that nearly tanked his firm and career. Apparently, he thinks its finally “safe” to call WeWork a “0”, according to the FT. His LPs are no doubt watching.

    And exactly how confident is Ackman? Pretty confident, he say.

    “I think WeWork has a pretty high probability of being a zero for the equity, as well as for the debt,” the billionaire hedge fund manager said.

    Ackman described Neumann as an amazing salesman (clearly, it takes a gifted charlatan to separate Masayoshi Son from his money), but that the company had become “enormously levered” too soon.

    And speaking from experience, he warned SoftBank about continuing to throw good money after bad.

    “As someone who has put good money after bad, I think this looks like putting good money after bad, and SoftBank should have walked away.”

    At this point, Ackman and the others who have said SoftBank should expect to eat its entire investment are only a little more aggressive than the ratings agencies. Fitch Ratings warned on Tuesday that WeWork had “minimal headroom” to weather an economic slowdown or management misstep. SoftBank’s most recent cash infusion was “the effective minimum” the company needed to finance its existing operations and make it through a restructuring that is expected to cost 4,000 jobs.


    Tyler Durden

    Wed, 10/30/2019 – 21:30

    Tags
    Business Finance

  • Freedom Of Thought Is Under Attack… Here's How To Save Your Mind
    Freedom Of Thought Is Under Attack… Here’s How To Save Your Mind

    Authored by Simon McCarthy-Jones via TheConversation.com,

    Freedom of thought stands at a critical crossroads. Technological and psychological advances could be used to promote free thought. They could shield our inner worlds, reduce our mental biases, and create new spaces for thought. Yet states and corporations are forging these advances into weapons that restrict what we think.

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    To lose freedom of thought would be to lose something uniquely human. We share our basic emotions with animals. But only we can step back and ask “do I want to be angry?”, “do I want to be that person?”, “couldn’t I be better?”.

    We can reflect whether the thoughts, feelings and desires that bubble up within us are consistent with our own goals, values and ideals. If we agree they are, then this makes them more truly our own. We can then act authentically.

    But we may also conclude that some thoughts that pop into our heads are a force other than our own. You sit down to do your work and “Check Facebook!” flashes through your mind. Did that thought come from you or from Mark Zuckerberg?

    Freedom of thought demands dignity, enables democracy, and is part of what makes us a person. To safeguard it, we must first recognise its enemies.

    Was that thought yours? Or Mark Zuckerberg’s?

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     Frederic Legrand – COMEO/Shutterstock

    Three threats to freedom of thought

    The first threat comes from advances in psychology. Research has created new understandings of what influences our thoughts, behaviours, and decision making.

    States and corporations use this knowledge to make us think and act in a way that serves their goals. These may differ to ours. They use this knowledge to make us gamble more, buy more, and spend more time on social media. It may even be used to swing elections.

    The second threat comes from the application of machine learning algorithms to “big data”. When we provide data to companies we allow them to see deep inside us. This makes us more vulnerable to manipulation, and when we realise our privacy is being compromised, this chills our ability to think freely.

    The third threat comes from a growing ability to decode our thoughts from our brain activity. Facebook, Microsoft, and Neuralink are developing brain-computer interfaces. This could create machines that will read our thoughts. But creating unprecedented access to our thoughts creates unprecedented threats to our freedom.

    These advances in technology and psychology are opening the doors for states and corporations to violate, manipulate, and punish our thoughts. So, what can we do about it?

    The law can save us

    International human rights law gives the right to freedom of thought. Yet, this right has been almost completely neglected. It is hardly ever invoked in the courtroom. We need to work out what we want this right to mean so we can use it to protect ourselves.

    We should use it to defend mental privacy. Otherwise conformity pressures will impede our free play of ideas and search for truth. We should use it to prevent our thoughts being manipulated, either through psychological tricks or through threatened punishment.

    And we should use it to protect thought in all of its forms. Thought isn’t just what happens in our heads. Sometimes we think by writing or by doing a Google search. If we recognise these activities as “thought” then they should qualify for absolute privacy under the right to freedom of thought.

    Finally, we should use this right to demand that governments create societies that allow us to think freely. This is where psychology can help.

    We need to learn about how our minds work from an early age.

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     Monkey Business Images/Shutterstock

    Preventing manipulation

    Better understanding our minds can help protect us from manipulation by others. For example, the psychologist Daniel Kahneman distinguishes between what we could call “rule-of-thumb” and “rule-of-reason” thinking.

    Rule-of-thumb thinking involves effortless and ancient mental processes that allow us to make quick decisions. The price of this speed can be mistakes. In contrast, rule-of-reason thinking is a slow, consciously controlled process, often based in language. It takes longer, but can be more accurate.

    This suggests that creating speed bumps in our thinking could help improve decision making. Clicking unthinkingly on content or adverts from corporations doesn’t allow us to exercise freedom of thought. We do not have time to work out if our desires are our own or those of a puppet master.

    We must also change our environment into one that supports autonomy. Such an environment would allow us to create our own reasons for our actions, minimise external controls like rewards and punishments, and encourage choice, participation and shared decision making.

    Technology can help create such an environment. But whose responsibility is it to implement this?

    Taking action

    Governments must help citizens learn from a young age about how the mind works. They must structure society to facilitate free thought. And they have a duty to stop those, including corporations, who would violate the right to freedom of thought.

    Corporations must play their part. They should state freedom of thought as a policy commitment. They should perform due diligence on how their activities may harm freedom of thought. They could be required to declare the psychological tricks they are using to try and shape our behaviour.

    And we the people must educate ourselves. We must promote and support free-thought values. We must condemn those turning one of our species’ greatest strengths, our sociality, into one of our greatest weaknesses by using it as a means of data extraction. We must vote with our feet and wallets against those who violate our freedom of thought.

