Feb 03

Today’s News 3rd February 2018

  • Can The Impending Collapse Of Russiagate Halt The Slide Toward A Nuclear 1914?

    Authored by James George Jatras via The Strategic Culture Foundation,

    In the period preceding the World War I how many Europeans suspected that their lives would soon be forever changed – and, for millions of them, ended?

     

    Who in the years, say, 1910 to 1913, could have imagined that the decades of peace, progress, and civilization in which they had grown up, and which seemingly would continue indefinitely, instead would soon descend into a horror of industrial-scale slaughter, revolution, and brutal ideologies?

    The answer is, probably very few, just as few people today care much about the details of international and security affairs. Normal folk have better things to do with their lives.

    To be sure, in that bygone era of smug jingosim, there was always the entertainment aspect that “our” side had forced “theirs” to back down in some exotic locale, as in the Fashoda incident (1898) or the Moroccan crises (1906, 1911). Even the Balkan Wars of 1912-13 seemed less a harbinger of the cataclysm to come than local dustups on the edge of the continent where the general peace had not been disturbed even by the much more disruptive Crimean or Franco-Prussian wars.

    Besides, no doubt level-headed statesmen were in charge in the various capitals, ensuring that things wouldn’t get out of hand.

    Until they did.

    A notable exception to the prevailing mood of business-as-usual, nothing-to-see-here-folks was Pyotr Durnovo, whose remarkable February 1914 memorandum to Tsar Nicholas II laid out not only what the great powers would do in the approaching general war but the behavior of the minor countries as well. Moreover, he anticipated that in the event of defeat, Russia, destabilized by unchecked socialist “agitation” amid wartime hardships, would “be flung into hopeless anarchy, the issue of which cannot be foreseen.” Germany, likewise, was “destined to suffer, in case of defeat, no lesser social upheavals” and “take a purely revolutionary path” of a nationalist hue.

    When the great powers blundered into war in August 1914, each confident of its ability speedily to dispatch its rivals, the price (adding in the toll from the 1939-1945 rematch) was upwards of 70 million lives. But the cost of a comparable mistake today might be literally incalculable – if there’s anyone left to do the tally.

    During the first Cold War between the US and the USSR, there was a general sense that a World War III was, in a word, unthinkable. As summed up by Ronald Reagan: “A nuclear war cannot be won and must never be fought.” Then, it was understood that all-out war, however it started, meant massed ICBMs over the North Pole and the “end of civilization as we know it.”

    Not anymore. What was unthinkable in the old Cold War has become all-too-thinkable in the new one between the US and Russia. As described by veteran arms control inspector Scott Ritter, in analyzing a draft of the 2018 US Nuclear Posture Review (NPR), the US threshold for the use of nuclear weapons has become dangerously low:

    ‘The 2018 NPR has a vision of nuclear conflict that goes far beyond the traditional imagery of mass missile launches. While ICBMs and manned bombers will be maintained on a day-to-day alert, the tip of the nuclear spear is now what the NPR calls “supplemental” nuclear forces – dual-use aircraft such as the F-35 fighter armed with B-61 gravity bombs capable of delivering a low-yield nuclear payload, a new generation of nuclear-tipped submarine-launched cruise missiles, and submarine-launched ballistic missiles tipped with a new generation of low-yield nuclear warheads. The danger inherent with the integration of these kinds of tactical nuclear weapons into an overall strategy of deterrence is that it fundamentally lowers the threshold for their use. […]

    ‘Noting that the United States has never adopted a “no first use” policy, the 2018 NPR states that “it remains the policy of the United States to retain some ambiguity regarding the precise circumstances that might lead to a US nuclear response.” In this regard, the NPR states that America could employ nuclear weapons under “extreme circumstances that could include significant non-nuclear strategic attacks.” … The issue of “non-nuclear strategic attack technologies” as a potential precursor for nuclear war is a new factor that previously did not exist in American policy. The United States has long held that chemical and biological weapons represent a strategic threat for which America’s nuclear deterrence capability serves as a viable counter. But the threat from cyber attacks is different. If for no other reason than the potential for miscalculation and error in terms of attribution and intent, the nexus of cyber and nuclear weapons should be disconcerting for everyone. […] 

    ‘Even more disturbing is the notion that a cyber intrusion such as the one perpetrated against the Democratic National Committee and attributed to Russia could serve as a trigger for nuclear war. This is not as far-fetched as it sounds. The DNC event has been characterized by influential American politicians, such as the Armed Services Committee Chairman John McCain, as “an act of war.” Moreover, former vice president Joe Biden hinted that, in the aftermath of the DNC breach, the United States was launching a retaliatory cyberattack of its own, targeting Russia. The possibility of a tit-for-tat exchange of cyberattacks that escalates into a nuclear conflict would previously have been dismissed out of hand; today, thanks to the 2018 NPR, it has entered the realm of the possible.’

    The idea that a first-strike Schlieffen Plan could knock out the Russians (and no doubt similar contingencies are in place for China) at the outset of hostilities reflects a dangerous illusion of predictability. Truth may be the first casualty of war, but “the plan” is inevitably the second. That’s because war planners generally don’t consult the enemy, who – annoyingly for the planners – also gets a vote.

    Recently US Secretary of State James Mattis declared that “great power competition – not terrorism – is now the primary focus of US national security,” specifying Russia and China as nations seeking to “create a world consistent with their authoritarian models, pursuing veto authority over other nations’ economic, diplomatic and security decisions.” At least we can drop the pretense that US policy has been to fight jihad terrorism, not to use it as a policy tool in Afghanistan, Bosnia, Kosovo, Libya, Syria, and elsewhere. And of course Washington never, ever meddles in “other nations’ economic, diplomatic and security decisions” . . .

    There is much anticipation that release of a House Intelligence Committee memo “naming names” of those in the FBI and elsewhere inside and outside of government to thwart the election of Donald Trump and cripple his administration with a phony Russian “collusion” probe will be a silver bullet that upturns the Mueller probe and cleans the Augean stables of the Deep State. Even in that unlikely case, the damage is already done. The primary purpose of Russiagate was always to ensure Trump could not reach out to Moscow, as seems to be his sincere desire. Even as the narrative began to boomerang against those who launched it, Trump’s defenders (such as fanatical Russophobe Nikki Haley) are as adamant as his detractors that Russia is and will remain the main enemy: Russia was behind the Steele Dossier, Russia tried to “corner the market” on “the foundational material for nuclear weapons” with the Uranium One deal, etc. Hostility toward Russia is not a means to an end – it is the end.

    At this point Trump is fastened to the neocons’ and generals’ axle, and all he can do is spin. Echoing Mattis, in his State of the Union speech Trump lumped “rivals like China and Russia” together with “rogue regimes” and “terrorist groups” as “horrible dangers” to the United States. (Note: The word “horrible” does not appear in the posted text. That evidently was Trump’s adlib.) The recently issued “name and shame” list of prominent Russians is a veritable Who’s Who of government and business, ensuring that there’s no American engagement with anyone within screaming distance of the Kremlin.

    To be fair, the Russians and Chinese are making their own war preparations. Russia’s “Kanyon,” a doomsday nuclear torpedo carrying a massive warhead, is designed to obliterate the U.S east and west coasts, rendering them inhabitable for generations. (Wait a minute. Is it any coincidence, Comrade, that the coastal cities are just where the Democrats’ electoral strength is? Talk about “collusion!” Somebody call Bob Mueller!) For its part, China is developing means to eliminate our white elephant carrier groups – handy for pummeling Third World backwaters but useless in a war with a major power – with drone swarms and hypersonic missiles.