    All this assumes that we want freedom of thought. But do we? Many of us would literally rather electrocute ourselves than sit quietly with our thoughts.

    Would many of us also prefer governments and corporations do our thinking for us, serving up predictions and nudges for us to simply follow? Would many of us be happy for freedom of thought to be limited if it led to increased security? How much do we want freedom of thought and what are we prepared to sacrifice for it?

    Simply put, do we still want to be human? Or has the pain, effort and responsibility of one of our signature abilities, free thought, become too much for us to bear? If it has, it is neither clear what will become of us nor clear what we will become.


    Tyler Durden

    Wed, 10/30/2019 – 21:10

  • Deadspin Reporter Fired After Private-Equity Owners Ask Newsroom To "Stick To Sports"
    Deadspin Reporter Fired After Private-Equity Owners Ask Newsroom To “Stick To Sports”

    Yesterday, the media blue-checkmark brigade threw a giant outrage party after the Gizmodo Media Group’s private-equity overlords (or whoever owns them now it’s getting really difficult to keep track) reportedly sent a memo to the Deadspin newsroom, asking them to “stick to sports” and avoid politics.

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    What prompted this memo? Well, earlier this week, the site’s editorial staffers published a post complaining about the new auto-play video ads being deployed across the historically money-losing suite of websites. That was followed by a tweet from the recently formed G/O Media Union encouraging readers to express their unhappiness with the ads to G/O’s PE bosses.

    Needless to say, these bosses weren’t pleased, and ordered the post to be removed.

    https://platform.twitter.com/widgets.js

    In response, the editorial team switched the featured article display on Deadspin’s website to feature only non-sports content. It was for this sin, apparently, that Petchesky was fired. He was, until today, the site’s longest-serving employee,

    https://platform.twitter.com/widgets.js

    For those who don’t read it, Deadspin, like the rest of the former Gawker Network sites, 100% bought in to producing “woke” content about politics, media after Hulk Hogan and Peter Thiel won their legal crusade against the company, and Deadspin produced an endless of piddle of political content, often at the expense of its sports coverage.

    It has been obvious for years that the site and its writers operate from squarely within the NYC-SF-DC media bubble, and it doesn’t take a genius businessman to understand that the overlap between that world, and the total addressable market for sports fans, is actually quite small. But that’s not surprising, since most of the writers ascribe to the same “woke” truisms, like the idea that Donald Trump is a reprehensible Russian spy, the number of possible genders is limitless and that businesses employing them have no right to prioritize things like profit over the whims of its reporting staff.

    And not 24 hours later, yet another employee has unceremoniously departed. (though, to be fair, other recent departures, like former Deadspin EIC Megan Greenwall, quit). This time, Deadspin Editor Barry Petchesky tweeted Tuesday afternoon that he was fired for “not sticking to sports” like the bosses asked.

    https://platform.twitter.com/widgets.js

    Deadspin and its staff have often feuded with another rival sports-media franchise: Barstool Sports. The feud has been fueled by stories like this one, criticizing Barstool’s ‘bro culture’ and  accusing it of stealing content online, and claiming its “brand was built on harassing anyone who criticizes the site or just anyone who doesn’t look like fucking Dan Katz [the host of a popular Barstool podcastt].” Barstool’s founder David “El Presidente” Portnoy tweeted about the blue-checkmark’s “crying in their soup” over Petchesky’s media martyrdom on Thursday shortly after Petchesky took to twitter with the news.

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    And he didn’t stop there.

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    In response to the firing, another Deadspin reporter tweeted that the site’s new owner (and thus, her boss) was “a piece of shit.”

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    Obviously, publicly declaring that your boss’s boss’s boss is a terrible human being for making editorial decisions that are well within his right to make – Deadspin’s staff can spare us the sanctimonious shpeil about editorial integrity and journalistic independence – probably isn’t the best career move. We imagine a full-on revolt followed by a mass exodus are at hand.

    So much for that G/O Union…


    Tyler Durden

    Wed, 10/30/2019 – 20:50

  • "If It's A Boeing I'm Not Going…"
    “If It’s A Boeing I’m Not Going…”

    Authored by Raul Ilargi Meijer via The Automatic Earth blog,

    During the Senate hearing into Boeing on October 29, Senator Jon Tester told the company’s CEO Dennis Muilenburg: 

    “I would walk before I would get on a 737 MAX. I would walk.” He added:

    “There is no way … You shouldn’t be cutting corners and I see corners being cut.”

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    That’s all fine and well, but the hearing, which continues today, Wednesday, lays bare a giant gap in US law: that of accountability. Muilenburg is the “ultimately responsible” in a chain of command that is responsible for killing 346 people. But he is still the CEO, even if he was demoted from the chairman of the board position. Which was taken over by another -10 year- veteran of the company by the way. Fresh insights galore.

    If you are employed by a large company, you can sign off on such decisions, the ones that kill people, and walk away unscathed. It reminds one of Monsanto/Bayer, which just annnounced that the number of Roundup lawsuits against it went from 18,000 in July to 43,000 today. Bayer at the same time announced that its turnover rose by 6% in Q3. 43,000 lawsuits and they’re doing fine, thank you.

    In that same vein, Boeing shares rose 2.4% last night after the hearing (“a sign investors were relieved.”) What the “investors” buying those shares may have missed is that India’s budget carrier IndiGo ordered 300 new aircraft from Airbus, at an initial cost of $33 billion -which will be subject to a juicy discount, but still-.

    Now, Boeing is America’s biggest exporter. It’s also one of the cornerstones of Pentagon policy, a huge provider for the US military. So one can only expect the Senate to be lenient, to appear to be tough but let things more or less go. Still, the fact remains that Muilenburg et al made cost-cutting and other decisions that killed 346 people. But CNCB still labeled this a “brutal Senate hearing”. Yeah. Define ‘brutal’.

    Maybe the thing is that those deaths were not in the US, but in Indonesia and Ethiopia. Think maybe the Senate is influenced by that? What do you think would have happened if two 737 MAX’s had fallen out of the sky in the US, even if only in deplorables’ territory? We can sort of imagine, can’t we?

    And no, it’s not an all black and white picture, some people involved made some sense (via Seattle Times):

    Boeing 737 MAX Should Be Grounded Until Certification Process Is ‘Reformed’ – Senator

    ..at least one member of the Senate committee that grilled Muilenburg on Tuesday suggested the troubled aircraft shouldn’t be flying again until a much-maligned Federal Aviation Administration (FAA) oversight program retreats from its practice of delegating authority to Boeing and other aerospace manufacturers.

    Sen. Richard Blumenthal — citing revelations in recent news reports of a Boeing engineer’s claims that the MAX’s safety was compromised by cost and schedule considerations, and that the company pushed to undercut regulatory oversight — pushed back against findings that the FAA’s practice of delegating more safety certification authority is only likely to increase.

    “The story of Boeing sabotaging rigorous safety scrutiny is chilling to all of us — and more reason to keep the 737 MAX grounded until certification is really and truly independent and the system is reformed,” said Blumenthal, D-Conn.

    But, you know, the entire narrative is about ‘the company’, not about the people in the company who make these fatal decisions. They can do whatever they want, secure in the knowledge they will never be held to account. For financial losses perhaps at some point, but not for the loss of life. At best, they’ll get fired and walk away with a huge bonus. And that’s just wrong.

    And it’s not like there were no warning signs (via Seattle Times again, from Oct 3):

    Boeing Rejected 737 MAX Safety Upgrades Before Fatal Crashes – Whistleblower

    Seven weeks after the second fatal crash of a 737 MAX in March, a Boeing engineer submitted a scathing internal ethics complaint alleging that management — determined to keep down costs for airline customers — had blocked significant safety improvements during the jet’s development. The ethics charge, filed by 33-year-old engineer Curtis Ewbank, whose job involved studying past crashes and using that information to make new planes safer, describes how around 2014 his group presented to managers and senior executives a proposal to add various safety upgrades to the MAX.

    The complaint, a copy of which was reviewed by The Seattle Times, suggests that one of the proposed systems could have potentially prevented the crashes in Indonesia and Ethiopia that killed 346 people. Three of Ewbank’s former colleagues interviewed for this story concurred. The details revealed in the ethics complaint raise new questions about the culture at Boeing and whether the long-held imperative that safety must be the overarching priority was compromised on the MAX by business considerations and management’s focus on schedule and cost. Managers twice rejected adding the new system on the basis of “cost and potential (pilot) training impact,” the complaint states.

    This one is from AP, Oct 18. These are just the most recent revelations, this stuff goes back years. Neither Boeing nor the FAA ever did anything, until the planes started falling from the skies:

    Messages From Former Boeing Test Pilot Reveal 737MAX Concerns

    A former senior Boeing test pilot told a co-worker that he unknowingly misled safety regulators about problems with a flight-control system that would later be implicated in two deadly crashes of the company’s 737 Max. The pilot, Mark Forkner, told another Boeing employee in 2016 that the flight system, called MCAS, was “egregious” and “running rampant” while he tested it in a flight simulator.

    “So I basically lied to the regulators (unknowingly),” wrote Forkner, then Boeing’s chief technical pilot for the 737. The exchange occurred as Boeing was trying to convince the Federal Aviation Administration that MCAS was safe. MCAS was designed at least in part to prevent the Max from stalling in some situations. The FAA certified the plane without fully understanding MCAS, according to a panel of international safety regulators.

    Forkner also lobbied FAA to remove mention of MCAS from the operating manual and pilot training for the Max, saying the system would only operate in rare circumstances. FAA allowed Boeing to do so, and most pilots did not know about MCAS until after the first crash, which occurred in October 2018 in Indonesia.

    As I covered extensively before the issue at hand is that Boeing, in order to cut costs, among other things, decided to have just one -active- “angle-of-attack” sensor (which measures the angle of the plane vs income air, it’s located at the bottom front of the fuselage) on the plane. All it takes is one bird flying into it to compromise and/or deactivate that sensor. And then neither the software not the pilots know what to do anymore. But yeah, it’s cheaper… One sensor won’t do, nor will two, you need at least three in case one is defective. But yeah, that costs money. Seattle Times once again:

    Messages From Former Boeing Test Pilot Reveal 737MAX Concerns

    Boeing’s chief engineer for commercial airlines acknowledged that the company erred by not specifically testing the potential for a key sensor to erroneously cause software on the 737 Max to drive down the plane’s nose. In both fatal crashes, faulty data from one of two angle-of-attack sensors, which measure the pitch of the plane against the oncoming stream of air, caused the 737 Max’s Maneuvering Characteristics Augmentation System, or MCAS, to drive down the jet’s nose, which pilots struggled to counteract before ultimately entering a fatal dive.

    John Hamilton, vice president and chief engineer of Boeing Commercial Airplanes, told senators that the company “did test the MCAS uncommanded inputs to the stabilizer system, due to whatever causes was driving it, not specifically due to an AOA sensor.’’ Senator Maria Cantwell of Washington, the Senate Commerce Committee’s top Democrat, asked if he now thought that was wrong. “In hindsight, senator, yes,’’ Hamilton replied.

    They didn’t test the hardware at all, they tested the software! And all they have to say is that that was wrong. But only in hindsight! And then they tried to fix the mess they created with a new software program, MCAS, but didn’t even tell the pilots it existed. I kid you not! They did this because it might have required pilots to do more training, which raises the price of a plane, and they were already losing out to Airbus.