    Just as in 1914, when Durnovo referred to “presence of abundant combustible material in Europe,” there is any number of global flashpoints that could turn Mattis’s “great power competition” into a major conflagration that probably was not desired by anyone. However, if the worst happens, and the lamps go out again – maybe this time forever – Americans will not again be immune from the consequences as we were in the wars of the 20th century. The remainder of our lives, however brief, might turn out very differently from what we had anticipated. 

  • Mapping Marijuana – Go West Young Man (For The Cheapest Weed)

    If you live in Washington D.C. and enjoy a responsible toke or two, move to Seattle…

    That’s the message, according to the 2018 Cannabis Price Index, a study compiled by Seedo, a Tel Aviv-based company that produces devices for home growers.

     

     

    The average cost of a gram of marijuana in Washington D.C. is a shocking $18.08, whereas in Seattle, the average cost is just $7.58, and in New York City, which consumes more marijuana than any other metropolis on Earth, the average price is $10.76.

    According to Seedo, the data (collected in December and January) matters because it helps to show the kind of tax revenue that could be collected if weed was legalized — something that Canada plans to do later this year.

     

    As Bloomberg reports, in Toronto, where the price is C$9.64 ($7.82), the city could generate as much as C$152 million per year if it levied tax at the same rate as cigarettes, the study shows, while the Big Apple could collect $354 million.

    It’s still unclear how Canada will actually set prices. Federal and provincial governments have agreed to split the proceeds from cannabis taxes, with 75 percent of the proceeds going to provincial authorities, who will oversee cannabis distribution.

  • Nomi Prins Fingers Trump's Financial Arsonists: "Next Financial Crisis – Not If, But When"

    Authored by Nomi Prins via TomDispatch.com,

    There’s been lots of fire and fury around Washington lately, including a brief government shutdown. In Donald Trump’s White House, you can hardly keep up with the ongoing brouhahas from North Korea to Robert Mueller’s Russian investigation, while it already feels like ages since the celebratory mood over the vast corporate tax cuts Congress passed last year. But don’t be fooled: none of that is as important as what’s missing from the picture.  Like a disease, in the nation’s capital it’s often what you can’t see that will, in the end, hurt you most.

     

    Amid a roaring stock market and a planet of upbeat CEOs, few are even thinking about the havoc that a multi-trillion-dollar financial system gone rogue could inflict upon global stability.  But watch out.  Even in the seemingly best of times, neglecting Wall Street is a dangerous idea. With a rag-tag Trumpian crew of ex-bankers and Goldman Sachs alumni as the only watchdogs in town, it’s time to focus, because one thing is clear: Donald Trump’s economic team is in the process of making the financial system combustible again.

    Collectively, the biggest U.S. banks already have their get-out-out-of-jail-free cards and are now sitting on record profits after, not so long ago, triggering sweeping unemployment, wrecking countless lives, and elevating global instability.  (Not a single major bank CEO was given jail time for such acts.)  Still, let’s not blame the dangers lurking at the heart of the financial system solely on the Trump doctrine of leaving banks alone. They should be shared by the Democrats who, under President Barack Obama, believed, and still believe, in the perfection of the Dodd-Frank Act of 2010.

    While Dodd-Frank created important financial safeguards like the Consumer Financial Protection Bureau, even stronger long-term banking reforms were left on the sidelines. Crucially, that law didn’t force banks to separate the deposits of everyday Americans from Wall Street’s complex derivatives transactions.  In other words, it didn’t resurrect the Glass-Steagall Act of 1933 (axed in the Clinton era).

    Wall Street is now thoroughly emboldened as the financial elite follows the mantra of Kelly Clarkston’s hit song: “What doesn’t kill you makes you stronger.” Since the crisis of 2007-2008, the Big Six U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — have seen the share price of their stocks significantly outpace those of the S&P 500 index as a whole.

    Jamie Dimon, chairman and CEO of JPMorgan Chase, the nation’s largest bank (that’s paid $13 billion in settlements for various fraudulent acts), recently even pooh-poohed the chances of the Democratic Party in 2020, suggesting that it was about time its leaders let banks do whatever they wanted. As he told Maria Bartiromo, host of Fox Business’s Wall Street Week, “The thing about the Democrats is they will not have a chance, in my opinion. They don’t have a strong centrist, pro-business, pro-free enterprise person.”

    This is a man who was basically gifted two banks, Bear Stearns and Washington Mutual, by the U.S. government during the financial crisis. That present came as his own company got cheap loans from the Federal Reserve, while clamoring for billions in bailout money that he swore it didn’t need.

    Dimon can afford to be brazen. JPMorgan Chase is now the second most profitable company in the country. Why should he be worried about what might happen in another crisis, given that the Trump administration is in charge? With pro-business and pro-bailout thinking reigning supreme, what could go wrong?

    Protect or Destroy?

    There are, of course, supposed to be safeguards against freewheeling types like Dimon. In Washington, key regulatory bodies are tasked with keeping too-big-to-fail banks from wrecking the economy and committing financial crimes against the public. They include the Federal Reserve, the Securities and Exchange Commission, the Treasury Department, the Office of the Comptroller of the Currency (an independent bureau of the Treasury), and most recently, under the Dodd-Frank Act of 2010, the Consumer Financial Protection Bureau (an independent agency funded by the Federal Reserve).

    These entities are now run by men whose only desire is to give Wall Street more latitude. Former Goldman Sachs partner, now treasury secretary, Steven Mnuchin caught the spirit of the moment with a selfie of his wife and him holding reams of newly printed money “like a couple of James Bond villains.” (After all, he was a Hollywood producer and even appeared in the Warren Beatty flick Rules Don’t Apply.) He’s making his mark on us, however, not by producing economic security, but by cheerleading for financial deregulation.

    Despite the fact that the Republican platform in election 2016 endorsed reinstating the Glass-Steagall Act, Mnuchin made it clear that he has no intention of letting that happen. In a signal to every too-big-not-to-fail financial outfit around, he also released AIG from its regulatory chains. That’s the insurance company that was at the epicenter of the last financial crisis. By freeing AIG from being monitored by the Financial Services Oversight Board that he chairs, he’s left it and others like it free to repeat the same mistakes.

    Elsewhere, having successfully spun through the revolving door from banking to Washington, Joseph Otting, a former colleague of Mnuchin’s, is now running the Office of the Comptroller of the Currency (OCC). While he’s no household name, he was the CEO of OneWest (formerly, the failed California-based bank IndyMac). That’s the bank Mnuchin and his billionaire posse picked up on the cheap in 2009 before carrying out a vast set of foreclosures on the homes of ordinary Americans (including active-duty servicemen and -women) and reselling it for hundreds of millions of dollars in personal profits.

    At the Federal Reserve, Trump’s selection for chairman, Jerome Powell (another Mnuchin pick), has repeatedly expressed his disinterest in bank regulations. To him, too-big-to-fail banks are a thing of the past. And to round out this heady crew, there’s Office of Management and Budget (OMB) head Mick Mulvaney now also at the helm of the Consumer Financial Protection Bureau (CFPB), whose very existence he’s mocked.

    In time, we’ll come to a reckoning with this era of Trumpian finance. Meanwhile, however, the agenda of these men (and they are all men) could lead to a financial crisis of the first order. So here’s a little rundown on them: what drives them and how they are blindly taking the economy onto distinctly treacherous ground.

    Joseph Otting, Office of the Comptroller of the Currency

    The Office of the Comptroller is responsible for ensuring that banks operate in a secure and reasonable manner, provide equal access to their services, treat customers properly, and adhere to the laws of the land as well as federal regulations.