    And lest we forget, this all happened because when Boeing was busy spending its capital on buying back its own shares, Airbus had developed a new plane to accommodate a much more energy-efficient -though larger- engine. When Boeing figured that out, they had neither the time nor the money left (because of the share buybacks) to develop their own new plane.

    So what they did was they stuck such an engine (which they did have) onto a 737 model that was not equipped for the much bigger and heavier load. That in turn lead them to work on a software solution to lift the nose of the plane despite that load, which might have worked in theory but was always a bad idea, something in the vein of putting a giraffe’s neck on a hummingbird.

    But Muilenburg and his people kept pushing it all, because they knew they had been caught awfully wanting, and they needed that more cost-efficient plane. And this is how all the ensuing mess started. It was all because of money. Of the execs being caught with their pants down, and trying to hide their naked hairy asses.

    And then, as I started out this essay, they are still not held accountable. The company will face billions in ‘repair’ damages, some of them may lose their jobs or bonuses, but none will be held responsible for the deaths of those 346 people.

    That is just not right. Not in the case of Monsanto, and not in that of Boeing. Not all Boeing planes are disasters, but the 737 definitely is. Donald Trump a few months ago suggested they should just rebrand the plane, give it another name, do some expensive PR work and bob’s your uncle. But let me ask you, would you fly on a 737, even if under another name? Far as I know, all they did was change the software, not the hardware.

    Plus, the other day some airline, was that in South Korea?!, grounded a whole bunch of 787’s because of cracks on their wings. Look, I’m not saying Boeing’s in trouble. I’m just saying Boeing’s in deep trouble. But then, you know, they’ll kick out Muilenburg and some other guys, and a few FAA heads will retire, and they’ll declare the rotten apples gone, and we’re off to a whole new start. Yay! But the 346 people will still be dead.

    *  *  *

    Please support The Automatic Earth at Patreon.


    Tyler Durden

    Wed, 10/30/2019 – 20:30

    Tags
    Disaster Accident

  • Nio's CFO Unexpectedly Resigns Just Weeks After Company Makes Massive Job Cuts
    Nio’s CFO Unexpectedly Resigns Just Weeks After Company Makes Massive Job Cuts

    Everything is just fine and dandy in the world of EVs.

    As we anxiously await Tesla’s 10-Q for an explanation of the company’s “surprising” profit, competitor Nio is continuing an exceptionally dismal 2019 that has so far included shareholders being decimated and four vehicles catching fire (that we know about).

    In addition to the company’s stock being down roughly about 80% since the beginning of the year, Nio unexpectedly announced on Monday that its CFO, Louis T. Hsieh, was resigning. 

    The company said in a press release that the CFO “tendered his resignation as chief financial officer of the Company for personal reasons, effective October 30, 2019.” 

    Hsieh had been with the company for a little over 2 years, joining in May of 2017. 

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    Tesla investor Baillie Gifford is also an investor in Nio, having paid $670 million to buy more than 100 million shares of Nio in 2018 and early 2019. They are now down more than 80% mark-to-market on their Nio stake. 

    Recall, almost one month ago to the day, we reported that Nio was making massive cuts, slashing its global headcount by more than 20% to 7,800 by the end of the third quarter. This is down from over 9,900 in January 2019. 

    The company said in late September that the slashing of jobs was “in response to the overall tempered market conditions” in a statement. It also said at the time that it had implemented “comprehensive efficiency and cost control measures” as a result of market conditions.

    The company also said it would pursue more restructuring, including spinning off some non-core businesses by year end.

    We’re going to venture a guess and say this strategic realignment may not be going as planned…

     


    Tyler Durden

    Wed, 10/30/2019 – 20:10

    Tags
    Business Finance

  • Yes, Virginia, There Is A Deep State And It's Feeding The Anti-POTUS Mob
    Yes, Virginia, There Is A Deep State And It’s Feeding The Anti-POTUS Mob

    Authored by David Stockman via TargetLiberty.com,

    The prepared statement of the latest UkraineGate whistle-blower is well worth the read. It tells you all you need to know about why the Deep State apparatchiks are coming out of the woodwork in a massive assault on America’s duly elected president.

    • They are deathly afraid Trump will begin to dismantle a far-flung Empire which has

    • …wreaked havoc around the world, 

    • …bled America’s fiscal accounts dry, and  

    • …fostered unspeakable prosperity among the beltway’s legions of empire-supporting agencies, contractors, think tanks, foreign lobbies, NGO’s and K-street racketeers.

    Whether out of common sense, naiveté or just contrariness, the Donald has dared to question and disrupt the Empire’s core policy on the Ukraine/Russia file. And that’s apparently exactly why the whistleblower de jour, Lt. Col. Alexander Vindman, wrote his now ballyhooed memos.

    He feared that Trump’s appropriate desire to get to the bottom of the well-documented Ukrainian involvement in the Obama Administration’s illegal spying on his 2016 presidential campaign would undermine the bipartisan consensus on Capitol Hill for Washington’s utterly wrong-headed Ukraine policy.

    Stated more crudely, Washington overthrew the duly elected government of Ukraine in early 2014 because its leader was deemed too cozy with Moscow. And in the vanguard of that illegal meddling in the governance of a sovereign foreign state was Obama’s state department led by neocon Assistant Secretary Victoria Nuland, Washington’s self-appointed roving proconsul John McCain and at length Vice-President Joe Biden.

    After aiding a motley phalanx of ultra-nationalists, crypto-Nazi and political fortune seekers in overthrowing President Viktor Yanukovych, Washington has stood-up what are essentially puppet governments. The purpose has been to cause maximum abrasion with Putin and Russia; and at a cost of billions in aid from the US and other western agencies designed to prop up the economic basket case and cease pool of corruption which passes for the Ukrainian economy.

    The Deep State narrative turns these realities on their head, of course, claiming that the mess in Ukraine is all the doing of the demonic Vladimir Putin. Accordingly, the very safety and security of the citizens of Lincoln NE and Springfield MA is allegedly on the line in a territory on Russia’s doorstep, which has historically been a meandering set of borders in search of a country when it was not otherwise a willing vassal and economic adjunct of Mother Russia.

    As it happens, Lt. Colonel Vindman is a vociferous partisan of Washington’s Big Lie about the Russian ogre, and was virtually a fifth column operative in the viper’s nest of neocons at the Donald’s national security council. In fact, Vindman reported to Russophobe Fiona Hill, who reported to the Walrus of Forever War himself, John Bolton.

    So despite all the Democrats’ crocodile tears for the constitution and rule of law, Vindman’s beef wasn’t really about their whole abuse of power canard. Nor did it touch upon the risible Dem/MSM nonsense that in asking a foreign government to undertake a legitimate action (an investigation of the corrupt use of taxpayers money by the former Vice President) Trump was committing a violation of U.S. election laws.

    To the contrary, the gravamen of the colonel’s concern was domestic politics and the possibility that in withholding the $380 million of pending Ukrainian aid (which should have been zero in the first place) and pressing the Biden investigation, Trump would alienate Capitol Hill Democrats and leave the Deep State’s policy of using the Ukraine as an anti-Putin battering ram high and dry.

    “…. I was worried about the implications for the U.S. government’s support of Ukraine…. “I realized that if Ukraine pursued an investigation into the Bidens and Burisma, it would likely be interpreted as a partisan play which would undoubtedly result in Ukraine losing the bipartisan support it has thus far maintained.” 

    “This would all undermine U.S. national security. Following the call, I again reported my concerns to NSC’s lead counsel.”

    Folks, Lt. Col. Vindman was not elected to nothin’. If he’s a proud 20-year veteran of the US Army and diplomatic service as he claims, fine. But his job is to implement policy as decided by the elected representatives of the people, not to free lance in the cause of the Empire group-think in which he is obviously and hopelessly steeped.

    So let’s cut to the chase: The policy he feared the Donald might be jeopardizing by his pressure tactics with President Zelensky has been a travesty from start to finish. The Ukraine has no bearing on America’s homeland security whatsoever, and the policies of its government vis a vis Russia or any of its other neighbors are none of Washington’s cotton picking business.

    You can’t be more emphatic about the utter irrelevancy of Ukraine to America’s homeland security. Even at the pre-coup peak in 2013 it had a miniscule GDP of $185 billion, which has since plunged by 30% to $130 billion. Even if Putin were foolish enough to annex the approximate 30 million Russian-hating Ukrainians outside of the Russian-speaking eastern Donbas region, which he surely is not, it wouldn’t amount to a hill of beans in the strategic equation.

    Ukraine amounts to just 8% of Russia’s pint-sized GDP and is actually worthless to the Kremlin. That’s because the cost of occupation and pacification of the non-Russian speaking majority of the country would vastly outweigh whatever industrial and material output it might steal from the Ukrainians.

    Besides, what in the hell is wrong with Washington when it gets all hot and bothered about a no-count territory plagued with economic failure and which generates annually about two days worth of US output?

    Moreover, even if you have warm and fuzzy regard for the rights and liberties of the Ukrainian “nation”, which has existed only infrequently as an independent state with wildly variant borders during the last 800 years, the question remains. Namely, how in the world can it be argued that its people were not better off in 2013 under an elected government of the Regions party that tilted toward Russia compared to the economic calamity which exits today and is only saved from complete collapse by US and European subventions?

    So here’s where the Deep State’s hegemonic “sole super-power” world view comes in. Washington’s Ukraine policy has nothing to do with homeland security or prevention of military attack on American shores.

    Instead, it is based on policing the world and demonizing the rump-state of Russia which emerged after the Soviet Union slithered off the pages of history in 1991. What was left was a decimated economy with half the former population and a current day GDP of $1.6 trillion, which is actually less than the GDP of the New York metro area. Still, the Warfare State needs palpable “enemies” and adversaries—no matter how tendentious the case— to justify its massive fiscal drain ($1.1 trillion counting everything) on US taxpayers, both current and unborn; and it also needs expansive missions like spreading the blessings of democracy, prosperity and western culture to the far corners of the earth.

    And that’s not our hyperbole in the slightest; it’s essentially the content of Vindman’s whistleblower testimony to Shifty Schiff’s Star Chamber proceedings today.

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    Thus, when it comes to the blatant lie that Russia is an expansionist power, Vindman’s purple prose would make even the late war-mongering Senator from Arizona proud:

    Since 2008, Russia has manifested an overtly aggressive foreign policy, leveraging military power and employing hybrid warfare to achieve its objectives of regional hegemony and global influence. Absent a deterrent to dissuade Russia from such aggression, there is an increased risk of further confrontations with the West. In this situation, a strong and independent Ukraine is critical to U.S. national security interests because Ukraine is a frontline state and a bulwark against Russian aggression.

    Wow! That’s just bellicose rubbish. A “frontline state and bulwark”my eye. In fact, during the years since 1991 when Washington has invaded and virtually destroyed upwards of a dozen sovereign countries, Russia hasn’t invaded anyone! But the reference to 2008 does tell you exactly where Vindman is coming from. He’s obviously referring to Russia’s thwarting of Georgia’s invasion of South Ossetia in August 2008.

    That incident has been spun by the Deep State ever since as Russian aggression when it was just the opposite.

    To wit, it was an aggressive military invasion by Georgia designed to reclaim the break-away republic of South Ossetia. The real culprit was its mercurial leader and Washington tool, Mikheil Saakashvili, who had been egged on by Senator McCain and the usual cast of neocons with the promise of Washington military help, which fortunately did not happen.