    As for Joseph Otting, though the Senate confirmed him as the new head of the OCC in November, four key senators called him “highly unqualified for [the] job.”  He will run an agency whose history snakes back to the Civil War. Established by President Abraham Lincoln in 1863, it was meant to safeguard the solidity and viability of the banking system.  Its leader remains charged with preventing bank-caused financial crashes, not enabling them. 

    Fast forward to the 1990s when Otting held a ranking position at Union Bank NA, overseeing its lending practices to medium-sized companies. From there he transitioned to U.S. Bancorp, where he was tasked with building its middle-market business (covering companies with $50 million to $1 billion in annual revenues) as part of that lender’s expansion in California.

    In 2010, Otting was hired as CEO of OneWest (now owned by CIT Group).  During his time there with Mnuchin, OneWest foreclosed on about 36,000 people and was faced with sweeping allegations of abusive foreclosure practices for which it was fined $89 million. Otting received $10.5 million in an employment contract payout when terminated by CIT in 2015. As Senator Sherrod Brown tweeted all too accurately during his confirmation hearings in the Senate, “Joseph Otting is yet another bank exec who profited off the financial crisis who is being rewarded by the Trump Administration with a powerful job overseeing our nation’s banking system.”

    Like Trump and Mnuchin, Otting has never held public office. He is, however, an enthusiastic proponent of loosening lending regulations. Not only is he against reinstating Glass-Steagall, but he also wants to weaken the “Volcker Rule,” a part of the Dodd-Frank Act that was meant to place restrictions on various kinds of speculative transactions by banks that might not benefit their customers.

    Jay Clayton, the Securities and Exchange Commission

    The Securities and Exchange Commission (SEC) was established by President Franklin Delano Roosevelt in 1934, in the wake of the crash of 1929 and in the midst of the Great Depression. Its intention was to protect investors by certifying that the securities business operated in a fair, transparent, and legal manner.  Admittedly, its first head, Joseph Kennedy (President John F. Kennedy’s father), wasn’t exactly a beacon of virtue. He had helped raise contributions for Roosevelt’s election campaign even while under suspicion for alleged bootlegging and other illicit activities.

    Since May 2017, the SEC has been run by Jay Clayton, a top Wall Street lawyer. Following law school, he eventually made partner at the elite legal firm Sullivan & Cromwell. After the 2008 financial crisis, Clayton was deeply involved in dealing with the companies that tanked as that crisis began. He advised Barclays during its acquisition of Lehman Brothers’ assets and then represented Bear Stearns when JPMorgan Chase acquired it.

    In the three years before he became head of the SEC, Clayton represented eight of the 10 largest Wall Street banks, institutions that were then regularly being investigated and charged with securities violations by the very agency Clayton now heads. He and his wife happen to hold assets valued at between $12 million and $47 million in some of those very institutions.

    Not surprisingly in this administration (or any other recent one), Clayton also has solid Goldman Sachs ties. On at least seven occasions between 2007 and 2014, he advised Goldman directly or represented its corporate clients in their initial public offerings. Recently, Goldman Sachs requested that the SEC release it from having to report its lobbying activities or payments because, it claimed, they didn’t make up a large enough percentage of its assets to be worth the bother. (Don’t be surprised when the agency agrees.) 

    Clayton’s main accomplishment so far has been to significantly reduce oversight activities. SEC penalties, for instance, fell by 15.5% to $3.5 billion during the first year of the Trump administration.  The SEC also issued enforcement actions against only 62 public companies in 2017, a 33% decline from the previous year. Perhaps you won’t then be surprised to learn that its enforcement division has an estimated 100 unfilled investigative and supervisory positions, while it has also trimmed its wish list for new regulatory provisions. As for Dodd-Frank, Clayton insists he won’t “attack” it, but thinks it should be “looked” at.

    Mick Mulvaney, the Consumer Financial Protection Bureau and the Office of Management and Budget

    As a congressman from South Carolina, ultra-conservative Republican Mick Mulvaney, dubbed “Mick the Knife,” once even labeled himself a “right-wing nut job.” Chosen by President Trump in November 2016 to run the Office of Management and Budget, he was confirmed by Congress last February.

    As he said during his confirmation hearings, “Each day, families across our nation make disciplined choices about how to spend their hard-earned money, and the federal government should exercise the same discretion that hard-working Americans do every day.” As soon as he was at the OMB, he took an axe to social programs that help everyday Americans. He was instrumental in creating the GOP tax plan that will add up to $1.5 trillion to the country’s debt in order to provide major tax breaks to corporations and wealthy individuals. He was also a key figure in selling the plan to the media.

    When Richard Cordray resigned as head of the Consumer Financial Protection Bureau in November, Trump promptly selected Mick the Knife for that role, undercutting the deputy director Cordray had appointed to the post. After much debate and a court order in his favor, Mulvaney grabbed a box of Dunkin’ Donuts and headed over from his OMB office adjacent to the White House. So even though he’s got a new job, Mulvaney is never far from Trump’s reach.

    The problem for the rest of us: Mulvaney loathes the CFPB, an agency he once called “a joke.” While he can’t unilaterally demolish it, he’s already obstructed its ability to enforce its government mandates. Soon after Trump appointed him, he imposed a 30-day freeze on hiring and similarly froze all further rule-making and regulatory actions.

    In his latest effort to undermine American consumers, he’s working to defund the CFPB. He just sent the Federal Reserve a letter stating that, “for the second quarter of fiscal year 2018, the Bureau is requesting $0.” That doesn’t bode well for American consumers.

    Jerome “Jay” Powell, Federal Reserve

    Thanks to the Senate confirmation of his selection for chairman of the board, Donald Trump now owns the Fed, too. The former number two man under Janet Yellen, Jerome Powell will be running the Fed, come Monday morning, February 5th.

    Established in 1913 during President Woodrow Wilson’s administration, the Fed’s official mission is to “promote a safe, sound, competitive, and accessible banking system.” In reality, it’s acted more like that system’s main drug dealer in recent years. In the wake of the 2007-2008 financial crisis, in addition to buying trillions of dollars in bonds (a strategy called “quantitative easing,” or QE), the Fed supplied four of the biggest Wall Street banks with an injection of $7.8 trillion in secret loans. The move was meant to stimulate the economy, but really, it coddled the banks.

    Powell’s monetary policy undoubtedly won’t represent a startling change from that of previous head Janet Yellen, or her predecessor, Ben Bernanke. History shows that Powell has repeatedly voted for pumping financial markets with Federal Reserve funds and, despite displaying reservations about the practice of quantitative easing, he always voted in favor of it, too. What makes his nomination out of the ordinary, though, is that he’s a trained lawyer, not an economist.

    Powell is assuming the helm at a time when deregulation is central to the White House’s economic and financial strategy.  Keep in mind that he will also have a role in choosing and guiding future Fed appointments. (At present, the Fed has the smallest number of sitting governors in its history.) The first such appointee, private equity investor Randal Quarles, already approved as the Fed’s vice chairman for supervision, is another major deregulator.

    Powell will be able to steer banking system decisions in other ways.  In recent Senate testimony, he confirmed his deregulatory predisposition. In that vein, the Fed has already announced that it seeks to loosen the capital requirements big banks need to put behind their riskier assets and activities. This will, it claims, allow them to more freely make loans to Main Street, in case a decade of cheap money wasn’t enough of an incentive.

    The Emperor Has No Rules

    Nearly every regulatory institution in Trumpville tasked with monitoring the financial system is now run by someone who once profited from bending or breaking its rules. Historically, severe financial crises tend to erupt after periods of lax oversight and loose banking regulations. By filling America’s key institutions with representatives of just such negligence, Trump has effectively hired a team of financial arsonists.

    Naturally, Wall Street views Trump’s chosen ones with glee. Amid the present financial euphoria of the stock market, big bank stock prices have soared.  But one thing is certain: when the next crisis comes, it will leave the last meltdown in the shade because our financial system is, at its core, unreformed and without adult supervision. Banks not only remain too big to fail but are still growing, while this government pushes policies guaranteed to put us all at risk again.

    There’s a pattern to this: first, there’s a crash; then comes a period of remorse and talk of reform; and eventually comes the great forgetting. As time passes, markets rise, greed becomes good, and Wall Street begins to champion more deregulation. The government attracts deregulatory enthusiasts and then, of course, there’s another crash, millions suffer, and remorse returns.

    Ominously, we’re now in the deregulation stage following the bull run. We know what comes next, just not when. Count on one thing: it won’t be pretty. 

  • Guess Which 'Shithole' Has The World's Most-Overcrowded Prison System

    According to Bureau of Justice Statistics, the U.S. has a prison population of 2.2 million, 481 inmates per 100,000 of the population.

    The U.S. prison system has attracted headlines for overcrowding with 18 states reporting they were operating at over 100 percent capacity at the end of 2014. According to the World Prison Brief, the U.S. has an an occupancy level of 103.9 percent and only comes 113th worldwide when it comes to overcrowding in prisons. 

    However, as Statista’s Niall McCarthy details, somebody who gets arrested and jailed in Haiti will have to endure far tougher conditions.

    Infographic: The World's Most Overcrowded Prison Systems | Statista

    You will find more statistics at Statista

    The Caribbean nation has the most overcrowded prisons of any country worldwide and its institutions are operating at 454 percent capacity. That has resulted in 80 to 100 men being crammed into a single cell at once, malnutrition and the spread of disease. Many of Haiti’s inmates have not been convicted of a crime and the UN has condemned the situtation, saying inmates are subject to daily violations of their human rights.

     

    The situation in the Philippines is similar and conditions in its prisons have deteriorated steadily since President Rodrigo Duterte launched his war on drugs. That has seen the number of arrests skyrocket with thousands of people thrown into prison. That has seen occupancy rates stretched to 436 percent of capacity and Quezon City Jail is a good example. An ABC News report claims the facility was built to house 262 prisoners and it now hosts over 3,000.

    El Salvador comes third for prison overcrowding with its institutions operating at 348.2 percent of their capacity.

  • The Fragile Generation

    Authored by &  via Jim Quinn’s Burning Platform blog,

    Bad policy and paranoid parenting are making kids too safe to succeed

    One day last year, a citizen on a prairie path in the Chicago suburb of Elmhurst came upon a teen boy chopping wood. Not a body. Just some already-fallen branches. Nonetheless, the onlooker called the cops.

    Officers interrogated the boy, who said he was trying to build a fort for himself and his friends. A local news site reports the police then “took the tools for safekeeping to be returned to the boy’s parents.”

    Elsewhere in America, preschoolers at the Learning Collaborative in Charlotte, North Carolina, were thrilled to receive a set of gently used playground equipment. But the kids soon found out they would not be allowed to use it, because it was resting on grass, not wood chips. “It’s a safety issue,” explained a day care spokeswoman. Playing on grass is against local regulations.

    And then there was the query that ran in Parents magazine a few years back: “Your child’s old enough to stay home briefly, and often does. But is it okay to leave her and her playmate home while you dash to the dry cleaner?” Absolutely not, the magazine averred: “Take the kids with you, or save your errand for another time.” After all, “you want to make sure that no one’s feelings get too hurt if there’s a squabble.”

    The principle here is simple: This generation of kids must be protected like none other. They can’t use tools, they can’t play on grass, and they certainly can’t be expected to work through a spat with a friend.

    And this, it could be argued, is why we have “safe spaces” on college campuses and millennials missing adult milestones today. We told a generation of kids that they can never be too safe—and they believed us.

    Safety First

    We’ve had the best of intentions, of course. But efforts to protect our children may be backfiring. When we raise kids unaccustomed to facing anything on their own, including risk, failure, and hurt feelings, our society and even our economy are threatened. Yet modern child-rearing practices and laws seem all but designed to cultivate this lack of preparedness. There’s the fear that everything children see, do, eat, hear, and lick could hurt them. And there’s a newer belief that has been spreading through higher education that words and ideas themselves can be traumatizing.

    How did we come to think a generation of kids can’t handle the basic challenges of growing up?

    Beginning in the 1980s, American childhood changed. For a variety of reasons—including shifts in parenting norms, new academic expectations, increased regulation, technological advances, and especially a heightened fear of abduction (missing kids on milk cartons made it feel as if this exceedingly rare crime was rampant)—children largely lost the experience of having large swaths of unsupervised time to play, explore, and resolve conflicts on their own. This has left them more fragile, more easily offended, and more reliant on others. They have been taught to seek authority figures to solve their problems and shield them from discomfort, a condition sociologists call “moral dependency.”

    This poses a threat to the kind of open-mindedness and flexibility young people need to thrive at college and beyond. If they arrive at school or start careers unaccustomed to frustration and misunderstandings, we can expect them to be hypersensitive. And if they don’t develop the resources to work through obstacles, molehills come to look like mountains.

    This magnification of danger and hurt is prevalent on campus today. It no longer matters what a person intended to say, or how a reasonable listener would interpret a statement—what matters is whether any individual feels offended by it. If so, the speaker has committed a “microaggression,” and the offended party’s purely subjective reaction is a sufficient basis for emailing a dean or filing a complaint with the university’s “bias response team.” The net effect is that both professors and students today report that they are walking on eggshells. This interferes with the process of free inquiry and open debate—the active ingredients in a college education.

    And if that’s the case already, what of the kids still in grammar school, constantly reminded they might accidentally hurt each other with the wrong words? When today’s 8-year-olds become the 18-year-olds starting college, will they still view free speech as worthy of protecting? As Daniel Shuchman, chairman of the free speech-promoting Foundation for Individual Rights in Education (FIRE), puts it, “How likely are they to consider the First Amendment essential if they start learning in fifth grade that you’re forbidden to say—or even think—certain things, especially at school?”

    Parents, teachers, and professors are talking about the growing fragility they see. It’s hard to avoid the conclusion that the overprotection of children and the hypersensitivity of college students could be two sides of the same coin. By trying so hard to protect our kids, we’re making them too safe to succeed.

    Children on a Leash

    If you’re over 40, chances are good that you had scads of free time as a child—after school, on weekends, over the summer. And chances are also good that, if you were asked about it now, you’d go on and on about playing in the woods and riding your bike until the streetlights came on.

    Today many kids are raised like veal. Only 13 percent of them even walk to school. Many who take the bus wait at the stop with parents beside them like bodyguards. For a while, Rhode Island was considering a bill that would prohibit children from getting off the bus in the afternoon if there wasn’t an adult waiting to walk them home. This would have applied until seventh grade.

    As for summer frolicking, campers don’t just have to take a buddy with them wherever they go, including the bathroom. Some are now required to take two—one to stay with whoever gets hurt, the other to run and get a grown-up. Walking to the john is treated like climbing Mt. Kilimanjaro.

    After school, kids no longer come home with a latchkey and roam the neighborhood. Instead, they’re locked into organized, supervised activities. Youth sports are a $15 billion business that has grown by 55 percent since just 2010. Children as young as third grade are joining traveling teams—which means their parents spend a lot of time in the car, too. Or they’re at tutoring. Or they’re at music lessons. And if all else fails, they are in their rooms, online.

    Even if parents want to shoo their kids outside—and don’t come home till dinner!—it’s not as easy as it once was. Often, there are no other children around to play with. Even more dishearteningly, adults who believe it’s good for young people to run some errands or play kickball down the street have to think twice about letting them, because busybodies, cops, and social workers are primed to equate “unsupervised” with “neglected and in danger.”