    But a subsequent 1,000 page report by an independent EU fact-finding mission led by a renown Swiss diplomat makes clear that the Georgian accusations of Russian aggression were completely fabricated.

    “It was Georgia which triggered off the war when it attacked (South Ossetian capital) Tskhinvali” said Heidi Tagliavini, the mission head, in a statement. Although the EU commission tactfully avoided using the word “lie,” the report implies that Saakashvili did not tell the truth about how the war started.

    The same is true of the so-called annexation of Crimea and the Kremlin’s support for the breakaway republics in eastern Ukraine.

    As to the former, the population of Crimea is overwhelmingly Russian, and for 171-years from 1783 to 1954 it was an integral province of Czarist Russia. It got arbitrarily assigned to the Ukraine Soviet Socialist Republic by Khrushchev after he won the post-Stalin power struggle in 1954 as a reward to his compatriots in Kiev—even though less than 15% of the population was Ukrainian.

    After the US funded, supported and instantly recognized coup in Kiev in February 2014 and the immediate passage of virulent anti-Russian legislation by the putsch, the Russian-speaking population of Crimea voted overwhelmingly (87%) to return to Mother Russia. The so-called coercive annexation by Russia is a figment of War Party propaganda, and implies a willingness to use American money and arms to enforce the dead hand of the Soviet Presidium.

    And the same story goes for the Donbas. The largely Russian speaking population of this industrial region, which is highly integrated with the Russian economy, wants to be separated from the Ukrainian nationalists in Kiev who have launched a vicious war to subdue them.

    But if the Donbas were to be partitioned or even if it voted to join the Russian Federation, so what?

    The honest truth of the matter is that Europe is flush with partitioned states. These include Slovakia and the Czech Republic as well as the manifold offspring of Yugoslavia including North Macedonia, Slovenia, Croatia, Bosnia, Montenegro and Serbia, which, at the insistence of Washington, got further carved up by the partition of Kosovo.

    That is to say, once Washington upended the tenuous political/ethnic balance of post- Soviet Ukraine by supporting the nationalist coup, there was still no reason that the Yugoslav model of partition could not have settled the matter.

    In fact, the 5-year war on the Donbas—which has killed upwards of 20,000 and brought economic and fiscal ruin to both the region and Ukraine as a whole—wouldn’t have lasted more than a few weeks without the promise of western economic and military aid and political support.

    The needless tragedy there is not the fruit of Russian aggression. It’s the consequence of Washington meddling, including all the corruption which has flowered after Ukraine was turned into a Washington vassal and found it necessary to hire Washington lobbyists and racketeers like Hunter Biden and Devon Archer (then Secretary of State John Kerry’s former campaign bundler) to keep the cash flowing.

    Needless to say, the Deep State slathers this toxic reality in a narrative that is pure hogwash. And Colonel Vindman has it down pat: Namely, under the tutelage, money and political and military cover of the Washington Imperium, Ukraine is to be brought into the “Euro-Atlantic community” as a splendid new democracy.

    The bolded term, of course, is an undisguised euphemism for NATO:

    In spite of being under assault from Russia for more than five years, Ukraine has taken major steps towards integrating with the West. The U.S. government policy community’s view is that the election of President Volodymyr Zelensky and the promise of reforms to eliminate corruption will lock in Ukraine’s Western-leaning trajectory, and allow Ukraine to realize its dream of a vibrant democracy and economic prosperity.

    The United States and Ukraine are and must remain strategic partners, working together to realize the shared vision of a stable, prosperous, and democratic Ukraine that is integrated into the Euro-Atlantic community.

    Here’s the thing. The expansion of NATO to the very doorstep of Russia was the most colossal mistake of the post-cold war period. And the War Party’s insistence that this should to taken all the way to the incorporation of Ukraine and Georgia—-historic vassals of Russia—actually trespasses upon the very border of insanity.

    Indeed, the father of containment and the intellectual architect of NATO in the late 1940s, the great George F. Kennan, hit the nail on the head when lightweight Clintonistas like Strobe Talbot and Madeleine Albright launched the NATO expansion process in the 1990s:

    ”I think it is the beginning of a new cold war,” said Mr. Kennan from his Princeton home. ”I think the Russians will gradually react quite adversely and it will affect their policies. I think it is a tragic mistake. There was no reason for this whatsoever. No one was threatening anybody else. This expansion would make the Founding Fathers of this country turn over in their graves. We have signed up to protect a whole series of countries, even though we have neither the resources nor the intention to do so in any serious way. [NATO expansion] was simply a light-hearted action by a Senate that has no real interest in foreign affairs.”

    “What bothers me is how superficial and ill informed the whole Senate debate was,” added Mr. Kennan, who was present at the creation of NATO and whose anonymous 1947 article in the journal Foreign Affairs, signed ”X,” defined America’s cold-war containment policy for 40 years. ”I was particularly bothered by the references to Russia as a country dying to attack Western Europe. Don’t people understand? Our differences in the cold war were with the Soviet Communist regime. And now we are turning our backs on the very people who mounted the greatest bloodless revolution in history to remove that Soviet regime.

    ”And Russia’s democracy is as far advanced, if not farther, as any of these countries we’ve just signed up to defend from Russia,” said Mr. Kennan, who joined the State Department in 1926 and was U.S. Ambassador to Moscow in 1952. ”It shows so little understanding of Russian history and Soviet history. Of course there is going to be a bad reaction from Russia, and then [the NATO expanders] will say that we always told you that is how the Russians are — but this is just wrong.”

    He couldn’t have been more right about the substance of what would happen. But little did even Kennan realize that once in motion any even tepid effort to question or stop it–per the Donald’s campaign rhetoric about the obsolescence of NATO–would actually provoke a Deep State assault on American democracy itself

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    So there’s your Deep State at work. It isn’t some kind of sinister conspiracy lurking deep in the shadows of the national security machinery.