    You may remember the story of the Meitivs in Maryland, investigated twice for letting their kids, 10 and 6, walk home together from the park. Or the Debra Harrell case in South Carolina, where a mom was thrown in jail for allowing her 9-year-old to play at the sprinkler playground while she worked at McDonald’s. Or the 8-year-old Ohio boy who was supposed to get on the bus to Sunday school, but snuck off to the Family Dollar store instead. His dad was arrested for child endangerment.

    These examples represent a new outlook: the belief that anytime kids are doing anything on their own, they are automatically under threat. But that outlook is wrong. The crime rate in America is back down to what it was in 1963, which means that most of today’s parents grew up playing outside when it was more dangerous than it is today. And it hasn’t gotten safer because we’re hovering over our kids. All violent crime is down, including against adults.

    Danger Things

    And yet it doesn’t feel safer. A 2010 study found “kidnapping” to be the top parental fear, despite the fact that merely being a passenger in a car is far more dangerous. Nine kids were kidnapped and murdered by strangers in 2011, while 1,140 died in vehicles that same year. While Harvard psychologist Steven Pinker writes in 2011’s The Better Angels of Our Nature that life in most countries is safer today than at any time in human history, the press keeps pushing paranoia. This makes stepping back feel doubly risky: There’s the fear of child kidnappers and the fear of Child Protective Services.

    At times, it seems like our culture is conjuring dangers out of thin air, just to have something new to worry about. Thus, the Boulder Public Library in Colorado recently forbade anyone under 12 to enter without an adult, because “children may encounter hazards such as stairs, elevators, doors, furniture, electrical equipment, or other library patrons.” Ah, yes, kids and library furniture. Always a lethal combo.

    Happily, the library backed off that rule, perhaps thanks to merciless mocking in the media. But saner minds don’t always prevail. At Mesa Elementary School, which also happens to be in Boulder, students got a list of the items they could not bring to the science fair. These included “chemicals,” “plants in soil,” and “organisms (living or dead).” And we wonder why American children score so low on international tests.

    But perhaps the single best example of how fantastically fearful we’ve become occurred when the city of Richland, Washington, got rid of all the swings on its school playgrounds. The love of swinging is probably older than humanity itself, given our arboreal origins. But as a school district spokesman explained, “Swings have been determined to be the most unsafe of all the playground equipment on a playground.”

    You may think your town has avoided such overkill, but is there a merry-go-round at your local park, or a see-saw? Most likely they, too, have gone the way of lawn darts. The Consumer Product Safety Commission even warns parks of “tripping hazards, like…tree stumps and rocks,” a fact unearthed (so to speak) by Philip Howard, author of 2010’s Life Without Lawyers.

    The problem is that kids learn by doing. Trip over a tree stump and you learn to look down. There’s an old saying: Prepare your child for the path, not the path for your child. We’re doing the opposite.

    Ironically, there are real health dangers in not walking, or biking, or hopping over that stump. A Johns Hopkins study this summer found that the typical 19-year-old is as sedentary as a 65-year-old. The Army is worried that its recruits don’t know how to skip or do somersaults.

    But the cost of shielding kids from risks goes well beyond the physical, as a robust body of research has shown.

    Of Trophies and Traumas

    A few years ago, Boston College psychology professor emeritus Peter Gray was invited by the head of counseling services at a major university to a conference on “the decline in resilience among students.” The organizer said that emergency counseling calls had doubled in the last five years. What’s more, callers were seeking help coping with everyday problems, such as arguments with a roommate. Two students had dialed in because they’d found a mouse in their apartment. They also called the police, who came and set a mousetrap. And that’s not to mention the sensitivity around grades. To some students, a B is the end of the world. (To some parents, too.)

    Free play has little in common with the “play” we give children today. In organized activities, adults run the show. It’s only when the grown-ups aren’t around that the kids get to take over. Play is training for adulthood.

    Part of the rise in calls could be attributed to the fact that admitting mental health issues no longer carries the stigma it once did, an undeniably positive development. But it could also be a sign, Gray realized, that failing at basic “adulting” no longer carries the stigma it once did. And that is far more troubling.

    Is this outcome the apotheosis of participation-trophy culture? It’s easy to scoff at a society that teaches kids that everything they do deserves applause. But more disturbing is the possibility that those trophies taught kids the opposite lesson: that they’re so easily hurt, they can’t handle the sad truth that they’re not the best at something.

    Not letting your kid climb a tree because he might fall robs him of a classic childhood experience. But being emotionally overprotective takes away something else. “We have raised a generation of young people who have not been given the opportunity to…experience failure and realize they can survive it,” Gray has said. When Lenore’s son came in eighth out of nine teams in a summer camp bowling league, he got an eighth-place trophy. The moral was clear: We don’t think you can cope with the negative emotions of finishing second-to-last.

    Of course, it’s natural to want to see kids happy. But the real secret to happiness isn’t more high fives; it’s developing emotional resilience. In our mania for physical safety, coupled with our recent tendency to talk about “emotional safety,” we have systematically deprived our children of the thousands of challenging—and sometimes upsetting—experiences that they need in order to learn that resiliency. And in our quest to protect them, we have stolen from children the best resilience training known to man: free play.

    Play’s the Thing

    All mammals play. It is a drive installed by Mother Nature. Hippos do backflips in the water. Dogs fetch sticks. And gazelles run around, engaging in a game that looks an awful lot like tag.

    Why would they do that? They’re wasting valuable calories and exposing themselves to predators. Shouldn’t they just sit quietly next to their mama gazelles, exploring the world through the magic of PBS Kids?

    It must be because play is even more important to their long-term survival than simply being “safe.” Gray’s main body of research is on the importance of free play, and he stresses that it has little in common with the “play” we give kids today. In organized activities—Little League, for example—adults run the show. It’s only when the grown-ups aren’t around that the kids get to take over. Play is training for adulthood.

    In free play, ideally with kids of mixed ages, the children decide what to do and how to do it. That’s teamwork, literally. The little kids desperately want to be like the bigger kids, so instead of bawling when they strike out during a sandlot baseball game, they work hard to hold themselves together. This is the foundation of maturity.

    The older kids, meanwhile, throw the ball more softly to the younger ones. They’re learning empathy. And if someone yells, “Let’s play on just one leg!”—something they couldn’t do at Little League, with championships (and trophies!) on the line—the kids discover what it means to come up with and try out a different way of doing things. In Silicon Valley terms, they “pivot” and adopt a “new business model.” They also learn that they, not just grown-ups, can collectively remake the rules to suit their needs. That’s called participatory democracy.

    Best of all, without adults intervening, the kids have to do all the problem solving for themselves, from deciding what game to play to making sure the teams are roughly equal. Then, when there’s an argument, they have to resolve it themselves. That’s a tough skill to learn, but the drive to continue playing motivates them to work things out. To get back to having fun, they first have to come up with a solution, so they do. This teaches them that they can disagree, hash it out, and—perhaps with some grumbling—move on.

    These are the very skills that are suddenly in short supply on college campuses.

    “Free play is the means by which children learn to make friends, overcome their fears, solve their own problems and generally take control of their own lives,” Gray writes in 2013’s Free to Learn (Basic Books). “Nothing we do, no amount of toys we buy or ‘quality time’ or special training we give our children, can compensate for the freedom we take away. The things that children learn through their own initiatives, in free play, cannot be taught in other ways.”

    Unstructured, unsupervised time for play is one of the most important things we have to give back to kids if we want them to be strong and happy and resilient.

    Where Have All the Paperboys Gone?

    It’s not just that kids aren’t playing much on their own. These days, they’re not doing much of anything on their own. In an article in The Atlantic, Hanna Rosin admits that “when my daughter was 10, my husband and I suddenly realized that in her whole life, she had probably not spent more than 10 minutes unsupervised by an adult.”

    In earlier generations, this would have seemed a bizarre and wildly overprotective upbringing. Society had certain age-related milestones that most people agreed on. Kids might be trusted to walk to school by first grade. They might get a latchkey at 8, take on a newspaper route around 10, start babysitting at 12. But over the past generation or so, those milestones disappeared—buried by fears of kidnapping, the rise of supervised activities, and the pre-eminence of homework. Parents today know all about the academic milestones their kids are supposed to reach, but not about the moments when kids used to start joining the world.

    It’s not necessarily their fault. Calls to eight newspapers in North Carolina found none that would take anyone under the age of 18 to deliver papers. A police chief in New Albany, Ohio, went on record saying kids shouldn’t be outside on their own till age 16, “the threshold where you see children getting a little bit more freedom.” A study in Britain found that while just under half of all 16- to 17-year-olds had jobs as recently as 1992, today that number is 20 percent.

    The responsibility expected of kids not so long ago has become almost inconceivable. Published in 1979, the book Your 6-Year-old: Loving and Defiant includes a simple checklist for what a child entering first grade should be able to do: Can he draw and color and stay within the lines of the design being colored? Can he ride a small two-wheeled bicycle without helper wheels? Can he travel alone in the neighborhood (four to eight blocks) to a store, school, playground, or friend’s home?

    Hang on. Walk to the store at 6—alone?

    It’s tempting to blame “helicopter parents” for today’s less resilient kids. But when all the first-graders are walking themselves to school, it’s easy to add yours to the mix. When your child is the only one, it’s harder. And that’s where we are today. Norms have dramatically changed. The kind of freedom that seemed unremarkable a generation ago has become taboo, and in some cases even illegal.

    A Very Hampered Halloween

    In Waynesboro, Georgia, “trick or treaters” must be 12 or younger; they must be in a costume; and they must be accompanied by an adult at least 21 years of age. So if you have kids who are 15, 10, and 8, you can’t send them out together. The 15-year-old is not allowed to dress up, yet she won’t be considered old enough to supervise her siblings for another six years. And this is on the one night of the entire year we traditionally let children pretend to be adults.

    Other schools and community centers now send letters home asking parents not to let their children wear scary costumes. Some even organize “trunk or treats”—cars parked in a circle, trunks open and filled with candy, thus saving the kids from having to walk around the neighborhood or knock on doors. (That would be tiring and terrifying.) If this is childhood, is it any wonder college kids also expect to be micromanaged on Halloween?

    At Yale in 2015, after 13 college administrators signed a letter outlining appropriate vs. inappropriate costume choices for students, the childhood development expert and campus lecturer Erika Christakis suggested that it would be better to allow kids to think for themselves. After all, Halloween is supposed to be about pushing boundaries. “Is there no room anymore for a child or young person to be a little obnoxious…or, yes, offensive?” she wrote. “Have we lost faith in young people’s capacity—your capacity—to ignore or reject things that trouble you?”

    Apparently, yes. Angry students mobbed her husband, the professor Nicholas Christakis, surrounding him in the courtyard of the residential college where he served as master. They screamed obscenities and demanded he apologize for believing, along with his wife, that college students are in fact capable of handling offensive costumes on Halloween. “Be quiet!” a student shouted at him at one point. “As master, it is your job to create a place of comfort and home for the students!” She did not take kindly to his response that, to the contrary, he sees it as his job to create a space where students can grow intellectually.

    As it turns out, Halloween is the perfect Petri dish for observing what we have done to childhood. We didn’t think anything was safe enough for young people. And now we are witnessing the results.

    No Fun and No Joy

    When parents curtail their kids’ independence, they’re not just depriving the younglings of childhood fun. They are denying themselves the grown-up joy of seeing their kids do something smart, brave, or kind without parental guidance.

    It’s the kind of joy described by a Washington Post columnist who answered the phone one day and was shocked to find her 8-year-old son on the other end. He’d accidentally gone home when he was supposed to stay after school. Realizing she wasn’t there, he decided to walk to the store a few blocks away—his first time. The mom raced over, fearing God knows what, and rushed in only to find her son happily helping the shopkeeper stock the shelves with meat. He’d had a snack and done his homework, too. It was an afternoon he’d never forget, and neither would his very proud mother.

    When we don’t let our kids do anything on their own, we don’t get to see just how competent they can be—and isn’t that, ultimately, the greatest reward of parenting? We need to make it easier for grown-ups to let go while living in a society that keeps warning them not to. And we need to make sure they won’t get arrested for it.

    What Is To Be Done?

    By trying to keep children safe from all risks, obstacles, hurt feelings, and fears, our culture has taken away the opportunities they need to become successful adults. In treating them as fragile—emotionally, socially, and physically—society actually makes them so.

    To combat this problem, we have established a new nonpartisan nonprofit, the Let Grow Foundation. Our goal is to restore resilience by overthrowing the culture of overprotection. We teamed up with Gray, the professor whose research we highlighted above, and FIRE’s Shuchman, a New York investment fund manager who is now our chairman.

    We are building an organization that seeks to change the social norms, policies, and laws that pressure and intimidate parents, schools, and towns into coddling their kids. We will research the effects of excessive caution, study the link between independence and success, and launch projects to give kids back some free time and free play. Most of all, the Let Grow Foundation will reject the assumption of fragility and promote intellectual, physical, and emotional resilience.

    Children know that their parents had more freedom to roam than they do, and more unscheduled time to read or tinker or explore. They also realize that older generations were trusted to roll with some punches, at school and beyond. We hope kids today will start demanding that same independence and respect for themselves. It’s their freedom that has been chiseled away, after all.

    We want them to insist on their right to engage not just with the physical world, but also with the world of ideas. We want them to hear, read, and voice opinions that go against the grain. We want them to be insulted by the assumption that they and their classmates are so easily hurt that arguments must stop before they start. To this end, we hope to encourage their skepticism about the programs and policies that are ostensibly there to “protect” them from discomfort.

    If this effort is successful, we’ll soon see kids outside again. Common setbacks will be considered “resilience moments” rather than traumas. Children will read widely, express themselves freely, and work through disagreements without automatically calling on authority figures to solve their problems for them. The more adults step back, the more we believe kids will step up, growing brave in the face of risk and just plain happy in their independence.

    Children today are safer and smarter than this culture gives them credit for. They deserve the freedom we had. The country’s future prosperity and freedom depend on it.

  • GOP Reps Seek Criminal Prosecution Of FBI, DOJ Officials For "Full Throated" Illegal Misconduct And "Treason"

    Following the release of a four-page memo detailing rampant FISA warrant abuse by the FBI and DOJ, Rep. Paul Gosar (R-AZ) announced that he will seek the criminal prosecution of FBI and DOJ officials for the “full throated adoption of this illegal misconduct and abuse of FISA by James Comey, Andrew McCabe, Sally Yates and Rod Rosenstein” who Gosar called “traitors to our nation.” 

    a

    Gosar focuses on the memo’s claim that the FBI and DOJ did not mention that Christopher Steele, the ex-MI6 spy who compiled the dossier, was partially funded by the Clinton campaign and the DNC. 

    “This is third world politics where the official government agencies are used as campaign attack dogs,” Gosar said.

    The letter reads in part:

    The House Permanent Select Committee on Intelligence memorandum on the FBI abuse of FISA warrants and targeting a sitting President is not just evidence of incompetence but clear and convincing evidence of treason….