    To the contrary, it’s right there in the broad daylight of the Imperial City. It is populated by hundreds of thousands of foot soldiers like Colonel Vindman who make a career of drinking the Cool Aid, collecting a pay check from the state and propagating the policies of Empire First—policies which are immoral, illegal, unaffordable and have absolutely nothing to do with protecting America’s liberty, prosperity and security inside the great ocean moats, which once upon a time birthed a peace-loving Republic.

    We have no illusions, of course, that the Donald is a peace-lover. He’s self-evidently first and foremost a Donald-lover.

    Still, what is underway in Washington—first with the RussiaGate hoax and now with UkraineGate and impeachment—is an extra-constitutional political lynching, and one that has turned Washington’s desperate, mendacious Dem pols into complaisant handmaids of the Deep State.

    So Lt. Colonel Alexander Vindman isn’t some kind of whistle-blowing hero. He’s just another mindless cog in the wheel of Empire talking his own book and thereby abetting the political mob that is now threatening the very constitution he was sworn to uphold.

    *  *  *

    The above originally appeared at David Stockman’s Contra Corner.


    Tyler Durden

    Wed, 10/30/2019 – 19:50

    Tags
    Politics

  • Crashing To Earth: Masa Son Speaks To "Almost Empty" Room At "Davos In The Desert"
    Crashing To Earth: Masa Son Speaks To “Almost Empty” Room At “Davos In The Desert”

    Last year, Wall Street firms scrambled to distance themselves from the Saudi Arabia and its young Crown Prince Mohammad bin Salman after Salman (allegedly) ordered the murder of Washington Post columnist and dissident expatriate Jamal Khashoggi. Fast forward one year, all was seemingly forgiven, and MbS’s “Davos in the Desert” 2019 has reportedly been packed with luminaries from across the industry.

    Which means there’s no excuse for this: Bloomberg reported Wednesday that the conference hall was nearly empty on Wednesday when SoftBank Group Executive Chairman Masayoshi Son took to the stage as part of a panel with four speakers. Apparently, after WeWork’s sudden implosion left the telecoms/VC giant holding one of the biggest bags of odious excrement ever assembled in the history of…capitalism.

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    Masayoshi Son

    Still, SoftBank and its Saudi-backed Vision Fund have already doubled down on the firm’s WeWork bet, pumping billions more into the struggling company and seizing control by installing new SoftBank-approved executives as WeWork scrambles to stave off an imminent bankruptcy.

    The WeWork mess, along with Uber’s disastrous IPO, seriously damaged Son’s reputation as one of the most successful momentum investors in recent years.

    Despite being one of the main attractions in year’s past, Son was relegated to a very minor speaking role, briefly opening up to say a few words about artificial intelligence and entrepreneurship (SoftBank has invested in several AI startups) without saying much at all about the kingdom’s commitment to his second Vision Fund iteration (for the record, the Saudis have reportedly backed out of financing V2, leaving its future highly uncertain). Saudi Arabia committed $45 billion of the $100 billion for the first Vision Fund.

    The poorly attended panel “underscores to some extent the diminished appeal of his Vision Fund idea,” as well as the reputations of both Son and SoftBank.

    Son’s poorly attended panel underscores to some extent the diminished appeal of his Vision Fund idea, which less than two years ago emerged as one of the kingdom’s boldest and certainly most expensive bets to help diversify its economy. As the Vision Fund copes with the controversy around co-working company WeWork, prime backers Saudi Arabia and the United Arab Emirates remain undecided as to whether to invest in Vision Fund 2.

    The contrast with Son’s previous appearance at the conference two years ago is striking, BBG added.

    The contrast with Son’s previous appearance two years ago at the Future Investment Initiative, Saudi Arabia’s flagship investment conference, is striking. Then, Son was all smiles as he sat on a panel with the kingdom’s powerful Crown Prince Mohammed bin Salman and made a commitment to participate in the country’s $500 billion futuristic city, known as Neom.

    In the aftermath of the WeWork IPO fiasco, Goldman Sachs and others have reduced their loan exposure to the Vision Fund. And we can’t blame them: After all, Uber and WeWork aren’t the only highly speculative, wildly overvalued Silicon Valley plays in SoftBank’s portfolio.

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    Tyler Durden

    Wed, 10/30/2019 – 19:30

    Tags
    Business Finance

  • Repo-calypse: No, Jamie, It Wasn't The SLR!
    Repo-calypse: No, Jamie, It Wasn’t The SLR!

    Authored by Jeffrey Snider via Alhambra Investment Partners,

    JP Morgan’s CEO Jamie Dimon has been running around Washington claiming that mid-September’s repo rumble was the result of the post-crisis regulatory environment. He now says that his bank had the spare cash and was willing to cash in on double digit repo rates but it was government rules which prevented that from happening. It’s unclear (but we can, and I will, guess) why he didn’t make the same claim and warn everyone on Friday, September 13, before the seasonal low point in liquidity that everyone knew was there.

    It wasn’t until quite a while afterward during that period when a stunned financial world was still trying (and failing) to make sense of what had happened.

    You probably won’t be surprised to learn that this isn’t the first time Wall Street has complained about these very same regulations. They’ve been against them from the very beginning. What’s different now is that they have a very public event about which nobody has any real answers to rally support. It all sounds pretty plausible (it always sounds plausible, yet never explains most of the facts).

    Suddenly, Treasury Secretary Mnuchin seems to be siding with the banks. Having spoken directly with Mr. Dimon recently, Secretary Mnuchin today says:

    The banks have raised an issue around intra-day liquidity, and that is something that makes sense for regulators to look at.