    I will be leading a letter to the Attorney General seeking criminal prosecution against these traitors to our nation.”

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

    Meanwhile, Georgia GOP Gubernatorial candidate Sen. Michael Williams is  calling for the prosecution of Comey – saying he should be “sent to prison for his crimes“:

    “The leadership of the FBI and DOJ behaved in a way we would expect of the former Soviet Union, not the United States of America. I applaud Representative Nunes and other Republican members of the House Intel Committee for fighting and exposing corruption. Americans are tired of corrupt bureaucrats and their career politician enablers. If powerful leaders are not held accountable, the American people will never regain faith in the institutions meant to protect us. Former FBI Director James Comey was entrusted with one of the most powerful positions in the world. Sadly, he intentionally abused his power in an effort to destroy Donald Trump’s presidency. He should be prosecuted to the fullest extent of the law and sent to prison for his crimes. No one is above the law. No one.” 

    We’re sure Attorney General Jeff Sessions – who resisted calls for a second special counsel to investigate FBI misconduct – will take Gosar’s request seriously, despite praising Deputy AG Rod Rosenstein earlier today for representing “the kind of quality and leadership that we want in the department” – right after the FISA memo detailing his conduct was released.

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

    Good thing Sessions isn’t some deep-state concession Trump had to agree to in exchange for GOP support during the election.

  • Why Albert Einstein Thought We Were All Insane

    Authored by Simon Black via SovereignMan.com,

    In the early summer of 1914, Albert Einstein was about to start a prestigious new job as Director of the Kaiser Wilhelm Institute for Physics.

    The position was a big deal for the 35-year old Einstein– confirmation that he was one of the leading scientific minds in the world. And he was excited about what he would be able to achieve there.

    But within weeks of Einstein’s arrival, the German government canceled plans for the Institute; World War I had broken out, and all of Europe was gearing up for one of the bloodiest conflicts in human history.

    The impact of the Great War was immeasurable.

    It cost the lives of 10 million people. It bankrupted entire nations.

    The war ripped two major European powers off the map– the Austro Hungarian Empire, and the Ottoman Empire– and deposited them in the garbage can of history.

    Austria-Hungary in particular boasted the second largest land mass in Europe, the third highest population, and one of the biggest economies. Plus it was a leading manufacturer of high-tech machinery.

    Yet by the end of the war it would no longer exist.

    World War I also played a major role in the emergence of communism in Russia through the 1917 Bolshevik revolution.

    Plus it was also a critical factor in the astonishing rise of the Nazi party in Germany.

    Without the Great War, Adolf Hitler would have been an obscure Austrian vagabond, and our world would be an entirely different place.

    One of the most bizarre things about World War I was how predictable it was.

    Tensions had been building in Europe for years, and the threat of war was deemed so likely that most major governments invested heavily in detailed war plans.

    The most famous was Germany’s “Schlieffen Plan”, a military offensive strategy named after its architect, Count Alfred von Schlieffen.

    To describe the Schlieffen Plan as “comprehensive” is a massive understatement.

    As AJP describes in his book War by Timetable, the Schlieffen Plan called for rapidly moving hundreds of thousands of soldiers to the front lines, plus food, equipment, horses, munitions, and other critical supplies, all in a matter of DAYS.

    Tens of thousands of trains were criss-crossing Europe during the mobilization, and as you can imagine, all the trains had to run precisely on time.

    A train that was even a minute early or a minute late would cause a chain reaction to the rest of the plan, affecting the time tables of other trains and other troop movements.

    In short, there was no room for error.

    In many respects the Schlieffen Plan is still with us to this day– not with regards to war, but for monetary policy.

    Like the German General Staff more than a century ago, modern central bankers concoct the most complicated, elaborate plans to engineer economic victory.

    Their success depends on being able to precisely control the [sometimes irrational] behavior of hundreds of millions of consumers, millions of businesses, dozens of foreign nations, and trillions of dollars of capital.

    And just like the obtusely complex war plans from 1914, central bank policy requires that all the trains run on time. There is no room for error.

    This is nuts. Economies are comprised of billions of moving pieces that are beyond anyone’s control and often have competing interests.

    A government that’s $21 trillion in debt requires cheap money (i.e. low interest rates) to stay afloat.

    Yet low interest rates are severely punishing for savers, retirees, and pension funds (including Social Security) because they’re unable to generate a sufficient rate of return to meet their needs.

    Low interest rates are great for capital intensive businesses that need to borrow money. But they also create dangerous asset bubbles and can eventually cause a painful rise in inflation.

    Raise interest rates too high, however, and it could bankrupt debtors and throw the economy into a tailspin.

    Like I said, there’s no room for error– they have to find the perfect balance between growth and inflation.

    Hedge fund billionaire Ray Dalio summed it up perfectly last month when he said,

    “It becomes more and more difficult to balance those things as time goes on. . . It may not be a problem in the next year or two, but the risk of not getting it right increases with time.”

    Today there’s a changing of the guard at the Federal Reserve– Janet Yellen is leaving her post as chair, and she’s being succeeded by Jerome Powell.

    Yellen leaves her post having brought down the unemployment rate in the United States to 4.2%, which certainly sounds nice.

    Yet at the same time, workers’ wages (when adjusted for inflation) have hardly budged under her tenure.

    Americans’ savings rate has been cut in half. Consumer debt and student loans are at all-time highs.

    And dangerous asset bubbles have expanded, from stocks to bonds to property.

    The risk of them getting it wrong is clearly growing.

    That’s why having your own Plan B is so important.

    It’s a simple concept: don’t keep all of your eggs in one basket, especially when the people who control the basket have such a tiny margin of error.

    The right Plan B makes sense no matter what happens, or doesn’t happen, next. If they get it right, you won’t be worse off. But if they get it wrong, you’ll still prosper.

    I truly hope they don’t get it wrong.

    But if they ever do, people may finally look back and wonder how we could have been so foolish to hand total control of our economy over to an unelected committee of bureaucrats with a mediocre track record… and then expect them to get it right forever.

    It’s pretty insane when you think about it.

    As Einstein quipped at the height of World War I in 1917, “What a pity we don’t live on Mars so that we could observe the futile activities of human beings only through a telescope. . .”

    *  * *

    And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

  • Mattis Threatens Military Action Over Syria Gas Attack Claims, Then Admits "No Evidence"

    Mattis Threatens Military Action Over Syria Gas Attack Claims, Then Admits “No Evidence”

    “I don’t have the evidence,” Mattis said. “What I am saying is that other groups on the ground – NGOs, fighters on the ground – have said that sarin has been used, so we are looking for evidence.”

    This week the American public was once again bombarded by fresh headlines alleging the Syrian government under President Bashar al-Assad gassed its own people. And in predictable fashion the usual threat of US military force soon followed.

    Except of course rather than “alleging” a chemical incident, all the usual suspects from CNN pundits to State Department bureaucrats to Pentagon officials in typical fashion are opting for the simpler “Assad did it” narrative. State Department spokesperson Heather Nauert stated Thursday, “Russia is making the wrong choice by not exercising its unique influence. To allow the Syria regime to use chemical weapons against its own people is unconscionable. We will pursue accountability.”


    The White Helmets published this photo on Thursday, claiming that its “volunteer was suffocated by the chlorine gas attack”. It appears that this is the “NGO” Defense Secretary Jim Mattis referenced on Friday to say “open sources” say Assad is using chemical weapons.

    Nauert’s statement was a repeat of talking points from last week’s chemical attack claims, wherein both she and Secretary of State Rex Tillerson ultimately blamed Russia. But like with other recent chemical attack allegations, the claims couldn’t be more vague or poorly sourced, yet was still enough for U.S. officials to issue more direct threats of US military action against Assad.

    While addressing the prior East Ghouta incident during a talk on January 23rd, Tillerson let slip that he didn’t actually know much about the supposed earlier January attack at all while still putting blame squarely on Syria and Russia, saying at the time, “Whoever conducted the attacks Russia ultimately bears responsibility for the victims in eastern Ghouta and countless other Syrians targeted with chemical weapons since Russia became involved in Syria.”

    This week the “evidence” doesn’t appear to be any clearer or narrowed.

    On Friday Defense Secretary Jim Mattis addressed the latest claims, confidently asserting the Syrian government had as a matter of routine used chlorine as a weapon against the remaining pockets of opposition areas of the country – specifically in the Damascus suburb of East Ghouta, but it appears at this point that even Reuters has suddenly found its journalistic skepticism… Yes, actual knowledge on whether or not there was even a chemical attack to begin with is indeed thin enough for Reuters to headline its own report with “Mattis says has no evidence of sarin gas used in Syria, but concerned”.

    Mattis, in line with the rest of the administration – especially the State Department – did his best to paint a scenario of the case being all but certain that the Syrian Army has been using chlorine gas to attack civilians, while also suggesting Sarin may have been deployed as well, which could serve as a “red line” triggering US military attack on the Syrian government. 

    But Mattis was also forced to admit the following, according to Reuters:

    Mattis, speaking with reporters, said the Syrian government had repeatedly used chlorine as a weapon. He stressed that the United States did not have evidence of sarin gas use.

    “We are even more concerned about the possibility of sarin use, (but) I don’t have the evidence,” Mattis said. “What I am saying is that other groups on the ground – NGOs, fighters on the ground – have said that sarin has been used, so we are looking for evidence.”

    And according to CNN, Mattis is now merely going on “open source” information, which essentially means anything from media reports to YouTube to Twitter to mere “opposition sources say…”. CNN reports the following:

    “You have all seen how we reacted to that [referencing the April 2017 US airstrike], so they’d be ill advised to go back to violating the chemical convention”… Mattis acknowledged that the US has not seen direct evidence of the use of Sarin gas but pointed to open source reports. “I don’t have the evidence… We are looking for evidence. I don’t have evidence credible or uncredible.”

    Like with previous allegations, US government officials are issuing threats of military action based on NGO’s and fighters on the ground.

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

    In this case it once again appears to be the word of the White Helmets, which it seems just about every other week issue new and unverified claims of chemical weapons attacks by the Syrian government. As is now generally well-known the White Helmets are funded by US and UK governments to the tune of many tens of millions of dollars, and have further been frequently filmed and documented cooperating closely with al-Qaeda factions on the ground in Syria.

    Indeed the group only operates in areas controlled by al-Qaeda (HTS) and other anti-government insurgents, especially in the locations of recent alleged attacks – Idlib and East Ghouta.

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

    Now that unverified claims of chemical attack incidents in Syria (and their subsequent uncritical amplification by media and politicians) have become routine, the following somewhat obvious observations need to be recalled:

    • The Assad government has long been winning the war, what incentive does it have to do the one thing (use CW) that would hasten its demise?
    • The US is a party to the conflict, so its claims must be evaluated accordingly.
    • The “NGOs and fighters on the ground” (in Mattis’ own words) are an even more direct party to the conflict.
    • The only way anti-Assad fighters can survive at this point is by triggering massive US military intervention (by claiming “Assad is gassing his own people!”).
    • The greater the momentum of Syria/Russia/Iran forces in defeating jihadists on Syrian territory, the more frequent the claims of chemical attacks  become – issued from those very jihadists suffering near certain defeat.
    • In the midst of a grinding 7-year long “fog of war” conflict involving constant claims and counterclaims, mere “open source” information means nothing in terms of proof or hard evidence.
    • Al-Qaeda administers the locations from which chemical attack allegations are being made. 
    • US officials stand ready to make use of “chemical attack” claims with or without “evidence credible or uncredible” (in Mattis’ words) anytime further pressure needs to be applied toward Russia or Syria.
    • Extraordinary claims demand extraordinary evidence (Iraq WMD anyone?).

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

    For its part, Russia alongside the Syrian government and other regional allies have long accused the US of blindly trusting opposition sources inside Syria concerning claims of chemical weapons attacks, including the April 2017 incident in al-Qaeda controlled (HTS) Idlib, which resulted in the US attacking an airbase in central Syria.

    Last October, the US State Department admitted that anti-Assad militant groups operating in Syria, especially in Idlib, possess and have used chemical weapons throughout the war – something which the US government previously said was impossible, as it consistently held the position that only the Assad government could be to blame.

  • The Ultimate Bear Chart

    Authored by Sven Henrich via NorthmanTrader.com,

    “There are two bubbles: We have a stock market bubble, and we have a bond market bubble” – Alan Greenspan January 31, 2018

    This may not come as a surprise, but: I agree with him. Oh I know, every time Alan Greenspan says something related to “irrational exuberance” immediately the comments come that he said it in 1996 and stocks didn’t blow-up until 2000. While that may have been true then it didn’t invalidate his premise nor is the timing relevant to now. Back then people ignored him and went full bubble mode until it popped.

    Indeed this one may still go on for a while and 2018 upside risk targets remain despite this week’s first pullback action of 2018. However this week’s corrective move coincided with a sustained technical breakout in the 10 year yield above its 30 year trend lines. Stock clearly reacted and not favorably.

    Which brings me precisely to the relationship between stocks and bonds. If Alan Greenspan is correct then a chart I have been watching and musing about for a while may be the ultimate bear chart.

    I’ve shown this chart before, but let me walk you through the theory of it.

    This is a ratio chart of $TNX (10 year yield) vs the $SPX and yields a stunning picture:

    The correlation is stunning to me from a technical perspective. Why? Because it is so incredibly precise.

    Indeed, if Alan Greenspan is right, this chart could have enormous implications for the next few years. This chart could suggests a massive multi year bear market to emerge.

    Let me explain why and how.

    The ratio bottomed right near the 2008/2009 lows and, as you can see, we’ve seen a continued rise until the middle of 2016. In the years in between a trend line established itself that acted as precise support until the US election. That’s when everything went pear shaped.

    Since then the trend line became resistance and the renewed effort to break above it rejected precisely at the trend line again in 2017. Given this history it seems hardly a coincidence, but rather suggests a technical relationship of importance.

    Currently we see the ratio dropping hard this week. Why? Because stocks are falling and yields are rising. Which means that for this to move back higher yields must drop and stocks rise. Or at least yields need to stop rising.

    But if yields continue to rise and stocks continue to fall the actual pattern of the ratio could be even more alarming:

    That’s a massive multi-year heads and shoulders pattern. It’s not confirmed until it breaks its neckline, but consider the possibilities in context of the recent price action and in correlation to stocks and bonds on their own:

    Basically what this implies is that the entire rally since the early 2016 lows will turn out to have been a blow-off top. Recall what I said at the outset: The high in ratio was made in mid 2016. The action since has placed 2 bear patterns: 1. The trend line break 2. The heads and shoulders pattern.

    Now let me clear: I’m not calling for an immediate collapse here, but I’m, pointing to a possibly huge structural relationship between bonds and stocks, one that will likely take years to play out. But the signs of trouble are already in this chart. Bottom line: Bulls need yields to drop sooner rather than later or this market party may come to an abrupt end with deep reaching consequences.

    There may hope in the short term as the ratio is about to reach critical support:

    But if the ratio breaks below its neckline, then this chart may indeed prove to be the ultimate bear chart.

Digest powered by RSS Digest