    That issue they’ve raised is something called the Supplemental Leverage Ratio, or SLR. It was created and applied to Global Systemically Important Bank organizations, or G-SIB. The FDIC, in particular, had pushed for the SLR because quite rightly the agency wasn’t very thrilled about the prospects for having to absorb potential deposit liabilities of huge banks sporting enormous leverage getting shut out of wholesale funding markets.

    The Global Financial Crisis of 2008 demonstrated conclusively this wasn’t a trivial possibility.

    To put it simply, regulators would require designated G-SIB’s (there are 8 in the US) to hold an additional liquidity buffer (SLR) based upon their reported leverage (one lesson authorities did learn from Bear, Lehman, and the rest). It would be a liquidity surcharge which would have to be met by a set percentage of holdings in unencumbered cash and highly liquid assets like UST’s over and above other regulatory (like Basel 3’s LCR) and good standing requirements.

    If any G-SIB bank wanted to employ more leverage, more power to them. The regulation was an attempt to recognize partly the risks to others beyond the one bank involved in doing so. Regardless of capital ratios, worthless capital ratios, beyond a preset threshold the more leverage the greater the SLR; more liquid assets including cash and Treasuries need to be held as further liquidity reserves.

    So, again, blaming the SLR along with Basel 3’s Liquidity Coverage Ratio sounds like a plausible excuse for September’s repo malfunction. JP Morgan, as its CEO now says, wanted to act but couldn’t because his bank’s SLR surcharge was the primary impediment.

    We also know this because they said essentially the same thing in September…2018. Again, you probably won’t be surprised to learn that early on last year the banks were supporting regulatory efforts to make changes to what is now the e-SLR (the “e” stands for “enhanced” while there is room for debate about whether that’s the proper use of that particular word in this context). Martin J. Gruenberg, an FDIC board member, spoke in Washington last September to that effect:

    On April 11 of this year [2018], the Federal Reserve Board and the OCC released a joint notice of proposed rulemaking, or NPR, to make changes to the enhanced supplementary leverage ratio capital requirement applied to the eight U.S. G-SIBs and their federally insured bank subsidiaries. The changes would have the effect of reducing the capital requirement. They are not technical fixes. They would significantly weaken constraints on financial leverage in systemically important banks put in place in response to the crisis.

    And where did that “e” come from in the first place? Way back in July 2017, Wall Street was lobbying for changes to the same regulatory paradigm back then, too. What I wrote at the time was:

    Released on June 12 [2017], it suggested that the SLR might be reformulated to make it less imposing. The SLR was initially proposed so that the risk-weighting shenanigans (regulatory capital relief) would at least be exposed by this measure of true(r) leverage. It takes Tier 1 capital divided by the sum of on-balance sheet assets plus off-balance sheet exposures. There is still a large gray area in that latter variable.

    Banks want now to deduct certain cash and liquid assets (including UST’s) from it. The result of which is supposed to, in Treasury’s estimation, unlock significant liquidity potential of the global banking system from just American operations. It is, in other words, the official acceptance of at least part of the idea that one big problem in the economy is insufficient liquidity (no sh@#).

    The banks succeeded and Secretary Mnuchin’s Treasury Department issued its favorable report that very June. Most attention was focused on what it said about the so-called Volcker Rule while the more complex (and more relevant) SLR, e-SLR, and G-SIB designations remained, pardon me, in the shadows.

    To sum up: Wall Street has hated almost every single post-crisis regulation that has been implemented, though in some cases they’ve been right to do so. However, there is absolutely no reason to believe that the e-SLR or G-SIB rules had anything to do with the repo market outbreak in September 2019.

    What’s been constant is the banking system’s ongoing efforts to remove these kinds of regulations. At the same time, problems in the repo market have been nearly as constant. Yet , you didn’t hear a single thing about the SLR during any of the other outbreaks simply because no one paid any attention to those prior bouts of repo market illiquidity.

    There was no opportunity, therefore, to pin the regulation on something bad.

    The only thing that changed, in its aftermath, was that the public for once had no choice but to look at the repo market and the funding environment. With attention now fixed and no plausible answers being offered, all of a sudden it’s now evidence against a regulation banks have been actively opposing for years.

    Shocking, I know.

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    As is the fact that May 29, 2018, had more to do with these repo market woes than anything about the SLR and the like. If that particular constraint was such a major issue in September, why wasn’t it in May 29 the prior year when the Treasury market began to embarrass Mr. Dimon and his prediction of 4% and even 5% 10-year UST yields? Repo rates were elevated at that time, too.

    Obviously, in the middle of 2018, the head of JP Morgan, the bank allegedly suffering under the unfair imposition of out-of-touch regulators, saw no reason why the US and global economy wouldn’t soar in an all-but-guaranteed inflationary breakout (interest rates had nowhere to go but up). Implicit in that view was a resilient and robust global financial system flourishing without the hint of liquidity issues.

    Dimon opposed the SLR (and LCR) when he fully believed things were really good, and he opposes the SLR now that he’s not so sure and he has something bad with which to blame. And he will oppose the SLR tomorrow if things really do turn around, and especially if they don’t.

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    So, is it that Dimon had no idea what was really going on during 2018 at his own bank, and has therefore come around to thinking some version of the SLR is to blame for getting 2019 all wrong? Or, is it because he had and has no real idea of the liquidity system that after being caught totally off-guard by pretty much everything he is cynically seeking to settle a longstanding score about the one thing he does know well?

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    When I came up with the zoo analogy to try to describe what’s going on, I didn’t realize just how well it would fit the times. What’s worse, the financial media will now be filled with stories about how it must be that Dimon is right! A real zoo.

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    Therefore, nothing will change even if the SLR does get changed.


    Tyler Durden

    Wed, 10/30/2019 – 19:10

    Tags
    Business Finance

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